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CONVIDIEN

Covidien Reports Fourth-Quarter and Fiscal 2010 Results

2010-11-12 10:18
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  • Net sales up 3%; Medical Devices sales up 9%
  • Fourth-quarter diluted GAAP earnings per share from continuing operations were $0.77; excluding specified items, adjusted diluted earnings per share from continuing operations were $0.84, up 18%
  • Fiscal 2010 diluted GAAP earnings per share from continuing operations were $3.10; excluding specified items, adjusted diluted earnings per share from continuing operations were $3.38, up 22%

DUBLIN, Ireland--(BUSINESS WIRE)--Covidien plc (NYSE: COV) today reported results for the fourth quarter of fiscal 2010 (July - September 2010). Fourth-quarter net sales of $2.67 billion increased 3% from the $2.59 billion reported a year ago, with foreign exchange rate movement reducing the quarterly sales growth rate by approximately one percentage point.

Fourth-quarter 2010 gross margin of 54.9% rose 0.6 percentage points from the 54.3% of the prior-year period. On an adjusted basis, fourth-quarter 2010 gross margin of 56.2% was 1.9 percentage points above that of a year ago. This improvement reflected positive mix in all three business segments, portfolio moves and benefits from our restructuring program, partially offset by unfavorable foreign exchange.

Selling, general and administrative expenses for the fourth quarter of 2010 were slightly below those of the comparable quarter of the year before. Research and Development (R&D) expense in the fourth quarter climbed 18% and represented 4.7% of net sales, versus 4.1% of sales in the year-ago period.

In the fourth quarter of 2010, the Company reported operating income of $443 million, versus $314 million in the same period the year before. Fourth-quarter 2010 adjusted operating income, excluding the specified items shown on the attached quarterly Non-GAAP reconciliations table, was $547 million, compared with $526 million in the previous year. Fourth-quarter 2010 adjusted operating income, excluding the specified items, represented 20.5% of sales, versus 20.3% a year ago.

As a result of tax planning strategies implemented in the fourth quarter of 2010, the Company received a tax benefit in the quarter, versus an effective tax rate of 68.8% in the fourth quarter of 2009. The fourth-quarter 2010 adjusted tax rate, excluding specified items, was 15.3%, versus 26.7% in the fourth quarter a year earlier.

Diluted GAAP earnings per share from continuing operations were $0.77 in the fourth quarter of 2010, versus $0.25 per share in the comparable quarter last year. Fourth-quarter 2010 adjusted diluted earnings per share, excluding specified items, were $0.84, versus $0.71 a year ago, an 18% increase.

For fiscal 2010, net sales of $10.43 billion were 2% above the $10.26 billion in fiscal 2009, with favorable foreign exchange increasing the sales growth rate by approximately two percentage points. On an adjusted basis, excluding sales of oxycodone hydrochloride extended-release tablets (Oxy ER) from the 2009 base, net sales were 5% higher than those of the prior year. Favorable foreign exchange increased the sales growth rate by approximately two percentage points.

The Company reported operating income of $2.06 billion in fiscal 2010, versus $1.81 billion a year earlier. Fiscal 2010 adjusted operating income, excluding the specified items shown on the attached Non-GAAP reconciliations table, was $2.26 billion, versus $2.03 billion in the previous year, a gain of 12%. Excluding the specified items and Oxy ER in 2009, fiscal 2010 adjusted operating income represented 21.7% of sales, versus 20.4% the year before.

The effective tax rate was 18.8% for fiscal 2010, versus 47.9% in fiscal 2009. Excluding the specified items, the adjusted tax rate for 2010 was 19.5%, versus 25.9% in fiscal 2009.

For fiscal 2010, diluted GAAP earnings per share from continuing operations were $3.10, versus $1.86 for fiscal 2009. Excluding the specified items and Oxy ER in 2009, adjusted diluted earnings per share from continuing operations were $3.38, versus $2.78 a year ago, a 22% increase.

“We finished fiscal 2010 by again delivering improvement in our quarterly gross and operating margins, combined with double-digit earnings growth,” said Richard J. Meelia, Chairman, President and CEO. “This solid performance was led by our largest business segment, Medical Devices, which posted another good quarter paced by strong gains in Vascular, Oximetry & Monitoring and Energy products.

“During 2010, we made significant progress in reshaping our portfolio, acquiring Aspect, ev3 and Somanetics, all of which are meeting or exceeding our expectations. We divested the Specialty Chemicals business, U.S. nuclear pharmacies, and sleep and oxygen product lines, reallocating resources to faster growing areas of our business. We launched more than 20 new products, including Tri-Staple™, LigaSure™ 5, TaperGuard™ and EXALGO®, all of which are doing well in the marketplace,” Mr. Meelia said, adding that “Although the market environment remains challenging, we are confident that our robust pipeline of new offerings, portfolio additions and strategic investments funded by our strong cash flow will drive positive operational results in 2011 and beyond.”

BUSINESS SEGMENT RESULTS

Medical Devices sales of $1.77 billion in the fourth quarter were 9% above the $1.63 billion in the comparable quarter of last year. Operational growth (net sales growth, excluding the effect of foreign exchange) was 10%, reflecting acquisitions, new products and increased volume, partially offset by divestitures. Operationally, fourth-quarter sales in Endomechanical advanced, driven by higher sales of stapling and laparoscopic products. In Soft Tissue Repair, biosurgery and fixation both registered good growth, while sales of mesh increased, though at a slower rate than in past quarters. The Energy double-digit quarterly sales gain was again due to a sharp rise in sales of vessel sealing products. In the Oximetry & Monitoring product line, double-digit sales gains were primarily due to the Aspect acquisition. In Airway & Ventilation, sales were below those of a year ago, primarily due to the divestiture of the sleep product line, coupled with lower ventilator sales due to difficult comparisons with last year’s flu-related volume. Vascular sales climbed more than 70%, reflecting the addition of ev3 products and double-digit increases for venous insufficiency and compression products. ev3’s sales and profitability performance in the quarter exceeded our expectations and, as a result, the acquisition was only slightly dilutive to earnings per share.

For fiscal 2010, Medical Devices sales rose 11% to $6.72 billion from $6.06 billion in the prior year. Favorable foreign exchange contributed approximately three percentage points to the increase.

Pharmaceuticals sales of $465 million in the fourth quarter were down 12% from last year’s fourth-quarter sales of $530 million. The decline primarily reflected the sale of the U.S. nuclear pharmacies business in the third quarter, coupled with a sales decline in Specialty Pharmaceuticals. Fourth-quarter sales of Contrast Products were above those of a year ago, primarily due to customer order patterns. Sales of Active Pharmaceutical Ingredients in the quarter increased somewhat from the year-before level, in part due to higher narcotic product sales. In Specialty Pharmaceuticals, generic sales declined, reflecting increased competitive activity which drove lower pricing versus a year ago. Compared with the third quarter 2010, however, generic pricing stabilized. In branded pharmaceuticals, sales of EXALGO and PENNSAID® did not offset a significant decline for Restoril and Tofranil that was related to competition from generics. Excluding the divestiture of the U.S. nuclear pharmacies business, sales of Radiopharmaceuticals were below those of a year ago, partially due to lower thallium sales.

Pharmaceuticals sales of $1.99 billion in fiscal 2010 decreased 5% from last year’s $2.10 billion.

Medical Supplies fourth-quarter sales of $432 million were essentially unchanged from the $433 million reported in the comparable quarter of the previous year, as increased sales of Nursing Care and OEM products offset lower sales of Medical Surgical and SharpSafety products. For fiscal 2010, sales of Medical Supplies, at $1.72 billion, were 2% below last year’s $1.75 billion.

In the fourth quarter of 2010, Covidien purchased approximately 6.6 million ordinary shares under its previously announced share buyback program.

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 2010 revenue of $10.4 billion, Covidien has approximately 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 800-659-2056. For participants outside the U.S., the dial-in number is 617-614-2714. The access code for all callers is 67108093.
  • Through an audio replay: A replay of the conference call will be available beginning at 11:30 a.m. on November 9, 2010, and ending at 5:00 p.m. on November 16, 2010. 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 25423270.

NON-GAAP FINANCIAL MEASURES

This press release contains financial measures, including operational growth, adjusted net sales, 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 excludes 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 in 2009 were $354 million.

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, third-party payors 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, 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 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 24, 2010 and September 25, 2009
(dollars in millions, except per share data)
           
 
Quarter Ended
September 24, 2010
Percent of
Net Sales
Quarter Ended
September 25, 2009
Percent of
Net Sales
 
Net sales $ 2,670 100.0 % $ 2,590 100.0 %
Cost of goods sold   1,203   45.1   1,183   45.7
Gross profit 1,467 54.9 1,407 54.3
 
Selling, general and administrative expenses 878 32.9 906 35.0
Research and development expenses 126 4.7 107 4.1
Restructuring charges 20 0.7 44 1.7
In-process research and development charge   -   -   36   1.4
Operating income 443 16.6 314 12.1
 
Interest expense (59 ) (2.2 ) (44 ) (1.7 )
Interest income 5 0.2 4 0.2
Other (expense) income, net   (9 ) (0.3 )   123   4.7
Income from continuing operations before income taxes 380 14.2 397 15.3
 
Income tax (benefit) expense   (8 ) (0.3 )   273   10.5
Income from continuing operations 388 14.5 124 4.8
 
Income (loss) from discontinued operations, net of income taxes   55   2.1   (68 ) (2.6 )
Net income $ 443   16.6 $ 56   2.2
 
Basic earnings per share:
Income from continuing operations $ 0.78 $ 0.25
Income (loss) from discontinued operations 0.11 (0.14 )
Net income 0.89 0.11
 
Diluted earnings per share:
Income from continuing operations $ 0.77 $ 0.25
Income (loss) from discontinued operations 0.11 (0.14 )
Net income 0.89 0.11
 
Weighted-average number of shares outstanding (in millions):
Basic 499 501
Diluted 501 503
 
 
Covidien plc
Non-GAAP Reconciliations
Quarters Ended September 24, 2010 and September 25, 2009
(dollars in millions, except per share data)
                           
Quarter Ended September 24, 2010
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 $ 2,670 $ 1,467 54.9 % $ 443 16.6 % $ 380 $ 388 $ 0.77
Adjustments:
Transaction costs (1) - 33 59 61 47 0.09
Loss on divestitures (2) - - 25 25 14 0.03
Restructuring charges (3) - - 20 20 15 0.03
Impact of tax sharing agreement (4) - - - 11 11 0.02
Tax matters (5)   -   -   -   -     (54 ) (0.11 )
As adjusted $ 2,670 $ 1,500 56.2 $ 547 20.5 $ 497   $ 421   0.84
 
 
 
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 $ 2,590 $ 1,407 54.3 % $ 314 12.1 % $ 397 $ 124 $ 0.25
Adjustments:
Loss on divestitures (2) - - 21 21 17 0.03
Legal charge (6) - - 58 58 36 0.07
Environmental charge (7) - - 53 53 32 0.06
Restructuring charges (3) - - 44 44 30 0.06
In-process research and development charge (8) - - 36 36 36 0.07
Impact of tax sharing agreement (9) - - - (122 ) (122 ) (0.24 )
Tax matters (10)   -   -   -   -     204   0.41
As adjusted $ 2,590 $ 1,407 54.3 $ 526 20.3 $ 487   $ 357   0.71
 
 
 
(1) Represents transaction costs associated with the acquisitions of ev3, Inc. and Somanetics Corporation, including charges in cost of goods sold related to ev3 inventory that had been written up to fair value upon acquisition and financing fees included in interest expense.
 
(2) Represents the net loss on the sale of businesses included in selling, general and administrative expenses.
 
(3) Primarily relates to employee severance and benefits.
 
(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 consists of a one-time release of a non-U.S. valuation allowance due to tax planning strategies implemented in the fourth quarter 2010 and adjustments to income tax liabilities, a portion of which are not subject to the tax sharing agreement with Tyco International and Tyco Electronics.
 
(6) Represents a legal charge related to the settlement of an anti-trust case included in selling, general and administrative expenses.
 
(7) Represents the estimated additional cost to remediate environmental matters at a site in Orrington, Maine.
 
(8) Relates to the acquisition of Power Medical Interventions by our Medical Devices segment.
 
(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.
                 
 
Covidien plc
Segment and Geographical Sales
Quarters Ended September 24, 2010 and September 25, 2009
(dollars in millions)
 
Quarters Ended
September 24,

2010

  September 25,

2009

Percent change

 

Currency
impact

   

Operational
growth (1)

 
 
Medical Devices
United States $ 804 $ 670 20 % - % 20 %
Non-U.S.   969   957 1 (1 ) 2
$ 1,773 $ 1,627 9 (1 ) 10
 
Pharmaceuticals
United States $ 315 $ 369 (15 ) % - % (15 ) %
Non-U.S.   150   161 (7 ) (4 ) (3 )
$ 465 $ 530 (12 ) (1 ) (11 )
 
Medical Supplies
United States $ 384 $ 378 2 % - % 2 %
Non-U.S.   48   55 (13 ) (8 ) (5 )
$ 432 $ 433 - (1 ) 1
 
Covidien plc
United States $ 1,503 $ 1,417 6 % - % 6 %
Non-U.S.   1,167   1,173 (1 ) (2 ) 1
$ 2,670 $ 2,590 3 (1 ) 4

(1) Operational growth, a non-GAAP financial measure, measures the change in sales between current and prior year periods using a constant currency, the exchange rate in effect during the applicable prior year period. See description of non-GAAP financial measures contained in this release.

               
 
Covidien plc
Select Product Line Sales
Quarters Ended September 24, 2010 and September 25, 2009
(dollars in millions)
 
Quarters Ended

September 24,
2010

September 25,
2009

Percent change

Currency
impact

Operational
growth (1)

 
Medical Devices
Endomechanical Instruments $ 535 $ 521 3 % (1 ) % 4 %
Soft Tissue Repair Products 213 207 3 (2 ) 5
Energy Devices 259 232 12 (1 ) 13
Oximetry & Monitoring Products 192 166 16 (1 ) 17
Airway & Ventilation Products 185 212 (13 ) (1 ) (12 )
Vascular Products 289 167 73 2 71
 
Pharmaceuticals
Specialty Pharmaceuticals $ 100 $ 118 (15 ) % - % (15 ) %
Active Pharmaceutical Ingredients 93 90 3 - 3
Contrast Products 167 159 5 (2 ) 7
Radiopharmaceuticals 105 163 (36 ) (2 ) (34 )

(1) Operational growth, a non-GAAP financial measure, measures the change in sales between current and prior year periods using a constant currency, the exchange rate in effect during the applicable prior year period. See description of non-GAAP financial measures contained in this release.

 

             
 

Covidien plc

Consolidated Statements of Income
Fiscal Years Ended September 24, 2010 and September 25, 2009
(dollars in millions, except per share data)
 
 

Fiscal Year Ended
September 24, 2010

Percent of
Net Sales
Fiscal Year Ended
September 25, 2009
Percent of
Net Sales
 
Net sales $ 10,429 100.0 % $ 10,263 100.0 %
Cost of goods sold   4,624 44.3   4,622 45.0
Gross profit 5,805 55.7 5,641 55.0
 
Selling, general and administrative expenses 3,219 30.9 3,042 29.6
Research and development expenses 447 4.3 427 4.2
Restructuring charges 76 0.7 61 0.6
Shareholder settlements - - 183 1.8
In-process research and development charges   - -   115 1.1
Operating income 2,063 19.8 1,813 17.7
 
Interest expense (199 ) (1.9 ) (175 ) (1.7 )
Interest income 22 0.2 24 0.2
Other income, net   40 0.4   145 1.4
Income from continuing operations before income taxes 1,926 18.5 1,807 17.6
 
Income tax expense   363 3.5   865 8.4
Income from continuing operations 1,563 15.0 942 9.2
 
Income (loss) from discontinued operations, net of income taxes   69 0.7   (35 ) (0.3 )
Net income $ 1,632 15.6 $ 907 8.8
 
Basic earnings per share:
Income from continuing operations $ 3.13 $ 1.87
Income (loss) from discontinued operations 0.14 (0.07 )
Net income 3.26 1.80
 
Diluted earnings per share:
Income from continuing operations $ 3.10 $ 1.86
Income (loss) from discontinued operations 0.14 (0.07 )
Net income 3.24 1.79
 
Weighted-average number of shares outstanding (in millions):
Basic 500 503
Diluted 504 505
                               
 
Covidien plc
Non-GAAP Reconciliations
Fiscal Years Ended September 24, 2010 and September 25, 2009
(dollars in millions, except per share data)
 
Fiscal Year Ended September 24, 2010
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 $ 10,429 $ 5,805 55.7 % $ 2,063 19.8 % $ 1,926 $ 1,563 $ 3.10
Adjustments:
Transaction costs (1) - 33 64 77 63 0.13
Loss on divestitures (2) - - 25 25 14 0.03
Legal charge (3) - - 33 33 20 0.04
Restructuring charges (4) - - 76 76 56 0.11
Impact of tax sharing agreement (5) - - - (21 ) (21 ) (0.04 )
Tax matters (6)   -     -     -     -     8   0.02
As adjusted $ 10,429   $ 5,838   56.0 $ 2,261   21.7 $ 2,116   $ 1,703   3.38
 
 
 
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 $ 10,263 $ 5,641 55.0 % $ 1,813 17.7 % $ 1,807 $ 942 $ 1.86
Adjustments:
Loss on divestitures (2) - - 21 21 17 0.03
Legal charges (3) - - 94 94 58 0.12
Licensing fees (7) - - 30 30 19 0.04
Environmental charge (8) - - 53 53 32 0.06
Restructuring charges (4) - - 61 61 39 0.08

Shareholder settlements (9)

-

-

183

183

183

0.36

In-process research and development charges (10)

- - 115 115 114 0.23
Impact of tax sharing agreement (11) - - - (126 ) (126 ) (0.25 )
Tax matters (12)   -     -     -     -     384   0.76
As adjusted 10,263 5,641 55.0 2,370 23.1 2,238 1,662 3.29
Impact of Oxy ER (13)   (354 )   (346 ) 97.7   (345 ) 97.5   (345 )   (259 ) (0.51 )
As adjusted, excluding impact of Oxy ER $ 9,909   $ 5,295   53.4 $ 2,025   20.4 $ 1,893   $ 1,403   2.78
 
 
 
(1) Represents transaction costs associated with the acquisitions of ev3, Inc. and Somanetics Corporation, including charges in cost of goods sold related to ev3 inventory that had been written up to fair value upon acquisition and financing fees included in interest expense.
 
(2) Represents the net loss on the sale of businesses included in selling, general and administrative expenses.
 

(3) Represents legal charges related to the settlement of anti-trust cases included in selling, general and administrative expenses.

 
(4) Primarily relates to employee severance and benefits.
 
(5) Represents the non-interest portion of the impact of our tax sharing agreement with Tyco International and Tyco Electronics included in other income.
 
(6) Primarily consists of adjustments to income tax liabilities, a portion of which are not subject to the tax sharing agreement with Tyco International and Tyco Electronics, partially offset by a one-time release of a non-U.S. valuation allowance due to tax planning strategies implemented in the fourth quarter 2010.
 
(7) Consists of research and development expenses related to up front fees and milestone payments for licensing arrangements entered into by our Pharmaceuticals segment.
 
(8) Represents the estimated additional cost to remediate environmental matters at a site in Orrington, Maine.
 

(9) 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.

 

(10) Relates to acquisitions by our Medical Devices segment, primarily VNUS Medical Technologies, Inc.

 
(11) 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.
 
(12) 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.
 
(13) 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 24, 2010 and September 25, 2009
(dollars in millions)
 
Fiscal Years Ended

September 24,
2010

September 25,
2009

Percent change

Currency
impact

Operational
growth (1)

 
Medical Devices
United States $ 2,839 $ 2,528 12 % - % 12 %
Non-U.S.   3,876   3,533 10 5 5
$ 6,715 $ 6,061 11 3 8
 
Pharmaceuticals
United States $ 1,372 $ 1,509 (9 ) % - % (9 ) %
Non-U.S.   619   587 5 3 2
$ 1,991 $ 2,096 (5 ) 1 (6 )
 
Medical Supplies
United States $ 1,514 $ 1,534 (1 ) % - % (1 ) %
Non-U.S.   209   218 (4 ) 1 (5 )

 

$ 1,723 $ 1,752 (2 ) - (2 )
 

Net sales of reportable segments

United States $ 5,725 $ 5,571 3 % - % 3 %
Non-U.S.   4,704   4,338 8 4 4
$ 10,429 $ 9,909 5 2 3
 
Sales of Oxy ER
United States $ - $ 354 (100 ) % - % (100 ) %
 
Covidien plc
United States $ 5,725 $ 5,925 (3 ) % - % (3 ) %
Non-U.S.   4,704   4,338 8 4 4
$ 10,429 $ 10,263 2 2 -

(1) Operational growth, a non-GAAP financial measure, measures the change in sales between current and prior year periods using a constant currency, the exchange rate in effect during the applicable prior year period. See description of non-GAAP financial measures contained in this release.

               
 
Covidien plc
Select Product Line Sales
Fiscal Years Ended September 24, 2010 and September 25, 2009
(dollars in millions)
 
Fiscal Years Ended

September 24,
2010

September 25,
2009

Percent change

Currency
impact

Operational
growth (1)

 
Medical Devices
Endomechanical Instruments $ 2,139 $ 1,982 8 % 3 % 5 %
Soft Tissue Repair Products 854 807 6 3 3
Energy Devices 992 867 14 2 12
Oximetry & Monitoring Products 755 636 19 2 17
Airway & Ventilation Products 770 763 1 3 (2 )
Vascular Products 810 574 41 3 38
 
Pharmaceuticals
Specialty Pharmaceuticals $ 473 $ 544 (13 ) % -

%

(13 ) %
Active Pharmaceutical Ingredients 395 405 (2 ) 1 (3 )
Contrast Products 604 591 2 2 -
Radiopharmaceuticals 519 556 (7 ) - (7 )

(1) Operational growth, a non-GAAP financial measure, measures the change in sales between current and prior year periods using a constant currency, the exchange rate in effect during the applicable prior year period. See description of non-GAAP financial measures contained in this release.

Contacts

Covidien plc
Eric Kraus, 508-261-8305
Senior Vice President
Corporate Communications
eric.kraus@covidien.com
or
Bruce Farmer, 508-452-4372
Vice President
Public Relations
bruce.farmer@covidien.com
or
Coleman Lannum, CFA, 508-452-4343
Vice President
Investor Relations
cole.lannum@covidien.com
or
Brian Nameth, 508-452-4363
Director
Investor Relations
brian.nameth@covidien.com