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January 13, 20092 |
Forward-Looking Statements
This presentation contains certain “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward-looking and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements.The forward-looking statements in this presentation may include statements addressing the following subjects: future financial condition and operating results, economic, business, competitive and/or regulatory factors affecting our business. Any of the following factors may affect our future results:
– 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 payers and governmental
organizations– Intellectual property rights disputes– Complex and costly regulation, including healthcare fraud and abuse regulations– Manufacturing or supply chain problems or disruptions– Recalls or safety alerts and negative publicity relating to Covidien or its products– Product liability losses and other litigation liability– Rising prices for oil, gas and other commodities
January 13, 20093 |
Forward-Looking Statements (cont.)
– 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– Potential environmental liabilities– Implementation of the ongoing reorganization of our operating structure
These are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. In addition, our historical combined financial information prior to June 29, 2007 is not necessarily representative of the results we would have achieved as an independent, publicly-traded company and may not be a reliable indicator of our future results. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements whether as a result of new information, future events or otherwise. More detailed information about these and other factors is set forth in Covidien Ltd.’s Annual Report on Form 10-K and other periodic filings with the SEC.
January 13, 20094 |
June 2007 Stated “Post-Spin” Objectives
Accelerate growth in higher margin franchises and products
Continued improvement in gross margins
Grow non-U.S. sales faster than U.S. sales
Renewed focus on manufacturing improvements and company-wide quality control
Focus R&D and business development on new technologies
Manage portfolio for growth, margin and ROIC
January 13, 20095 |
Key Challenges
Become more competitive in Respiratory and Monitoring
Manage through Oxycodone ER opportunity
Increase profitability of Imaging Solutions
Determine best use of excess cash to increase shareholder value
January 13, 20097 |
Research & Development
R&D % of Sales 2.1% 2.6% 2.7% 3.0% 2.9% 3.4%
147204 221
248
341
260
2003 2004 2005 2006 2007 2008
$ Millions
Goal4 - 5% of sales
over next few years
+31%
January 13, 20098 |8 |
OptimarkEurope
RFIDInjector
Pleuraseal
Safety Dialysis
CathetersEndoClip III
VersaportBladeless
Trocar
15mmVersastep
PrevadMesh
SprayShieldEurope
SandmanPocket
ProlapseMesh
SandmanIntroCPAP
Vascuseal
LigaSureAdvance
Parietex Progrip Mesh
ParastomalMesh
FilacElectronic
Thermometers
2008 - 2009 Selected Product Launches Medical Devices
Imaging Solutions
Pharmaceutical Products
Oxy ERTaper Guard
`AbsorbaTack MicrowaveAblation
SandmanInfo, Auto
CPAP
OptistarElite
Tussicaps
2008 2009*
Seal Guard
AirwayProduct
EGIAButtress
New Suture
Next GenEGIA
Universal
Next GenEndoStitch
Next GenCollection
System
* Excludes 3 ANDA’s awaiting approval at FDA.
RapidVac
SILS™ Port
SandmanProduct
540 Ventilator
January 13, 20099 |
Recent Acquisitions
ScandiusNov 2007
TSLMar 2008
PinyonsMay 2008
CardioDigitalAug 2008
PNavelOct 2008
Expands current product offerings
Provides adjacent market opportunities
Benefits from geographic footprint
Bolsters intellectual property portfolio
Date Announced
January 13, 200911 |
Medical Devices
SurgicalLaparoscopic instruments and staplers
Focus on hernia
Expand biosurgery
EnergyForce Triad and related instruments
Expand market penetration
Tumor ablation business
January 13, 200912 |
Medical Devices
Respiratory
Improve position in monitoring
Targeted VAP initiative
Expand ventilation
Patient Care & Safety ProductsVascular compression and dialysis
Accelerate growth outside US
Healthcare-acquired infections
January 13, 200913 |
Imaging Solutions & Pharmaceutical Products
Pharmaceutical ProductsOptimize launch of oxycodone extended releaseBuild Tussicaps® businessAccelerate new products and FDA approvals
Imaging SolutionsManage supply issues in radiopharmaceuticalsExecute generic sestamibi launch
Improve operating margin
January 13, 200914 |
• Continue sales growth and market share gains in base business
• Focus on higher margin products in key growth categories
• Accelerate pace of acquisition / licensing activity
• Leverage SG&A
• Deliver savings from 2008 restructuring program
• Lower tax rate
How do we Plan to Mitigate Loss of Oxy ER in 2010?
January 13, 200916 |
Economic Environment
Unprecedented recent foreign exchange volatility
U.S. recession and global economic slowdown
Restricted credit availability
Raw material prices
January 13, 200917 |
Covidien Well Positioned
Broad product line across multiple healthcare categories
Less than 5% of revenues are considered capital equipment
Modest exposure to elective surgical procedures
Global footprint and growing non-US business
Strong balance sheet, ample cash on hand, good cash flow generation
January 13, 200918 |
Incorporation in Ireland
Announced relocation of tax residency and plan to move executive office from Bermuda to Ireland in December 2008
Incorporation requires shareholder and Bermuda court approval; shareholder vote later in 2009
No impact on 2009 guidance
January 13, 200920 |
Appendix
In connection with the Irish reorganization, Covidien intends to file with the SEC a proxy statement and mail the proxy statement to its shareholders. Shareholders are urged to read such proxy statement when it becomes available because it will contain important information. The proxy statement will be, and other documents filed or to be filed by Covidien with the SEC are or will be, available free of charge at the SEC’s web site (www.sec.gov) and at Covidien’s web site (www.covidien.com).
Covidien and its directors and executive officers and other persons may be deemed participants in the solicitation of proxies in connection with the proposed reorganization. Information about the direct or indirect interests of the participants, by security holdings or otherwise, is available in Covidien’s Annual Report on Form 10-K for the year ended September 26, 2008 and proxy statement for Covidien’s 2008 annual meeting, which were filed on November 21, 2008 and January 24, 2008, respectively, and will be available in the proxy statement to be filed in connection with the reorganization.
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