Covidien Ltd. (COV, Financial) filed Quarterly Report for the period ended 2010-12-24.
Covidien Plc has a market cap of $23.51 billion; its shares were traded at around $47.47 with a P/E ratio of 13.8 and P/S ratio of 2.3. The dividend yield of Covidien Plc stocks is 1.7%.Hedge Fund Gurus that owns COV: Private Capital of Private Capital Management, Manning & Napier Advisors, Inc, David Tepper of APPALOOSA MANAGEMENT LP, Jim Simons of Renaissance Technologies LLC, Stanley Druckenmiller of Duquesne Capital Management, LLC, Louis Moore Bacon of Moore Capital Management, LP, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC. Mutual Fund and Other Gurus that owns COV: Steven Romick of FPA Crescent Fund, First Pacific Advisors of First Pacific Advisors, LLC, Bill Nygren of Oak Mark Fund, Donald Yacktman of Yacktman Asset Management Co., Donald Yacktman of Yacktman Asset Management Co., John Buckingham of Al Frank Asset Management, Inc., Dodge & Cox, Edward Owens of Vanguard Health Care Fund, Edward Owens of Vanguard Health Care Fund, Pioneer Investments, Mario Gabelli of GAMCO Investors, HOTCHKIS & WILEY of Hotchkis & Wliey Capital Management LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management, Jeremy Grantham of GMO LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC.
In fiscal 2009, we launched a restructuring program designed to improve our cost structure. This program includes actions across all three segments as well as corporate. We expect to incur charges of approximately $200 million under this program, most of which is expected to occur by the end of 2011. These charges have been or will be recorded as the specific actions required to execute on these initiatives are identified and approved. The anticipated expenditures primarily relate to employee severance and benefits. As of December 24, 2010, we had incurred $147 million of restructuring charges under this program since its inception. This program excludes restructuring actions associated with acquisitions. In addition to continuing to incur charges under the 2009 program, we also expect to incur additional charges as restructuring actions stemming from our recent acquisitions are implemented.
Net sales generated by our businesses in the United States were $1.527 billion and $1.419 billion for the first quarter of fiscal 2011 and 2010, respectively. Our non-U.S. businesses generated net sales of $1.242 billion and $1.225 billion for the first quarter of fiscal 2011 and 2010, respectively. Our business outside the United States accounted for approximately 45% and 46% of our net sales for the first quarter of fiscal 2011 and 2010, respectively.
Selling, general and administrative expensesSelling, general and administrative expenses in the first quarter of fiscal 2011 increased $41 million, or 5.0%, to $861 million, compared with $820 million in the first quarter of fiscal 2010. The increase was primarily due to increased costs, primarily selling and marketing, resulting from recent acquisitions within our Medical Devices segment and, to a lesser extent, recent product launches within our Pharmaceuticals segment.
Restructuring chargesDuring the first quarter of fiscal 2011, we recorded net restructuring charges of $53 million, comprised of restructuring charges of $63 million, partially offset by changes in estimates of $10 million. The $63 million of restructuring charges primarily related to severance and employee benefit costs incurred under our 2009 program and, to a lesser extent, the cancellation of distributor and supplier agreements and severance costs related to actions associated with recent acquisitions by our Medical Devices segment. In addition, during the first quarter of fiscal 2011, we determined that one of the restructuring actions within our Medical Supplies segment was no longer cost effective. Accordingly, we reversed $10 million of restructuring reserves. During the first quarter of fiscal 2010, we recorded restructuring charges of $5 million.
Operating incomeIn the first quarter of fiscal 2011, operating income increased $13 million to $549 million, compared with operating income of $536 million in the first quarter of fiscal 2010. The increase in operating income for the first quarter of fiscal 2011, compared with the same prior year period was primarily due increased sales volume within our Medical Devices segment, largely attributable to the acquisition of ev3, and the absence of a $33 million legal charge incurred in the prior year to settle an anti-trust case. These increases in operating income were partially offset by increased costs resulting from acquisitions and $48 million of incremental net restructuring charges.
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Covidien Plc has a market cap of $23.51 billion; its shares were traded at around $47.47 with a P/E ratio of 13.8 and P/S ratio of 2.3. The dividend yield of Covidien Plc stocks is 1.7%.Hedge Fund Gurus that owns COV: Private Capital of Private Capital Management, Manning & Napier Advisors, Inc, David Tepper of APPALOOSA MANAGEMENT LP, Jim Simons of Renaissance Technologies LLC, Stanley Druckenmiller of Duquesne Capital Management, LLC, Louis Moore Bacon of Moore Capital Management, LP, Steven Cohen of SAC Capital Advisors, Bruce Kovner of Caxton Associates, George Soros of Soros Fund Management LLC. Mutual Fund and Other Gurus that owns COV: Steven Romick of FPA Crescent Fund, First Pacific Advisors of First Pacific Advisors, LLC, Bill Nygren of Oak Mark Fund, Donald Yacktman of Yacktman Asset Management Co., Donald Yacktman of Yacktman Asset Management Co., John Buckingham of Al Frank Asset Management, Inc., Dodge & Cox, Edward Owens of Vanguard Health Care Fund, Edward Owens of Vanguard Health Care Fund, Pioneer Investments, Mario Gabelli of GAMCO Investors, HOTCHKIS & WILEY of Hotchkis & Wliey Capital Management LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, John Keeley of Keeley Fund Management, David Dreman of Dreman Value Management, Jeremy Grantham of GMO LLC, Jean-Marie Eveillard of First Eagle Investment Management, LLC.
Highlight of Business Operations:
In March 2010, the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act were enacted in the United States, which includes provisions that would impose a 2.3% excise tax on the sale of certain of our medical device and supply products in the United States starting in 2013. In addition, the new legislation includes a $28 billion fee on the branded pharmaceutical industry over nine years starting in 2011 and a $2.8 billion annual fee on branded pharmaceuticals thereafter. The amount of branded pharmaceutical fee payable by each company is based upon market share. Since our branded pharmaceutical sales currently represent a small portion of the total market, we do not expect this annual assessment to have a significant impact on Covidien. The medical devices tax, however, may have a significant impact on our results of operations. We are still evaluating the potential impact that this tax may have on our overall business. This new legislation increases our cost of doing business. If this cost is not offset by increased demand for our products, cost reductions or price increases, we could experience lower margins and profitability and our business and results of operations could be materially and adversely affected. In addition to the excise tax and annual fee described above, the new legislation contains numerous other provisions, many of which pertain to health insurance plans, which could impact our financial results in future periods.In fiscal 2009, we launched a restructuring program designed to improve our cost structure. This program includes actions across all three segments as well as corporate. We expect to incur charges of approximately $200 million under this program, most of which is expected to occur by the end of 2011. These charges have been or will be recorded as the specific actions required to execute on these initiatives are identified and approved. The anticipated expenditures primarily relate to employee severance and benefits. As of December 24, 2010, we had incurred $147 million of restructuring charges under this program since its inception. This program excludes restructuring actions associated with acquisitions. In addition to continuing to incur charges under the 2009 program, we also expect to incur additional charges as restructuring actions stemming from our recent acquisitions are implemented.
Net sales generated by our businesses in the United States were $1.527 billion and $1.419 billion for the first quarter of fiscal 2011 and 2010, respectively. Our non-U.S. businesses generated net sales of $1.242 billion and $1.225 billion for the first quarter of fiscal 2011 and 2010, respectively. Our business outside the United States accounted for approximately 45% and 46% of our net sales for the first quarter of fiscal 2011 and 2010, respectively.
Selling, general and administrative expensesSelling, general and administrative expenses in the first quarter of fiscal 2011 increased $41 million, or 5.0%, to $861 million, compared with $820 million in the first quarter of fiscal 2010. The increase was primarily due to increased costs, primarily selling and marketing, resulting from recent acquisitions within our Medical Devices segment and, to a lesser extent, recent product launches within our Pharmaceuticals segment.
Restructuring chargesDuring the first quarter of fiscal 2011, we recorded net restructuring charges of $53 million, comprised of restructuring charges of $63 million, partially offset by changes in estimates of $10 million. The $63 million of restructuring charges primarily related to severance and employee benefit costs incurred under our 2009 program and, to a lesser extent, the cancellation of distributor and supplier agreements and severance costs related to actions associated with recent acquisitions by our Medical Devices segment. In addition, during the first quarter of fiscal 2011, we determined that one of the restructuring actions within our Medical Supplies segment was no longer cost effective. Accordingly, we reversed $10 million of restructuring reserves. During the first quarter of fiscal 2010, we recorded restructuring charges of $5 million.
Operating incomeIn the first quarter of fiscal 2011, operating income increased $13 million to $549 million, compared with operating income of $536 million in the first quarter of fiscal 2010. The increase in operating income for the first quarter of fiscal 2011, compared with the same prior year period was primarily due increased sales volume within our Medical Devices segment, largely attributable to the acquisition of ev3, and the absence of a $33 million legal charge incurred in the prior year to settle an anti-trust case. These increases in operating income were partially offset by increased costs resulting from acquisitions and $48 million of incremental net restructuring charges.
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