2020 IRISH STATUTORY ACCOUNTS

MALLINCKRODT PLC

Directors' Report and Consolidated Financial Statements

For the Fiscal Year Ended December 25, 2020

MALLINCKRODT PLC

TABLE OF CONTENTS

Directors' Report

4

Directors' Responsibilities Statement

52

Independent Auditor's Report - Group

53

Consolidated Profit and Loss Account

59

Consolidated Statement of Other Comprehensive Loss

60

Consolidated Balance Sheet

61

Consolidated Statement of Cash Flows

62

Consolidated Statement of Changes in Equity

63

Notes to Consolidated Financial Statements

64

Independent Auditor's Report - Company

134

Company Balance Sheet

139

Company Statement of Changes in Equity

140

Notes to Company Financial Statements

141

DIRECTORS' REPORT

For the Fiscal Year Ended December 25, 2020

(dollars in millions, except share data and where indicated)

Basis of Presentation

The directors present their report on the audited consolidated financial statements for the fiscal year ended December 25, 2020, beginning on page 52, and audited parent company financial statements for the fiscal year ended December 25, 2020, beginning on page 133.

The directors have elected to prepare the Irish statutory Mallinckrodt plc consolidated financial statements in accordance with Section 279 of the Irish Companies Act 2014, which provides that a true and fair view of the assets and liabilities, financial position and profit or loss may be given by preparing the financial statements in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") to the extent that the use of those principles in the preparation of the financial statements does not contravene any provision of Part 6 of the Irish Companies Act 2014.

The directors have elected to prepare the Mallinckrodt plc parent company financial statements in accordance with Financial Reporting Standards applicable in the United Kingdom ("U.K.") and Republic of Ireland ("FRS 102") together with the Irish Companies Act 2014.

The accompanying financial statements reflect the consolidated financial position of the parent company ("Mallinckrodt plc" or "the Company") and its subsidiaries (Mallinckrodt plc and all its subsidiaries, hereinafter referred to as "Mallinckrodt," "the Group," "us," "we," or "our") as an independent, publicly-traded company.

Fiscal Year

We report our results based on a "52-53 week" year ending on the last Friday of December. Fiscal 2020 and 2019 both consisted of 52 weeks and ended on December 25, 2020, and December 27, 2019, respectively. All references to "fiscal" year are considered to be defined as "financial" year under FRS 102.

Trademarks and Trade Names

Mallinckrodt owns or has rights to use trademarks and trade names that it uses in conjunction with the operation of its business. One of the more important trademarks that it owns or has rights to use that appears in this Directors' Report is "Mallinckrodt," which is a registered trademark or the subject of pending trademark applications in the U.S. and other jurisdictions. Solely for convenience, we only use the ™ or ® symbols the first time any trademark or trade name is mentioned. Such references are not intended to indicate in any way that we will not assert, to the fullest extent permitted under applicable law, our rights to our trademarks and trade names. Each trademark or trade name of any other company appearing in this Directors' Report is, to our knowledge, owned by such other company.

Forward-Looking Statements

We have made forward-looking statements in this Directors' Report that are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, information concerning our possible or assumed future results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements and the effects of competition, litigation and future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "plan," "intend," "project," "anticipate," "estimate," "predict," "potential," "continue," "may," "should" or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not place undue reliance on any forward-looking statements.

The principal risks and uncertainties included in this Directors' Report could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business.

These forward-looking statements are made as of the issuance date of this Directors' Report. We expressly disclaim any obligation to update these forward-looking statements other than as required by law.

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Principal Activities

Mallinckrodt plc is the parent company of a global business consisting of multiple wholly owned subsidiaries whose principal activity is to 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.

We continue to pursue our ongoing transformation to become an innovation-driven biopharmaceutical company focused on improving outcomes for underserved patients with severe and critical conditions.

The Group is incorporated in Ireland where we maintain our principal executive offices and continues to be subject to the United States ("U.S.") Securities and Exchange Commission ("SEC") reporting requirements.

Significant Events

Voluntary Filing Under Chapter 11 and Going Concern

Chapter 11 Proceedings

On October 12, 2020 (the "Petition Date"), Mallinckrodt plc and certain of its subsidiaries voluntarily initiated proceedings (the "Chapter 11 Cases") under chapter 11 of title 11 ("Chapter 11") of the United States Code (the "Bankruptcy Code") to modify our capital structure, including restructuring portions of our debt, and to resolve potential legal liabilities, including but not limited to a proposed resolution of all opioid-related claims against us (the "Amended Proposed Opioid-Related Litigation Settlement") and a proposed resolution of various Acthar® Gel (repository corticotropin injection) ("Acthar Gel")-related matters (the "Proposed Acthar Gel-Related Settlement"), including the Medicaid lawsuit with the Centers for Medicare and Medicaid Services ("CMS"), an associated False Claims Act ("FCA") lawsuit in Boston and an Eastern District of Pennsylvania ("EDPA") FCA lawsuit relating to Acthar Gel's previous owner's interactions with an independent charitable foundation. The entities that filed the Chapter 11 Cases include Mallinckrodt plc, substantially all of our U.S. subsidiaries, including certain subsidiaries of Mallinckrodt plc operating the Specialty Generics business (the "Specialty Generics Subsidiaries") and the Specialty Brands business (the "Specialty Brands Subsidiaries"), and certain of our international subsidiaries (together with Mallinckrodt plc, Specialty Generics Subsidiaries and Specialty Brands Subsidiaries, the "Debtors"). In connection with the filing of the Chapter 11 Cases, we entered into a restructuring support agreement (as amended, supplemented or otherwise modified, "Restructuring Support Agreement" or "RSA") as part of a prearranged plan of reorganization. Refer to Note 2 of the Notes to the Consolidated Financial Statements for further information on the voluntary petitions for reorganization, the RSA and subsequent joinders and an amendment thereto. We are continuing to operate our business as debtors-in-possession and supply customers and patients with products as normal.

On October 27, 2020, the U.S. Trustee for the District of Delaware appointed an official committee of unsecured creditors and an official committee of opioid-related claimants pursuant to section 1102 of the Bankruptcy Code. Generally, these statutory committees and their legal representatives have a right to be heard on all matters that come before the Bankruptcy Court with respect to the Chapter 11 Cases.

To assure ordinary course operations, we received Bankruptcy Court approval of our customary motions filed on the Petition Date ("First Day Motions") on an interim basis seeking court authorization to continue to support our business operations during the Chapter 11 Cases, including the continued payment of employee wages and benefits without interruption, payment of critical and foreign vendors, continuation of customer programs, continuation of use of existing cash management programs and allowance of certain financing payments under a cash collateral order. The First Day Motions were subsequently approved by the Bankruptcy Court on a final basis at hearings.

We intend to use the Chapter 11 process to provide a fair, orderly, efficient and legally binding mechanism to implement a RSA pursuant to which, among other things, the parties thereto have agreed to support:

  • a financial restructuring that would, among other things, reduce our total debt by approximately $1,300.0 million, improving our financial position and better positioning us for long-term growth;
  • the Amended Proposed Opioid-Related Litigation Settlement; and
  • the Proposed Acthar Gel-Related Settlement.

Taken together, these actions are intended to enable us to move forward with our vision to become an innovation-driven biopharmaceutical company meeting the needs of underserved patients with severe and critical conditions.

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Mallinckrodt plc published this content on 04 May 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 May 2021 14:10:09 UTC.