Covidien Announces Reporting Changes And Revised Revenue Guidance

Covidien plc (NYSE:COV) today provided further details regarding its previously disclosed realignment of reportable segments and announced additional changes in its revenue reporting format. These changes are designed to further align with the company’s recent reorganization and provide additional transparency of financial performance.

The new format provides a worldwide view of sales across three major product categories while enhancing geographic reporting by breaking out non-U.S. sales into new categories for emerging and non-U.S. developed markets. The company will begin using this format when it releases its fiscal first quarter 2014 results in January.

“Our new revenue reporting format more closely reflects the way we operate our business, providing our stakeholders with enhanced transparency,” said Charles J. Dockendorff, Executive Vice President & Chief Financial Officer, Covidien. “This approach underscores our continuing commitment to communicating our business results clearly and consistently.”

Highlights of new reporting structure:
  • Reportable Segments – Effective October 1, 2013, results of the Medical Supplies business in Western Europe are reflected in the Medical Devices segment, consistent with the way that business is managed.
  • Product Sales Categories – Product line sales now will be reported in the following categories:
    • Surgical Solutions – Advanced Surgical 1 and General Surgical 2
    • Vascular Therapies – Peripheral Vascular and Neurovascular
    • Respiratory & Patient Care – Patient Monitoring, Airway & Ventilation, Nursing Care and Patient Care
  • Geographic Sales Methodology – Geographic sales for the company now will be reported in the following categories, reflecting sales primarily based on customer location rather than location of the selling entity:
    • United States
    • Non-U.S. Developed Markets3
    • Emerging Markets
  • Historical Corporate Expense Allocation – Certain costs that previously were included in corporate expense, including information technology and certain shared service costs, are now reflected in the company’s reportable segments.

To assist investors, Covidien is providing certain financial data for fiscal 2013 and 2012 reflecting these changes. These changes have no impact on the consolidated results of the company’s operations. The financial data as well as supporting materials are available on the Investor Relations section of Covidien’s website: http://investor.covidien.com .

Covidien also announced revised revenue guidance for fiscal 2014. At current rates, foreign exchange is expected to reduce reported revenues by 100 to 125 basis points. All revenue guidance is presented on an “as-reported” basis and includes this expected negative impact of foreign exchange.

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