Covidien Reports Second-Quarter 2008 Results

06/05/2008 - 13:20

Covidien Ltd. (NYSE: COV; BSX: COV) today reported results for the

second quarter of fiscal 2008 (January "â€œ March 2008). Second-quarter net sales rose 10% to $2.4 billion from $2.2

billion a year ago, fueled by strong growth in the Medical Devices and

Imaging Solutions business segments. Sales growth was driven by higher

volume and new products. Favorable foreign exchange contributed 5

percentage points to the sales increase. International markets, paced by

Europe, Other Americas and Japan, generated strong double-digit sales

gains.
Second-quarter gross margin of 52.4% was up 1 percentage point from that

of the prior year. This substantial improvement reflected positive mix

in our established business and favorable foreign exchange.
Selling, general and administrative expenses were significantly higher

than in the second quarter of last year. The increase was attributable

to planned growth in selling and marketing investments, foreign exchange

and higher administrative costs. Research and Development (R&D) expense

in the quarter was up 19% over the prior year and represented 3.1% of

sales.
For the second quarter, the Company reported operating income of $405

million, versus $484 million a year ago. Excluding restructuring and

asset impairment charges and charges for Covidien´s

portion of a Tyco International shareholder settlement, adjusted

operating income was $500 million in the second quarter of 2008, versus

$488 million in the prior year. Second-quarter 2008 adjusted operating

income represented 20.6% of sales, versus 22.2% in the second quarter of

2007.
The second-quarter effective tax rate was 30.8%. Excluding the specified

items shown in the attached table, the second-quarter tax rate was

27.0%. The rate was favorably impacted by a greater proportion of income

realized in lower tax jurisdictions as a result of favorable foreign

exchange rates. In addition, the tax rate benefited from reduced

interest rates on accrued tax liabilities.
Second-quarter diluted GAAP earnings per share from continuing

operations were $0.49, versus $0.76 in the second quarter last year. The

second quarter of 2008 included the following items: decreases of $0.11

for restructuring and asset impairment charges and $0.06 for Covidien´s

portion of a Tyco International shareholder settlement. Excluding these

items, diluted earnings per share from continuing operations were $0.66

versus $0.68 a year ago.
For the first six months of fiscal 2008, net sales of $4.7 billion were

10% above the $4.3 billion in the prior year, with favorable foreign

exchange contributing 5 percentage points to the sales increase. Sales

rose 3% in the United States and 18% outside the U.S., with double-digit

increases in all international regions.
The Company reported operating income of $860 million in the first six

months of fiscal 2008 versus $960 million a year ago. The 2008 operating

income for the first six months included charges of $69 million for

restructuring and asset impairments, $31 million for Covidien´s

portion of a Tyco International shareholder settlement and $12 million

for in-process R&D. Excluding these charges, operating income would have

been $972 million, representing 20.5% of sales.
The effective tax rate was 26.7% for the first six months of fiscal

2008. Excluding the specified items shown in the attached table, the tax

rate for the six months 2008 was 29.4%.
For the first six months of 2008, diluted GAAP earnings per share from

continuing operations of $1.38 included the following items: an increase

of $0.34 from the Tax Sharing Agreement and decreases of $0.11 for

restructuring and asset impairment charges, $0.06 for Covidien´s

portion of a Tyco International shareholder settlement, $0.02 for

in-process R&D charges and $0.01 for other tax matters that impacted the

effective tax rate. Excluding these items, diluted earnings per share

from continuing operations were $1.24.
"We are pleased with our second quarter

operational results, which met our expectations, though earnings

benefited from a lower than expected tax rate," said President and Chief Executive Officer Richard J. Meelia. "The

quarter featured another strong performance for Medical Devices, aided

by favorable foreign exchange, and for Imaging Solutions, which reported

double-digit operational sales growth. As a result, we are raising our

sales guidance for fiscal 2008.
"During the quarter, we again saw the benefit

of our earlier investments in selling, marketing and R&D. Our sales

growth rate accelerated significantly, particularly outside the U.S.

and we launched a number of meaningful new products," Mr. Meelia said, adding that "Following the

close of the quarter, we completed the previously announced divestiture

of the Retail Products business."
Results by business segment follow.
Medical Devices sales climbed 12% in the second quarter to $1.7

billion from $1.5 billion in the second quarter of the previous year.

The sales gain was driven by favorable foreign exchange, which

contributed 6 percentage points to the increase, as well as by new

products and higher volume. Sales in Endomechanical were well above

those of a year ago, paced by higher sales in both the United States and

Europe. Energy registered strong double-digit growth in the quarter, due

to higher sales of vessel sealing and new products, including LigaSure

Impact and Hand Switching Atlas. Sales in Soft Tissue Repair were up

significantly, aided by a strong U.S. performance for mesh and

biosurgery products.
For the first six months of fiscal 2008, Medical Devices sales grew 12%

to $3.3 billion from $2.9 billion a year ago. Favorable foreign exchange

contributed 7 percentage points to the sales advance.
Imaging Solutions sales rose 17% to $304 million, compared

with $259 million in the prior year´s second

quarter. Favorable foreign exchange contributed 5 percentage points to

the sales increase. Sales growth was broad-based, as both

Radiopharmaceuticals and Contrast Products delivered gains at a strong

double-digit pace in the quarter. The Radiopharmaceutical increase was

aided by favorable comparisons due to last year´s

product recall, while Contrast Products benefited from higher volume in

the U.S. and Asia, which more than offset pricing pressures in the U.S.
For the six months, Imaging Solutions sales climbed 16% to $595 million

versus $515 million the year before. Favorable foreign exchange

contributed 5 percentage points to the sales increase.
Pharmaceutical Products sales in the second quarter were even

with a year ago at $239 million. An increase in sales of Active

Pharmaceutical Ingredients, driven by higher sales of peptides, was

offset by a decline in sales of Dosage products. Within Dosage, sales of

branded products were higher, but the increase was more than offset by a

decline in sales of generics.
For the six months, Pharmaceutical Products sales were off 1% to $460

million from $464 million last year.
Medical Supplies sales declined 1% to $220 million from $222

million in the second quarter of the previous year, primarily due to

lower OEM sales. For the six months, sales of Medical Supplies, at $437

million, were 1% below last year´s $443

million.
FISCAL 2008 OUTLOOK
The Company has updated its fiscal 2008 guidance. This update reflects

the stronger first-half performance, due in part to favorable exchange

rates. The Company now estimates that sales in the 2008 fiscal year will

increase 8% - 11%, including the impact of foreign exchange. Net sales

are expected to increase 10% - 13% versus 2007 in the Medical Devices

segment, 11% - 14% in Imaging Solutions and 3% - 6% in Pharmaceutical

Products. The Company expects sales in Medical Supplies to be about even

with those of 2007. Consistent with prior guidance and excluding the

impact of one-time items, the operating margin is expected to be in the

20% - 21% range. We now anticipate the effective tax rate will be in the

28% - 31% range for fiscal 2008, excluding the impact of one-time items.
ABOUT COVIDIEN LTD.
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 four segments: Medical Devices, Imaging Solutions

Pharmaceutical Products and Medical Supplies. With 2007 revenue of

nearly $9 billion, Covidien has more than 42,000 employees worldwide in

57 countries, and its products are sold in over 130 countries. Please

visit www.covidien.com to learn

more about our business.
CONFERENCE CALL AND WEBCAST
The Company will hold a conference call for investors today, beginning

at 8:30 a.m. ET. This call can be accessed three ways:

Web "â€œ Go to Covidien´s

website at www.covidien.com. A

replay of the call will be available through May 13 at the same

website.

Telephone "â€œ The dial-in number for

participants in the United States is (800)-322-5044. For participants

outside the United States, the dial-in number is (617)-614-4927. The

access code for both numbers is 80983121.

Audio replay "â€œ The conference call will be

available for replay, beginning at 10:30 a.m. ET on May 6, 2008, and

ending at 11:59 p.m. on May 13, 2008. The dial-in number for

participants in the United States is (888)-286-8010. For participants

outside the United States, the replay dial-in number is

(617)-801-6888. The replay access code for all callers is 33653329.

NON-GAAP FINANCIAL MEASURES
This press release contains financial measures, including adjusted

operating income, adjusted earnings per share and adjusted operating

margin, that 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 non-GAAP financial measures used in this press release adjust for

specified items that can be highly variable or difficult to predict. The

Company generally uses these non-GAAP financial measures to facilitate

management´s financial and operational

decision-making, including evaluation of Covidien´s

historical operating results, comparison to competitors´ operating results and determination of management incentive compensation.
These non-GAAP financial measures reflect an additional way of viewing

aspects of the Company´s operations that

when viewed with GAAP results and the reconciliations to corresponding

GAAP financial measures, may provide a more complete understanding of

factors and trends affecting Covidien´s business.
Because non-GAAP financial measures exclude the effect of items that

will increase or decrease the Company´s

reported results of operations, management strongly encourages investors

to review the Company´s consolidated

financial statements and publicly filed reports in their entirety. A

reconciliation of the non-GAAP financial measures to the most directly

comparable GAAP financial measures is included in the tables

accompanying this release.
The Company presents its operating margin 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.
FORWARD-LOOKING STATEMENTS
Any statements contained in this press release 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

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, 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 or

increased costs after the separation from Tyco International or as a

result of the separation. These and other factors are identified and

described in more detail in our filings with the SEC. We disclaim any

obligation to update these forward-looking statements other than as

required by law.

= = = = = = = = = = =

Covidien Ltd.
- - - - - -

Consolidated and Combined Statements of Income
- - - - - -

Quarters Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions, except per share data)
- - - - - -

- - - - - -

Quarter Ended

Percent of

Quarter Ended

Percent of

- - - - - -

March 28, 2008

Net Sales

March 30, 2007

Net Sales

- - - - - -

Net sales

$
2,426

100.0

$
2,200

100.0

%
- - - - - -

Cost of products sold

1,155

47.6

1,069

48.6

- - - - - -

Gross profit

1,271

52.4

1,131

51.4

- - - - - -

Selling, general and administrative expenses

696

28.7

580

26.4

- - - - - -

Research and development expenses

3.1

2.9

- - - - - -

Restructuring and asset impairment charges

2.6

0.2

- - - - - -

Shareholder settlement

1.3

- - - - - -

Operating income

405

16.7

484

22.0

- - - - - -

Interest expense

2.3

1.8

- - - - - -

Interest income

(8
)

(0.3
)

(10
)

(0.5
)

- - - - - -

Other income, net

(3
)

(0.1
)

(6
)

(0.3
)

- - - - - -

Income from continuing operations before income taxes

360

14.8

461

21.0

- - - - - -

Income taxes

111

4.6

3.8

- - - - - -

Income from continuing operations

249

10.3

377

17.1

- - - - - -

Income from discontinued operations, net of income taxes

(14
)

(0.6
)

(17
)

(0.8
)

- - - - - -

Net income

$
263

10.8

$
394

17.9

- - - - - -

Basic earnings per share:

- - - - - -

Income from continuing operations

$
0.50

$
0.76

- - - - - -

Income from discontinued operations

(0.03
)

- - - - - -

Net income

0.53

0.79

- - - - - -

Diluted earnings per share:

- - - - - -

Income from continuing operations

$
0.49

$
0.76

- - - - - -

Income from discontinued operations

(0.03
)

- - - - - -

Net income

0.52

0.79

- - - - - -

Weighted-average number of shares outstanding: (1)

- - - - - -

Basic

499

497

- - - - - -

Diluted

503

497

- - - - - -

(1) For the quarter ended March 30

2007, the common shares outstanding immediately following the

Separation were used to calculate basic and diluted earnings per

share because no common shares, share options or restricted shares

of Covidien were outstanding on or before June 29, 2007.
- - - - - -

= = = = = = = = = = =

Covidien Ltd.

- - - - - -

Non-GAAP Reconciliations
- - - - - -

Quarters Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions, except per share data)
- - - - - -

- - - - - -

Quarter Ended March 28, 2008
- - - - - -

Operating income

Income from continuing operations before income taxes

Income from continuing operations

Diluted earnings per share from continuing operations
- - - - - -

- - - - - -

GAAP

$
405

$
360

$
249

$
0.49

- - - - - -

Adjustments:

- - - - - -

Restructuring and asset impairment charges (1)

0.11

- - - - - -

Shareholder settlement (2)

0.06

- - - - - -

Tax matters

(1
)

- - - - - -

As adjusted

$
500

$
455

$
332

0.66

- - - - - -

(1) Consists of restructuring charges

of $47 million and asset impairment charges of $17 million primarily

related to our Medical Devices segment.

- - - - - -

(2) Shareholder settlement charge

represents our portion of Tyco International´s legal settlement with

the State of New Jersey.
- - - - - -

- - - - - -

Quarter Ended March 30, 2007
- - - - - -

Operating income

Income from continuing operations before income taxes

Income from continuing operations

Diluted earnings per share from continuing operations
- - - - - -

- - - - - -

GAAP

$
484

$
461

$
377

$
0.76

- - - - - -

Adjustments:

- - - - - -

Restructuring charges (1)

0.01

- - - - - -

Tax matters (2)

(42
)

(0.08
)
- - - - - -

As adjusted

$
488

$
465

$
338

0.68

- - - - - -

(1) Primarily relates to our Medical

Devices segment.
- - - - - -

- - - - - -

(2) Primarily relates to the release

of deferred tax valuation allowances resulting from changes in

non-U.S. tax law.
- - - - - -

= = = = = = = = = = =

Covidien Ltd.
- - - - - -

Consolidated and Combined Statements of Income
- - - - - -

Six Months Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions, except per share data)
- - - - - -

- - - - - -

Six Months Ended

Percent of

Six Months Ended

Percent of

- - - - - -

March 28, 2008

Net Sales

March 30, 2007

Net Sales

- - - - - -

Net sales

$
4,742

100.0

$
4,328

100.0

%
- - - - - -

Cost of products sold

2,232

47.1

2,081

48.1

- - - - - -

Gross profit

2,510

52.9

2,247

51.9

- - - - - -

Selling, general and administrative expenses

1,385

29.2

1,136

26.2

- - - - - -

Research and development expenses

153

3.2

123

2.8

- - - - - -

In-process research & development charges

0.3

0.2

- - - - - -

Restructuring and asset impairment charges

1.5

0.5

- - - - - -

Shareholder settlement

0.7

- - - - - -

Operating income

860

18.1

960

22.2

- - - - - -

Interest expense

116

2.4

1.8

- - - - - -

Interest income

(20
)

(0.4
)

(19
)

(0.4
)

- - - - - -

Other income, net

(183
)

(3.9
)

(6
)

(0.1
)

- - - - - -

Income from continuing operations before income taxes

947

20.0

906

20.9

- - - - - -

Income taxes

253

5.3

197

4.6

- - - - - -

Income from continuing operations

694

14.6

709

16.4

- - - - - -

Loss (income) from discontinued operations, net of income taxes

0.2

(23
)

(0.5
)

- - - - - -

Net income

$
683

14.4

$
732

16.9

- - - - - -

Basic earnings per share:

- - - - - -

Income from continuing operations

$
1.39

$
1.43

- - - - - -

Loss (income) from discontinued operations

0.02

(0.04
)

- - - - - -

Net income

1.37

1.47

- - - - - -

Diluted earnings per share:

- - - - - -

Income from continuing operations

$
1.38

$
1.43

- - - - - -

Loss (income) from discontinued operations

0.02

(0.04
)

- - - - - -

Net income

1.36

1.47

- - - - - -

Weighted-average number of shares outstanding: (1)

- - - - - -

Basic

498

497

- - - - - -

Diluted

503

497

- - - - - -

(1) For the six months ended March

30, 2007, the common shares outstanding immediately following the

Separation were used to calculate basic and diluted earnings per

share because no common shares, share options or restricted shares

of Covidien were outstanding on or before June 29, 2007.
- - - - - -

= = = = = = = = = = =

Covidien Ltd.

- - - - - -

Non-GAAP Reconciliations
- - - - - -

Six Months Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions, except per share data)
- - - - - -

- - - - - -

Six Months Ended March 28, 2008
- - - - - -

Operating income

Income from continuing operations before income taxes

Income from continuing operations

Diluted earnings per share from continuing operations
- - - - - -

- - - - - -

GAAP
$
860

$
947

$
694

$
1.38

- - - - - -

Adjustments:

- - - - - -

In-process research and development charge (1)

0.02

- - - - - -

Restructuring and asset impairment charges (2)

0.11

- - - - - -

Shareholder settlement (3)

0.06

- - - - - -

Impact of tax sharing agreement resulting from FIN 48 adoption (4)

(172
)

(0.34
)
- - - - - -

Tax matters

0.01

- - - - - -

As adjusted
$
972

$
887

$
626

1.24

- - - - - -

(1) Write-off of in-process research

and development in connection with the acquisition of Scandius

Biomedical, Inc. by our Medical Devices segment.
- - - - - -

- - - - - -

(2) Consists of restructuring

charges of $52 million and asset impairment charges of $17 million

primarily related to our Medical Devices segment.
- - - - - -

- - - - - -

(3) Shareholder settlement charge

represents our portion of Tyco International´s legal settlement with

the State of New Jersey.
- - - - - -

- - - - - -

(4) Other income includes the impact

of our tax sharing agreement with Tyco International and Tyco

Electronics primarily resulting from the adoption of FIN 48.
- - - - - -

- - - - - -

Six Months Ended March 30, 2007
- - - - - -

Operating income

Income from continuing operations before income taxes

Income from continuing operations

Diluted earnings per share from continuing operations
- - - - - -

- - - - - -

GAAP
$
960

$
906

$
709

$
1.43

- - - - - -

Adjustments:

- - - - - -

In-process research and development charge (1)

0.02

- - - - - -

Restructuring charges (2)

0.03

- - - - - -

Tax matters (3)

(47
)

(0.09
)
- - - - - -

As adjusted
$
988

$
934

$
683

1.37

- - - - - -

(1) Write-off of in-process research

and development in connection with the acquisition of Airox S.A. by

our Medical Devices segment.
- - - - - -

- - - - - -

(2) Primarily related to our Medical

Devices segment.
- - - - - -

- - - - - -

(3) Primarily relates to the release

of deferred tax valuation allowances resulting from changes in

non-U.S. tax law.
- - - - - -

= = = = = = = = = = =

- - - - - -

Covidien Ltd.

- - - - - -

Segment and Geographical Sales
- - - - - -

Quarters Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions)
- - - - - -

- - - - - -

Quarters Ended

- - - - - -

March 28, 2008

March 30, 2007

Percent change

Percent change currency

Operationalgrowth

- - - - - -

Medical Devices (1)

- - - - - -

United States

$
702

$
667

-
%

%
- - - - - -

Non-U.S.

961

813

- - - - - -

$
1,663

$
1,480

- - - - - -

Imaging Solutions (1)

- - - - - -

United States

$
182

$
159

-
%

%
- - - - - -

Non-U.S.

122

100

- - - - - -

$
304

$
259

- - - - - -

Pharmaceutical Products (1)

- - - - - -

United States

$
217

$
219

(1
)
%

-
%

(1
)
%
- - - - - -

Non-U.S.

- - - - - -

$
239

- - - - - -

Medical Supplies (1)

- - - - - -

United States

$
220

$
222

(1
)
%

-
%

(1
)
%
- - - - - -

Non-U.S.

- - - - - -

$
220

$
222

(1
)

- - - - - -

Covidien Ltd. (1)

- - - - - -

United States

$
1,321

$
1,267

-
%

%
- - - - - -

Non-U.S.

1,105

933

- - - - - -

$
2,426

$
2,200

- - - - - -

(1) Sales to external

customers are reflected in the regions based on the location of the

sales force executing the transaction.
- - - - - -

= = = = = = = = = = =

- - - - - -

Covidien Ltd.
- - - - - -

Segment and Geographical Sales

- - - - - -

Six Months Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions)
- - - - - -

- - - - - -

Six Months Ended

- - - - - -

March 28, 2008

March 30, 2007

Percent change

Percent change currency

Operationalgrowth

- - - - - -

MedicalDevices (1)

- - - - - -

United States

$
1,389

$
1,322

-
%

%
- - - - - -

Non-U.S.

1,861

1,584

- - - - - -

$
3,250

$
2,906

- - - - - -

Imaging Solutions (1)

- - - - - -

United States

$
361

$
324

-
%

%
- - - - - -

Non-U.S.

234

191

- - - - - -

$
595

$
515

- - - - - -

Pharmaceutical Products (1)

- - - - - -

United States

$
414

$
427

(3
)
%

-
%

(3
)
%
- - - - - -

Non-U.S.

- - - - - -

$
460

$
464

(1
)

- - - - - -

Medical Supplies (1)

- - - - - -

United States

$
437

$
443

(1
)
%

-
%

(1
)
%
- - - - - -

Non-U.S.

- - - - - -

$
437

$
443

(1
)

- - - - - -

Covidien Ltd. (1)

- - - - - -

United States

$
2,601

$
2,516

-
%

%
- - - - - -

Non-U.S.

2,141

1,812

- - - - - -

$
4,742

$
4,328

- - - - - -

(1) Sales to external

customers are reflected in the regions based on the location of the

sales force executing the transaction.
- - - - - -

= = = = = = = = = = =

- - - - - -

Covidien Ltd.
- - - - - -

Select Product Line Sales
- - - - - -

Quarters Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions)
- - - - - -

- - - - - -

Quarters Ended

- - - - - -

March 28, 2008

March 30, 2007

Percent change

Percent change currency

Operational growth

- - - - - -

Medical Devices

- - - - - -

Endomechanical (1)

$
518

$
457

13
%

8
%

5
%
- - - - - -

Soft Tissue Repair (2)

141

119

- - - - - -

Energy (3)

194

154

- - - - - -

Oximetry and Monitoring (4)

165

152

- - - - - -

Airway and Ventilation (5)

208

192

- - - - - -

Vascular (6)

128

114

- - - - - -

SharpSafety (7)

116

113

- - - - - -

Clinical Care (8)

101

- - - - - -

Imaging Solutions

- - - - - -

Radio-pharmaceuticals (9)

$
141

$
119

18
%

4
%

14
%
- - - - - -

Contrast (10)

163

140

- - - - - -

(1) Endomechanical includes

our laparoscopic instruments and surgical staplers.
- - - - - -

- - - - - -

(2) Soft Tissue Repair

includes our suture products, mesh products and biosurgery products.
- - - - - -

- - - - - -

(3) Energy includes our

vessel sealing products, electrosurgical products, ablation products

and related capital equipment.
- - - - - -

- - - - - -

(4) Oximetry and Monitoring

includes our sensors and monitors products and our temperature

management products.
- - - - - -

- - - - - -

(5) Airway and Ventilation

includes our airway products, ventilator products, breathing

systems, sleep products and inhalation therapy products.
- - - - - -

- - - - - -

(6) Vascular includes our

compression products and vascular therapy products.
- - - - - -

- - - - - -

(7) SharpSafety includes our

needles and syringes products and our sharps disposable products.
- - - - - -

- - - - - -

(8) Clinical Care includes

our urology products, enteral feeding products and other advanced

woundcare products.
- - - - - -

- - - - - -

(9) Radiopharmaceuticals

includes our radioactive isotopes and associated pharmaceutical

products used for the diagnosis and treatment of disease.
- - - - - -

- - - - - -

(10) Contrast includes our

contrast delivery systems and contrast agents.
- - - - - -

= = = = = = = = = = =

- - - - - -

Covidien Ltd.
- - - - - -

Select Product Line Sales
- - - - - -

Six Months Ended March 28, 2008 and March 30, 2007
- - - - - -

(dollars in millions)
- - - - - -

- - - - - -

Six Months Ended

- - - - - -

March 28, 2008

March 30, 2007

Percent change

Percent change currency

Operationalgrowth

- - - - - -

Medical Devices

- - - - - -

Endomechanical (1)

$
1,018

$
899

13
%

7
%

6
%
- - - - - -

Soft TissueRepair (2)

270

237

- - - - - -

Energy (3)

379

302

- - - - - -

Oximetry and Monitoring (4)

317

295

- - - - - -

Airway and Ventilation (5)

393

368

- - - - - -

Vascular (6)

257

231

- - - - - -

SharpSafety (7)

229

225

- - - - - -

Clinical Care (8)

200

181

- - - - - -

Imaging Solutions

- - - - - -

Radio-pharmaceuticals (9)

$
276

$
237

16
%

3
%

13
%
- - - - - -

Contrast (10)

319

278

- - - - - -

(1) Endomechanical includes

our laparoscopic instruments and surgical staplers.
- - - - - -

- - - - - -

(2) Soft Tissue Repair

includes our suture products, mesh products and biosurgery products.
- - - - - -

- - - - - -

(3) Energy includes our

vessel sealing products, electrosurgical products, ablation products

and related capital equipment.
- - - - - -

- - - - - -

(4) Oximetry and Monitoring

includes our sensors and monitors products and our temperature

management products.
- - - - - -

- - - - - -

(5) Airway and Ventilation

includes our airway products, ventilator products, breathing

systems, sleep products and inhalation therapy products.
- - - - - -

- - - - - -

(6) Vascular includes our

compression products and vascular therapy products.
- - - - - -

- - - - - -

(7) SharpSafety includes our

needles and syringes products and our sharps disposable products.
- - - - - -

- - - - - -

(8) Clinical Care includes

our urology products, enteral feeding products and other advanced

woundcare products.
- - - - - -

- - - - - -

(9) Radiopharmaceuticals

includes our radioactive isotopes and associated pharmaceutical

products used for the diagnosis and treatment of disease.
- - - - - -

- - - - - -

(10) Contrast includes our

contrast delivery systems and contrast agents.
- - - - - -