Covidien Reports Fourth-Quarter and Fiscal 2009 Results
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COV | Quote | Chart | News | PowerRating -- --Fiscal 2009 diluted GAAP earnings per share from continuing operations were $1.78; excluding specified items, adjusted diluted earnings per share from continuing operations were $2.84
--Fiscal 2010 sales guidance raised
Covidien plc (NYSE: COV | Quote | Chart | News | PowerRating) today reported results for the fourth quarter
of fiscal 2009 (July -- September 2009). Fourth-quarter net sales of $2.7
billion were essentially unchanged from those of a year ago, with
unfavorable foreign exchange of $54 million reducing the quarterly sales
growth rate by approximately 2 percentage points. The fourth-quarter
results included several one-time items as shown in the attached
quarterly Non-GAAP Reconciliations table, including income tax, legal
and environmental charges.
Excluding the comparison of $57 million in fourth-quarter 2008 sales of
oxycodone hydrochloride extended-release tablets (Oxy ER),
fourth-quarter 2009 operational growth (net sales growth excluding the
effect of foreign exchange) was 4%, driven primarily by higher volume,
new products and pricing.
Fourth-quarter 2009 gross margin of 52.8% was down 0.5 percentage points
from the prior-year period. As shown on the attached quarterly Non-GAAP
Reconciliations table, the fourth-quarter 2009 adjusted gross margin was
53.2%, up 0.9 percentage points from the 2008 adjusted gross margin. The
fourth-quarter 2009 improvement reflected positive mix in Medical
Devices and benefits from our restructuring program, partially offset by
unfavorable foreign exchange.
Selling, general and administrative expenses for the fourth quarter of
fiscal 2009 were significantly higher than those of a year ago. The 2009
expenses included planned increases in selling and marketing, as well as
one-time charges primarily related to legal and environmental matters.
These expenses were partially offset by benefits from foreign exchange.
Research and Development (R&D) expense in the quarter increased 7% from
that of the prior year and represented 4.2% of net sales.
In the fourth quarter, the Company reported operating income of $308
million, versus $555 million in the same period the year before.
Fourth-quarter 2009 adjusted operating income, excluding the specified
items shown in the attached quarterly Non-GAAP Reconciliations table,
was $538 million, versus $519 million in the fourth quarter of the
previous year. Fourth-quarter adjusted operating income, excluding the
specified items, represented 19.9% of sales, versus 19.7% a year ago.
The fourth-quarter results also included other income of $122 million
representing the impact of our tax sharing agreement, primarily
resulting from Tyco International's settlement of certain pre-separation
tax matters.
The fourth-quarter effective tax rate of 86.0% was negatively impacted
by several items, including the effect of Tyco International's
settlement of certain outstanding pre-separation tax matters with the
IRS and the write-off of a previously recognized deferred tax asset
related to the Specialty Chemicals business. Excluding the specified
items, the fourth-quarter tax rate was 27.4%.
Fourth-quarter diluted GAAP earnings per share from continuing
operations were $0.11, versus $0.84 per share in the fourth quarter of
last year. Fourth-quarter adjusted diluted earnings per share, excluding
the specified items, were $0.72, versus $0.68 a year ago.
For fiscal 2009, net sales of $10.7 billion were 3% above the $10.4
billion in the prior year, with unfavorable foreign exchange lowering
the sales growth rate by approximately 5 percentage points. Sales rose
8% in the United States, but declined 3% outside the U.S., reflecting
non-U.S. operational growth of 7% and a negative currency impact of 10%.
Total Company operational growth, excluding the impact of Oxy ER, was 5%.
The Company reported operating income of $1.9 billion in fiscal 2009,
versus $2.0 billion a year earlier. Fiscal 2009 adjusted operating
income, excluding the items specified in the attached Non-GAAP
Reconciliations table, as well as Oxy ER, was $2.08 billion, versus
$2.10 billion in the previous year. Fiscal 2009 adjusted operating
income, excluding the specified items and Oxy ER, represented 20.1% of
sales, versus 20.3% a year ago.
The effective tax rate was 51.3% for fiscal 2009. Excluding the
specified items, the adjusted tax rate was 26.3%.
For fiscal 2009, diluted GAAP earnings per share from continuing
operations were $1.78, versus $3.04 in 2008. Excluding the specified
items and Oxy ER, adjusted diluted earnings per share from continuing
operations were $2.84, versus $2.70 a year ago.
"We finished fiscal 2009 with a solid performance that was in line with
our expectations," said Richard J. Meelia, Chairman, President and CEO.
"Our 2009 results were aided by successful new product launches, market
share gains and several strategic acquisitions. We significantly
increased R&D spending, made several portfolio management moves to
strengthen our business and again generated strong cash flow.
"Looking forward to 2010, we are revising our guidance upward to reflect
the weakening of the U.S. dollar, the acquisition of Aspect Medical
Systems and the FDA's recent approval of two important new products in
our Pharmaceuticals business," Mr. Meelia added. "We are confident that
our strong pipeline of new products, aggressive cost control initiatives
and recent key strategic investments will drive our continued growth in
the coming year and beyond."
Results by business segment follow.
Medical Devices sales of $1.6 billion in the fourth quarter were
7% above the $1.5 billion in the comparable quarter of last year.
Operational growth was 9%, reflecting new products and increased volume.
Operationally, sales in Endomechanical climbed at a double-digit pace,
fueled by sharply higher sales of stapling products. The Energy
double-digit quarterly sales gain was again due to strong growth for
vessel sealing products, partially offset by a continued slowdown in
capital-related hardware products. In Soft Tissue Repair, sales of mesh
and biosurgery products again rose rapidly, but growth in the product
line was restrained by somewhat lower sales of sutures. In Airway and
Ventilation, quarterly operational sales were up slightly, driven by an
increase in ventilator sales outside the United States. Vascular sales
rose at a double-digit pace, due to the addition of VNUS and Bacchus
products, both of which surpassed our expectations, coupled with good
growth for compression products.
For fiscal 2009, Medical Devices sales were up 2% to $6.1 billion,
versus $5.9 billion a year ago. Unfavorable foreign exchange reduced the
sales growth rate by approximately 6 percentage points.
Pharmaceuticals sales of $637 million in the fourth quarter were
10% below those of the prior year's $708 million. Unfavorable foreign
exchange contributed about 2 percentage points to the decrease. In
addition, the year-ago quarter included $57 million in Oxy ER sales.
Excluding the impact of foreign exchange and Oxy ER, sales were
essentially unchanged in the fourth quarter. Sales in the quarter
benefited from a double-digit increase in radiopharmaceuticals, aided by
an improved supply situation versus the year before. Operationally,
sales of contrast products were up slightly, though growth was
restrained by continued softness for capital equipment. Sales of Active
Pharmaceutical Ingredients were little changed from those of the prior
year's fourth quarter, while Specialty Chemicals sales declined,
reflecting weakness in microelectronic chemicals. Excluding Oxy ER,
sales of Specialty Pharmaceuticals were well below those of a year ago,
due to sharply lower sales of branded products and softness for generic
products.
For fiscal 2009, Pharmaceuticals sales climbed 8%, from $2.66 billion
last year to $2.86 billion, with unfavorable foreign exchange reducing
the sales growth rate by approximately 4 percentage points. Oxy ER
contributed $354 million in 2009 and $57 million in 2008. Excluding the
impact of foreign exchange and Oxy ER, Pharmaceuticals sales in 2009
were 1% above those of the prior year.
Medical Supplies fourth-quarter sales of $433 million were 6%
below the $462 million reported in the comparable quarter of the
previous year. The decline was primarily due to lower sales of Nursing
Care, SharpSafety and OEM products. For fiscal 2009, sales of Medical
Supplies, at $1.75 billion, were 2% below last year's $1.79 billion,
with unfavorable foreign exchange reducing the sales growth rate by
approximately 2 percentage points.
During fiscal 2009, Covidien purchased approximately 6 million ordinary
shares under its previously announced share buyback program.
FISCAL 2010 OUTLOOK
Covidien has updated its fiscal 2010 guidance to reflect the recent
weakening of the U.S. dollar against most currencies, the acquisition of
Aspect Medical Systems and the FDA approvals of Oral Transmucosal
Fentanyl Citrate and Pennsaid(R). The Company now estimates
that sales in fiscal 2010 will be up 6% to 9%, including foreign
exchange at current rates and excluding Oxy ER sales from the 2009 base.
Net sales are now expected to be up 9% to 12% versus 2009 in the Medical
Devices segment and flat to up 3% in Pharmaceuticals. There is no change
to previous 2010 guidance for the Medical Supplies segment, where sales
are expected to increase 2% to 5%. Including foreign exchange at current
rates and excluding the impact of one-time items, the operating margin
is expected to be in the 20% to 21% range and the effective tax rate is
expected to be in the 21% to 23% range, both consistent with prior
guidance.
ABOUT COVIDIEN
Covidien is a leading global healthcare products company that creates
innovative medical solutions for better patient outcomes and delivers
value through clinical leadership and excellence. Covidien manufactures,
distributes and services a diverse range of industry-leading product
lines in three segments: Medical Devices, Pharmaceuticals and Medical
Supplies. With 2009 revenue in excess of $10 billion, Covidien has
42,000 employees worldwide in more than 60 countries, and its products
are sold in over 140 countries. Please visit www.covidien.com
to learn more about our business.
CONFERENCE CALL AND WEBCAST
The Company will hold a conference call for investors today, beginning
at 8:30 a.m. ET. This call can be accessed three ways:
--
At Covidien's website: http://investor.covidien.com
--
By telephone: For both "listen-only" participants and those
participants who wish to take part in the question-and-answer portion
of the call, the telephone dial-in number in the U.S. is 866-713-8310.
For participants outside the U.S., the dial-in number is 617-597-5308.
The access code for all callers is 91064338.
--
Through an audio replay: A replay of the conference call will be
available beginning at 11:30 a.m. on November 17, 2009, and ending at
5:00 p.m. on November 24, 2009. The dial-in number for U.S.
participants is 888-286-8010. For participants outside the U.S., the
replay dial-in number is 617-801-6888. The replay access code for all
callers is 58107629.
NON-GAAP FINANCIAL MEASURES
This press release contains financial measures, including operational
growth, adjusted net sales, adjusted gross margin, adjusted operating
income, adjusted earnings per share and adjusted operating margin, which
are considered "non-GAAP" financial measures under applicable Securities
& Exchange Commission rules and regulations. These non-GAAP financial
measures should be considered supplemental to and not a substitute for
financial information prepared in accordance with generally accepted
accounting principles. The Company's definition of these non-GAAP
measures may differ from similarly titled measures used by others.
The non-GAAP financial measures used in this press release adjust for
specified items that can be highly variable or difficult to predict. The
Company generally uses these non-GAAP financial measures to facilitate
management's financial and operational decision-making, including
evaluation of Covidien's historical operating results, comparison to
competitors' operating results and determination of management incentive
compensation. These non-GAAP financial measures reflect an additional
way of viewing aspects of the Company's operations that, when viewed
with GAAP results and the reconciliations to corresponding GAAP
financial measures, may provide a more complete understanding of factors
and trends affecting Covidien's business.
Because non-GAAP financial measures exclude the effect of items that
will increase or decrease the Company's reported results of operations,
management strongly encourages investors to review the Company's
consolidated financial statements and publicly filed reports in their
entirety. A reconciliation of the non-GAAP financial measures to the
most directly comparable GAAP financial measures is included in the
tables accompanying this release.
The Company presents its operating margin and effective tax rate
forecast before special items to give investors a perspective on the
expected underlying business results. Because the Company cannot predict
the amount and timing of such items and the associated charges or gains
that will be recorded in the Company's financial statements, it is
difficult to include the impact of those items in the forecast. In
addition, the Company is excluding the one-time impact of Oxy ER from
its fiscal 2009 net sales to give investors a better perspective on its
base business operations. Sales of Oxy ER is fiscal 2009 were $354
million. Given the substantial but finite nature of Oxy ER sales, the
Company believes that excluding the impact provides investors with a
better understanding of its base business operations. Including Oxy ER
and foreign exchange rates at current levels, the Company estimates that
net sales in fiscal 2010 will increase 2.5% to 5.5% versus 2009 and
sales in the Pharmaceuticals segment will be down 13% to down 10% versus
those of 2009.
FORWARD-LOOKING STATEMENTS
Any statements contained in this communication that do not describe
historical facts may constitute forward-looking statements as that term
is defined in the Private Securities Litigation Reform Act of 1995. Any
forward-looking statements contained herein are based on our
management's current beliefs and expectations, but are subject to a
number of risks, uncertainties and changes in circumstances, which may
cause actual results or Company actions to differ materially from what
is expressed or implied by these statements. The factors that could
cause actual future results to differ materially from current
expectations include, but are not limited to, our ability to effectively
introduce and market new products or keep pace with advances in
technology, the reimbursement practices of a small number of large
public and private insurers, cost-containment efforts of customers,
purchasing groups, fourth-party payers and governmental organizations,
intellectual property rights disputes, complex and costly regulation,
including healthcare fraud and abuse regulations, manufacturing or
supply chain problems or disruptions, rising commodity costs, recalls or
safety alerts and negative publicity relating to Covidien or its
products, product liability losses and other litigation liability,
including legacy Tyco-related litigation, divestitures of some of our
businesses or product lines, our ability to execute strategic
acquisitions of, investments in or alliances with other companies and
businesses, competition, risks associated with doing business outside of
the United States, foreign currency exchange rates, issues related to
our existing material weakness in accounting for income taxes or
potential environmental liabilities. These and other factors are
identified and described in more detail in our filings with the SEC. We
disclaim any obligation to update these forward-looking statements other
than as required by law.
Covidien plc
Consolidated Statements of Income
Quarters Ended September 25, 2009 and September 26, 2008
(dollars in millions, except per share data)
Quarter Ended Percent of Quarter Ended Percent of
September 25, 2009 Net Sales September 26, 2008 Net Sales
Net sales $ 2,697 100.0 % $ 2,690 100.0 %
Cost of products sold 1,273 47.2 1,257 46.7
Gross profit 1,424 52.8 1,433 53.3
Selling, general and administrative expenses 924 34.3 762 28.3
Research and development expenses 112 4.2 105 3.9
In-process research and development charges 36 1.3 - -
Restructuring charges 44 1.6 4 0.1
Shareholder settlements, net of insurance recovery - - 7 0.3
Operating income 308 11.4 555 20.6
Interest expense (44 ) (1.6 ) (45 ) (1.7 )
Interest income 5 0.2 13 0.5
Other income, net 123 4.6 3 0.1
Income from continuing operations before income taxes 392 14.5 526 19.6
Income tax expense 337 12.5 101 3.8
Income from continuing operations 55 2.0 425 15.8
Income (loss) from discontinued operations, net of income taxes 1 - (16 ) (0.6 )
Net income $ 56 2.1 $ 409 15.2
Basic earnings per share:
Income from continuing operations $ 0.11 $ 0.85
Income (loss) from discontinued operations - (0.03 )
Net income 0.11 0.81
Diluted earnings per share:
Income from continuing operations $ 0.11 $ 0.84
Income (loss) from discontinued operations - (0.03 )
Net income 0.11 0.81
Weighted-average number of shares outstanding (in millions):
Basic 501 502
Diluted 503 508
Covidien plc
Non-GAAP Reconciliations
Quarters Ended September 25, 2009 and September 26, 2008
(dollars in millions, except per share data)
Quarter Ended September 25, 2009
Sales Gross profit Gross margin percent Operating income Operating margin percent Income from continuing operations before income taxes Income from continuing operations Diluted earnings per share from continuing operations
GAAP $ 2,697 $ 1,424 52.8 % $ 308 11.4 % $ 392 $ 55 $ 0.11
Adjustments:
Reclass of discontinued operations (1) - 10 18 18 72 0.14
Legal charge (2) - - 58 58 36 0.07
Environmental charge (3) - - 53 53 32 0.06
Loss on divestiture (4) - - 21 21 17 0.03
In-process research and development charges (5) - - 36 36 36 0.07
Restructuring charges (6) - - 44 44 30 0.06
Impact of tax sharing agreement (7) - - - (122 ) (122 ) (0.24 )
Tax matters (8) - - - - 207 0.41
As adjusted $ 2,697 $ 1,434 53.2 $ 538 19.9 $ 500 $ 363 0.72
(1) Consists of incremental depreciation and
amortization expense recorded relating to the period from the first
quarter of fiscal 2008 when we classified our Specialty Chemicals
pharmaceuticals business as held for sale through the third quarter
of fiscal 2009 and the write-off of a previously recognized deferred
tax asset.
(2) Represents a legal charge associated with an
anti-trust case, which is included in selling, general and
administrative expenses.
(3) Represents the estimated additional cost to
remediate environmental matters at a site located in Orrington,
Maine.
(4) Represents charges included in selling,
general and administrative expenses for the loss on sale of Sleep
Diagnostics and the write down of Oxygen Therapy to its fair value
less cost to sell.
(5) Relates to the acquisition of Power Medical
Interventions, Inc. by our Medical Devices segment.
(6) Relates to severance costs across the Company
and impairment charges within our Pharmaceuticals segment.
(7) Represents other income recorded under our tax
sharing agreement with Tyco International and Tyco Electronics,
primarily resulting from Tyco International's settlement with the
IRS of certain outstanding tax matters in the 2001 through 2004
audit cycle.
(8) Primarily relates to an increase in income tax
liabilities resulting from the effect of Tyco International's
settlement with the IRS of certain outstanding tax matters in the
2001 through 2004 audit cycle.
Quarter Ended September 26, 2008
Sales Gross profit Gross margin percent Operating income Operating margin percent Income from continuing operations before income taxes Income from continuing operations Diluted earnings per share from continuing operations
GAAP $ 2,690 $ 1,433 53.3 % $ 555 20.6 % $ 526 $ 425 $ 0.84
Adjustments:
Restructuring charges (1) - - 4 4 1 -
Shareholder settlements, net of insurance recovery (2) - - 7 7 7 0.01
Impact of tax sharing agreement (3) - - - (12 ) (12 ) (0.02 )
Tax matters (4) - - - - (42 ) (0.08 )
As adjusted 2,690 1,433 53.3 566 21.0 525 379 0.75
Impact of Oxy ER (5) (57 ) (56 ) 98.2 (47 ) 82.5 (47 ) (34 ) (0.07 )
As adjusted, excluding impact of Oxy ER $ 2,633 $ 1,377 52.3 $ 519 19.7 $ 478 $ 345 0.68
(1) Primarily relates to severance costs within
our Pharmaceuticals and Medical Supplies segments.
(2) Represents our portion of Tyco International's
legal settlements with certain shareholders, net of our portion of
an insurance recovery.
(3) Represents the non-interest portion of the
impact of our tax sharing agreement with Tyco International and Tyco
Electronics included in other income.
(4) Primarily consists of the settlement of
certain income tax matters and adjustments to legacy income tax
liabilities, a portion of which are not subject to the tax sharing
agreement with Tyco International and Tyco Electronics.
(5) Represents the sales and direct costs
attributable to selling oxycodone hydrochloride extended-release
tablets (Oxy ER).
Covidien plc
Segment and Geographical Sales
Quarters Ended September 25, 2009 and September 26, 2008
(dollars in millions)
Quarters Ended
September 25, September 26, Percent change Percent change Operational
2009 2008 currency growth
Medical Devices
United States $ 670 $ 598 12 % - % 12 %
Non-U.S. 957 922 4 (3 ) 7
$ 1,627 $ 1,520 7 (2 ) 9
Pharmaceuticals
United States $ 434 $ 508 (15 ) % - % (15 ) %
Non-U.S. 203 200 2 (8 ) 10
$ 637 $ 708 (10 ) (2 ) (8 )
Medical Supplies
United States $ 378 $ 395 (4 ) % - % (4 ) %
Non-U.S. 55 67 (18 ) (6 ) (12 )
$ 433 $ 462 (6 ) (1 ) (5 )
Covidien plc
United States $ 1,482 $ 1,501 (1 ) % - % (1 ) %
Non-U.S. 1,215 1,189 2 (5 ) 7
$ 2,697 $ 2,690 - (2 ) 2
Covidien plc
Select Product Line Sales
Quarters Ended September 25, 2009 and September 26, 2008
(dollars in millions)
Quarters Ended
September 25, September 26, Percent change Percent change Operational
2009 2008 currency growth
Medical Devices
Endomechanical Instruments $ 521 $ 485 7 % (3 ) % 10 %
Soft Tissue Repair Products 207 208 - (4 ) 4
Energy Devices 232 213 9 (3 ) 12
Oximetry & Monitoring Products 166 158 5 - 5
Airway & Ventilation Products 212 209 1 (2 ) 3
Vascular Products 167 128 30 - 30
Pharmaceuticals
Oxycodone Hydrochloride Extended-Release Tablets $ - $ 57 (100 ) % - % (100 ) %
Other Specialty Pharmaceuticals 118 144 (18 ) - (18 )
Active Pharmaceutical Ingredients 90 95 (5 ) (4 ) (1 )
Specialty Chemicals 107 117 (9 ) (5 ) (4 )
Contrast Products 159 159 - (3 ) 3
Radiopharmaceuticals 163 136 20 (1 ) 21
Covidien plc
Consolidated Statements of Income
Fiscal Years Ended September 25, 2009 and September 26, 2008
(dollars in millions, except per share data)
Fiscal Year Ended Percent of Fiscal Year Ended Percent of
September 25, 2009 Net Sales September 26, 2008 Net Sales
Net sales $ 10,677 100.0 % $ 10,358 100.0 %
Cost of products sold 4,938 46.2 4,943 47.7
Gross profit 5,739 53.8 5,415 52.3
Selling, general and administrative expenses 3,086 28.9 2,923 28.2
Research and development expenses 438 4.1 350 3.4
In-process research and development charges 115 1.1 22 0.2
Restructuring charges 61 0.6 77 0.7
Shareholder settlements, net of insurance recoveries 183 1.7 42 0.4
Operating income 1,856 17.4 2,001 19.3
Interest expense (175 ) (1.6 ) (209 ) (2.0 )
Interest income 25 0.2 44 0.4
Other income, net 145 1.4 199 1.9
Income from continuing operations before income taxes 1,851 17.3 2,035 19.6
Income tax expense 949 8.9 498 4.8
Income from continuing operations 902 8.4 1,537 14.8
Income (loss) from discontinued operations, net of income taxes 5 - (176 ) (1.7 )
Net income $ 907 8.5 $ 1,361 13.1
Basic earnings per share:
Income from continuing operations $ 1.79 $ 3.08
Income (loss) from discontinued operations 0.01 (0.35 )
Net income 1.80 2.72
Diluted earnings per share:
Income from continuing operations $ 1.78 $ 3.04
Income (loss) from discontinued operations 0.01 (0.35 )
Net income 1.79 2.70
Weighted-average number of shares outstanding (in millions):
Basic 503 500
Diluted 505 505
Covidien plc
Non-GAAP Reconciliations
Fiscal Years Ended September 25, 2009 and September 26, 2008
(dollars in millions, except per share data)
Fiscal Year Ended September 25, 2009
Sales Gross profit Gross margin percent Operating income Operating margin percent Income from continuing operations before income taxes Income from continuing operations Diluted earnings per share from continuing operations
GAAP $ 10,677 $ 5,739 53.8 % $ 1,856 17.4 % $ 1,851 $ 902 $ 1.78
Adjustments:
Reclass of discontinued operations (1) - 5 9 9 66 0.13
Legal charges (2) - - 94 94 58 0.12
Licensing fees (3) - - 30 30 19 0.04
Environmental charge (4) - - 53 53 32 0.06
Loss on divestiture (5) - - 21 21 17 0.03
In-process research and development charges (6) - - 115 115 114 0.23
Restructuring charges (7) - - 61 61 39 0.08
Shareholder settlements (8) - - 183 183 183 0.36
Impact of tax sharing agreement (9) - - - (126 ) (126 ) (0.25 )
Tax matters (10) - - - - 389 0.77
As adjusted 10,677 5,744 53.8 2,422 22.7 2,291 1,693 3.35
Impact of Oxy ER (11) (354 ) (346 ) 97.7 (345 ) 97.5 (345 ) (259 ) (0.51 )
As adjusted, excluding impact of Oxy ER $ 10,323 $ 5,398 52.3 $ 2,077 20.1 $ 1,946 $ 1,434 2.84
(1) Consists of incremental depreciation and
amortization expense recorded relating to the period from the first
quarter of fiscal 2008 when we classified our Specialty Chemicals
pharmaceuticals business as held for sale through the end of fiscal
2008 and the write-off of a previously recognized deferred tax asset.
(2) Represents legal charges associated with three
anti-trust cases, which are included in selling, general and
administrative expenses.
(3) Consists of research and development expenses
related to up front fees and milestone payments for licensing
arrangements entered into by our Pharmaceuticals segment.
(4) Represents the estimated additional cost to
remediate environmental matters at a site located in Orrington,
Maine.
(5) Represents charges included in selling,
general and administrative expenses for the loss on sale of Sleep
Diagnostics and the write down of Oxygen Therapy to its fair value
less cost to sell.
(6) Relates to acquisitions by our Medical Devices
segment, primarily VNUS Medical Technologies, Inc. and Power Medical
Interventions, Inc.
(7) Primarily relates to severance costs across
the Company and impairment charges within our Pharmaceuticals
segment.
(8) Represents our portion of Tyco International's
legal settlements with certain shareholders and our portion of the
estimated cost to settle all of the remaining securities cases
outstanding.
(9) Represents other income recorded under our tax
sharing agreement with Tyco International and Tyco Electronics,
primarily resulting from Tyco International's settlement with the
IRS of certain outstanding tax matters in the 2001 through 2004
audit cycle.
(10) Primarily relates to an increase in income
tax liabilities resulting from the effect of Tyco International's
settlement with the IRS of certain outstanding tax matters in the
2001 through 2004 audit cycle and withholding tax incurred on
repatriated earnings.
(11) Represents the sales and direct costs
attributable to selling oxycodone hydrochloride extended-release
tablets (Oxy ER).
Fiscal Year Ended September 26, 2008
Sales Gross profit Gross margin percent Operating income Operating margin percent Income from continuing operations before income taxes Income from continuing operations Diluted earnings per share from continuing operations
GAAP $ 10,358 $ 5,415 52.3 % $ 2,001 19.3 % $ 2,035 $ 1,537 $ 3.04
Adjustments:
In-process research and development charges (1) - - 22 22 22 0.04
Restructuring charges (2) - - 77 77 60 0.12
Shareholder settlements, net of insurance recoveries (3) - - 42 42 42 0.08
Impact of tax sharing agreement (4) - - - (193 ) (193 ) (0.38 )
Tax matters (5) - - - - (70 ) (0.14 )
As adjusted 10,358 5,415 52.3 2,142 20.7 1,983 1,398 2.77
Impact of Oxy ER (6) (57 ) (56 ) 98.2 (47 ) 82.5 (47 ) (34 ) (0.07 )
As adjusted, excluding impact of Oxy ER $ 10,301 $ 5,359 52.0 $ 2,095 20.3 $ 1,936 $ 1,364 2.70
(1) Primarily relates to acquisitions by our
Medical Devices segment.
(2) Consists of restructuring charges of $59
million and related asset impairment charges of $18 million, both
primarily within our Medical Devices segment.
(3) Represents our portion of Tyco International's
legal settlements with certain shareholders, net of our portion of
insurance recoveries.
(4) Represents the non-interest portion of the
impact of our tax sharing agreement with Tyco International and Tyco
Electronics included in other income.
(5) Primarily represents the tax benefit resulting
from the establishment of a deferred tax asset related to our
Specialty Chemicals pharmaceuticals business.
(6) Represents the sales and direct costs
attributable to selling oxycodone hydrochloride extended-release
tablets (Oxy ER).
Covidien plc
Segment and Geographical Sales
Fiscal Years Ended September 25, 2009 and September 26, 2008
(dollars in millions)
Fiscal Years Ended
September 25, September 26, Percent change Percent change Operational
2009 2008 currency growth
Medical Devices
United States $ 2,528 $ 2,316 9 % - % 9 %
Non-U.S. 3,533 3,598 (2 ) (9 ) 7
$ 6,061 $ 5,914 2 (6 ) 8
Pharmaceuticals
United States $ 2,108 $ 1,885 12 % - % 12 %
Non-U.S. 756 770 (2 ) (16 ) 14
$ 2,864 $ 2,655 8 (4 ) 12
Medical Supplies
United States $ 1,534 $ 1,512 1 % - % 1 %
Non-U.S. 218 277 (21 ) (11 ) (10 )
$ 1,752 $ 1,789 (2 ) (2 ) -
Covidien plc
United States $ 6,170 $ 5,713 8 % - % 8 %
Non-U.S. 4,507 4,645 (3 ) (10 ) 7
$ 10,677 $ 10,358 3 (5 ) 8
Covidien plc
Select Product Line Sales
Fiscal Years Ended September 25, 2009 and September 26, 2008
(dollars in millions)
Fiscal Years Ended
September 25, September 26, Percent change Percent change Operational
2009 2008 currency growth
Medical Devices
Endomechanical Instruments $ 1,982 $ 1,928 3 % (6 ) % 9 %
Soft Tissue Repair Products 807 786 3 (7 ) 10
Energy Devices 867 805 8 (5 ) 13
Oximetry & Monitoring Products 636 636 - (3 ) 3
Airway & Ventilation Products 763 806 (5 ) (4 ) (1 )
Vascular Products 574 493 16 (2 ) 18
Pharmaceuticals
Oxycodone Hydrochloride Extended-Release Tablets $ 354 $ 57 521 % - % 521 %
Other Specialty Pharmaceuticals 544 525 4 - 4
Active Pharmaceutical Ingredients 405 431 (6 ) (7 ) 1
Specialty Chemicals 414 448 (8 ) (9 ) 1
Contrast Products 591 635 (7 ) (5 ) (2 )
Radiopharmaceuticals 556 559 (1 ) (4 ) 3
Covidien plc
Non-GAAP Sales Analysis
(dollars in millions)
For the Quarter Ended September 25, 2009
Net Sales for the Incremental Currency Impact Operational Growth Net Sales for the
Quarter Ended Oxy ER Impact Excluding the Impact Quarter Ended
September 25, 2009 of Oxy ER September 26, 2008
Medical Devices $ 1,627 7 % $ - - % $ (33 ) (2 ) % $ 140 9 % $ 1,520
Pharmaceuticals 637 (10 ) (57 ) (8 ) (16 ) (2 ) 2 - 708
Medical Supplies 433 (6 ) - - (5 ) (1 ) (24 ) (5 ) 462
Total Net Sales $ 2,697 - $ (57 ) (2 ) $ (54 ) (2 ) $ 118 4 $ 2,690
For the Fiscal Year Ended September 25, 2009
Net Sales for the Incremental Currency Impact Operational Growth Net Sales for the
Fiscal Year Ended Oxy ER Impact Excluding the Impact Fiscal Year Ended
September 25, 2009 of Oxy ER September 26, 2008
Medical Devices $ 6,061 2 % $ - - % $ (317 ) (6 ) % $ 464 8 % $ 5,914
Pharmaceuticals 2,864 8 297 11 (121 ) (4 ) 33 1 2,655
Medical Supplies 1,752 (2 ) - - (31 ) (2 ) (6 ) - 1,789
Total Net Sales $ 10,677 3 $ 297 3 $ (469 ) (5 ) $ 491 5 $ 10,358
SOURCE: Covidien plc
Covidien plc
Eric Kraus, 508-261-8305
Senior Vice President
Corporate Communications
eric.kraus@covidien.com
or
Coleman Lannum, CFA, 508-452-4343
Vice President
Investor Relations
cole.lannum@covidien.com
or
Bruce Farmer, 508-452-4372
Vice President
Public Relations
bruce.farmer@covidien.com
or
Brian Nameth, 508-452-4363
Director
Investor Relations
brian.nameth@covidien.com
For full details on Covidien Ltd (COV) COV. Covidien Ltd (COV) has Short Term PowerRatings at TradingMarkets. Details on Covidien Ltd (COV) Short Term PowerRatings is available at This Link.
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