plc (NYSE: COV) today reported results for the first quarter of fiscal 2013 (October - December 2012). First-quarter net sales of $3.06 billion were 5% above the $2.90 billion reported in the comparable period a year ago. Foreign exchange rate movement lowered the quarterly sales growth rate by one percentage point.
First-quarter 2013 gross margin of 57.5% declined 1.2 percentage points from the 58.7% of the prior-year period. On an adjusted basis, excluding the specified items shown on the attached quarterly Non-GAAP reconciliations table, first-quarter 2013 gross margin of 57.5% was 1.3 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 productivity improvements.
Selling, general and administrative expenses (SG&A) for the first quarter of 2013 were above those of the same period of the year before, reflecting expenses associated with recent acquisitions, as well as spending on growth initiatives, including investments to expand the Company’s presence in emerging markets. Research and development (R&D) expense in the first quarter of 2013 represented 4.9% of net sales, versus 5.0% of sales in the first quarter of 2012.
In the first quarter of 2013, the Company reported operating income of $658 million, versus $636 million in the same period the year before. First-quarter 2013 adjusted operating income, excluding specified items on the attached table, was $686 million, compared with $705 million in the prior year. First-quarter 2013 adjusted operating income, excluding the specified items, represented 22.4% of sales, versus 24.3% of sales in the year-ago period.
The first-quarter 2013 effective tax rate was 19.2%, versus an effective tax rate of 16.7% in the first quarter of 2012. The first-quarter 2013 adjusted tax rate, excluding specified items on the attached table, was 18.0%, versus 17.4% in the first quarter last year.