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Shareholder Separation Agreement

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Shareholder Separation Agreement Powered By Docstoc
					                   Statement Of Income (USD $)
                                                           3 Months Ended
                                                            Dec. 25, 2009
                  In Millions, except Per Share data
Net sales                                                               $2,749
Cost of products sold                                                    1,257
Gross profit                                                             1,492
Selling, general and administrative expenses                                 834
Research and development expenses                                            101
Restructuring charges                                                          5
Operating income                                                             552
Interest expense                                                             (43)
Interest income                                                                 5
Other income                                                                    8
Income from continuing operations before income taxes                         522
Income tax expense                                                           110
Income from continuing operations                                            412
Income from discontinued operations, net of income taxes                       0
Net income                                                                  $412
Basic earnings per share:
Income from continuing operations                                           $0.82
Income from discontinued operations                                            $0
Net income                                                                  $0.82
Diluted earnings per share:
Income from continuing operations                                           $0.82
Income from discontinued operations                                            $0
Net income                                                                  $0.82
Weighted-average number of shares outstanding (note 3):
Basic                                                                        499
Diluted                                                                      504
3 Months Ended
 Dec. 26, 2008

             $2,564
              1,192
              1,372
                  731
                   94
                    3
                  544
                  (45)
                     7
                    10
                   516
                  135
                  381
                    5
                 $386

                 $0.76
                 $0.01
                 $0.77

                 $0.75
                 $0.01
                 $0.76

                  504
                  507
        Statement Of Financial Position Classified (USD $)
                                                                         Dec. 25, 2009
                               In Millions
Current Assets:
Cash and cash equivalents                                                                $1,513
Accounts receivable trade, less allowance for doubtful accounts of $43
and $43                                                                                   1,745
Inventories                                                                               1,324
Shareholder settlement receivables                                                           61
Prepaid expenses and other current assets                                                   785
Total current assets                                                                      5,428
Property, plant and equipment, net                                                        2,661
Goodwill                                                                                  6,118
Intangible assets, net                                                                    1,700
Due from former parent and affiliates                                                       706
Other assets                                                                                737
Total Assets                                                                             17,350
Current Liabilities:
Current maturities of long-term debt                                                        255
Accounts payable                                                                            519
Shareholder settlement liability                                                            104
Accrued and other current liabilities                                                     1,329
Total current liabilities                                                                 2,207
Long-term debt                                                                            2,709
Income taxes payable                                                                      1,808
Guaranteed contingent tax liabilities                                                       718
Other liabilities                                                                         1,510
Total Liabilities                                                                         8,952
Shareholders' Equity:
Preference shares, $0.20 par value, 125,000,000 authorized; none
issued and outstanding                                                                       0
Ordinary shares, $0.20 par value, 1,000,000,000 authorized;
500,017,406 and 499,049,675 outstanding, net of 4,539,685 and
3,979,904 treasury shares                                                                   100
Additional paid-in capital                                                                6,237
Retained earnings                                                                         1,587
Accumulated other comprehensive income                                                      474
Total Shareholders' Equity                                                                8,398
Total Liabilities and Shareholders' Equity                                           $17,350
Sep. 25, 2009


                 $1,467

                  1,724
                  1,334
                     62
                    875
                  5,462
                  2,661
                  6,046
                  1,562
                    708
                    700
                 17,139

                     30
                    500
                    106
                  1,603
                  2,239
                  2,961
                  1,774
                    718
                  1,446
                  9,138



                     0


                    100
                  6,173
                  1,199
                    529
                  8,001
                $17,139
Statement Of Financial Position Classified (Parenthetical) (USD
                              $)
                                                                  Dec. 25, 2009
                    In Millions, except Share data
Accounts receivable trade, allowance for doubtful accounts                         $43
Preference shares, par value                                                      $0.2
Preference shares, authorized                                              125,000,000
Preference shares, issued                                                            0
Preference shares, outstanding                                                       0
Ordinary shares, par value                                                        $0.2
Ordinary shares, authorized                                              1,000,000,000
Ordinary shares, outstanding                                               500,017,406
Ordinary shares, treasury shares                                             4,539,685
Sep. 25, 2009

                 $43
                $0.2
         125,000,000
                   0
                   0
                $0.2
       1,000,000,000
         499,049,675
           3,979,904
            Statement Of Cash Flows Indirect (USD $)
                                                                        3 Months Ended
                                                                         Dec. 25, 2009
                             In Millions
Cash Flows From Operating Activities:
Net income                                                                               $412
Income from discontinued operations, net of income taxes                                    0
Income from continuing operations                                                         412
Adjustments to reconcile net cash provided by continuing
operating activities:
Change in receivable from former parent and affiliates related to Tax
Sharing Agreement                                                                          (8)
Depreciation and amortization                                                             120
Share-based compensation                                                                    28
Deferred income taxes                                                                      (6)
Provision for losses on accounts receivable and inventory                                   18
Other non-cash items                                                                         1
Changes in assets and liabilities, net of the effects of
acquisitions and divestitures:
Accounts receivable, net                                                                  (34)
Inventories                                                                                 (1)
Accounts payable                                                                             19
Income taxes                                                                                 37
Accrued and other liabilities                                                            (175)
Other                                                                                        42
Net cash provided by operating activities                                                  453
Cash Flows From Investing Activities:
Capital expenditures                                                                      (88)
Acquisition-related payments, net of cash acquired                                       (156)
Acquisition of licenses and technology                                                    (15)
Other                                                                                       15
Net cash used in investing activities                                                    (244)
Cash Flows From Financing Activities:
Net repayment of commercial paper                                                          (1)
Repayment of debt                                                                         (84)
Dividends paid                                                                            (90)
Repurchase of shares                                                                      (27)
Proceeds from exercise of share options                                                     38
Other                                                                                        2
Net cash used in financing activities                                                    (162)
Effect of currency rate changes on cash                                                    (1)
Net increase (decrease) in cash and cash equivalents                                        46
Cash and cash equivalents at beginning of period                                      1,467
Cash and cash equivalents at end of period                                           $1,513
3 Months Ended
 Dec. 26, 2008


                 $386
                   (5)
                  381




                  (10)
                    97
                    21
                    24
                    16
                     2


                    23
                  (90)
                  (69)
                    25
                  (42)
                 (115)
                   263

                  (93)
                  (22)
                   (2)
                     9
                 (108)

                  (75)
                  (15)
                  (81)
                   (5)
                     6
                     0
                 (170)
                  (57)
                  (72)
              1,208
             $1,136
                        Basis of Presentation
                                                    3 Months Ended
                                                     Dec. 25, 2009
                                                     USD / shares

                                                1. Basis of Presentation
                                                 Basis of
                                                PresentationThe
                                                accompanying financial
                                                statements reflect the
                                                consolidated operations of
                                                Covidien plc and its
                                                subsidiaries (Covidien or the
                                                Company). The unaudited
                                                financial statements have
                                                been prepared in United
                                                States dollars, in accordance
                                                with accounting principles
                                                generally accepted in the
                                                United States of America
                                                (GAAP). The preparation of
                                                the financial statements in
                                                conformity with GAAP
                                                requires management to
                                                make use of estimates and
                                                assumptions that affect the
                                                reported amount of assets
                                                and liabilities, disclosure of
                                                contingent assets and
                                                liabilities, and the reported
                                                amounts of revenues and
                                                expenses. Actual results
                                                may differ from those
                                                estimates. In managements
                                                opinion, the unaudited
                                                financial statements contain
Basis of Presentation                           all normal recurring
                                                adjustments necessary for a
                     Acquisition and Divestitures
                                                        3 Months Ended
                                                         Dec. 25, 2009
                                                         USD / shares

                                                    2. Acquisition and
                                                    Divestitures Aspect
                                                    Medical Systems, Inc.In
                                                    November2009, the
                                                    Companys Medical Devices
                                                    segment acquired Aspect
                                                    Medical Systems, Inc.
                                                    (Aspect), a provider of brain
                                                    monitoring technology, for
                                                    $150 million, net of cash
                                                    acquired. In addition, the
                                                    Company assumed $58
                                                    million of debt in the
                                                    transaction, which was
                                                    subsequently repaid. The
                                                    acquisition of Aspect
                                                    broadens the Companys
                                                    product offerings and adds a
                                                    brain monitoring technology
                                                    to its product portfolio.
                                                     The following table
                                                    sets forth the Companys
                                                    preliminary allocation of the
                                                    purchase price for Aspect
                                                    (dollars in millions):
                                                     Current
                                                    assets (including cash
                                                    acquired) $ 108
                                                    Intangible assets
                                                     153 Goodwill
                                                    (non-tax deductible)
Acquisition and Divestitures                        70 Other non-
                                                    current assets 46
                     Earnings Per Share
                                              3 Months Ended
                                               Dec. 25, 2009
                                               USD / shares

                                          3. Earnings Per Share
                                           The weighted average
                                          ordinary shares used in the
                                          computations of basic and
                                          diluted earnings per share
                                          were as follows:

                                          QuartersEnded (in
                                          Millions) December25,
                                          2009 December26,
                                          2008 Basic shares
                                          499 504
                                          Effect of share
                                          options and restricted
                                          shares 5 3
                                           Diluted shares
                                           504 507
                                            The
                                          computation of diluted
                                          earnings per share for the
                                          quarters ended
                                          December25, 2009 and
                                          December26, 2008 excludes
                                          the effect of the potential
                                          exercise of options to
                                          purchase approximately
                                          10million and 13million
                                          shares, respectively,
                                          because the effect would
                                          have been anti-dilutive.

Earnings Per Share
                   Comprehensive Income
                                              3 Months Ended
                                               Dec. 25, 2009
                                               USD / shares

                                          4. Comprehensive
                                          Income Comprehensive
                                          income was comprised of
                                          the following:

                                          QuartersEnded
                                          (Dollars in Millions)
                                          December25, 2009
                                          December26, 2008
                                          Net income $
                                          412 $ 386
                                          Currency
                                          translation (56 )
                                           (256 )
                                          Unrealized gain (loss)
                                          on derivatives, net of
                                          income taxes 1
                                          (1 ) Change
                                          related to benefit plans, net
                                          of income taxes
                                           1
                                             Total
                                          comprehensive income
                                          $ 357 $ 130




Comprehensive Income
              Inventories
                                3 Months Ended
                                 Dec. 25, 2009
                                 USD / shares

                            5. Inventories
                            Inventories were comprised
                            of the following at the end
                            of each period:
                              (Dollars
                            in Millions)
                            December25, 2009
                            September25, 2009
                            Purchased materials
                            and manufactured parts
                            $ 319 $ 303
                            Work in process
                            341 331
                            Finished goods
                            664 700

                            Inventories $
                            1,324 $ 1,334
Inventories
                  Goodwill and Intangible Assets
                                                       3 Months Ended
                                                        Dec. 25, 2009
                                                        USD / shares

                                                   6. Goodwill and
                                                   Intangible Assets The
                                                   changes in the carrying
                                                   amount of goodwill were as
                                                   follows:

                                                    (Dollars in
                                                   Millions) Medical
                                                   Devices
                                                   Pharmaceuticals
                                                   Medical Supplies
                                                   Total Goodwill
                                                   at September25, 2009
                                                   $ 5,125 $
                                                   532 $ 389 $
                                                   6,046
                                                   Acquisitions
                                                   83
                                                   83 Currency
                                                   translation (11 )
                                                      (11
                                                   )

                                                   Goodwill at
                                                   December25, 2009 $
                                                   5,197 $ 532
                                                   $ 389 $ 6,118

                                                       The
                                                   gross carrying amount and
                                                   accumulated amortization of
Goodwill and Intangible Assets                     intangible assets at the end
                                                   of each period were as
       Debt
                  3 Months Ended
                   Dec. 25, 2009
                   USD / shares

              7. Debt Debt was
              comprised of the following
              at the end of each period:

               (Dollars in
              Millions) December25,
              2009 September25,
              2009 Current
              maturities of long-term
              debt:
              5.2% senior
              notes due October2010
              $ 250 $
              Capital lease
              obligations 5
              5 Other
              25
              Total 255
               30
              Long-term debt:

              Commercial
              paper program 150
               151 5.2%
              senior notes due
              October2010
              250 5.5% senior
              notes due October2012
               500 500
              6.0% senior notes
              due October2017
Debt          1,150 1,150
              6.6% senior notes
                   Retirement Plans
                                          3 Months Ended
                                           Dec. 25, 2009
                                           USD / shares

                                      8. Retirement Plans
                                       The net periodic
                                      benefit cost for the
                                      Companys defined benefit
                                      retirement plans and
                                      postretirement plans was as
                                      follows:
                                        (Dollars in
                                      Millions) Quarters
                                      Ended
                                      December25, 2009
                                      December26, 2008
                                      Service cost $
                                      6 $6
                                      Interest cost
                                      14 15
                                      Expected return on
                                      plan assets (11 )
                                       (11 )
                                      Amortization of prior
                                      service benefit (2
                                      ) (1 )
                                      Amortization of net
                                      actuarial loss 6
                                      3
                                        Net periodic
                                      benefit cost $ 13
                                       $ 12
                                           The
                                      Company anticipates that, at
                                      a minimum, it will make
Retirement Plans                      required contributions of
                                      $41million to its U.S. and
                        Financial Instruments
                                                    3 Months Ended
                                                     Dec. 25, 2009
                                                     USD / shares

                                                9. Financial Instruments
                                                 The Company is
                                                exposed to certain risks
                                                relating to its business
                                                operations. Risks that relate
                                                to interest rate exposure,
                                                foreign exchange exposure
                                                and commodity price
                                                exposure are managed by
                                                using derivative
                                                instruments. Interest rate
                                                lock contracts were entered
                                                into prior to the issuance of
                                                the Companys fixed rate
                                                senior notes to manage the
                                                risk of changes in interest
                                                rates prior to issuance of the
                                                debt. Foreign currency
                                                option and forward
                                                contracts are used to
                                                economically manage the
                                                foreign exchange exposures
                                                of operations outside the
                                                United States. Swap
                                                contracts on various
                                                commodities are periodically
                                                entered into to manage the
                                                price risk associated with
                                                forecasted purchases of
                                                commodities used in the
                                                Companys manufacturing
Financial Instruments                           processes. The
                                                Company recognizes all
          Transactions with Former Parent and Affiliates
                                                               3 Months Ended
                                                                Dec. 25, 2009
                                                                USD / shares

                                                           10. Transactions with
                                                           Former Parent and Affiliates
                                                            Separation and
                                                           Distribution AgreementOn
                                                           June29, 2007, the Company
                                                           entered into a Separation
                                                           and Distribution Agreement
                                                           and other agreements with
                                                           Tyco International and Tyco
                                                           Electronics. These
                                                           agreements provided for the
                                                           allocation to Covidien and
                                                           Tyco Electronics of certain
                                                           of Tyco Internationals
                                                           assets, liabilities and
                                                           obligations attributable to
                                                           periods prior to the
                                                           separation. In addition,
                                                           these agreements govern
                                                           the ongoing relationships
                                                           among Covidien, Tyco
                                                           International and Tyco
                                                           Electronics. Under the
                                                           Separation and Distribution
                                                           Agreement and other
                                                           agreements, subject to
                                                           certain exceptions contained
                                                           in the Tax Sharing
                                                           Agreement, Covidien, Tyco
                                                           International and Tyco
                                                           Electronics assumed 42%,
Transactions with Former Parent and Affiliates             27% and 31%, respectively,
                                                           of certain of Tyco
                Commitments and Contingencies
                                                    3 Months Ended
                                                     Dec. 25, 2009
                                                     USD / shares

                                                11. Commitments and
                                                Contingencies The
                                                Company is subject to
                                                various legal proceedings
                                                and claims, including patent
                                                infringement claims,
                                                antitrust claims, product
                                                liability matters,
                                                environmental matters,
                                                employment disputes,
                                                disputes on agreements and
                                                other commercial disputes.
                                                Management believes that
                                                these legal proceedings and
                                                claims likely will be resolved
                                                over an extended period of
                                                time. Although it is not
                                                feasible to predict the
                                                outcome of these
                                                proceedings, based upon
                                                the Companys experience,
                                                current information and
                                                applicable law, management
                                                does not expect that these
                                                proceedings will have a
                                                material adverse effect on
                                                the Companys financial
                                                condition. However, one or
                                                more of the proceedings
                                                could have a material
                                                adverse effect on the
Commitments and Contingencies                   Companys results of
                                                operations or cash flows for
               Segment Data
                                  3 Months Ended
                                   Dec. 25, 2009
                                   USD / shares

                              12. Segment Data
                              Selected information by
                              business segment is
                              presented in the following
                              tables:
                               Quarters Ended
                               (Dollars in Millions)
                              December25, 2009
                              December26, 2008
                              Net sales(1):
                               Medical
                              Devices $ 1,690
                              $ 1,432
                              Pharmaceuticals
                               616 697
                              Medical Supplies
                               443 435

                              $ 2,749 $ 2,564

                              (1)
                              Amounts represent
                              sales to external customers.
                              Intersegment sales are not
                              significant.

                              Quarters Ended
                              (Dollars in Millions)
                              December25, 2009
                              December26, 2008
                              Operating income:
Segment Data
                              Medical Devices
                Covidien International Finance S.A.
                                                          3 Months Ended
                                                           Dec. 25, 2009
                                                           USD / shares

                                                      13. Covidien
                                                      International Finance S.A.
                                                       CIFSA, a Luxembourg
                                                      company, is a holding
                                                      company that owns, directly
                                                      or indirectly, all of the
                                                      operating subsidiaries of
                                                      Covidienplc. CIFSA is the
                                                      issuer of the Companys
                                                      senior notes and commercial
                                                      paper and the borrower
                                                      under the revolving credit
                                                      facility, substantially all of
                                                      which are fully and
                                                      unconditionally guaranteed
                                                      by both Covidien plc and
                                                      Covidien Ltd., the owners of
                                                      CIFSA. Covidien plc was
                                                      incorporated on January16,
                                                      2009 and replaced Covidien
                                                      Ltd. as the ultimate parent
                                                      company on June4, 2009.
                                                      The following information
                                                      provides the composition of
                                                      the Companys income,
                                                      assets, liabilities, equity and
                                                      cash flows by relevant group
                                                      within the Company:
                                                      Covidien plc and
                                                      CovidienLtd. as the
                                                      guarantors, CIFSA as issuer
Covidien International Finance S.A.                   of the debt and the
                                                      operating companies that
                   Document Information
                                             3 Months Ended
                                              Dec. 25, 2009
                                              USD / shares

Document Information [Text Block]
Document Type                             10-Q
Amendment Flag                            false
Document Period End Date                  2009-12-25
                   Entity Information (USD $)
                                                    3 Months Ended
                                                     Dec. 25, 2009

Entity [Text Block]
Trading Symbol                                  COV
Entity Registrant Name                          Covidien plc
Entity Central Index Key                        0001385187
Current Fiscal Year End Date                    --09-24
Entity Filer Category                           Large Accelerated Filer
Entity Common Stock, Shares Outstanding
Jan. 15, 2010




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Description: Shareholder Separation Agreement document sample