NEW YORK - Saturday, September 10th 2011 [ME NewsWire]
(BUSINESS WIRE)-- Covidien (NYSE: COV), a leading global provider of healthcare products, today outlined the strengths, strategies and innovations that are expected to drive the Company’s growth in 2012 and beyond at a meeting held here for the investment community.
President and CEO José (Joe) E. Almeida spoke about the Company’s recent accomplishments, the current market environment for medical devices and the key strategic initiatives which will drive the Company’s growth over the next few years.
“We are delivering another strong performance in 2011, despite the challenging external environment, which is negatively impacting the medical device industry,” Almeida said. “We made incremental investments to ensure our future growth, delivered improved gross and operating margins, launched several meaningful new products and significantly increased research and development spending to improve our new product pipeline.
“Our key initiatives – broaden innovation focus, aggressively manage our portfolio, capitalize on emerging markets opportunities and optimize spending to provide for investments in innovation and growth – will be important drivers of our future performance,” he added. “We will use our strong cash flow to fund business expansion and remain committed to returning cash to shareholders through dividends and our recently expanded stock buyback program.”
Chief Financial Officer Charles Dockendorff provided an outlook for fiscal 2012. The Company estimates that net sales in the 2012 fiscal year will increase 3% - 5% versus 2011 net sales. Net sales are expected to increase 4% - 7% versus 2011 in the Medical Devices segment and be up 2% to up 5% in Pharmaceuticals. The Company expects sales in Medical Supplies to be about even with 2011 net sales. All sales growth rates assume current foreign exchange rates.
Excluding the impact of one-time items, the operating margin is expected to be in the 22% - 23% range. Covidien anticipates the effective tax rate will be in the 18% - 19% range for fiscal 2012, excluding the impact of one-time items. Free cash flow is expected to be in excess of $1.9 billion in 2012, excluding any legacy tax payments.
Individuals who were unable to attend the meeting in person may view a replay of the presentations at Covidien’s website: http://investor.covidien.com. Presentation materials are also available at the same website.
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 41,000 employees worldwide in more than 65 countries, and its products are sold in over 140 countries. Please visit www.covidien.com to learn more about our business.
NON-GAAP FINANCIAL MEASURES
This press release contains financial measures, including adjusted operating margin and free cash flow, 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 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.
Free cash flow is defined as net cash provided by continuing operating activities less capital expenditures.
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 and the Foreign Corrupt Practices Act, 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 and environmental remediation costs. These and other factors are identified and described in more detail in our Annual Report on Form 10-K for the fiscal year ended September 24, 2010, and in subsequent filings with the SEC. We disclaim any obligation to update these forward-looking statements other than as required by law.
Contacts
Covidien
Eric Kraus
Senior Vice President
Corporate Communications
508-261-8305
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
Todd Carpenter, 508-452-4363
Director
Investor Relations
todd.carpenter@covidien.com
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