Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 27, 2020 | May 01, 2020 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 001-35803 | |
Security Exchange Name | NYSE | |
Entity Registrant Name | Mallinckrodt plc | |
Entity Incorporation, State or Country Code | L2 | |
Entity Tax Identification Number | 98-1088325 | |
Entity Address, Address Line One | 3 Lotus Park, The Causeway | |
Entity Address, City or Town | Staines-Upon-Thames | |
Entity Address, Postal Zip Code | TW18 3AG | |
Entity Address, Country | GB | |
City Area Code | 017 | |
Local Phone Number | 8463 6700 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Entity Central Index Key | 0001567892 | |
Trading Symbol | MNK | |
Title of 12(b) Security | Ordinary shares, par value $0.20 per share | |
Current Fiscal Year End Date | --12-25 | |
Entity Filer Category | Large Accelerated Filer | |
Document Period End Date | Mar. 27, 2020 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Ordinary Shares Outstanding | 84,455,284 | |
Entity Emerging Growth Company | false | |
Entity Small Business | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Net sales | $ 665.8 | $ 790.6 |
Cost of sales | 382 | 455.5 |
Gross profit | 283.8 | 335.1 |
Selling, general and administrative expenses | 231.1 | 230.2 |
Research and development expenses | 77.4 | 85.3 |
Restructuring charges, net | (1.8) | 4.2 |
Losses on divestiture | 0.2 | 0 |
Opioid-related litigation settlement (Note 11) | (16.8) | 0 |
Operating (loss) income | (6.3) | 15.4 |
Interest expense | (74.5) | (82.7) |
Interest income | 3.5 | 1.5 |
Other income, net | 1.7 | 16.3 |
Loss from continuing operations before income taxes | (75.6) | (49.5) |
Income tax benefit | (18.9) | (204.7) |
(Loss) income from continuing operations | (56.7) | 155.2 |
Income (loss) from discontinued operations, net of income taxes | 6.5 | (0.3) |
Net (loss) income | $ (50.2) | $ 154.9 |
Basic (loss) earnings per share (Note 5): | ||
Income (loss) from continuing operations, per share | $ (0.67) | $ 1.86 |
Income from discontinued operations, per share | 0.08 | 0 |
Net income, per share | $ (0.60) | $ 1.86 |
Basic weighted-averaged shares outstanding (in shares) | 84.2 | 83.5 |
Diluted (loss) earnings per share (Note 5): | ||
Income (loss) from continuing operations, per share | $ (0.67) | $ 1.83 |
Income from discontinued operations, per share | 0.08 | 0 |
Net income, per share | $ (0.60) | $ 1.83 |
Diluted weighted-average shares outstanding (in shares) | 84.2 | 84.6 |
Retained Earnings (Deficit) | ||
Net (loss) income | $ (50.2) | $ 154.9 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Net (loss) income | $ (50.2) | $ 154.9 |
Other comprehensive (loss) income, net of tax: | ||
Currency translation adjustments | (1.1) | 1.4 |
Derivatives, net of tax | 0 | 0.2 |
Benefit plans, net of tax | (0.2) | (0.3) |
Total other comprehensive (loss) income, net of tax | (1.3) | 1.3 |
Comprehensive (loss) income | $ (51.5) | $ 156.2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Current Assets: | ||
Cash and cash equivalents | $ 808 | $ 790.9 |
Accounts receivable, less allowance for doubtful accounts of $4.0 and $4.0 | 527.2 | 577.5 |
Inventories | 327.1 | 312.1 |
Prepaid expenses and other current assets | 211 | 150.2 |
Total current assets | 1,873.3 | 1,830.7 |
Property, plant and equipment, net | 878.2 | 896.5 |
Intangible assets, net | 6,820.4 | 7,018 |
Other assets | 599.4 | 593.7 |
Total Assets | 10,171.3 | 10,338.9 |
Current Liabilities: | ||
Current maturities of long-term debt | 634.2 | 633.6 |
Accounts payable | 110.2 | 139.8 |
Accrued payroll and payroll-related costs | 63 | 105.2 |
Accrued interest | 82.3 | 62.9 |
Accrued and other current liabilities | 394.4 | 485.4 |
Total current liabilities | 1,284.1 | 1,426.9 |
Long-term debt | 4,739.1 | 4,741.2 |
Opioid-related litigation settlement liability (Note 11) | 1,626.6 | 1,643.4 |
Pension and postretirement benefits | 61.5 | 62.4 |
Environmental liabilities | 60.6 | 60 |
Other income tax liabilities | 291.3 | 227.1 |
Other liabilities | 212.3 | 237.2 |
Other liabilities | 8,275.5 | 8,398.2 |
Shareholders' Equity: | ||
Preferred shares | 0 | 0 |
Ordinary A shares | 0 | 0 |
Ordinary shares | 18.7 | 18.7 |
Ordinary shares held in treasury at cost | (1,615.7) | (1,615.7) |
Additional paid-in capital | 5,569.1 | 5,562.5 |
Retained deficit | (2,067.1) | (2,016.9) |
Accumulated other comprehensive loss | (9.2) | (7.9) |
Total Shareholders' Equity | 1,895.8 | 1,940.7 |
Total Liabilities and Shareholders' Equity | $ 10,171.3 | $ 10,338.9 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) $ in Millions | Mar. 27, 2020€ / shares | Mar. 27, 2020USD ($)$ / sharesshares | Dec. 27, 2019€ / shares | Dec. 27, 2019USD ($)$ / sharesshares |
Allowance for doubtful accounts | $ | $ 4 | $ 4 | ||
Preferred shares, par value (in usd per share) | $ / shares | $ 0.20 | $ 0.20 | ||
Preferred shares, shares authorized (in shares) | 500,000,000 | 500,000,000 | ||
Preferred shares, shares issued (in shares) | 0 | 0 | ||
Preferred shares, shares outstanding (in shares) | 0 | 0 | ||
Ordinary shares, par value (in usd per share) | $ / shares | $ 0.20 | $ 0.20 | ||
Ordinary shares, shares authorized (in shares) | 500,000,000 | 500,000,000 | ||
Ordinary shares, shares issued (in shares) | 93,576,710 | 93,459,206 | ||
Ordinary shares, shares outstanding (in shares) | 84,208,441 | 84,105,786 | ||
Ordinary shares held in treasury at cost (in shares) | 9,368,269 | 9,353,420 | ||
Ordinary A | ||||
Ordinary shares, par value (in usd per share) | € / shares | € 1 | € 1 | ||
Ordinary shares, shares authorized (in shares) | 40,000 | 40,000 | ||
Ordinary shares, shares issued (in shares) | 0 | 0 | ||
Ordinary A shares, shares outstanding (in shares) | 0 | 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Cash Flows From Operating Activities: | ||
Net (loss) income | $ (50.2) | $ 154.9 |
Adjustments to reconcile net cash from operating activities: | ||
Depreciation and amortization | 223.1 | 247.6 |
Share-based compensation | 6.7 | 10 |
Deferred income taxes | 5.5 | (243.2) |
Losses on divestiture | 0.2 | 0 |
Other non-cash items | (19.6) | 2.6 |
Changes in assets and liabilities, net of the effects of acquisitions: | ||
Accounts receivable, net | 49.4 | 48.7 |
Inventories | (18.4) | (0.7) |
Accounts payable | (22.9) | (7.1) |
Income taxes | (34.9) | 19.8 |
Other | (85.2) | (68.1) |
Net Cash From Operating Activities | 53.7 | 164.5 |
Cash Flows From Investing Activities: | ||
Capital expenditures | (19.9) | (39.8) |
Proceeds from divestitures, net of cash | (3.5) | 0 |
Other | 6.7 | 0.4 |
Net Cash From Investing Activities | (16.7) | (39.4) |
Cash Flows From Financing Activities: | ||
Issuance of external debt | 0 | 200 |
Repayment of external debt | (4.9) | (448.7) |
Debt financing costs | (4) | 0 |
Proceeds from exercise of share options | 0 | 0.3 |
Repurchase of shares | 0 | (0.5) |
Other | 0 | 0.5 |
Net Cash Provided From Financing Activities | (8.9) | (248.4) |
Effect of currency rate changes on cash | (1.5) | 0.3 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect | 26.6 | (123) |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 822.6 | 367.5 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents | 849.2 | 244.5 |
Cash and cash equivalents, end of period | 808 | 225.8 |
Restricted Cash and Investments, Noncurrent | 41.2 | 18.7 |
Retained Earnings (Deficit) | ||
Cash Flows From Operating Activities: | ||
Net (loss) income | $ (50.2) | $ 154.9 |
Condensed Consolidated Statem_4
Condensed Consolidated Statement of Changes in Shareholders' Equity Statement - USD ($) $ in Millions | Total | Ordinary Shares | Treasury Shares | Additional Paid-In Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss |
Shares, Outstanding | 92,700,000 | 9,400,000 | ||||
Beginning balance at Dec. 28, 2018 | $ 2,887.3 | $ 18.5 | $ (1,617.4) | $ 5,528.2 | $ (1,017.7) | $ (24.3) |
Net (loss) income | 154.9 | 154.9 | ||||
Other Comprehensive Income (Loss), Net of Tax | 1.3 | 1.3 | ||||
Stock Issued During Period, Value, Stock Options Exercised | 0.3 | 0.3 | ||||
Vesting of restricted shares (in shares) | 200,000 | 0 | ||||
Vesting of restricted shares (in usd) | (0.4) | $ 0.1 | $ (0.5) | 0 | ||
Share-based compensation | $ 10 | 10 | ||||
Reissuance of treasury shares (in shares) | 0 | |||||
Reissuance of treasury shares | $ (0.5) | (0.9) | (0.4) | |||
Ending balance at Mar. 29, 2019 | 3,053.9 | $ 18.6 | $ (1,617) | 5,538.5 | (863.7) | (22.5) |
Cumulative Effect of New Accounting Principle in Period of Adoption | Accounting Standards Update 2018-02 [Member] | $ 0 | (0.5) | 0.5 | |||
Shares, Outstanding | 92,900,000 | 9,400,000 | ||||
Shares, Outstanding | 93,500,000 | 9,400,000 | ||||
Beginning balance, ordinary shares (in shares) at Dec. 27, 2019 | 93,459,206 | |||||
Beginning balance, treasury shares (in shares) at Dec. 27, 2019 | 9,353,420 | |||||
Beginning balance at Dec. 27, 2019 | $ 1,940.7 | $ 18.7 | $ (1,615.7) | 5,562.5 | (2,016.9) | (7.9) |
Net (loss) income | (50.2) | (50.2) | ||||
Other Comprehensive Income (Loss), Net of Tax | (1.3) | (1.3) | ||||
Vesting of restricted shares (in shares) | 100,000 | 0 | ||||
Vesting of restricted shares (in usd) | (0.1) | $ 0 | $ 0 | (0.1) | ||
Share-based compensation | $ 6.7 | 6.7 | ||||
Ending balance, ordinary shares (in shares) at Mar. 27, 2020 | 93,576,710 | |||||
Ending balance, treasury shares (in shares) at Mar. 27, 2020 | 9,368,269 | |||||
Ending balance at Mar. 27, 2020 | $ 1,895.8 | $ 18.7 | $ (1,615.7) | $ 5,569.1 | $ (2,067.1) | $ (9.2) |
Shares, Outstanding | 93,600,000 | 9,400,000 |
Background and Basis of Present
Background and Basis of Presentation | 3 Months Ended |
Mar. 27, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | 1. Background and Basis of Presentation Background Mallinckrodt plc is a global business of multiple wholly owned subsidiaries (collectively, "Mallinckrodt" or "the Company") that develop, manufacture, market and distribute specialty pharmaceutical products and therapies. Areas of focus include autoimmune and rare diseases in specialty areas like neurology, rheumatology, nephrology, pulmonology and ophthalmology; immunotherapy and neonatal respiratory critical care therapies; analgesics and gastrointestinal products. The Company operates in two reportable segments, which are further described below: • Specialty Brands includes innovative specialty pharmaceutical brands; and • Specialty Generics includes niche specialty generic drugs and active pharmaceutical ingredients ("API(s)"). The Company owns or has rights to use the trademarks and trade names that are used in conjunction with the operation of its business. One of the more important trademarks that the Company owns or has rights to use that appears in this Quarterly Report on Form 10-Q is "Mallinckrodt," which is a registered trademark or the subject of pending trademark applications in the United States ("U.S.") and other jurisdictions. Solely for convenience, the Company only uses the ™ or ® symbols the first time any trademark or trade name is mentioned in the following notes. Such references are not intended to indicate in any way that the Company will not assert, to the fullest extent permitted under applicable law, its rights to its trademarks and trade names. Each trademark or trade name of any other company appearing in the following notes is, to the Company's knowledge, owned by such other company. Basis of Presentation The unaudited condensed consolidated financial statements have been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the U.S. ("GAAP"). The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results may differ from those estimates. The unaudited condensed consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries and entities in which they own or control more than 50.0% of the voting shares, or have the ability to control through similar rights. All intercompany balances and transactions have been eliminated in consolidation and all normal recurring adjustments necessary for a fair presentation have been included in the results reported. The results of entities disposed of are included in the unaudited condensed consolidated financial statements up to the date of disposal, and where appropriate, these operations have been reported in discontinued operations. Divestitures of product lines and businesses not meeting the criteria for discontinued operations have been reflected in operating income. The fiscal year end balance sheet data was derived from audited consolidated financial statements, but do not include all of the annual disclosures required by GAAP; accordingly these unaudited condensed consolidated financial statements should be read in conjunction with the Company's audited annual consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 27, 2019 filed with the U.S. Securities and Exchange Commission ("SEC") on February 26, 2020. During fiscal 2019, the Company experienced a change in its reportable segments, which primarily served to move the results related to Amitiza ® to the Specialty Brands segment from the Specialty Generics segment. All prior period segment information has been recast to reflect the realignment of the Company's reportable segments on a comparable basis. Fiscal Year The Company reports its results based on a "52-53 week" year ending on the last Friday of December. Unless otherwise indicated, the three months ended March 27, 2020 refers to the thirteen week period ended March 27, 2020 and the three months ended March 29, 2019 refers to the thirteen week period ended March 29, 2019 |
Revenue from Contracts with Cus
Revenue from Contracts with Customers Revenue from Contracts with Customers (Notes) | 3 Months Ended |
Mar. 27, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | 2. Revenue from Contracts with Customers Product Sales Revenue See Note 13 for presentation of the Company's net sales by product family. Reserves for variable consideration The following table reflects activity in the Company's sales reserve accounts: Rebates and Chargebacks Product Returns Other Sales Deductions Total Balance as of December 28, 2018 $ 354.3 $ 34.0 $ 17.1 $ 405.4 Provisions 602.9 6.2 17.7 626.8 Payments or credits (805.8 ) (8.2 ) (12.4 ) (826.4 ) Balance as of March 29, 2019 $ 151.4 $ 32.0 $ 22.4 $ 205.8 Balance as of December 27, 2019 $ 295.8 $ 28.4 $ 13.2 $ 337.4 Provisions 457.8 3.8 13.7 475.3 Payments or credits (498.8 ) (6.1 ) (15.9 ) (520.8 ) Balance as of March 27, 2020 $ 254.8 $ 26.1 $ 11.0 $ 291.9 Product sales transferred to customers at a point in time and over time were as follows: Three Months Ended March 27, March 29, Product sales transferred at a point in time 78.5 % 80.7 % Product sales transferred over time 21.5 19.3 Transaction price allocated to the remaining performance obligations The following table includes estimated revenue from contracts extending greater than one year for certain of the Company's hospital products that are expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of March 27, 2020 : Remainder of Fiscal 2020 $ 148.5 Fiscal 2021 102.7 Fiscal 2022 37.7 Fiscal 2023 8.1 Thereafter 0.3 Costs to fulfill a contract As of March 27, 2020 and December 27, 2019 , the total net book value of the devices used in the Company's portfolio of drug-device combination products, which are used in satisfying future performance obligations, were $28.4 million and $26.5 million , respectively, and were classified in property, plant and equipment, net, on the unaudited condensed consolidated balance sheets. The associated depreciation expense recognized during both the three months ended March 27, 2020 and March 29, 2019 was $1.5 million . Product Royalty Revenues The Company licenses certain rights to Amitiza to a third party in exchange for royalties on net sales of the product. The Company recognizes such royalty revenue as the related sales occur. The royalty rates consist of several tiers ranging from 18.0% to 26.0% with the royalty rate resetting every year. The associated royalty revenue recognized was as follows: Three Months Ended March 27, March 29, Royalty revenue $ 15.6 $ 17.4 Contract Liabilities The following table reflects the balance of the Company's contract liabilities at the end of each period: March 27, December 27, Accrued and other current liabilities $ 4.7 $ 5.6 Other liabilities 0.6 0.6 Contract liabilities $ 5.3 $ 6.2 Revenue recognized during the three months ended March 27, 2020 and March 29, 2019 from amounts included in contract liabilities at the beginning of the period was $2.3 million and $4.5 million , respectively, inclusive of the Company's wholly owned subsidiary BioVectra Inc. ("BioVectra), prior to the completion of the sale of this business in November 2019. |
Restructuring and Related Charg
Restructuring and Related Charges | 3 Months Ended |
Mar. 27, 2020 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Charges | 3. Restructuring and Related Charges During fiscal 2018 and 2016, the Company launched restructuring programs designed to improve its cost structure. Charges of $100.0 million to $125.0 million were provided for under each program. Each program generally commenced upon substantial completion of the previous program. In addition to the aforementioned programs, the Company has taken restructuring actions to generate synergies from its acquisitions. Net restructuring and related charges by segment were as follows: Three Months Ended March 27, March 29, Specialty Brands $ — $ 0.5 Specialty Generics 0.1 3.5 Corporate (1.9 ) 0.2 Restructuring and related charges, net (1.8 ) 4.2 Less: accelerated depreciation — — Restructuring charges, net $ (1.8 ) $ 4.2 Net restructuring and related charges by program were comprised of the following: Three Months Ended March 27, March 29, 2018 Program $ 0.1 $ 3.5 2016 Program — 0.7 Acquisition Programs (1.9 ) — Total charges expected to be settled in cash $ (1.8 ) $ 4.2 The following table summarizes cash activity for restructuring reserves, substantially all of which related to contract termination costs, employee severance and benefits and exiting of certain facilities: 2018 Program 2016 Program Acquisition Programs Total Balance as of December 27, 2019 $ 2.7 $ 31.3 $ 0.2 $ 34.2 Charges 0.1 — — 0.1 Changes in estimate — — (1.9 ) (1.9 ) Cash payments (2.5 ) (30.5 ) (0.2 ) (33.2 ) Currency translation and other — — 1.9 1.9 Balance as of March 27, 2020 $ 0.3 $ 0.8 $ — $ 1.1 As of March 27, 2020 , net restructuring and related charges incurred cumulative to date were as follows: 2018 Program 2016 Program Specialty Brands $ 3.0 $ 68.1 Specialty Generics 10.1 14.6 Corporate 2.0 28.9 $ 15.1 $ 111.6 All of the restructuring reserves were included in accrued and other current liabilities on the Company's unaudited condensed consolidated balance sheets. Amounts paid in the future may differ from the amount currently recorded. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 27, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 4. Income Taxes On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act. The CARES Act was a response to the market volatility and instability resulting from the coronavirus pandemic. It includes provisions to support individuals and businesses in the form of loans, grants, and tax changes among other types of relief. Estimates of the effects of the changes to the U.S. tax code have been incorporated into the Company’s three months ended March 27, 2020 provision for income taxes, as applicable. The CARES Act income tax provisions applicable to the Company effective within the three months ended March 27, 2020 include, but are not limited to (1) carrybacks of certain net operating losses (“NOLs”) generated in tax years beginning after December 31, 2017 and before January 1, 2021 to the preceding five taxable years, (2) suspension of the 80.0% taxable income limitation for NOLs generated in tax years beginning after December 31, 2017 and before January 1, 2021, (3) increase in the limitation of the interest expense deduction under Internal Revenue Code §163(j) from 30.0% to 50.0% of adjusted taxable income for any taxable year beginning in 2019 or 2020, (4) expansion of the charitable contribution deduction limit to 25.0% of taxable income versus the previous 10.0% limitation for contributions made during 2020, and (5) acceleration of Alternative Minimum Tax credits being refunded incrementally in tax years 2018, 2019, 2020 and 2021 to recover the entire remaining balance in either the 2018 or 2019 tax year. Accounting Standards Codification Topic 740, "Income Taxes," requires companies to recognize the effects of tax law changes in the period of enactment, which for the Company is the three months ended March 27, 2020. As a result of the CARES Act, the Company is able to carryback a portion of its estimated prior year U.S. Federal NOLs resulting in an anticipated cash tax refund of $91.5 million . A tax benefit of $11.5 million has been recognized primarily due to a remeasurement of the NOLs to the historical statutory tax rates. The carryback of the U.S. Federal NOLs has an ancillary effect on the Company’s unrecognized tax benefits, as disclosed below. These amounts may change when the Federal income tax return for the tax year ended September 27, 2019 is filed with the Internal Revenue Service ("IRS") no later than in the quarter ending September 25, 2020. The Company recognized an income tax benefit of $18.9 million on a loss from continuing operations before income taxes of $75.6 million for the three months ended March 27, 2020 , and an income tax benefit of $204.7 million on a loss from continuing operations before income taxes of $49.5 million for the three months ended March 29, 2019 . This resulted in effective tax rates of 25.0% and 413.5% for the three months ended March 27, 2020 and March 29, 2019 , respectively. The income tax benefit for the three months ended March 27, 2020 was comprised of $22.4 million of current tax benefit and $3.5 million of deferred tax expense. The deferred tax expense was predominantly comprised of deferred tax expense as a result of the CARES Act partially offset by deferred tax benefit related to previously acquired intangibles. The income tax benefit for the three months ended March 29, 2019 was comprised of $38.5 million of current tax expense and $243.2 million of deferred tax benefit. The deferred tax benefit was predominantly related to previously acquired intangibles as well as the reorganization of the Company's intercompany financing and associated legal entity ownership which eliminated the interest bearing deferred tax obligation. The income tax benefit was $18.9 million for the three months ended March 27, 2020 , compared with a tax benefit of $204.7 million for the three months ended March 29, 2019 . The $185.8 million net decrease in the tax benefit included a decrease of $192.8 million attributed to the tax benefit from the reorganization of the Company's intercompany financing and associated legal entity ownership, a decrease in tax benefit of $6.0 million predominately attributed to changes in the timing, amount and jurisdictional mix of income, and a decrease of $1.4 million attributed to net restructuring, partially offset by an increase of $11.5 million attributed to the CARES Act, an increase of $1.7 million attributed to the gain on debt repurchased, and an increase of $1.2 million attributed to separation costs. During the three months ended March 27, 2020 , and fiscal 2019, the net cash payments for income taxes were $12.7 million and $30.7 million , respectively. On August 5, 2019, the IRS proposed an adjustment to the taxable income of Mallinckrodt Hospital Products Inc. (“MHP”) (formerly known as Cadence Pharmaceuticals, Inc. ("Cadence")) as a result of its findings in the audit of MHP's tax year ended September 26, 2014. The proposed adjustment to taxable income of $871.0 million , excluding potential associated interest and penalties, is proposed as a multi-year adjustment and may result in a non-cash reduction of the Company's U.S. Federal net operating loss carryforward of $765.1 million . The Company strongly disagrees with the proposed adjustment, continues to engage in resolution discussions with the IRS audit team and intends to contest it through all available administrative and judicial remedies, which may take a number of years to conclude. See Note 11 for further details. The Company's unrecognized tax benefits, excluding interest, totaled $418.9 million and $398.6 million as of March 27, 2020 and December 27, 2019 , respectively. The net increase of $20.3 million primarily resulted from an increase to prior period tax positions of $25.1 million offset by a decrease related to releases due to a lapse of statute of limitations of $4.8 million . If favorably settled, $416.6 million of unrecognized tax benefits as of March 27, 2020 would benefit the effective tax rate, of which up to $20.0 million may be reported in discontinued operations. The total amount of accrued interest and penalties related to these obligations was $34.5 million and $32.9 million as of March 27, 2020 and December 27, 2019 , respectively. It is reasonably possible that within the next twelve months the unrecognized tax benefits could decrease by up to $95.5 million and the amount of related interest and penalties could decrease by up to $22.3 million as a result of payments or releases due to the resolution of various United Kingdom ("U.K.") and non-U.K. examinations, appeals and litigation and the expiration of various statutes of limitation. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 27, 2020 | |
Earnings Per Share [Abstract] | |
Earnings per Share | 5. (Loss) Earnings per Share Basic (loss) earnings per share is computed by dividing net (loss) income by the number of weighted-average shares outstanding during the period. Diluted (loss) earnings per share is computed using the weighted-average shares outstanding and, if dilutive, potential ordinary shares outstanding during the period. Potential ordinary shares represent the incremental ordinary shares issuable for restricted share units and share option exercises. The Company calculated the dilutive effect of outstanding restricted share units and share options on (loss) earnings per share by application of the treasury stock method. Dilutive securities, including participating securities, are not included in the computation of loss per share when the Company reports a net loss from continuing operations as the impact would be anti-dilutive. The weighted-average number of shares outstanding used in the computations of basic and diluted (loss) earnings per share were as follows ( in millions ): Three Months Ended March 27, March 29, Basic 84.2 83.5 Dilutive impact of restricted share units and share options — 1.1 Diluted 84.2 84.6 The computation of diluted weighted-average shares outstanding for the three months ended March 27, 2020 and March 29, 2019 excluded approximately 5.8 million shares and 3.2 million shares of equity awards, respectively, because the effect would have been anti-dilutive. |
Inventories
Inventories | 3 Months Ended |
Mar. 27, 2020 | |
Inventory, Net [Abstract] | |
Inventories | 6. Inventories Inventories were comprised of the following at the end of each period: March 27, December 27, Raw materials and supplies $ 56.5 $ 62.7 Work in process 184.5 166.5 Finished goods 86.1 82.9 $ 327.1 $ 312.1 |
Property, Plant and Equipment
Property, Plant and Equipment | 3 Months Ended |
Mar. 27, 2020 | |
Property, Plant and Equipment | |
Property, Plant and Equipment Disclosure | 7. Property, Plant and Equipment The gross carrying amount and accumulated depreciation of property, plant and equipment were comprised of the following at the end of each period: March 27, December 27, 2019 Property, plant and equipment, gross $ 1,902.7 $ 1,900.1 Less: accumulated depreciation (1,024.5 ) (1,003.6 ) Property, plant and equipment, net $ 878.2 $ 896.5 Depreciation expense was as follows: Three Months Ended March 27, March 29, Depreciation expense $ 25.5 $ 24.8 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Mar. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | 8. Intangible Assets The Company annually tests the indefinite-lived intangible assets for impairment, or whenever events or changes in circumstances indicate that the carrying value may not be recoverable by either a qualitative or income approach. Management relies on a number of qualitative factors when considering a potential impairment such as changes to planned revenue or earnings that could affect significant inputs used to determine the fair value of the indefinite-lived intangible asset. The gross carrying amount and accumulated amortization of intangible assets were comprised of the following at the end of each period: March 27, 2020 December 27, 2019 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizable: Completed technology $ 10,456.9 $ 4,018.5 $ 10,456.9 $ 3,822.8 License agreements 120.1 75.1 120.1 74.1 Trademarks 77.7 21.0 77.7 20.1 Total $ 10,654.7 $ 4,114.6 $ 10,654.7 $ 3,917.0 Non-Amortizable: Trademarks $ 35.0 $ 35.0 In-process research and development 245.3 245.3 Total $ 280.3 $ 280.3 Intangible asset amortization expense Intangible asset amortization expense was as follows: Three Months Ended March 27, March 29, Amortization expense $ 197.6 $ 222.8 The estimated aggregate amortization expense on intangible assets owned by the Company is expected to be as follows: Remainder of Fiscal 2020 $ 556.6 Fiscal 2021 657.6 Fiscal 2022 585.1 Fiscal 2023 581.1 Fiscal 2024 581.1 |
Debt
Debt | 3 Months Ended |
Mar. 27, 2020 | |
Debt Disclosure [Abstract] | |
Debt | 9. Debt Debt was comprised of the following at the end of each period: March 27, 2020 December 27, 2019 Principal Unamortized Discount and Debt Issuance Costs Principal Unamortized Discount and Debt Issuance Costs Current maturities of long-term debt: 4.875% senior notes due April 2020 $ 614.8 $ 0.1 $ 614.8 $ 0.6 Term loan due September 2024 15.6 0.1 15.6 0.2 Term loan due February 2025 4.1 0.1 4.1 0.1 Total current debt 634.5 0.3 634.5 0.9 Long-term debt: 9.50% debentures due May 2022 10.4 — 10.4 — 5.75% senior notes due August 2022 610.3 3.3 610.3 3.7 8.00% debentures due March 2023 4.4 — 4.4 — 4.75% senior notes due April 2023 133.7 0.8 133.7 0.8 5.625% senior notes due October 2023 514.7 4.1 514.7 4.4 Term loan due September 2024 1,501.3 14.7 1,505.2 15.5 Term loan due February 2025 398.5 5.8 399.5 6.1 5.50% senior notes due April 2025 387.2 3.5 387.2 3.6 10.00% second lien senior notes due April 2025 322.9 9.4 322.9 9.9 Revolving credit facility 900.0 2.7 900.0 3.1 Total long-term debt 4,783.4 44.3 4,788.3 47.1 Total debt $ 5,417.9 $ 44.6 $ 5,422.8 $ 48.0 As of March 27, 2020 , the applicable interest rate and outstanding borrowings on the Company's variable-rate debt instruments were as follows: Applicable interest rate Outstanding borrowings Term loan due September 2024 4.69 % $ 1,516.9 Term loan due February 2025 4.70 402.6 Revolving credit facility 3.86 900.0 As of March 27, 2020 , the Company was fully drawn on its $900.0 million revolving credit facility. As of March 27, 2020 , the Company continues to be in full compliance with the provisions and covenants associated with its debt agreements. The Company's debt instruments are further described within the notes to the financial statements included within the Company's Annual Report filed on Form 10-K for the fiscal year ended December 27, 2019. |
Guarantees
Guarantees | 3 Months Ended |
Mar. 27, 2020 | |
Guarantees [Abstract] | |
Guarantees | 10. Guarantees In disposing of assets or businesses, the Company has from time to time provided representations, warranties and indemnities to cover various risks and liabilities, including unknown damage to assets, environmental risks involved in the sale of real estate, liability to investigate and remediate environmental contamination at waste disposal sites and manufacturing facilities, and unidentified tax liabilities related to periods prior to disposition. The Company assesses the probability of potential liabilities related to such representations, warranties and indemnities and adjusts potential liabilities as a result of changes in facts and circumstances. The Company believes, given the information currently available, that the ultimate resolutions will not have a material adverse effect on its financial condition, results of operations and cash flows. In connection with the sale of the Specialty Chemical business (formerly known as Mallinckrodt Baker) in fiscal 2010, the Company agreed to indemnify the purchaser with respect to various matters, including certain environmental, health, safety, tax and other matters. The indemnification obligations relating to certain environmental, health and safety matters have a term of 17 years from the sale, while some of the other indemnification obligations have an indefinite term. The amount of the liability relating to all of these indemnification obligations included in other liabilities on the Company's unaudited condensed consolidated balance sheets as of March 27, 2020 and December 27, 2019 was $15.7 million and $15.0 million , respectively, of which $12.9 million and $12.3 million , respectively, related to environmental, health and safety matters. The value of the environmental, health and safety indemnity was measured based on the probability-weighted present value of the costs expected to be incurred to address environmental, health and safety claims made under the indemnity. The aggregate fair value of these indemnification obligations did not differ significantly from their aggregate carrying value as of March 27, 2020 and December 27, 2019 . As of March 27, 2020 , the maximum future payments the Company could be required to make under these indemnification obligations were $70.2 million . The Company was required to pay $30.0 million into an escrow account as collateral to the purchaser, of which $19.0 million and $18.9 million remained in restricted cash, included in other long-term assets on the unaudited condensed consolidated balance sheets as of March 27, 2020 and December 27, 2019 , respectively. The Company has recorded liabilities for known indemnification obligations included as part of environmental liabilities, which are discussed in Note 11. The Company is also liable for product performance; however, the Company believes, given the information currently available, that the ultimate resolution of any such claims will not have a material adverse effect on its financial condition, results of operations and cash flows. As of March 27, 2020 , the Company had various other letters of credit, guarantees and surety bonds totaling $32.7 million and restricted cash of $22.2 million |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 27, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 11. Commitments and Contingencies The Company is subject to various legal proceedings and claims, including patent infringement claims, product liability matters, personal injury, environmental matters, employment disputes, contractual disputes and other commercial disputes, including those described below. The Company believes that these legal proceedings and claims likely will be resolved over an extended period of time. Although it is not feasible to predict the outcome of these matters, the Company believes, unless otherwise indicated below, given the information currently available, that their ultimate resolution will not have a material adverse effect on its financial condition, results of operations and cash flows. Governmental Proceedings Opioid-Related Matters Since 2017, multiple U.S. states, counties, a territory, other governmental persons or entities and private plaintiffs have filed lawsuits against certain entities of the Company, as well as various other manufacturers, distributors, pharmacies, pharmacy benefit managers, individual doctors and/or others, asserting claims relating to defendants' alleged sales, marketing, distribution, reimbursement, prescribing, dispensing and/or other practices with respect to prescription opioid medications, including certain of the Company's products. As of May 6, 2020, the cases the Company is aware of include, but are not limited to, approximately 2,531 cases filed by counties, cities, Native American tribes and/or other government-related persons or entities; approximately 261 cases filed by hospitals, health systems, unions, health and welfare funds or other third-party payers; approximately 116 cases filed by individuals; approximately seven cases filed by schools and school boards; and 17 cases filed by the Attorneys General for New Mexico, Kentucky, Rhode Island, Georgia, Florida, Alaska, New York, Nevada, South Dakota, New Hampshire, Louisiana, Illinois, Mississippi, West Virginia, Puerto Rico, Ohio, and Idaho, with Idaho being the only state Attorney General to file in federal as opposed to state court. As of May 6, 2020, the Mallinckrodt defendants in these cases consist of Mallinckrodt plc and the following subsidiaries of Mallinckrodt plc: Mallinckrodt Enterprises LLC, Mallinckrodt LLC, SpecGx LLC, Mallinckrodt Brand Pharmaceuticals Inc., Mallinckrodt Inc., MNK 2011 Inc., and Mallinckrodt Enterprises Holdings, Inc. On November 22, 2019, the Delaware Attorney General filed a motion in the Superior Court of the State of Delaware to amend its complaint to add certain entities of the Company, which the court granted on December 18, 2019. The Delaware Attorney General has not yet filed its amended complaint. The Hawaii Attorney General filed a complaint against the Company on June 3, 2019. On December 27, 2019, the First Circuit Court entered a written order dismissing the Hawaii Attorney General's claims against all defendants without prejudice, finding that the allegations in the State's complaint failed to give notice of the claims against the defendants. Certain of the lawsuits have been filed as putative class actions. Most pending federal lawsuits have been coordinated in a federal multi-district litigation (“MDL”) pending in the U.S. District Court for the Northern District of Ohio. The MDL court has issued a series of case management orders permitting motion practice addressing threshold legal issues in certain cases, allowing discovery, setting pre-trial deadlines and setting a trial date on October 21, 2019 for two cases originally filed in the Northern District of Ohio by Summit County and Cuyahoga County against opioid manufacturers, distributors, and pharmacies ("Track 1 Cases"). The counties claimed that opioid manufacturers' marketing activities changed the medical standard of care for treating both chronic and acute pain, which led to increases in the sales of their prescription opioid products. They also alleged that opioid manufacturers' and distributors' failure to maintain effective controls against diversion was a substantial cause of the opioid crisis. On September 30, 2019, the Company announced that Mallinckrodt plc, along with its wholly owned subsidiaries Mallinckrodt LLC and SpecGx LLC, had executed a definitive settlement agreement and release with Cuyahoga and Summit Counties in Ohio. The settlement fully resolves the Track 1 cases against all named Mallinckrodt entities that were scheduled to go to trial in October 2019 in the MDL. Under the agreement, the Company paid $24.0 million in cash on October 1, 2019. In addition, the Company will provide $6.0 million in generic products, including addiction treatment products, and will also provide a $0.5 million payment in two years in recognition of the counties' time and expenses. Further, in the event of a comprehensive resolution of government-related opioid claims, the Company has agreed that the two plaintiff counties will receive the value they would have received under such a resolution, less the payments described above. All named Mallinckrodt entities were dismissed with prejudice from the lawsuit. The value of the settlement should not be extrapolated to any other opioid-related cases or claims. On October 21, 2019, the MDL court issued a Stipulated Dismissal Order dismissing the claims against the remaining manufacturers and distributors pursuant to a settlement agreement, and severing the claims against the remaining pharmacy defendants to be heard in a subsequent trial, currently scheduled for November 9, 2020. Judge Polster issued Suggestions of Remand for City and County of San Francisco, California and City of Chicago, Illinois. Both cases have been remanded, respectively, to the Northern District of California and the Northern District of Illinois. Manufacturer defendants moved to dismiss the City of San Francisco action on April 20, 2020, which the Company joined. Additionally, all manufacturer defendants, including us, were severed from the “Track Two” MDL cases, City of Huntington and Cabell County Commission, West Virginia. Those cases have subsequently been remanded to the Southern District of West Virginia. Other lawsuits remain pending in various state courts. In some jurisdictions, such as Arizona, California, Connecticut, Illinois, Massachusetts, New York, Pennsylvania, South Carolina, Texas, Utah and West Virginia, certain of the 231 state lawsuits have been consolidated or coordinated for pre-trial proceedings before a single court within their respective state court systems. State cases are generally at the pleading and/or discovery stage. Trials have been set in certain state cases, including in Alaska (January 4, 2021), Arizona (June 1, 2021), Georgia (January 24, 2022), Louisiana (July 19, 2021), New Mexico (September 7, 2021), Rhode Island (January 19, 2021), and West Virginia (March 22, 2021). The Circuit Court for Sullivan County, Tennessee continued the Staubus et al. v. Purdue Pharma, LP et al ., No. C-41916 trial originally scheduled to begin on May 18, 2020 until August 17, 2020. During a status conference on February 26, 2020, the District Court for Clark County, Nevada continued the State of Nevada v. McKesson Corp. , No. A-19-796755-B trial originally scheduled to begin on January 4, 2021. There is also a trial in Ohio scheduled to begin on August 10, 2020, but the parties have stipulated to moving the trial to March 2021 and are awaiting the court’s ruling. On April 2, 2020, the Texas court entered the parties’ joint motion to reschedule the date that the first of two bellwether trials would be ready for jury trial from January 19, 2021 to April 12, 2021. The Company is named in the alternate bellwether candidate. The date and candidates for the second bellwether trial have not yet been selected. On March 26, 2020, the Supreme Court of Tennessee granted defendants’ application for permission to appeal the judgment of the Tennessee Court of Appeals in Effler et al. v. Purdue Pharma , LP et al., No. 16596, which reversed the Circuit Court for Campbell County’s grant of defendants’ motion to dismiss plaintiffs’ claims under Tennessee’s Drug Dealer Liability Act (DDLA). A successful ruling from the Tennessee Supreme Court in Effler would also require dismissal of the DDLA claim brought by the district attorney general plaintiffs in Staubus et al. v. Purdue Pharma, LP et al. , No. C-41916. The Staubus matter is currently set for trial in the Circuit Court for Sullivan County on August 17, 2020. The lawsuits assert a variety of claims, including, but not limited to, public nuisance, negligence, civil conspiracy, fraud, violations of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) or similar state laws, violations of state Controlled Substances Acts or state False Claims Acts, product liability, consumer fraud, unfair or deceptive trade practices, false advertising, insurance fraud, unjust enrichment, negligence and negligent misrepresentation, and other common law and statutory claims arising from defendants' manufacturing, distribution, marketing and promotion of opioids and seek restitution, damages, injunctive and other relief and attorneys' fees and costs. The claims generally are based on alleged misrepresentations and/or omissions in connection with the sale and marketing of prescription opioid medications and/or an alleged failure to take adequate steps to prevent diversion. Litigation Settlement. On February 25, 2020, the Company announced an agreement in principle on the terms of a global settlement that would resolve all opioid-related claims against the Company and its subsidiaries (“Litigation Settlement”). The Litigation Settlement would contemplate the filing of voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code (“Chapter 11”) by certain subsidiaries of Mallinckrodt plc operating the Specialty Generics business (the “Specialty Generics Subsidiaries”) and the establishment of a trust for the benefit of plaintiffs holding opioid-related claims against the Company (the “Opioid Claimant Trust”). Subject to the Settlement Closing (as defined below), the Company would make certain structured payments to the Opioid Claimant Trust. Pursuant to the terms of a channeling injunction and third-party release, which would be subject to court approval, all persons or entities asserting opioid-related claims against the Company would recover solely from the Opioid Claimant Trust on account of such claims. If the Settlement Closing occurs, all other claims against, and equity interests in, the Specialty Generics Subsidiaries would be unimpaired and it is expected that all contracts to which the Specialty Generics Subsidiaries are party would be assumed. The Litigation Settlement would provide for: • the payment of $300.0 million upon Specialty Generics' emergence from the completed Chapter 11 case; • the payment to the Opioid Claimant Trust of additional cash totaling $1,300.0 million , consisting of $200.0 million on each of the first and second anniversaries of emergence and $150.0 million on each of the third through eighth anniversaries of emergence; and • the issuance of warrants ("Settlement Warrants") upon emergence from the contemplated Chapter 11 process to the Opioid Claimant Trust to purchase ordinary shares of the Company with an eight year term at a strike price of $3.15 per ordinary share that would represent approximately 19.99% of the Company's fully diluted outstanding shares, including after giving effect to the exercise of the warrants, provided that such warrants may not be exercised during any calendar quarter in a quantity that would exceed 5.0% of the number of shares outstanding. The terms of the Litigation Settlement included a number of conditions to its consummation (such consummation, the "Settlement Closing") such as, among other things, bankruptcy court approval of the bankruptcy plan effectuating the Litigation Settlement, the emergence of the Specialty Generics Subsidiaries from bankruptcy and: • the exchange of the 4.875% senior unsecured notes that had a maturity date of April 15, 2020 (the "2020 Notes") and the 5.75% senior unsecured notes due August 2022 (the "2022 Notes") into new secured notes on terms reasonably satisfactory to the Company; • the coordination of the action filed by the State of New York against the Company to allow the Specialty Generics Subsidiaries sufficient time to arrange for pre-arranged filings under Chapter 11; • the support and participation of a supermajority of all claimants with opioid-related claims, including a future claims representative (if one is deemed necessary by the Company in consultation with an ad hoc committee of certain Supporting Claimants or their representatives (the "AHC")), against the Company on terms satisfactory to the Company; • the resolution of U.S. Department of Justice ("DOJ") civil and criminal claims against the Company on reasonable terms; • the agreement by and between the Company and the Supporting Claimants to an injunction governing the sale and distribution of opioids by the Specialty Generics Subsidiaries, compliance with which is expected to protect the Company from further opioid-related liability, on terms satisfactory to the Company, with such terms to be binding on the Specialty Generics Subsidiaries and any buyers thereof or successors thereto; • the treatment of potential indemnification claims of Covidien plc on terms satisfactory to the Company and the AHC; • the disclosure by the Company of a subset of its litigation documents to be made publicly available as part of an industry-wide document disclosure program, subject to scope and protocols to be negotiated by the parties’ informed representatives; • the entry of a judgment between the Company and the Centers for Medicare & Medicaid Services ("CMS") and the entry by the Company into any other legal judgments or settlements, each on such terms and at such levels as may be acceptable to the Company, such that the Company is able to make all payments required under the terms of the Litigation Settlement (such condition to the Litigation Settlement, the "Medicaid Lawsuit Condition"); • the resolution and settlement of certain outstanding intercompany indebtedness between the Specialty Generics Subsidiaries and the Company’s other subsidiaries and the entry into a shared services agreement between the Specialty Generics Subsidiaries and certain other subsidiaries of the Company, as the case may be, in each case on terms reasonably satisfactory to the Company, subject to consent of the AHC; • a rights offering or a shareholder vote to satisfy any applicable legal requirements relating to the issuance of the warrants, in a manner reasonably acceptable to the Company and the AHC; and • the satisfaction such other conditions as may be mutually agreed to by the Company and the AHC. As further described below, on March 16, 2020, the Company received an adverse decision from the federal district court for the District of Columbia ("D.C.") with respect to the Medicaid lawsuit, resulting in a failure of the Medicaid Lawsuit Condition. The Company is engaged in constructive dialogue with the plaintiff parties to the Litigation Settlement to address the impact of the court’s decision, but there can be no assurance that such dialogue will result in a modification of or amendment to the Litigation Settlement that will be satisfactory to all parties. In addition, at the time the Company announced the Litigation Settlement, the Company had planned to commence an exchange offer for the 2022 Notes pursuant to a support and exchange agreement, and to refinance the 2020 Notes with the proceeds of new term loans that were then contemplated to be obtained pursuant to a support agreement. Both agreements have since terminated. As further described in Note 14, on April 7, 2020, the Company entered into an exchange agreement with certain noteholders providing for the exchange of such noteholders’ holdings of 2020 Notes for new 10.00% first lien senior secured notes due 2025. The Litigation Settlement was reached with a court-appointed plaintiffs' executive committee representing the interests of thousands of plaintiffs in the MDL and supported by a broad-based group of 48 state and U.S. Territory Attorneys General, including the New York State Attorney General. In connectio n with New York State’s support of the Litigation Settlement, on March 9, 2020, the State of New York and Suffolk County, together with Mallinckrodt LLC and SpecGx LLC, jointly filed a motion to sever, or remove, Mallinckrodt LLC and SpecGx LLC from the New York State opioid trial, which, as of March 10, 2020, has been postponed indefinitely due to the coronavirus. Nassau County opposed the motion. The motion to sever Mallinckrodt LLC and SpecGx LLC from the New York State trial is currently pending before the Supreme Court of New York, County of Suffolk . As a result of the Litigation Settlement, the Company recorded an accrual for this contingency of $1,600.0 million related to the structured cash payments and $43.4 million related to the Settlement Warrants in the unaudited condensed consolidated balance sheet as of December 27, 2019. As of March 27, 2020, the Settlement Warrants were valued at $26.6 million . Refer to Note 12 for further information regarding the valuation of the Settlement Warrants. Other Opioid-Related Matters. In addition to the lawsuits described above, certain entities of the Company have received subpoenas and civil investigative demands ("CID(s)") for information concerning the sale, marketing and/or distribution of prescription opioid medications and the Company's suspicious order monitoring programs, including from the U.S. DOJ and the Attorneys General for Missouri, New Hampshire, Kentucky, Washington, Alaska, South Carolina, Puerto Rico, New York, West Virginia, Indiana, the Divisions of Consumer Protection and Occupational and Professional Licensing of the Utah Department of Commerce, and the New York State Department of Financial Services. The Company has been contacted by the coalition of State Attorneys General investigating the role manufacturers and distributors may have had in contributing to the increased use of opioids in the U.S. On January 27, 2018, the Company received a grand jury subpoena from the U.S. Attorneys' Office (“USAO”) for the Southern District of Florida for documents related to the distribution, marketing and sale of generic oxymorphone products. On April 17, 2019, the Company received a grand jury subpoena from the USAO for the Eastern District of New York ("EDNY") for documents related to the sales and marketing of controlled substances, the policies and procedures regarding controlled substances, and other related documents. On June 4, 2019, the Company received a rider from the USAO for EDNY requesting additional documents regarding the Company's anti-diversion program. The Company is responding or has responded to these subpoenas, CIDs and any informal requests for documents. In August 2018, the Company received a letter from the leaders of the Energy and Commerce Committee in the U.S. House of Representatives requesting a range of documents relating to its marketing and distribution of opioids. The Company completed its response to this letter in December 2018. The Company received a follow-up letter in January 2020 and provided the committee a response. The Company is cooperating with the investigation. The Attorneys General for Kentucky, Alaska, New York, New Hampshire, West Virginia and Puerto Rico have subsequently filed lawsuits against the Company. Similar subpoenas and investigations may be brought by others or the foregoing matters may be expanded or result in litigation. The Company intends to continue to vigorously defend itself in these matters. At this stage, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with these investigations and/or lawsuits. On April 21, 2020, New York Governor Andrew Cuomo announced that the New York State Department of Financial Services had filed a Statement of Charges against Mallinckrodt, including allegations that it misrepresented the safety and efficacy of its branded and unbranded opioid products and downplayed the risks of negative outcomes to patients, resulting in claims for payment of medically unnecessary opioid prescriptions to commercial insurance companies. The Statement of Charges claims that Mallinckrodt violated Section 403 of the New York Insurance Law, which prohibits fraudulent insurance acts and includes penalties of up to $5,000 plus the amount of the fraudulent claim for each violation. It further alleges that Mallinckrodt violated Section 408 of the Financial Services Law, which prohibits intentional fraud or intentional misrepresentation of a material fact with respect to a financial product or service and includes penalties of up to $5,000 per violation. The Department claims that each fraudulent prescription constitutes a separate violation of these laws. A hearing on the Statement of Charges is scheduled for August 24, 2020. The Company intends to continue to vigorously defend itself in this matter. At this stage, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with this lawsuit. Other Matters Medicaid Lawsuit. In May 2019, the Company filed a lawsuit under the Administrative Procedure Act ("APA") in U.S. District Court for the District of Columbia ("Court") against the U.S. Department of Health and Human Services ("HHS") and CMS (collectively, the "Agency"). The dispute involves the base date average manufacturer price ("AMP") under the Medicaid Drug Rebate Program for Mallinckrodt's Acthar ® Gel. A drug's “base date AMP” is used to calculate the Medicaid rebate amount payable by the drug's manufacturer to state Medicaid agencies when the drug is prescribed to Medicaid beneficiaries. At issue in the lawsuit is whether the U.S. Food and Drug Administration ("FDA")'s 2010 approval of a new drug application for use of Acthar Gel in treating infantile spasms rendered Acthar Gel eligible for a new base date AMP, as indicated by CMS's written communications in 2012. In May 2019, CMS indicated that if the Company failed to revert to use of the original base date AMP in its calculation of Acthar Gel Medicaid rebates, CMS would identify the Company as being out of compliance with its Medicaid Drug Rebate Program reporting requirements, among other potential actions, triggering certain negative consequences. As such, the Company filed a lawsuit alleging (i) that CMS has violated the Medicaid drug rebate statute, (ii) that CMS has violated its own regulations defining “single source drug,” (iii) that CMS has failed to adequately explain its change in position based on two letters that CMS sent Questcor Pharmaceuticals Inc. ("Questcor") in 2012 regarding the base date AMP for Acthar Gel, (iv) that CMS failed to give the Company fair notice of its latest position, and (v) that CMS should be prohibited from applying its new position retroactively. The Court held a hearing regarding this matter in August 2019. In March 2020, the Company received an adverse decision from the Court, which upheld CMS' decision to reverse its previous determination of the base date AMP used to calculate Acthar Gel rebates. The Company intends to continue to vigorously defend itself in this matter and, on March 16, 2020, filed an Emergency Motion for Reconsideration and Stay of Entry of Judgment Pending Reconsideration Or, Alternatively, Injunction Pending Appeal. In response, the government has agreed that CMS will not require the Company to change the Medicaid rebate calculation for Acthar Gel until June 14, 2020, which will allow the Court time to decide the Company’s motion. Based on current Medicaid patient volume, the Company estimates the annualized prospective change to the Medicaid rebate calculation will reduce Acthar Gel annual net sales by roughly $90.0 million to $100.0 million . In the event the Court denies the motion, the Company intends to immediately appeal the decision to the U.S. Court of Appeals for the D.C. Circuit. The base date AMP would only be adjusted, if required, after conclusion of a stay, an appeal, or a settlement, as necessary. While the Company believes that its lawsuit has strong factual and legal bases, as of March 27, 2020, the potential for retroactive non-recurring charges could be up to approximately $640.0 million ("CMS" Retroactive Rebates"). Given the potential for either retroactive or prospective changes to the base date AMP, or a combination of both, and the Company's considerations of various alternatives to resolve this matter, including but not limited to settlement, the amount of loss cannot be reasonably estimated. As such, the Company has not recognized an accrual for this contingency in its financial results for the three months ended March 27, 2020. Boston Civil Investigative Demand. In January 2019, the Company received a CID from the USAO for the District of Massachusetts for documents related to the Company's participation in the Medicaid Drug Rebate Program. The Company responded to the government's requests and cooperated with the investigation. In March 2020, the U.S. District Court for the District of Massachusetts unsealed a qui tam complaint under the federal False Claims Act against the Company in which the DOJ has intervened alleging that the Company had failed to pay rebates for its Acthar Gel product. Other related legal proceedings involving the Company, including the litigation described as the Medicaid Lawsuit , are discussed above. By agreement of the parties, the Company has until July 10, 2020 to respond to the Complaint in Intervention. While the Company disagrees with the government’s characterization of the facts and applicable law and intends to vigorously defend itself in this matter. In the event that the Company does not prevail in its Medicaid Lawsuit the potential for damages in this matter could be up to approximately $1,280.0 million , after subtracting out potential restitution, related to the CMS Retroactive Rebates. Given the early nature of this litigation, the pending underlying dispute over Acthar’s base date AMP, which is driven by a different anchoring statute, and the Company's considerations of various alternatives to resolve this litigation, including but not limited to settlement, the Company does not currently believe a loss related to this matter is probable and the amount of loss cannot be reasonably estimated. As such, the Company has not recognized an accrual for this contingency in its financial results for the three months ended March 27, 2020. Questcor EDPA Qui Tam Litigation. In September 2012, Questcor received a subpoena from the USAO for the Eastern District of Pennsylvania for information relating to its promotional practices related to Acthar Gel. The investigation eventually expanded to include Questcor's provision of financial and other support to patients, including through charitable foundations and related matters. The Company cooperated with the investigation. In March 2019, the U.S. District Court for the Eastern District of Pennsylvania unsealed two qui tam actions involving the allegations under investigation by the USAO for the Eastern District of Pennsylvania. The DOJ intervened in both actions, which were later consolidated. In September 2019, the Company executed a settlement agreement with the DOJ for $15.4 million and finalized settlements with the three qui tam plaintiffs. These settlements were paid during the three months ended September 27, 2019 and resolve the portion of the investigation and litigation involving Questcor's promotional practices related to Acthar Gel. In June 2019, the DOJ filed its Complaint in Intervention in the litigation, alleging claims under the federal False Claim Act based on Questcor's relationship with and donations to an independent charitable patient co-pay foundation. The Company disagrees with the DOJ's characterization of the facts and applicable law. In January 2020, the court denied the Company's motion to dismiss the Complaint in Intervention. The Company intends to vigorously defend itself in this matter. At this stage, the Company is not able to reasonably estimate the expected amount or range of cost or any loss associated with this lawsuit. Patent Litigation INOmax ® Patent Litigation: Praxair Distribution, Inc. and Praxair, Inc. (collectively “Praxair”). In February 2015, INO Therapeutics LLC and Ikaria, Inc., both subsidiaries of the Company, filed suit in the U.S. District Court for the District of Delaware against Praxair following receipt of a January 2015 notice from Praxair concerning its submission of an abbreviated new drug application ("ANDA") containing a Paragraph IV patent certification with the FDA for a nitric oxide drug product delivery system. In July 2016, the Company filed a second suit against Praxair in the U.S. District Court for the District of Delaware following receipt of a Paragraph IV notice concerning three additional patents recently added to the FDA Orange Book that was submitted by Praxair regarding its ANDA for its nitric oxide drug product delivery system. The infringement claims in the second suit were added to the original suit. In September 2016, the Company filed a third suit against Praxair in the U.S. District Court for the District of Delaware following receipt of a Paragraph IV notice concerning a fourth patent added to the FDA Orange Book that was submitted by Praxair regarding its ANDA for its nitric oxide drug product delivery system. Trial for the suit filed in February 2015 was held in March 2017 and a decision was rendered September 5, 2017 that ruled five patents invalid and six patents not infringed. The Company appealed the decision to the Court of Appeals for the Federal Circuit. The oral arguments in the appeal occurred on February 6, 2019. Praxair received FDA approval of their ANDA for their Noxivent nitric oxide and clearance of their 510(k) for their NOxBOXi device on October 2, 2018. The appeal decision, issued on August 27, 2019, substantively affirmed the District Court decision with respect to the invalidity of the heart failure (HF) patents and the non-infringement of the delivery system infrared (DSIR) patents. The Company filed a petition for en banc review at the Federal Circuit on September 26, 2019, which the Federal Circuit denied on November 19, 2019. The Company filed a petition for a writ of certiorari with the United States Supreme Court on March 6, 2020 and the petition was denied on April 6, 2020. The adverse final outcome in the appeal of the Praxair litigation decision is expected to result in the broader-scale launch of a competitive nitric oxide product before the expiration of the last of the listed patents on May 3, 2036 (November 3, 2036 including pediatric exclusivity), which could adversely affect the Company's ability to successfully maximize the value of INOmax and have an adverse effect on its financial condition, results of operations and cash flows. Ofirmev Patent Litigation: Baxter Healthcare Corporation. In March 2020, MHP and Mallinckrodt Hospital Products IP Limited, both subsidiaries of the Company, and New Pharmatop LP, the current owner of the U.S. patents licensed exclusively by the Company, filed suit in the U.S. District Court for the District of Delaware against Baxter Healthcare Corporation (“BHC”) alleging that BHC infringed U.S. Patent No. 6,992,218, U.S. Patent No. 9,399,012, U.S. Patent No. 9,610,265, U.S. Patent No. 9,987,238 and U.S. Patent No. 10,383,834 following receipt of a February 2020 notice from Baxter concerning its submission of an ANDA, containing a Paragraph IV patent certification with the FDA for a competing version of Ofirmev ® . The Company intends to vigorously enforce its intellectual property rights relating to Ofirmev. On April 23, 2020, the parties entered into a settlement agreement under which BHC was granted the non-exclusive right to market a competing intravenous acetaminophen product in the U.S. under its ANDA on or after December 6, 2020, or earlier under certain circumstances. Commercial and Securities Litigation Health Care Service Corporation Litigation. In February 2020, Health Care Service Corporation (“HCSC”) filed a non-class complaint against the Company in California state court alleging improper pricing and distribution of Acthar Gel, in violation of the New Jersey RICO statute and various states’ antitrust laws. |
Financial Instruments and Fair
Financial Instruments and Fair Value Measurements | 3 Months Ended |
Mar. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial Instruments and Fair Value Measurements | 12. Financial Instruments and Fair Value Measurements Fair value is defined as the exit price that would be received from the sale of an asset or paid to transfer a liability, using assumptions that market participants would use in pricing an asset or liability. The fair value guidance establishes a three-level fair value hierarchy, which maximizes the use of observable inputs and minimizes the use of unobservable inputs used in measuring fair value. The levels within the hierarchy are as follows: Level 1— observable inputs such as quoted prices in active markets for identical assets or liabilities; Level 2— significant other observable inputs that are observable either directly or indirectly; and Level 3— significant unobservable inputs in which there is little or no market data, which requires the Company to develop its own assumptions. The following tables provide a summary of the significant assets and liabilities that are measured at fair value on a recurring basis at the end of each period: March 27, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Debt and equity securities held in rabbi trusts $ 28.6 $ 19.3 $ 9.3 $ — Equity securities 29.2 29.2 — — $ 57.8 $ 48.5 $ 9.3 $ — Liabilities: Deferred compensation liabilities $ 27.5 $ — $ 27.5 $ — Contingent consideration and acquired contingent liabilities 68.8 — — 68.8 Settlement Warrants 26.6 — — 26.6 $ 122.9 $ — $ 27.5 $ 95.4 December 27, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Debt and equity securities held in rabbi trusts $ 30.6 $ 21.0 $ 9.6 $ — Equity securities 26.2 26.2 — — $ 56.8 $ 47.2 $ 9.6 $ — Liabilities: Deferred compensation liabilities $ 39.2 $ — $ 39.2 $ — Contingent consideration and acquired contingent liabilities 69.3 — — 69.3 Settlement Warrants 43.4 — — 43.4 $ 151.9 $ — $ 39.2 $ 112.7 Debt and equity securities held in rabbi trusts. Debt securities held in rabbi trusts primarily consist of U.S. government and agency securities and corporate bonds. When quoted prices are available in an active market, the investments are classified as level 1. When quoted market prices for a security are not available in an active market, they are classified as level 2. Equity securities held in rabbi trusts primarily consist of U.S. common stocks, which are valued using quoted market prices reported on nationally recognized securities exchanges. Equity securities. Equity securities consist of shares in Silence Therapeutics plc, for which quoted prices are available in an active market; therefore, the investment is classified as level 1 and is valued based on quoted market prices reported on an internationally recognized securities exchange. Deferred compensation liabilities. The Company maintains a non-qualified deferred compensation plan in the U.S., which permits eligible employees of the Company to defer a portion of their compensation. A recordkeeping account is set up for each participant and the participant chooses from a variety of funds for the deemed investment of their accounts. The recordkeeping accounts generally correspond to the funds offered in the Company's U.S. tax-qualified defined contribution retirement plan and the account balance fluctuates with the investment returns on those funds. Contingent consideration and acquired contingent liabilities. As of March 27, 2020 , the Company maintains various contingent consideration and acquired contingent liabilities associated with the acquisitions of Questcor, Stratatech Corporation ("Stratatech"), and Ocera Therapeutics, Inc. ("Ocera"). The contingent liability associated with the acquisition of Questcor pertains to the Company's license agreement with Novartis AG and Novartis Pharma AG (collectively "Novartis") related to Synacthen, otherwise known as the Company's development product MNK-1411. The fair value of the remaining contingent payments expected to be transferred was measured based on the net present value of a probability-weighted assessment. The Company determined the fair value of the contingent consideration associated with the acquisition of Questcor to be $24.8 million and $24.5 million as of March 27, 2020 and December 27, 2019 , respectively. As part of the acquisition of Stratatech, the Company provided contingent consideration to the prior shareholders of Stratatech, primarily in the form of regulatory filing and approval milestones associated with the deep partial thickness and full thickness indications associated with StrataGraft ® . The Company assesses the likelihood and timing of making such payments at each balance sheet date. The fair value of the contingent payments was measured based on the net present value of a probability-weighted assessment. The Company determined the fair value of the contingent consideration associated with the acquisition of Stratatech to be $31.4 million and $29.0 million as of March 27, 2020 and December 27, 2019 , respectively. As part of the acquisition of Ocera, the Company provided contingent consideration to the prior shareholders of Ocera in the form of both patient enrollment clinical study milestones and sales-based milestones associated with MNK-6105 and MNK-6106. The Company determined the fair value of the contingent consideration based on an option pricing model to be $12.6 million and $15.8 million as of March 27, 2020 and December 27, 2019 , respectively. Of the total fair value of the contingent consideration of $68.8 million , $62.1 million was classified as current and $6.7 million was classified as non-current in the unaudited condensed consolidated balance sheet as of March 27, 2020 . The following table summarizes the activity for contingent consideration: Balance as of December 27, 2019 $ 69.3 Accretion expense 0.3 Fair value adjustments (0.8 ) Balance as of March 27, 2020 $ 68.8 Settlement Warrants. As a result of the Litigation Settlement, the Company is to issue Settlement Warrants upon emergence from the contemplated Chapter 11 process to the Opioid Claimant Trust to purchase ordinary shares of the Company with an eight year term at a strike price of $3.15 per ordinary share that would represent approximately 19.99% of the Company's fully diluted outstanding shares, including after giving effect to the exercise of the warrants, provided that such warrants may not be exercised during any calendar quarter in a quantity that would exceed 5.0% of the number of shares outstanding. The fair value of the Settlement Warrants has been estimated using the Black-Scholes pricing model. Use of a valuation model requires management to make certain assumptions with respect to selected model inputs. The expected volatility assumption is based on the historical and implied volatility of the Company's peer group with similar business models. The expected term assumption is based on the contractual term of the Settlement Warrants, including the maximum exercise restriction of 5.0% per calendar quarter, which resulted in the valuation of four separate tranches. The expected annual dividend per share is based on the Company's current intentions regarding payment of cash dividends. The risk-free interest rate is based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term assumed. The estimated fair value for the Settlement Warrants will be subject to revaluation at each balance sheet date with any changes in fair value recorded as a non-cash gain or (loss) in the consolidated statements of operations until the Settlement Warrants are issued, at which point they will be recorded as equity or as a liability based upon the facts and circumstances at the time of issuance. The key assumptions used to estimate the fair value of the Settlement Warrants were as follows: March 27, 2020 December 27, 2019 Expected share price volatility 64.1 % 54.4 % Weighted-average risk-free rate 0.6 % 1.8 % Expected annual dividend per share — % — % Weighted-average expected term (in years) 7.6 7.6 Share price $ 2.23 $ 3.45 Financial Instruments Not Measured at Fair Value The following methods and assumptions were used by the Company in estimating fair values for financial instruments not measured at fair value as of March 27, 2020 and December 27, 2019 : • The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and the majority of other current assets and liabilities approximate fair value because of their short-term nature. The Company classifies cash on hand and deposits in banks, including commercial paper, money market accounts and other investments it may hold from time to time, with an original maturity of three months or less, as cash and cash equivalents (level 1). The fair value of restricted cash was equivalent to its carrying value of $41.2 million and $31.7 million as of March 27, 2020 and December 27, 2019 , (level 1), respectively, which was included in other assets on the unaudited condensed consolidated balance sheets. • The Company has received a portion of consideration as part of contingent earn-out payments related to the sale of the Nuclear Imaging business in the form of preferred equity certificates. These securities are classified as held-to-maturity and are carried at amortized cost, which approximates fair value (level 3), of $29.8 million and $18.9 million as of March 27, 2020 and December 27, 2019 , respectively. These securities are included in other assets on the unaudited condensed consolidated balance sheets. • The Company's life insurance contracts are carried at cash surrender value, which is based on the present value of future cash flows under the terms of the contracts (level 3). Significant assumptions used in determining the cash surrender value include the amount and timing of future cash flows, interest rates and mortality charges. The fair value of these contracts approximates the carrying value of $51.0 million and $51.1 million as of March 27, 2020 and December 27, 2019 , respectively. These contracts are included in other assets on the unaudited condensed consolidated balance sheets. • The carrying value of the Company's revolving credit facility approximates the fair value due to the short-term nature of this instrument, and is therefore classified as level 1. The Company's 4.875% , 5.75% , 4.75% , 5.625% , 5.50% and 10.00% senior notes are classified as level 1, as quoted prices are available in an active market for these notes. Since the quoted market prices for the Company's term loans and 9.50% and 8.00% debentures are not available in an active market, they are classified as level 2 for purposes of developing an estimate of fair value. The following table presents the carrying values and estimated fair values of the Company's debt as of the end of each period: March 27, 2020 December 27, 2019 Carrying Value Fair Value Carrying Value Fair Value Level 1: 4.875% senior notes due April 2020 $ 614.8 $ 408.9 $ 614.8 $ 480.0 5.75% senior notes due August 2022 610.3 283.3 610.3 251.0 4.75% senior notes due April 2023 133.7 28.8 133.7 53.7 5.625% senior notes due October 2023 514.7 131.2 514.7 193.2 5.50% senior notes due April 2025 387.2 76.1 387.2 135.5 10.00% second lien senior notes due April 2025 322.9 221.9 322.9 253.8 Revolving credit facility 900.0 900.0 900.0 900.0 Level 2: 9.50% debentures due May 2022 10.4 5.2 10.4 5.4 8.00% debentures due March 2023 4.4 1.6 4.4 2.0 Term loan due September 2024 1,516.9 1,026.3 1,520.8 1,240.0 Term loan due February 2025 402.6 270.2 403.6 326.2 Total Debt $ 5,417.9 $ 3,353.5 $ 5,422.8 $ 3,840.8 Concentration of Credit and Other Risks Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of accounts receivable. The Company generally does not require collateral from customers. A portion of the Company's accounts receivable outside the U.S. includes sales to government-owned or supported healthcare systems in several countries, which are subject to payment delays. Payment is dependent upon the financial stability and creditworthiness of those countries' national economies. The following table shows net sales attributable to distributors that accounted for 10.0% or more of the Company's total net sales: Three Months Ended March 27, March 29, CuraScript, Inc. 24.6 % 27.5 % The following table shows accounts receivable attributable to distributors that accounted for 10.0% or more of the Company's gross accounts receivable at the end of each period: March 27, December 27, AmerisourceBergen Corporation 31.1 % 31.3 % McKesson Corporation 18.5 15.3 CuraScript, Inc. * 12.1 *Accounts receivable attributable to this distributor were less than 10.0% of total gross accounts receivable during the respective period presented above. The following table shows net sales attributable to products that accounted for 10.0% or more of the Company's total net sales: Three Months Ended March 27, March 29, Acthar Gel 25.2 % 28.3 % INOmax 21.3 19.1 Ofirmev 11.3 12.1 |
Segment Data
Segment Data | 3 Months Ended |
Mar. 27, 2020 | |
Segment Reporting [Abstract] | |
Segment Data | 13. Segment Data The Company operates in two reportable segments, which are further described below: • Specialty Brands includes innovative specialty pharmaceutical brands; and • Specialty Generics includes niche specialty generic drugs and APIs. All prior period segment information has been reclassified to reflect the realignment of the Company's reportable segments on a comparable basis, as previously discussed in Note 1. Selected information by reportable segment was as follows: Three Months Ended March 27, March 29, Net sales: Specialty Brands $ 490.6 $ 604.2 Specialty Generics 175.2 186.4 Net sales $ 665.8 $ 790.6 Operating (loss) income: Specialty Brands $ 212.2 $ 275.5 Specialty Generics 48.3 24.4 Segment operating income 260.5 299.9 Unallocated amounts: Corporate and unallocated expenses (1) (66.5 ) (45.8 ) Intangible asset amortization (197.6 ) (222.8 ) Restructuring and related charges, net 1.8 (4.2 ) Separation costs (2) (21.3 ) (11.7 ) Opioid-related litigation settlement (3) 16.8 — Operating (loss) income $ (6.3 ) $ 15.4 (1) Includes administration expenses and certain compensation, legal, environmental and other costs not charged to the Company's reportable segments. (2) These costs, which are included in SG&A expenses, primarily relate to professional fees, incremental costs incurred to build out the corporate infrastructure of the previously planned spin-off of the Company's Specialty Generics segment, costs incurred as the Company works to resolve opioid uncertainties, as well as rebranding initiatives associated with the Specialty Brands ongoing transformation. (3) Represents the change in the Settlement Warrants' fair value. Refer to Note 12 for further information regarding the valuations of the Settlement Warrants. Net sales by product family within the Company's reportable segments were as follows: Three Months Ended March 27, March 29, Acthar Gel $ 167.6 $ 223.9 INOmax 141.7 151.1 Ofirmev 74.9 95.6 Therakos 63.7 61.8 Amitiza (1) 41.1 53.0 Other (2) 1.6 18.8 Specialty Brands 490.6 604.2 Hydrocodone (API) and hydrocodone-containing tablets 26.5 17.4 Oxycodone (API) and oxycodone-containing tablets 16.9 16.5 Acetaminophen (API) 44.1 46.2 Other controlled substances 83.6 94.2 Other 4.1 12.1 Specialty Generics 175.2 186.4 Net sales $ 665.8 $ 790.6 (1) Amitiza consists of both product net sales and royalties. Refer to Note 2 for further details on Amitiza's revenues. (2) The three months ended March 29, 2019 includes $12.4 million of net sales related to BioVectra prior to the completion of the sale of this business in November 2019. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 27, 2020 | |
Subsequent Event [Line Items] | |
Subsequent Events | 14. Subsequent Events Commitments and Contingencies Certain litigation matters occurred during the three months ended March 27, 2020 or prior, but had subsequent updates through the issuance of this report. See further discussion in Note 11. Financing Activities 2020 Notes On April 7, 2020, the Company, Mallinckrodt International Finance S.A. and Mallinckrodt CB LLC (" the Issuers") entered into an exchange agreement (the “Exchange Agreement”) with certain third parties (collectively, the “Exchanging Holders”). Pursuant to the Exchange Agreement, the Exchanging Holders agreed to exchange with the Issuers, on April 7, 2020, their holdings of 2020 Notes issued by the Issuers (the “Existing Notes”) (consisting of approximately $495.0 million aggregate principal amount of the Existing Notes) for new 10.00% First Lien Senior Secured Notes due 2025 issued by the Issuers (the “First Lien 2025 Notes”), at a rate of $1,000 of First Lien 2025 Notes for every $1,000 of Existing Notes exchanged (such exchange, the “Exchange”). The Issuers and Exchanging Holders consummated the Exchange on April 7, 2020. Interest on the First Lien 2025 Notes is payable semi-annually in cash on April 15 th and October 15 th of each year, commencing on October 15, 2020. The Issuers may redeem some or all of the First Lien 2025 Notes prior to April 15, 2022 by paying a “make-whole” premium. The Issuers may redeem some or all of the First Lien 2025 Notes on or after April 15, 2022 at specified redemption prices. In addition, prior to April 15, 2022, the Issuers may redeem up to 40% of the aggregate principal amount of the First Lien 2025 Notes with the net proceeds of certain equity offerings. The Issuers may also redeem all, but not less than all, of the First Lien 2025 Notes at any time at a price of 100% of their principal amount, plus accrued and unpaid interest, if any, in the event the Issuers become obligated to pay additional amounts as a result of changes affecting certain withholding tax laws applicable to payments on the First Lien 2025 Notes. The Issuers are obligated to offer to repurchase (a) all of the First Lien 2025 Notes at a price of 101% of their principal amount plus accrued and unpaid interest, if any, as a result of certain change of control events and (b) First Lien 2025 Notes using asset sale proceeds at a price of 100% of their principal amount plus accrued and unpaid interest, if any, in the event of certain asset sales. These obligations are subject to certain qualifications and exceptions. The First Lien 2025 Notes are subject to an indenture that contains certain customary covenants and events of default (subject in certain cases to customary grace and cure periods). The occurrence of an event of default under the indenture could result in the acceleration of the First Lien 2025 Notes and could cause a cross-default that could result in the ac celeration of other indebtedness of the Company and its subsidiaries. The First Lien 2025 Notes are jointly and severally guaranteed, subject to certain exceptions, on a secured, unsubordinated basis by the Company and each of its subsidiaries (other than the Issuers) (the “Note Guarantors”) that guarantees the obligations under the Issuers’ existing senior secured credit facilities. The First Lien 2025 Notes and the guarantees thereof are secured by liens on the same assets of the Issuers and the Note Guarantors that are subject to liens securing the existing senior secured credit facilities, subject to certain exceptions. On April 15, 2020, the Company paid in full the remaining approximately $119.8 million in principal amount of outstanding 2020 Notes at the maturity thereof with cash on hand. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Disaggregation of Revenue [Line Items] | |
Sales Reserves Rollforward | The following table reflects activity in the Company's sales reserve accounts: Rebates and Chargebacks Product Returns Other Sales Deductions Total Balance as of December 28, 2018 $ 354.3 $ 34.0 $ 17.1 $ 405.4 Provisions 602.9 6.2 17.7 626.8 Payments or credits (805.8 ) (8.2 ) (12.4 ) (826.4 ) Balance as of March 29, 2019 $ 151.4 $ 32.0 $ 22.4 $ 205.8 Balance as of December 27, 2019 $ 295.8 $ 28.4 $ 13.2 $ 337.4 Provisions 457.8 3.8 13.7 475.3 Payments or credits (498.8 ) (6.1 ) (15.9 ) (520.8 ) Balance as of March 27, 2020 $ 254.8 $ 26.1 $ 11.0 $ 291.9 |
Disaggregation of Revenue | The associated royalty revenue recognized was as follows: Three Months Ended March 27, March 29, Royalty revenue $ 15.6 $ 17.4 Product sales transferred to customers at a point in time and over time were as follows: Three Months Ended March 27, March 29, Product sales transferred at a point in time 78.5 % 80.7 % Product sales transferred over time 21.5 19.3 |
Contract with Customer, Timing of Satisfaction of Performance Obligation and Payment | The following table includes estimated revenue from contracts extending greater than one year for certain of the Company's hospital products that are expected to be recognized in the future related to performance obligations that were unsatisfied or partially unsatisfied as of March 27, 2020 : Remainder of Fiscal 2020 $ 148.5 Fiscal 2021 102.7 Fiscal 2022 37.7 Fiscal 2023 8.1 Thereafter 0.3 |
Contract with Customer, Asset and Liability | The following table reflects the balance of the Company's contract liabilities at the end of each period: March 27, December 27, Accrued and other current liabilities $ 4.7 $ 5.6 Other liabilities 0.6 0.6 Contract liabilities $ 5.3 $ 6.2 |
Restructuring and Related Cha_2
Restructuring and Related Charges (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Charges by Segment | Net restructuring and related charges by segment were as follows: Three Months Ended March 27, March 29, Specialty Brands $ — $ 0.5 Specialty Generics 0.1 3.5 Corporate (1.9 ) 0.2 Restructuring and related charges, net (1.8 ) 4.2 Less: accelerated depreciation — — Restructuring charges, net $ (1.8 ) $ 4.2 |
Schedule of Net Restructuring and Related Charges | Net restructuring and related charges by program were comprised of the following: Three Months Ended March 27, March 29, 2018 Program $ 0.1 $ 3.5 2016 Program — 0.7 Acquisition Programs (1.9 ) — Total charges expected to be settled in cash $ (1.8 ) $ 4.2 |
Schedule of Restructuring Reserves Reconciliation by Program | The following table summarizes cash activity for restructuring reserves, substantially all of which related to contract termination costs, employee severance and benefits and exiting of certain facilities: 2018 Program 2016 Program Acquisition Programs Total Balance as of December 27, 2019 $ 2.7 $ 31.3 $ 0.2 $ 34.2 Charges 0.1 — — 0.1 Changes in estimate — — (1.9 ) (1.9 ) Cash payments (2.5 ) (30.5 ) (0.2 ) (33.2 ) Currency translation and other — — 1.9 1.9 Balance as of March 27, 2020 $ 0.3 $ 0.8 $ — $ 1.1 |
Schedule of Restructuring Charges Incurred Cumulative to Date | As of March 27, 2020 , net restructuring and related charges incurred cumulative to date were as follows: 2018 Program 2016 Program Specialty Brands $ 3.0 $ 68.1 Specialty Generics 10.1 14.6 Corporate 2.0 28.9 $ 15.1 $ 111.6 |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings per Share | The weighted-average number of shares outstanding used in the computations of basic and diluted (loss) earnings per share were as follows ( in millions ): Three Months Ended March 27, March 29, Basic 84.2 83.5 Dilutive impact of restricted share units and share options — 1.1 Diluted 84.2 84.6 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Inventory, Net [Abstract] | |
Schedule of Inventories | Inventories were comprised of the following at the end of each period: March 27, December 27, Raw materials and supplies $ 56.5 $ 62.7 Work in process 184.5 166.5 Finished goods 86.1 82.9 $ 327.1 $ 312.1 |
Property, Plant and Equipment (
Property, Plant and Equipment (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Property, Plant and Equipment | |
Property, Plant and Equipment | The gross carrying amount and accumulated depreciation of property, plant and equipment were comprised of the following at the end of each period: March 27, December 27, 2019 Property, plant and equipment, gross $ 1,902.7 $ 1,900.1 Less: accumulated depreciation (1,024.5 ) (1,003.6 ) Property, plant and equipment, net $ 878.2 $ 896.5 |
Depreciation of Fixed Assets | Depreciation expense was as follows: Three Months Ended March 27, March 29, Depreciation expense $ 25.5 $ 24.8 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | The gross carrying amount and accumulated amortization of intangible assets were comprised of the following at the end of each period: March 27, 2020 December 27, 2019 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortizable: Completed technology $ 10,456.9 $ 4,018.5 $ 10,456.9 $ 3,822.8 License agreements 120.1 75.1 120.1 74.1 Trademarks 77.7 21.0 77.7 20.1 Total $ 10,654.7 $ 4,114.6 $ 10,654.7 $ 3,917.0 Non-Amortizable: Trademarks $ 35.0 $ 35.0 In-process research and development 245.3 245.3 Total $ 280.3 $ 280.3 |
Intangible Asset Amortization Expense | Intangible asset amortization expense was as follows: Three Months Ended March 27, March 29, Amortization expense $ 197.6 $ 222.8 |
Schedule of Future Amortization Expense, Intangible Assets | The estimated aggregate amortization expense on intangible assets owned by the Company is expected to be as follows: Remainder of Fiscal 2020 $ 556.6 Fiscal 2021 657.6 Fiscal 2022 585.1 Fiscal 2023 581.1 Fiscal 2024 581.1 |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Debt including Capital Lease Obligation | Debt was comprised of the following at the end of each period: March 27, 2020 December 27, 2019 Principal Unamortized Discount and Debt Issuance Costs Principal Unamortized Discount and Debt Issuance Costs Current maturities of long-term debt: 4.875% senior notes due April 2020 $ 614.8 $ 0.1 $ 614.8 $ 0.6 Term loan due September 2024 15.6 0.1 15.6 0.2 Term loan due February 2025 4.1 0.1 4.1 0.1 Total current debt 634.5 0.3 634.5 0.9 Long-term debt: 9.50% debentures due May 2022 10.4 — 10.4 — 5.75% senior notes due August 2022 610.3 3.3 610.3 3.7 8.00% debentures due March 2023 4.4 — 4.4 — 4.75% senior notes due April 2023 133.7 0.8 133.7 0.8 5.625% senior notes due October 2023 514.7 4.1 514.7 4.4 Term loan due September 2024 1,501.3 14.7 1,505.2 15.5 Term loan due February 2025 398.5 5.8 399.5 6.1 5.50% senior notes due April 2025 387.2 3.5 387.2 3.6 10.00% second lien senior notes due April 2025 322.9 9.4 322.9 9.9 Revolving credit facility 900.0 2.7 900.0 3.1 Total long-term debt 4,783.4 44.3 4,788.3 47.1 Total debt $ 5,417.9 $ 44.6 $ 5,422.8 $ 48.0 |
Schedule of Applicable Interest Rate on Variable-rate Debt | As of March 27, 2020 , the applicable interest rate and outstanding borrowings on the Company's variable-rate debt instruments were as follows: Applicable interest rate Outstanding borrowings Term loan due September 2024 4.69 % $ 1,516.9 Term loan due February 2025 4.70 402.6 Revolving credit facility 3.86 900.0 |
Financial Instruments and Fai_2
Financial Instruments and Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of Share-based Payment Awared, Warrants, Valuation Assumptions [Table Text Block] [Table Text Block] | The key assumptions used to estimate the fair value of the Settlement Warrants were as follows: March 27, 2020 December 27, 2019 Expected share price volatility 64.1 % 54.4 % Weighted-average risk-free rate 0.6 % 1.8 % Expected annual dividend per share — % — % Weighted-average expected term (in years) 7.6 7.6 Share price $ 2.23 $ 3.45 |
Schedule of Fair Value of Assets and Liabilities Measured on a Recurring Basis | The following tables provide a summary of the significant assets and liabilities that are measured at fair value on a recurring basis at the end of each period: March 27, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Debt and equity securities held in rabbi trusts $ 28.6 $ 19.3 $ 9.3 $ — Equity securities 29.2 29.2 — — $ 57.8 $ 48.5 $ 9.3 $ — Liabilities: Deferred compensation liabilities $ 27.5 $ — $ 27.5 $ — Contingent consideration and acquired contingent liabilities 68.8 — — 68.8 Settlement Warrants 26.6 — — 26.6 $ 122.9 $ — $ 27.5 $ 95.4 December 27, Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Assets: Debt and equity securities held in rabbi trusts $ 30.6 $ 21.0 $ 9.6 $ — Equity securities 26.2 26.2 — — $ 56.8 $ 47.2 $ 9.6 $ — Liabilities: Deferred compensation liabilities $ 39.2 $ — $ 39.2 $ — Contingent consideration and acquired contingent liabilities 69.3 — — 69.3 Settlement Warrants 43.4 — — 43.4 $ 151.9 $ — $ 39.2 $ 112.7 |
Schedule of Reconciliation of Changes in Fair Value of Contingent Liabilities | The following table summarizes the activity for contingent consideration: Balance as of December 27, 2019 $ 69.3 Accretion expense 0.3 Fair value adjustments (0.8 ) Balance as of March 27, 2020 $ 68.8 |
Schedule of Carrying Amount and Fair Value of Long-term Debt | The following table presents the carrying values and estimated fair values of the Company's debt as of the end of each period: March 27, 2020 December 27, 2019 Carrying Value Fair Value Carrying Value Fair Value Level 1: 4.875% senior notes due April 2020 $ 614.8 $ 408.9 $ 614.8 $ 480.0 5.75% senior notes due August 2022 610.3 283.3 610.3 251.0 4.75% senior notes due April 2023 133.7 28.8 133.7 53.7 5.625% senior notes due October 2023 514.7 131.2 514.7 193.2 5.50% senior notes due April 2025 387.2 76.1 387.2 135.5 10.00% second lien senior notes due April 2025 322.9 221.9 322.9 253.8 Revolving credit facility 900.0 900.0 900.0 900.0 Level 2: 9.50% debentures due May 2022 10.4 5.2 10.4 5.4 8.00% debentures due March 2023 4.4 1.6 4.4 2.0 Term loan due September 2024 1,516.9 1,026.3 1,520.8 1,240.0 Term loan due February 2025 402.6 270.2 403.6 326.2 Total Debt $ 5,417.9 $ 3,353.5 $ 5,422.8 $ 3,840.8 |
Schedules of Concentration of Risk | The following table shows net sales attributable to distributors that accounted for 10.0% or more of the Company's total net sales: Three Months Ended March 27, March 29, CuraScript, Inc. 24.6 % 27.5 % The following table shows accounts receivable attributable to distributors that accounted for 10.0% or more of the Company's gross accounts receivable at the end of each period: March 27, December 27, AmerisourceBergen Corporation 31.1 % 31.3 % McKesson Corporation 18.5 15.3 CuraScript, Inc. * 12.1 *Accounts receivable attributable to this distributor were less than 10.0% of total gross accounts receivable during the respective period presented above. The following table shows net sales attributable to products that accounted for 10.0% or more of the Company's total net sales: Three Months Ended March 27, March 29, Acthar Gel 25.2 % 28.3 % INOmax 21.3 19.1 Ofirmev 11.3 12.1 |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Mar. 27, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information by Reportable Segment | Selected information by reportable segment was as follows: Three Months Ended March 27, March 29, Net sales: Specialty Brands $ 490.6 $ 604.2 Specialty Generics 175.2 186.4 Net sales $ 665.8 $ 790.6 Operating (loss) income: Specialty Brands $ 212.2 $ 275.5 Specialty Generics 48.3 24.4 Segment operating income 260.5 299.9 Unallocated amounts: Corporate and unallocated expenses (1) (66.5 ) (45.8 ) Intangible asset amortization (197.6 ) (222.8 ) Restructuring and related charges, net 1.8 (4.2 ) Separation costs (2) (21.3 ) (11.7 ) Opioid-related litigation settlement (3) 16.8 — Operating (loss) income $ (6.3 ) $ 15.4 (1) Includes administration expenses and certain compensation, legal, environmental and other costs not charged to the Company's reportable segments. (2) These costs, which are included in SG&A expenses, primarily relate to professional fees, incremental costs incurred to build out the corporate infrastructure of the previously planned spin-off of the Company's Specialty Generics segment, costs incurred as the Company works to resolve opioid uncertainties, as well as rebranding initiatives associated with the Specialty Brands ongoing transformation. (3) Represents the change in the Settlement Warrants' fair value. Refer to Note 12 for further information regarding the valuations of the Settlement Warrants. |
Schedule of Net Sales from External Customers by Products | Net sales by product family within the Company's reportable segments were as follows: Three Months Ended March 27, March 29, Acthar Gel $ 167.6 $ 223.9 INOmax 141.7 151.1 Ofirmev 74.9 95.6 Therakos 63.7 61.8 Amitiza (1) 41.1 53.0 Other (2) 1.6 18.8 Specialty Brands 490.6 604.2 Hydrocodone (API) and hydrocodone-containing tablets 26.5 17.4 Oxycodone (API) and oxycodone-containing tablets 16.9 16.5 Acetaminophen (API) 44.1 46.2 Other controlled substances 83.6 94.2 Other 4.1 12.1 Specialty Generics 175.2 186.4 Net sales $ 665.8 $ 790.6 (1) Amitiza consists of both product net sales and royalties. Refer to Note 2 for further details on Amitiza's revenues. (2) The three months ended March 29, 2019 includes $12.4 million of net sales related to BioVectra prior to the completion of the sale of this business in November 2019. |
Revenue from Contracts with C_3
Revenue from Contracts with Customers Future Performance Obligations (Details) $ in Millions | Mar. 27, 2020USD ($) |
Remainder of Fiscal 2020 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | $ 148.5 |
Fiscal 2021 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | 102.7 |
Fiscal 2022 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | 37.7 |
Fiscal 2023 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | 8.1 |
Thereafter | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Revenue, Remaining Performance Obligation, Amount | $ 0.3 |
Revenue from Contracts with C_4
Revenue from Contracts with Customers (Details) - USD ($) $ in Millions | 3 Months Ended | |||
Mar. 27, 2020 | Mar. 29, 2019 | Dec. 27, 2019 | Dec. 28, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue Reserves | $ 291.9 | $ 205.8 | $ 337.4 | $ 405.4 |
Revenue Reserve Provision | 475.3 | 626.8 | ||
Revenue Reserve Payments or Credits | (520.8) | (826.4) | ||
Deferred Revenue, Revenue Recognized | 2.3 | 4.5 | ||
Contract with Customer, Liability | 5.3 | 6.2 | ||
Contract with Customer, Liability, Current | 4.7 | 5.6 | ||
Capitalized Contract Cost, Gross | 28.4 | 26.5 | ||
Capitalized Contract Cost, Amortization | 1.5 | 1.5 | ||
Contract with Customer, Liability, Noncurrent | 0.6 | 0.6 | ||
Net sales | $ 665.8 | $ 790.6 | ||
Transferred at Point in Time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 78.50% | 80.70% | ||
Transferred over Time [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 21.50% | 19.30% | ||
Royalty [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales | $ 15.6 | $ 17.4 | ||
Rebates and Chargebacks [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue Reserves | 254.8 | 151.4 | 295.8 | 354.3 |
Revenue Reserve Provision | 457.8 | 602.9 | ||
Revenue Reserve Payments or Credits | (498.8) | (805.8) | ||
Allowance for Sales Returns [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue Reserves | 26.1 | 32 | 28.4 | 34 |
Revenue Reserve Provision | 3.8 | 6.2 | ||
Revenue Reserve Payments or Credits | (6.1) | (8.2) | ||
Other Sales Deductions [Member] | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue Reserves | 11 | 22.4 | $ 13.2 | $ 17.1 |
Revenue Reserve Provision | 13.7 | 17.7 | ||
Revenue Reserve Payments or Credits | $ (15.9) | $ (12.4) | ||
Minimum | ||||
Disaggregation of Revenue [Line Items] | ||||
Royalty Rate Percentage | 18.00% | |||
Maximum | ||||
Disaggregation of Revenue [Line Items] | ||||
Royalty Rate Percentage | 26.00% |
Restructuring and Related Cha_3
Restructuring and Related Charges (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 27, 2020 | Mar. 29, 2019 | Feb. 01, 2018 | |
Restructuring Cost and Reserve | |||
Restructuring charges, net | $ (1.8) | $ 4.2 | |
Restructuring Fiscal 2018 Plan | Minimum | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost | $ 100 | ||
Restructuring Fiscal 2018 Plan | Maximum | |||
Restructuring Cost and Reserve | |||
Restructuring and Related Cost, Expected Cost | $ 125 |
Restructuring and Related Cha_4
Restructuring and Related Charges (Schedule of Restructuring and Related Charges by Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | $ (1.8) | $ 4.2 |
Less: accelerated depreciation | 0 | 0 |
Restructuring charges, net | (1.8) | 4.2 |
Specialty Brands | ||
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | 0 | 0.5 |
Specialty Generics | ||
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | 0.1 | 3.5 |
Corporate | ||
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | $ (1.9) | $ 0.2 |
Restructuring and Related Cha_5
Restructuring and Related Charges (Schedule of Net Restructuring and Related Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | $ (1.8) | $ 4.2 |
Total charges expected to be settled in cash | (1.8) | 4.2 |
Restructuring Fiscal 2018 Plan | ||
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | 0.1 | 3.5 |
Restructuring Fiscal 2016 Plan | ||
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | 0 | 0.7 |
Acquisitions | ||
Restructuring Cost and Reserve | ||
Restructuring and related charges, net | $ (1.9) | $ 0 |
Restructuring and Related Cha_6
Restructuring and Related Charges (Schedule of Restructuring Reserves by Type of Cost) (Details) $ in Millions | 3 Months Ended |
Mar. 27, 2020USD ($) | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | $ 34.2 |
Charges | 0.1 |
Changes in estimate | (1.9) |
Currency translation and other | 1.9 |
Cash payments | (33.2) |
Ending Balance | 1.1 |
Restructuring Fiscal 2018 Plan | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | 2.7 |
Charges | 0.1 |
Changes in estimate | 0 |
Currency translation and other | 0 |
Cash payments | (2.5) |
Ending Balance | 0.3 |
Restructuring Fiscal 2016 Plan | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | 31.3 |
Charges | 0 |
Changes in estimate | 0 |
Currency translation and other | 0 |
Cash payments | (30.5) |
Ending Balance | 0.8 |
Acquisitions | |
Restructuring Reserve [Roll Forward] | |
Beginning Balance | 0.2 |
Charges | 0 |
Changes in estimate | (1.9) |
Currency translation and other | (1.9) |
Cash payments | (0.2) |
Ending Balance | $ 0 |
Restructuring and Related Cha_7
Restructuring and Related Charges (Schedule of Restructuring Charges Incurred Cumulative to Date) (Details) $ in Millions | Mar. 27, 2020USD ($) |
Restructuring Fiscal 2016 Plan | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | $ 111.6 |
Restructuring Fiscal 2016 Plan | Specialty Brands | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | 68.1 |
Restructuring Fiscal 2016 Plan | Specialty Generics | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | 14.6 |
Restructuring Fiscal 2016 Plan | Corporate | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | 28.9 |
Restructuring Fiscal 2018 Plan | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | 15.1 |
Restructuring Fiscal 2018 Plan | Specialty Brands | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | 3 |
Restructuring Fiscal 2018 Plan | Specialty Generics | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | 10.1 |
Restructuring Fiscal 2018 Plan | Corporate | |
Restructuring Cost and Reserve | |
Restructuring costs incurred cumulative to date | $ 2 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 27, 2020 | Mar. 29, 2019 | Dec. 27, 2019 | Sep. 26, 2014 | |
Income Taxes [Line Items] | ||||
Income tax benefit | $ (18.9) | $ (204.7) | ||
Increase (decrease) tax benefit | 185.8 | |||
Increase (Decrease) Tax Benefit, Intercompany Financing Reorganization | 192.8 | |||
(Loss) income from continuing operations before income taxes | $ (75.6) | $ (49.5) | ||
Effective tax rate | 25.00% | 413.50% | ||
Current Income Tax Expense (Benefit) | $ (22.4) | $ 38.5 | ||
Deferred Income Tax Expense (Benefit) | 3.5 | $ (243.2) | ||
Income Taxes Paid, Net | 12.7 | $ 30.7 | ||
Operating Loss Carryforwards | 765.1 | |||
Unrecognized tax benefits | 418.9 | 398.6 | ||
Unrecognized tax benefits, net increase | 20.3 | |||
Unrecognized Tax Benefits, Increase Resulting from Prior Period Tax Positions | 25.1 | |||
Unrecognized Tax Benefits, Reduction Resulting from Lapse of Applicable Statute of Limitations | 4.8 | |||
Unrecognized tax benefits, which if favorably settled would benefit the effective tax rate | 416.6 | |||
Interest accrued on unrecognized tax benefits | 34.5 | $ 32.9 | ||
Unrecognized tax benefits that would impact effective tax rate, upper bound of change | 95.5 | |||
Income tax penalties and interest accrued that would impact effective tax rate, upper bound of change | 22.3 | |||
Increase (Decrease) Tax Expense (Benefit), Change in Operating Income | 6 | |||
Increase (Decrease), Tax Expense (Benefit), Gain on Debt Repurchases | 1.7 | |||
Increase (Decrease), Tax Expense (Benefit), Restructuring | 1.4 | |||
Increase (Decrease), Tax Expense (Benefit), CARES Act | (11.5) | |||
Increase (Decrease), Tax Expense (Benefit), Separation Costs | 1.2 | |||
Discontinued Operations [Member] | ||||
Income Taxes [Line Items] | ||||
Unrecognized tax benefits, which if favorably settled would benefit the effective tax rate | 20 | |||
CARES Act [Member] | ||||
Income Taxes [Line Items] | ||||
Proceeds from Income Tax Refunds | 91.5 | |||
Income tax benefit | $ (11.5) | |||
Internal Revenue Service (IRS) [Member] | Cadence Pharmaceuticals, Inc. [Member] | ||||
Income Taxes [Line Items] | ||||
Proposed Adjustment to Taxable Income | $ 871 |
Earnings per Share (Details)
Earnings per Share (Details) - shares shares in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Earnings Per Share | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 5.8 | 3.2 |
Weighted-average shares outstanding - basic (in shares) | 84.2 | 83.5 |
Dilutive impact of restricted share units and share options (in shares) | 0 | 1.1 |
Weighted-average shares outstanding - diluted (in shares) | 84.2 | 84.6 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Raw materials and supplies | $ 56.5 | $ 62.7 |
Work in process | 184.5 | 166.5 |
Finished goods | 86.1 | 82.9 |
Inventories | $ 327.1 | $ 312.1 |
Property, Plant and Equipment_2
Property, Plant and Equipment (Schedule of Property, Plant and Equipment) (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Property, Plant and Equipment | ||
Property, plant and equipment, gross | $ 1,902.7 | $ 1,900.1 |
Less: accumulated depreciation | (1,024.5) | (1,003.6) |
Property, plant and equipment, net | $ 878.2 | $ 896.5 |
Property, Plant and Equipment D
Property, Plant and Equipment Depreciation (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Property, Plant and Equipment | ||
Depreciation | $ 25.5 | $ 24.8 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets (Schedule Of Intangible Assets) (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Schedule of Intangible Asset by Major Class [Line Items] | ||
Amortizable intangible assets, gross | $ 10,654.7 | $ 10,654.7 |
Accumulated amortization | 4,114.6 | 3,917 |
Non-Amortizable intangible assets, gross | 280.3 | 280.3 |
Trademarks | ||
Schedule of Intangible Asset by Major Class [Line Items] | ||
Non-Amortizable intangible assets, gross | 35 | 35 |
In-process Research and Development | ||
Schedule of Intangible Asset by Major Class [Line Items] | ||
Non-Amortizable intangible assets, gross | 245.3 | 245.3 |
Completed Technology | ||
Schedule of Intangible Asset by Major Class [Line Items] | ||
Amortizable intangible assets, gross | 10,456.9 | 10,456.9 |
Accumulated amortization | 4,018.5 | 3,822.8 |
Trademarks | ||
Schedule of Intangible Asset by Major Class [Line Items] | ||
Amortizable intangible assets, gross | 77.7 | 77.7 |
Accumulated amortization | 21 | 20.1 |
Licensing Agreements [Member] | ||
Schedule of Intangible Asset by Major Class [Line Items] | ||
Amortizable intangible assets, gross | 120.1 | 120.1 |
Accumulated amortization | $ 75.1 | $ 74.1 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets (Schedule of Intangible Asset Amortization Expense) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 197.6 | $ 222.8 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets (Schedule of Future Amortization Expense, Intangible Assets) (Details) $ in Millions | Mar. 27, 2020USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of Fiscal 2020 | $ 556.6 |
Fiscal 2021 | 657.6 |
Fiscal 2022 | 585.1 |
Fiscal 2023 | 581.1 |
Fiscal 2024 | $ 581.1 |
Debt (Details)
Debt (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Current maturities of long-term debt | ||
Debt Issuance Costs, Current, Net | $ 0.3 | $ 0.9 |
Long-term Debt, Current Maturities | 634.5 | 634.5 |
Long-term debt | ||
Long-term Debt | 4,783.4 | 4,788.3 |
Total Debt | 5,417.9 | 5,422.8 |
Debt Issuance Costs | 44.3 | 47.1 |
Total Debt Issuance Costs | 44.6 | 48 |
Term Loan due 2025 | Secured Debt | ||
Current maturities of long-term debt | ||
Debt Issuance Costs, Current, Net | 0.1 | 0.1 |
Long-term Debt, Current Maturities | 4.1 | 4.1 |
Long-term debt | ||
Long-term Debt | 398.5 | 399.5 |
Debt Issuance Costs | 5.8 | 6.1 |
Loans Payable | 402.6 | 403.6 |
Term Loan due 2024 | Secured Debt | ||
Current maturities of long-term debt | ||
Debt Issuance Costs, Current, Net | 0.1 | 0.2 |
Long-term Debt, Current Maturities | 15.6 | 15.6 |
Long-term debt | ||
Long-term Debt | 1,501.3 | 1,505.2 |
Debt Issuance Costs | 14.7 | 15.5 |
Loans Payable | 1,516.9 | 1,520.8 |
4.88% Senior Notes | Unsecured Debt | ||
Current maturities of long-term debt | ||
Debt Issuance Costs, Current, Net | 0.1 | 0.6 |
Long-term Debt, Current Maturities | 614.8 | 614.8 |
Long-term debt | ||
Long-term Debt | 614.8 | |
9.50% Debenture | Debentures | ||
Long-term debt | ||
Long-term Debt | 10.4 | 10.4 |
Debt Issuance Costs | 0 | 0 |
5.75% Senior Notes | Unsecured Debt | ||
Long-term debt | ||
Long-term Debt | 610.3 | 610.3 |
Debt Issuance Costs | 3.3 | 3.7 |
8.00% Debenture | Debentures | ||
Long-term debt | ||
Long-term Debt | 4.4 | 4.4 |
Debt Issuance Costs | 0 | 0 |
4.75% Senior Notes | Unsecured Debt | ||
Long-term debt | ||
Long-term Debt | 133.7 | 133.7 |
Debt Issuance Costs | 0.8 | 0.8 |
5.625% Senior Notes | Unsecured Debt | ||
Long-term debt | ||
Long-term Debt | 514.7 | 514.7 |
Debt Issuance Costs | 4.1 | 4.4 |
5.50% Senior Notes | Unsecured Debt | ||
Long-term debt | ||
Long-term Debt | 387.2 | 387.2 |
Debt Issuance Costs | 3.5 | 3.6 |
2017 Revolving Credit Facility | Secured Debt | ||
Long-term debt | ||
Long-term Debt | 900 | 900 |
Debt Issuance Costs | 2.7 | 3.1 |
10.00% Second Lien Senior Notes | Unsecured Debt | ||
Long-term debt | ||
Long-term Debt | 322.9 | 322.9 |
Debt Issuance Costs | $ 9.4 | $ 9.9 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) $ in Millions | Mar. 27, 2020USD ($) |
Unsecured Debt | 2017 Revolving Credit Facility | |
Debt Instrument | |
Line of Credit Facility, Maximum Borrowing Capacity | $ 900 |
Debt (Schedule of Applicable In
Debt (Schedule of Applicable Interest Rates on Variable-rate Debt) (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
2017 Revolving Credit Facility | ||
Schedule of Applicable Interest Rate on Variable-rate Debt [Line Items] | ||
Interest rate | 3.86% | |
Long-term Line of Credit | $ 900 | |
Term Loan due 2025 | Secured Debt | ||
Schedule of Applicable Interest Rate on Variable-rate Debt [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate, at Point in Time | 4.70% | |
Loans Payable | $ 402.6 | $ 403.6 |
Term Loan due 2024 | Secured Debt | ||
Schedule of Applicable Interest Rate on Variable-rate Debt [Line Items] | ||
Long-term Debt, Weighted Average Interest Rate, at Point in Time | 4.69% | |
Loans Payable | $ 1,516.9 | $ 1,520.8 |
Guarantees (Details)
Guarantees (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Dec. 27, 2019 | |
Others | ||
Guarantor Obligations [Line Items] | ||
Maximum future payments | $ 32.7 | |
Asset Pledged as Collateral [Member] | ||
Guarantor Obligations [Line Items] | ||
Restricted Cash | $ 22.2 | |
Mallinckrodt Baker | Indemnification Agreement | ||
Guarantor Obligations [Line Items] | ||
Guarantor obligations, obligation term | 17 years | |
Maximum future payments | $ 70.2 | |
Escrow Deposit | 30 | |
Mallinckrodt Baker | Indemnification Agreement | Other current and non-current liabilities | ||
Guarantor Obligations [Line Items] | ||
Guarantors obligation | 15.7 | $ 15 |
Mallinckrodt Baker | Indemnification Agreement | Other current and non-current assets | ||
Guarantor Obligations [Line Items] | ||
Escrow Deposit | 19 | 18.9 |
Mallinckrodt Baker | Environmental, Health and Safety Matters | Indemnification Agreement | Other current and non-current liabilities | ||
Guarantor Obligations [Line Items] | ||
Guarantors obligation | $ 12.9 | $ 12.3 |
Commitments and Contingencies (
Commitments and Contingencies (Narrative) (Details) | Feb. 25, 2020USD ($)$ / shares | Mar. 19, 2014USD ($) | Mar. 27, 2020USD ($)lawsuitCase | Dec. 27, 2019USD ($) | Dec. 27, 2019USD ($) | Sep. 26, 2014USD ($) |
Loss Contingencies [Line Items] | ||||||
Environmental liabilities | $ 61,900,000 | |||||
Interest Payable, Installment Sales | 47,400,000 | $ 47,400,000 | $ 47,400,000 | |||
Operating Loss Carryforwards | $ 765,100,000 | |||||
Asbestos Matters | ||||||
Loss Contingencies [Line Items] | ||||||
Pending claims | Case | 11,800 | |||||
Estimation of liability, historical term | 5 years | |||||
Estimation of liability, expected future term of claims | 7 years | |||||
Accrued and other current liabilities | ||||||
Loss Contingencies [Line Items] | ||||||
Environmental liabilities, current | $ 1,300,000 | |||||
Minimum | Environmental Remediation | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 38,200,000 | |||||
Maximum | Environmental Remediation | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 87,000,000 | |||||
Questcor Subpoena [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Payments for Legal Settlements | 15,400,000 | |||||
Boston Civil Investigative Demand [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency Accrual | 0 | |||||
Boston Civil Investigative Demand [Member] | Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 1,280,000,000 | |||||
Medicaid Lawsuit [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency Accrual | 0 | |||||
Medicaid Lawsuit [Member] | Maximum | Retroactive [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 640,000,000 | |||||
Track 1 Cases [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Payments for Legal Settlements | 24,000,000 | |||||
Loss Contingency Accrual, Product Liability, Gross | 6,000,000 | |||||
Loss Contingency, Accrual, Noncurrent | $ 500,000 | |||||
Opioid crisis [Member] | Cities, Counties, and/or Other Government-related Persons/Entities [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Number of Plaintiffs | lawsuit | 2,531 | |||||
Opioid crisis [Member] | Hospitals, Health Systems, Unions, Health and Welfare Fund or Third-Party Payers [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Number of Plaintiffs | lawsuit | 261 | |||||
Opioid crisis [Member] | Individuals [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Number of Plaintiffs | lawsuit | 116 | |||||
Opioid crisis [Member] | Schools and School Boards [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Number of Plaintiffs | lawsuit | 7 | |||||
Opioid crisis [Member] | State Attorney Generals [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Number of Plaintiffs | lawsuit | 17 | |||||
Opioid crisis [Member] | U.S. States [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Number of Plaintiffs | lawsuit | 231 | |||||
Opioid Claimant Trust [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Warrant, Exercise Price | $ / shares | $ 3.15 | |||||
Litigation Settlement, Amount Awarded to Other Party, Settlement Closing Amount | $ 300,000,000 | |||||
Litigation Settlement, Amount Awarded to Other Party, Post Closing Settlement Amount, Total | 1,300,000,000 | |||||
Litigation Settlement, Amount Awarded to Other Party, Post Closing Settlement Amount, Year One & Two | 200,000,000 | |||||
Litigation Settlement, Amount Awarded to Other Party, Post Closing Settlement Amount, Year Three through Eight | $ 150,000,000 | |||||
Opioid Claimant Trust [Member] | Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Acquisition of Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners, Quarterly Limit | 5.00% | |||||
Loss Contingency Accrual | $ 1,600,000,000 | 1,600,000,000 | ||||
Warrant Expense, Opioid-related Settlement | $ 26,600,000 | $ 43,400,000 | ||||
New York State Department of Financial Services [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 5,000 | |||||
Acthar | Medicaid Lawsuit [Member] | Minimum | Prospective [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 90,000,000 | |||||
Acthar | Medicaid Lawsuit [Member] | Maximum | Prospective [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Loss Contingency, Estimate of Possible Loss | 100,000,000 | |||||
Acthar | Humana Inc. [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Proceeds from Customers | $ 700,000,000 | |||||
Cadence Pharmaceuticals, Inc. [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Business Combination, Consideration Transferred | $ 1,329,000,000 | |||||
Internal Revenue Service (IRS) [Member] | Cadence Pharmaceuticals, Inc. [Member] | ||||||
Loss Contingencies [Line Items] | ||||||
Proposed Adjustment to Taxable Income | $ 871,000,000 | |||||
Senior Notes | 4.88% Senior Notes | ||||||
Loss Contingencies [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 4.875% | |||||
Senior Notes | 5.75% Senior Notes | ||||||
Loss Contingencies [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | |||||
Senior Notes | 10.00% Second Lien Senior Notes | ||||||
Loss Contingencies [Line Items] | ||||||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |||||
Other Ownership Interest [Member] | Opioid Claimant Trust [Member] | Maximum | ||||||
Loss Contingencies [Line Items] | ||||||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 19.99% |
Financial Instruments and Fai_3
Financial Instruments and Fair Value Measurements (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 25, 2020 | Mar. 27, 2020 | Dec. 27, 2019 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Contingent Consideration, Liability, Current | $ 62.1 | ||
Contingent Consideration, Liability, Noncurrent | $ 6.7 | ||
Senior Notes | 5.75% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | ||
Senior Notes | 4.88% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.875% | ||
Senior Notes | 10.00% Second Lien Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||
Level 3 | Other current and non-current assets | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Cash surrender value of life insurance | $ 51 | $ 51.1 | |
Level 3 | Recurring | Questcor Pharmaceuticals, Inc. | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Fair value of contingent liability | 24.8 | 24.5 | |
Level 3 | StrataGraft [Member] | Recurring | Stratatech | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Fair value of contingent liability | 31.4 | 29 | |
Level 3 | MNK-6105 [Member] | Recurring | Ocera [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Fair value of contingent consideration | $ 12.6 | 15.8 | |
Level 2 | Debentures | 8.00% Debenture | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% | ||
Level 2 | Debentures | 9.50% Debenture | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 9.50% | ||
Level 1 | Senior Notes | 4.75% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | ||
Level 1 | Senior Notes | 5.75% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | ||
Level 1 | Senior Notes | 4.88% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.875% | ||
Level 1 | Senior Notes | 5.50% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | ||
Level 1 | Senior Notes | 10.00% Second Lien Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | ||
Level 1 | Unsecured Debt | 5.625% Senior Notes | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Debt Instrument, Interest Rate, Stated Percentage | 5.625% | ||
Nuclear Imaging | Level 3 | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Contingent Consideration, Equity Certificates | $ 29.8 | 18.9 | |
Indemnification Agreement | Mallinckrodt Baker | Level 1 | Other current and non-current assets | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Restricted Cash and Cash Equivalents | 41.2 | 31.7 | |
Contingent Liabilities | Level 3 | Recurring | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Fair value adjustment | 0.8 | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability Value | $ 68.8 | $ 69.3 | |
Opioid Claimant Trust [Member] | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate | 64.10% | 54.40% | |
Warrant, Exercise Price | $ 3.15 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate | 0.60% | 1.80% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate | 0.00% | 0.00% | |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term | 7 years 7 months 6 days | 7 years 7 months 6 days | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ 2.23 | $ 3.45 | |
Opioid Claimant Trust [Member] | Maximum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Acquisition of Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners, Quarterly Limit | 5.00% | ||
Other Ownership Interest [Member] | Opioid Claimant Trust [Member] | Maximum | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis | |||
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 19.99% |
Financial Instruments and Fai_4
Financial Instruments and Fair Value Measurements (Schedule of Fair Value of Assets and Liabilities Measured on a Recurring Basis) (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Assets: | ||
Other Assets, Fair Value Disclosure | $ 29.2 | $ 26.2 |
Assets, Fair Value Disclosure | 57.8 | 56.8 |
Recurring | ||
Assets: | ||
Rabbi Trust Investments, Fair Value Disclosure | 28.6 | 30.6 |
Liabilities: | ||
Deferred Compensation Liability, Fair Value | 27.5 | 39.2 |
Contingent consideration and acquired contingent liabilities | 68.8 | 69.3 |
Settlement Warrants, Fair Value Disclosure | 26.6 | 43.4 |
Total liabilities at fair value | 122.9 | 151.9 |
Recurring | Level 1 | ||
Assets: | ||
Rabbi Trust Investments, Fair Value Disclosure | 19.3 | 21 |
Other Assets, Fair Value Disclosure | 29.2 | 26.2 |
Assets, Fair Value Disclosure | 48.5 | 47.2 |
Liabilities: | ||
Deferred Compensation Liability, Fair Value | 0 | 0 |
Contingent consideration and acquired contingent liabilities | 0 | 0 |
Settlement Warrants, Fair Value Disclosure | 0 | 0 |
Total liabilities at fair value | 0 | 0 |
Recurring | Level 2 | ||
Assets: | ||
Rabbi Trust Investments, Fair Value Disclosure | 9.3 | 9.6 |
Other Assets, Fair Value Disclosure | 0 | 0 |
Assets, Fair Value Disclosure | 9.3 | 9.6 |
Liabilities: | ||
Deferred Compensation Liability, Fair Value | 27.5 | 39.2 |
Contingent consideration and acquired contingent liabilities | 0 | 0 |
Settlement Warrants, Fair Value Disclosure | 0 | 0 |
Total liabilities at fair value | 27.5 | 39.2 |
Recurring | Level 3 | ||
Assets: | ||
Rabbi Trust Investments, Fair Value Disclosure | 0 | 0 |
Other Assets, Fair Value Disclosure | 0 | 0 |
Assets, Fair Value Disclosure | 0 | 0 |
Liabilities: | ||
Deferred Compensation Liability, Fair Value | 0 | 0 |
Contingent consideration and acquired contingent liabilities | 68.8 | 69.3 |
Settlement Warrants, Fair Value Disclosure | 26.6 | 43.4 |
Total liabilities at fair value | $ 95.4 | $ 112.7 |
Financial Instruments and Fai_5
Financial Instruments and Fair Value Measurements (Schedule of Reconciliation of Changes in Fair Value of Contingent Liabilities) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 27, 2020 | Dec. 27, 2019 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Contingent Consideration, Liability, Current | $ 62.1 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent Consideration, Liability, Noncurrent | 6.7 | |
Level 3 | Recurring | Contingent Liabilities | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Beginning balance | 69.3 | |
Accretion expense | 0.3 | |
Fair value adjustment | (0.8) | |
Ending balance | 68.8 | |
Questcor Pharmaceuticals, Inc. | Level 3 | Recurring | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fair value of contingent liability | 24.8 | $ 24.5 |
StrataGraft [Member] | Stratatech | Level 3 | Recurring | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Fair value of contingent liability | 31.4 | 29 |
MNK-6105 [Member] | Ocera [Member] | Level 3 | Recurring | ||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Contingent Consideration, Liability | $ 12.6 | $ 15.8 |
Financial Instruments and Fai_6
Financial Instruments and Fair Value Measurements (Schedule of Carrying Amount and Fair Value of Long-term Debt) (Details) - USD ($) $ in Millions | Mar. 27, 2020 | Dec. 27, 2019 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long-term Debt, Current Maturities | $ 634.5 | $ 634.5 |
Total debt, fair value | 3,353.5 | 3,840.8 |
Long-term Debt | 4,783.4 | 4,788.3 |
Total Debt | 5,417.9 | 5,422.8 |
Secured Debt | Term Loan due 2024 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long-term Debt, Current Maturities | 15.6 | 15.6 |
Loans Payable | 1,516.9 | 1,520.8 |
Long-term Debt | 1,501.3 | 1,505.2 |
Loans Payable, Fair Value Disclosure | 1,026.3 | 1,240 |
Secured Debt | 2017 Revolving Credit Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 900 | 900 |
Long-term Debt | 900 | 900 |
Secured Debt | Term Loan due 2025 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long-term Debt, Current Maturities | 4.1 | 4.1 |
Loans Payable | 402.6 | 403.6 |
Long-term Debt | 398.5 | 399.5 |
Loans Payable, Fair Value Disclosure | 270.2 | 326.2 |
Unsecured Debt | 4.88% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Long-term Debt, Current Maturities | 614.8 | 614.8 |
Total debt, fair value | 408.9 | 480 |
Long-term Debt | 614.8 | |
Unsecured Debt | 5.75% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 283.3 | 251 |
Long-term Debt | 610.3 | 610.3 |
Unsecured Debt | 4.75% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 28.8 | 53.7 |
Long-term Debt | 133.7 | 133.7 |
Unsecured Debt | 5.625% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 131.2 | 193.2 |
Long-term Debt | 514.7 | 514.7 |
Unsecured Debt | 5.50% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 76.1 | 135.5 |
Long-term Debt | 387.2 | 387.2 |
Unsecured Debt | 10.00% Second Lien Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 221.9 | 253.8 |
Long-term Debt | $ 322.9 | 322.9 |
Senior Notes | 4.88% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.875% | |
Senior Notes | 5.75% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | |
Senior Notes | 10.00% Second Lien Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |
Debentures | 9.50% Debenture | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | $ 5.2 | 5.4 |
Long-term Debt | 10.4 | 10.4 |
Debentures | 8.00% Debenture | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Total debt, fair value | 1.6 | 2 |
Long-term Debt | $ 4.4 | $ 4.4 |
Level 1 | Unsecured Debt | 5.625% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.625% | |
Level 1 | Senior Notes | 4.88% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.875% | |
Level 1 | Senior Notes | 5.75% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.75% | |
Level 1 | Senior Notes | 4.75% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 4.75% | |
Level 1 | Senior Notes | 5.50% Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 5.50% | |
Level 1 | Senior Notes | 10.00% Second Lien Senior Notes | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |
Level 2 | Debentures | 9.50% Debenture | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 9.50% | |
Level 2 | Debentures | 8.00% Debenture | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions | ||
Debt Instrument, Interest Rate, Stated Percentage | 8.00% |
Financial Instruments and Fai_7
Financial Instruments and Fair Value Measurements (Schedules of Concentration of Risk) (Details) | 3 Months Ended | 12 Months Ended | |
Mar. 27, 2020 | Mar. 29, 2019 | Dec. 27, 2019 | |
Distributor Concentration Risk | Revenue from Contract with Customer Benchmark [Member] | CuraScript, Inc | |||
Concentration Risk | |||
Concentration Risk, Percentage | 24.60% | 27.50% | |
Distributor Concentration Risk | Accounts Receivable Attributable to Distributors | Amerisource Bergen Corporation [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 31.10% | 31.30% | |
Distributor Concentration Risk | Accounts Receivable Attributable to Distributors | McKesson Corporation [Member] | |||
Concentration Risk | |||
Concentration Risk, Percentage | 18.50% | 15.30% | |
Distributor Concentration Risk | Accounts Receivable Attributable to Distributors | CuraScript, Inc | |||
Concentration Risk | |||
Concentration Risk, Percentage | 12.10% | ||
Product Concentration Risk | Net Sales Attributable to Products | Acthar | |||
Concentration Risk | |||
Concentration Risk, Percentage | 25.20% | 28.30% | |
Product Concentration Risk | Net Sales Attributable to Products | Inomax | |||
Concentration Risk | |||
Concentration Risk, Percentage | 21.30% | 19.10% | |
Product Concentration Risk | Net Sales Attributable to Products | Ofirmev | |||
Concentration Risk | |||
Concentration Risk, Percentage | 11.30% | 12.10% |
Segment Data (Schedule of Segme
Segment Data (Schedule of Segment Reporting Information by Business Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 27, 2020 | Mar. 29, 2019 | ||
Net sales | $ 665.8 | $ 790.6 | |
Operating Income (Loss) | (6.3) | 15.4 | |
Intangible asset amortization | (197.6) | (222.8) | |
Restructuring and related charges, net | 1.8 | (4.2) | |
Opioid-related litigation settlement (Note 11) | (16.8) | 0 | |
Specialty Brands | |||
Restructuring and related charges, net | 0 | (0.5) | |
Specialty Generics | |||
Restructuring and related charges, net | (0.1) | (3.5) | |
Operating Segments | |||
Operating Income (Loss) | 260.5 | 299.9 | |
Operating Segments | Specialty Brands | |||
Net sales | 490.6 | 604.2 | |
Operating Income (Loss) | 212.2 | 275.5 | |
Operating Segments | Specialty Generics | |||
Net sales | 175.2 | 186.4 | |
Operating Income (Loss) | 48.3 | 24.4 | |
Corporate, Non-Segment | |||
Corporate and unallocated expenses | [1] | (66.5) | (45.8) |
Intangible asset amortization | (197.6) | (222.8) | |
Restructuring and related charges, net | 1.8 | (4.2) | |
Separation Costs | [2] | (21.3) | (11.7) |
Opioid-related litigation settlement (Note 11) | [3] | $ 16.8 | $ 0 |
[1] | Includes administration expenses and certain compensation, legal, environmental and other costs not charged to the Company's reportable segments. | ||
[2] | These costs, which are included in SG&A expenses, primarily relate to professional fees, incremental costs incurred to build out the corporate infrastructure of the previously planned spin-off of the Company's Specialty Generics segment, costs incurred as the Company works to resolve opioid uncertainties, as well as rebranding initiatives associated with the Specialty Brands ongoing transformation. | ||
[3] | Represents the change in the Settlement Warrants' fair value. Refer to Note 12 for further information regarding the valuations of the Settlement Warrants. |
Segment Data (Schedule of Net S
Segment Data (Schedule of Net Sales from External Customers by Products) (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 27, 2020 | Mar. 29, 2019 | ||
Segment Reporting Information | |||
Net sales | $ 665.8 | $ 790.6 | |
Operating Segments | Specialty Generics | |||
Segment Reporting Information | |||
Net sales | 175.2 | 186.4 | |
Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | 490.6 | 604.2 | |
Acthar | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | 167.6 | 223.9 | |
Inomax | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | 141.7 | 151.1 | |
Ofirmev | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | 74.9 | 95.6 | |
Therakos immunotherapy | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | 63.7 | 61.8 | |
Amitiza [Member] | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | [1] | 41.1 | 53 |
BioVectra Inc [Member] | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | 12.4 | ||
Other | Operating Segments | Specialty Generics | |||
Segment Reporting Information | |||
Net sales | 4.1 | 12.1 | |
Other | Operating Segments | Specialty Brands | |||
Segment Reporting Information | |||
Net sales | [2] | 1.6 | 18.8 |
Hydrocodone (API) [Member] | Operating Segments | Specialty Generics | |||
Segment Reporting Information | |||
Net sales | 26.5 | 17.4 | |
Oxycodone (API) [Member] | Operating Segments | Specialty Generics | |||
Segment Reporting Information | |||
Net sales | 16.9 | 16.5 | |
Acetaminophen (API) [Member] | Operating Segments | Specialty Generics | |||
Segment Reporting Information | |||
Net sales | 44.1 | 46.2 | |
Other Controlled Substances [Member] | Operating Segments | Specialty Generics | |||
Segment Reporting Information | |||
Net sales | $ 83.6 | $ 94.2 | |
[1] | Amitiza consists of both product net sales and royalties. Refer to Note 2 for further details on Amitiza's revenues. | ||
[2] | The three months ended March 29, 2019 includes $12.4 million of net sales related to BioVectra prior to the completion of the sale of this business in November 2019. |
Subsequent Events Subsequent Ev
Subsequent Events Subsequent Events (Details) - Subsequent Event [Member] - USD ($) | Apr. 15, 2020 | Apr. 07, 2020 |
Ten Point Zero Percent First Lien Notes [Member] [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Interest Rate, Stated Percentage | 10.00% | |
Debt Instrument, Redemption Price, Percentage | 100.00% | |
Ten Point Zero Percent First Lien Notes [Member] [Domain] | Option A [Member] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Repurchase Percentage | 101.00% | |
Ten Point Zero Percent First Lien Notes [Member] [Domain] | Option B [Member] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Repurchase Percentage | 100.00% | |
4.88% Senior Notes | ||
Subsequent Event [Line Items] | ||
Exchange of Debt, Amount | $ 495,000,000 | |
Debt Instrument, Face Amount | 1,000 | |
Repayments of Debt | $ 119,800,000 | |
4.88% Senior Notes | Ten Point Zero Percent First Lien Notes [Member] [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Conversion, Converted Instrument, Amount | $ 1,000 | |
Maximum | Ten Point Zero Percent First Lien Notes [Member] [Domain] | ||
Subsequent Event [Line Items] | ||
Debt Instrument, Redemption Price, Percentage of Principal Amount Redeemed | 40.00% |