http://www.morningstar.com/earnings/32477675-covidien-plc-cov-q4-2011.aspx

Covidien PLC COV
Q4 2011 Earnings Call Transcript

Transcript Call Date 11/15/2011

Operator: Good day, ladies and gentlemen and welcome to the Fourth Quarter 2011 Covidien plc Earnings Conference Call. My name is Kammin. I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will have a question-and-answer session at the end of prepared remarks. As a reminder, this call is being recorded.

I would now like to turn the call over to your host for today's conference, Mr. Cole Lannum, Vice President, Investor Relations. Please proceed, Mr. Lannum.

Coleman N. Lannum - VP, IR: Thanks, Kim, and good morning everyone. With me today are Joe Almeida, Covidien's President and CEO and Chuck Dockendorff, our Chief Financial Officer.

We will be making some brief, brief introductory comments and then spend most of the time as usual this morning answering your questions. The press release with details of our fourth quarter results was issued earlier this morning and is available on our website and the newswires.

Now, during today's call, we'll make some forward-looking statements and it's always possible that actual results could differ materially from our current expectations. We ask that you please refer to the cautionary statements contained in our SEC filings for more detailed explanation of the inherent limitations of such forward-looking statements.

We'll also discuss some non-GAAP financial measures with respect to our performance. A reconciliation of non-GAAP to GAAP measures can be found in our press release and in its related financial tables, as well as in the Investor Relations section of our website, covidien.com.

As a reminder, the fourth quarter of 2011 included an extra selling week, a phenomenon that occurs once every five or six years for us. While exact quantification of the impact of the extra week is extremely difficult, we believe it added approximately 7 to 8 percentage points to the quarterly sales growth rate of the Company as a whole, and about 2 percentage points to our annual sales growth.

We provided the sales impact to the total Covidien level, which should not imputed at a lower level to any segment or product line as that may give you an inadequate picture of our performance. After the call offline, both Todd and I will be more than happy to take you through these details mathematically on a case-by-case basis.

The fourth quarter, we reported GAAP diluted earnings per share of $0.93. After adjusting for certain specified items, our non-GAAP earnings came in at $1.08 per share.

Now, I'll turn it over to Joe, who'll go into more detail on the fourth quarter results. Joe?

Jose E. Almeida - President and CEO: Thank, Cole. We had strong finish to fiscal 2011, as sales came in slightly above our expectations. We again improved our gross and operating margins, and we delivered an exceptional 29% increase in adjusted EPS in the quarter. This is the fifth quarter in a row that we have exceeded our internal expectations on the bottom line.

In the Medical Devices segment, we had another solid quarter with broad-based growth led by Vascular, Energy and Stapling products. Quarterly sales improved in our pharmaceuticals business for the first time since the first quarter of 2010, based by outstanding growth for specialty products. In Supplies, all four product line advanced lead by incontinence, enteral feeding and electrodes.

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