Q4 2012 Earnings Call Transcript

Transcript Call Date 11/09/2012

Operator: Good day, ladies and gentlemen and welcome to the Fourth Quarter 2012 Covidien Earnings Conference Call. My name is Diana and I'll be the operator for today. At this time, all participants are in a listen-only mode, later we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes.

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

Coleman N. Lannum - VP, IR: Thanks, Diana, 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 this morning as we usually do 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 on the newswires.

Now, during today's call, we will be making some forward-looking statements and it's always possible that actual results could differ materially from our current expectations. Please note that under the safe harbor rules we are under no obligation to update these forward-looking statements even if actual results or our future expectations change materially. We ask that you please refer to the cautionary statements contained in our SEC filings for a more detailed explanation of the inherent limitations of such forward-looking statements.

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

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 difficult, we believe it negatively impacted the fourth quarter 2012 sales growth rate by approximately 7 to 8 percentage points and reduced our annual growth by about 2 percentage points. We provided the sales impact at the Total Covidien level but you should not impute it at a lower level to any segment or product line as that may give you an inaccurate picture of our performance for the quarter.

For the fourth quarter, we reported GAAP diluted earnings per share of $0.96. After adjusting for certain specified items, our non-GAAP earnings came in at $1.02 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 - Chairman, President and CEO: Thanks Cole. While our reported results were negatively impacted by the extra week a year ago, we finished fiscal 2012 with a very solid performance. For the fourth quarter, sales are on plan, flat operationally and off 3% as reported. Our recent acquisitions contributed about a point of revenue growth in the quarter.

In the Medical Devices segment, we had a strong quarter, 2% operational growth led by Energy and Vascular products. In the Pharmaceuticals business, we again registered a very good performance for Specialty Pharmaceuticals paced by EXALGO. And in Supplies, reported sales were below a year ago primarily reflecting the impact of the extra week.

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