Covidien plc (NYSE: COV) today reported results for the fourth quarter of fiscal 2012 (July - September 2012). Fourth-quarter net sales of $3.00 billion were 3% lower than the $3.08 billion reported in the fourth quarter last year. The reported quarterly sales growth rate reflected unfavorable foreign exchange rate movement, which decreased the rate by about three percentage points, and the inclusion of an extra selling week in the fourth quarter of 2011, which reduced the rate by seven to eight percentage points.
Fourth-quarter 2012 gross margin of 55.6% declined 0.9 percentage points from the 56.5% of the prior-year period. On an adjusted basis, excluding the specified items shown on the attached quarterly Non-GAAP reconciliations table, fourth-quarter 2012 gross margin of 56.5% was 0.2 percentage points below that of a year ago. The decline was largely due to unfavorable foreign exchange rate movement, partially offset by positive business mix and manufacturing cost reduction activities.
Selling, general and administrative expenses for the fourth quarter of 2012 were slightly lower than those of the comparable quarter of the year before, reflecting the additional week and higher legal charges in the year-ago period. Research and development (R&D) expense in the fourth quarter of 2012 represented 5.1% of net sales, versus 5.4% of sales in the fourth quarter a year ago.
In the fourth quarter of 2012, the Company reported operating income of $552 million, versus $596 million in the same period the year before. Fourth-quarter 2012 adjusted operating income, excluding specified items on the attached table, was $635 million, compared with $685 million in the prior year. Fourth-quarter 2012 adjusted operating income, excluding the specified items, represented 21.2% of sales, versus 22.3% of sales in the year-ago period.The fourth-quarter 2012 effective tax rate was 9.2%, versus an effective tax rate of 19.7% in the fourth quarter of 2011. The fourth-quarter 2012 adjusted tax rate, excluding specified items on the attached table, was 17.3%, versus 18.2% in the fourth quarter last year.
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