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As Of Filer Filing For·On·As Docs:Size 10/26/18 Stryker Corp 10-Q 9/30/18 57:6.9M |
Document/Exhibit Description Pages Size 1: 10-Q Quarterly Report HTML 615K 2: EX-3.1 Articles of Incorporation/Organization or Bylaws HTML 33K 3: EX-31.1 Certification -- §302 - SOA'02 HTML 24K 4: EX-31.2 Certification -- §302 - SOA'02 HTML 25K 5: EX-32.1 Certification -- §906 - SOA'02 HTML 20K 6: EX-32.2 Certification -- §906 - SOA'02 HTML 21K 13: R1 Document and Entity Information HTML 42K 14: R2 Consolidated Statements Of Earnings (Unaudited) HTML 81K 15: R3 Consolidated Statements of Comprehensive Income HTML 44K (Unaudited) 16: R4 Consolidated Balance Sheets HTML 137K 17: R5 Consolidated Balance Sheets (Parenthetical) HTML 22K 18: R6 Consolidated Statements Of Cash Flows (Unaudited) HTML 101K 19: R7 Basis Of Presentation HTML 31K 20: R8 Revenue Recognition HTML 159K 21: R9 Accumulated Other Comprehensive (Loss) Income HTML 123K (Aoci) 22: R10 Derivative Instruments HTML 66K 23: R11 Fair Value Measurements HTML 74K 24: R12 Contingencies and Commitments HTML 28K 25: R13 Acquisitions HTML 51K 26: R14 Debt and Credit Facilities HTML 63K 27: R15 Income Taxes HTML 22K 28: R16 Segment Information HTML 64K 29: R17 Basis Of Presentation (Policies) HTML 30K 30: R18 Revenue Recognition (Tables) HTML 149K 31: R19 Accumulated Other Comprehensive (Loss) Income HTML 228K (Aoci) (Tables) 32: R20 Derivative Instruments (Tables) HTML 63K 33: R21 Fair Value Measurements (Tables) HTML 74K 34: R22 Acquisitions (Tables) HTML 47K 35: R23 Debt and Credit Facilities (Tables) HTML 59K 36: R24 Segment Information (Tables) HTML 66K 37: R25 Basis Of Presentation Adoption of New Accounting HTML 20K Standards (Details) 38: R26 Revenue Recognition - Narrative (Details) HTML 32K 39: R27 Revenue Recognition - Disaggregated Sales Analysis HTML 87K (Details) 40: R28 Accumulated Other Comprehensive (Loss) Income HTML 69K (Aoci) (Details) 41: R29 Derivative Instruments (Forward Currency Exchange HTML 55K Contracts) (Details) 42: R30 Derivative Instruments (Income Statement Location) HTML 28K (Details) 43: R31 Derivative Instruments (Narrative) (Details) HTML 33K 44: R32 Fair Value Measurements (Valuation Of Financial HTML 85K Instruments By Pricing Categories) (Details) 45: R33 Fair Value Measurements (Assets and Liabilities HTML 23K Measured At Fair Value On A Recurring Basis Using Unobservable Inputs (Level 3)) (Details) 46: R34 Fair Value Measurements (Narrative) (Details) HTML 20K 47: R35 Fair Value Measurements (Unrealized Losses And HTML 31K Fair Value Of Investments With Unrealized Losses) (Details) 48: R36 Contingencies and Commitments (Narrative) HTML 48K (Details) 49: R37 Acquisitions (Narrative) (Details) HTML 39K 50: R38 Acquisitions (Allocation Of The Preliminary HTML 54K Purchase Price To The Acquired Net Assets (Details) 51: R39 Acquisitions (Future Amortization Expense) HTML 29K (Details) 52: R40 Debt and Credit Facilities (Details) HTML 93K 53: R41 Income Taxes (Details) HTML 21K 54: R42 Segment Information (Sales And Other Financial HTML 53K Information By Business Segment) (Details) 56: XML IDEA XML File -- Filing Summary XML 97K 55: EXCEL IDEA Workbook of Financial Reports XLSX 56K 7: EX-101.INS XBRL Instance -- syk-20180930 XML 2.62M 9: EX-101.CAL XBRL Calculations -- syk-20180930_cal XML 169K 10: EX-101.DEF XBRL Definitions -- syk-20180930_def XML 376K 11: EX-101.LAB XBRL Labels -- syk-20180930_lab XML 1.07M 12: EX-101.PRE XBRL Presentations -- syk-20180930_pre XML 606K 8: EX-101.SCH XBRL Schema -- syk-20180930 XSD 102K 57: ZIP XBRL Zipped Folder -- 0000310764-18-000205-xbrl Zip 169K
Document |
[X] | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Large accelerated filer | [X] | Accelerated
filer | [ ] | |||
Non-accelerated filer | [ ] | Small reporting company | [ ] | |||
Emerging
growth company | [ ] |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
ITEM 1. | FINANCIAL
STATEMENTS |
Three Months | Nine
Months | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 3,242 | $ | 3,006 | $ | 9,805 | $ | 8,973 | |||||||
Cost
of sales | 1,087 | 1,022 | 3,323 | 3,034 | |||||||||||
Gross profit | $ | 2,155 | $ | 1,984 | $ | 6,482 | $ | 5,939 | |||||||
Research,
development and engineering expenses | 221 | 198 | 641 | 582 | |||||||||||
Selling, general and administrative expenses | 1,242 | 1,103 | 3,668 | 3,335 | |||||||||||
Recall
charges | 4 | 66 | 10 | 164 | |||||||||||
Amortization of intangible assets | 112 | 92 | 324 | 275 | |||||||||||
Total
operating expenses | $ | 1,579 | $ | 1,459 | $ | 4,643 | $ | 4,356 | |||||||
Operating
income | $ | 576 | $ | 525 | $ | 1,839 | $ | 1,583 | |||||||
Other
income (expense), net | (42 | ) | (54 | ) | (140 | ) | (169 | ) | |||||||
Earnings before income taxes | $ | 534 | $ | 471 | $ | 1,699 | $ | 1,414 | |||||||
Income
taxes | (56 | ) | 37 | 214 | 145 | ||||||||||
Net earnings | $ | 590 | $ | 434 | $ | 1,485 | $ | 1,269 | |||||||
Net
earnings per share of common stock: | |||||||||||||||
Basic net earnings per share of common stock | $ | 1.58 | $ | 1.16 | $ | 3.97 | $ | 3.39 | |||||||
Diluted
net earnings per share of common stock | $ | 1.55 | $ | 1.14 | $ | 3.90 | $ | 3.34 | |||||||
Weighted-average
shares outstanding (in millions): | |||||||||||||||
Basic | 374.1 | 374.2 | 374.0 | 373.8 | |||||||||||
Effect
of dilutive employee stock options | 6.1 | 6.0 | 6.4 | 6.0 | |||||||||||
Diluted | 380.2 | 380.2 | 380.4 | 379.8 | |||||||||||
Cash
dividends declared per share of common stock | $ | 0.470 | $ | 0.425 | $ | 1.410 | $ | 1.275 |
Three Months | Nine
Months | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net earnings | $ | 590 | $ | 434 | $ | 1,485 | $ | 1,269 | |||||||
Other
comprehensive income (loss), net of tax: | |||||||||||||||
Marketable securities | — | (3 | ) | (1 | ) | (3 | ) | ||||||||
Pension
plans | (3 | ) | 14 | (1 | ) | 4 | |||||||||
Unrealized gains (losses) on designated hedges | 6 | (6 | ) | 23 | (7 | ) | |||||||||
Financial
statement translation | (50 | ) | 87 | (72 | ) | 269 | |||||||||
Total other comprehensive income (loss), net of tax | $ | (47 | ) | $ | 92 | $ | (51 | ) | $ | 263 | |||||
Comprehensive
income | $ | 543 | $ | 526 | $ | 1,434 | $ | 1,532 |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 1 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
September 30 | December 31 | ||||||
2018 | 2017 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current
assets | |||||||
Cash and cash equivalents | $ | 1,918 | $ | 2,542 | |||
Marketable securities | 292 | 251 | |||||
Accounts
receivable, less allowance of $62 ($59 in 2017) | 2,076 | 2,198 | |||||
Inventories: | |||||||
Materials and supplies | 614 | 528 | |||||
Work
in process | 174 | 148 | |||||
Finished goods | 2,105 | 1,789 | |||||
Total inventories | $ | 2,893 | $ | 2,465 | |||
Prepaid
expenses and other current assets | 739 | 537 | |||||
Total current assets | $ | 7,918 | $ | 7,993 | |||
Property,
plant and equipment: | |||||||
Land, buildings and improvements | 976 | 936 | |||||
Machinery and equipment | 3,176 | 2,864 | |||||
Total
property, plant and equipment | $ | 4,152 | $ | 3,800 | |||
Less accumulated depreciation | 1,974 | 1,825 | |||||
Property,
plant and equipment, net | $ | 2,178 | $ | 1,975 | |||
Goodwill | 7,634 | 7,168 | |||||
Other
intangibles, net | 3,463 | 3,477 | |||||
Other noncurrent assets | 891 | 1,584 | |||||
Total assets | $ | 22,084 | $ | 22,197 | |||
Liabilities
and shareholders' equity | |||||||
Current liabilities | |||||||
Accounts payable | $ | 563 | $ | 487 | |||
Accrued
compensation | 748 | 838 | |||||
Income taxes | 100 | 143 | |||||
Dividend payable | 176 | 178 | |||||
Accrued
recall expenses | 111 | 196 | |||||
Accrued expenses and other liabilities | 1,180 | 1,011 | |||||
Current maturities of debt | 1,275 | 632 | |||||
Total
current liabilities | $ | 4,153 | $ | 3,485 | |||
Long-term debt, excluding current maturities | 5,928 | 6,590 | |||||
Income
taxes | 1,251 | 1,261 | |||||
Other noncurrent liabilities | 892 | 881 | |||||
Total liabilities | $ | 12,224 | $ | 12,217 | |||
Shareholders'
equity | |||||||
Common stock, $0.10 par value | 37 | 37 | |||||
Additional paid-in capital | 1,535 | 1,496 | |||||
Retained
earnings | 8,892 | 8,986 | |||||
Accumulated other comprehensive loss | (604 | ) | (553 | ) | |||
Total Stryker shareholders' equity | $ | 9,860 | $ | 9,966 | |||
Noncontrolling
interest | — | 14 | |||||
Total shareholders' equity | $ | 9,860 | $ | 9,980 | |||
Total
liabilities and shareholders' equity | $ | 22,084 | $ | 22,197 |
Dollar amounts are in millions except per share
amounts or as otherwise specified. | 2 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Nine
Months | |||||||
2018 | 2017 | ||||||
Operating activities | |||||||
Net earnings | $ | 1,485 | $ | 1,269 | |||
Adjustments
to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation | 223 | 198 | |||||
Amortization of intangible assets | 324 | 275 | |||||
Share-based
compensation | 87 | 85 | |||||
Recall charges | 10 | 164 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts
receivable | 119 | 72 | |||||
Inventories | (439 | ) | (322 | ) | |||
Accounts payable | 57 | (2 | ) | ||||
Accrued
expenses and other liabilities | (40 | ) | (97 | ) | |||
Recall-related payments | (89 | ) | (492 | ) | |||
Income taxes | (231 | ) | (7 | ) | |||
Other,
net | 58 | (263 | ) | ||||
Net cash provided by operating activities | $ | 1,564 | $ | 880 | |||
Investing
activities | |||||||
Acquisitions, net of cash acquired | (770 | ) | (712 | ) | |||
Purchases of marketable securities | (214 | ) | (85 | ) | |||
Proceeds
from sales of marketable securities | 173 | 56 | |||||
Purchases of property, plant and equipment | (418 | ) | (412 | ) | |||
Net cash used in investing activities | $ | (1,229 | ) | $ | (1,153 | ) | |
Financing
activities | |||||||
Payments on short-term borrowings, net | (8 | ) | (198 | ) | |||
Proceeds from issuance of long-term debt | 595 | 498 | |||||
Payments
on long-term debt | (600 | ) | — | ||||
Dividends paid | (528 | ) | (477 | ) | |||
Repurchases of common stock | (300 | ) | (230 | ) | |||
Cash
paid for taxes from withheld shares | (104 | ) | (83 | ) | |||
Payments to purchase noncontrolling interest | (14 | ) | — | ||||
Other financing, net | 8 | (32 | ) | ||||
Net
cash used in financing activities | $ | (951 | ) | $ | (522 | ) | |
Effect of exchange rate changes on cash and cash equivalents | (8 | ) | 71 | ||||
Change
in cash and cash equivalents | $ | (624 | ) | $ | (724 | ) | |
Cash and cash equivalents at beginning of period | 2,542 | 3,316 | |||||
Cash
and cash equivalents at end of period | $ | 1,918 | $ | 2,592 |
Dollar amounts are in millions except per share amounts
or as otherwise specified. | 3 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Dollar
amounts are in millions except per share amounts or as otherwise specified. | 4 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Three
Months | Nine Months | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Orthopaedics: | |||||||||||||
Knees | $ | 395 | $ | 369 | $ | 1,236 | $ | 1,149 | |||||
Hips | 316 | 313 | 983 | 955 | |||||||||
Trauma
and Extremities | 376 | 367 | 1,152 | 1,070 | |||||||||
Other | 84 | 83 | 244 | 234 | |||||||||
$ | 1,171 | $ | 1,132 | $ | 3,615 | $ | 3,408 | ||||||
MedSurg: | |||||||||||||
Instruments | $ | 442 | $ | 404 | $ | 1,292 | $ | 1,190 | |||||
Endoscopy | 443 | 404 | 1,335 | 1,183 | |||||||||
Medical | 492 | 464 | 1,508 | 1,413 | |||||||||
Sustainability | 66 | 64 | 190 | 191 | |||||||||
$ | 1,443 | $ | 1,336 | $ | 4,325 | $ | 3,977 | ||||||
Neurotechnology
and Spine: | |||||||||||||
Neurotechnology | $ | 435 | $ | 353 | $ | 1,282 | $ | 1,036 | |||||
Spine | 193 | 185 | 583 | 552 | |||||||||
$ | 628 | $ | 538 | $ | 1,865 | $ | 1,588 | ||||||
Total | $ | 3,242 | $ | 3,006 | $ | 9,805 | $ | 8,973 |
Three
Months 2018 | Three Months 2017 | ||||||||||||
United States | International | United States | International | ||||||||||
Orthopaedics: | |||||||||||||
Knees | $ | 291 | $ | 104 | $ | 270 | $ | 99 | |||||
Hips | 198 | 118 | 194 | 119 | |||||||||
Trauma
and Extremities | 242 | 134 | 237 | 130 | |||||||||
Other | 67 | 17 | 68 | 15 | |||||||||
$ | 798 | $ | 373 | $ | 769 | $ | 363 | ||||||
MedSurg: | |||||||||||||
Instruments | $ | 352 | $ | 90 | $ | 316 | $ | 88 | |||||
Endoscopy | 346 | 97 | 316 | 88 | |||||||||
Medical | 393 | 99 | 357 | 108 | |||||||||
Sustainability | 66 | — | 63 | — | |||||||||
$ | 1,157 | $ | 286 | $ | 1,052 | $ | 284 | ||||||
Neurotechnology
and Spine: | |||||||||||||
Neurotechnology | $ | 284 | $ | 150 | $ | 222 | $ | 131 | |||||
Spine | 142 | 52 | 139 | 46 | |||||||||
$ | 426 | $ | 202 | $ | 361 | $ | 177 | ||||||
Total | $ | 2,381 | $ | 861 | $ | 2,182 | $ | 824 |
Nine
Months 2018 | Nine Months 2017 | ||||||||||||
United States | International | United States | International | ||||||||||
Orthopaedics: | |||||||||||||
Knees | $ | 896 | $ | 340 | $ | 838 | $ | 311 | |||||
Hips | 610 | 373 | 601 | 354 | |||||||||
Trauma
and Extremities | 729 | 423 | 693 | 377 | |||||||||
Other | 198 | 46 | 190 | 44 | |||||||||
$ | 2,433 | $ | 1,182 | $ | 2,322 | $ | 1,086 | ||||||
MedSurg: | |||||||||||||
Instruments | $ | 1,007 | $ | 285 | $ | 927 | $ | 263 | |||||
Endoscopy | 1,049 | 286 | 927 | 256 | |||||||||
Medical | 1,158 | 350 | 1,099 | 314 | |||||||||
Sustainability | 189 | 1 | 190 | 1 | |||||||||
$ | 3,403 | $ | 922 | $ | 3,143 | $ | 834 | ||||||
Neurotechnology
and Spine: | |||||||||||||
Neurotechnology | $ | 820 | $ | 462 | $ | 660 | $ | 376 | |||||
Spine | 424 | 159 | 421 | 131 | |||||||||
$ | 1,244 | $ | 621 | $ | 1,081 | $ | 507 | ||||||
Total | $ | 7,080 | $ | 2,725 | $ | 6,546 | $ | 2,427 |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 5 |
STRYKER
CORPORATION | 2018 Third Quarter Form 10-Q |
Three Months 2018 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||
Beginning | $ | (5 | ) | $ | (132 | ) | $ | 45 | $ | (465 | ) | $ | (557 | ) | |
OCI
| 1 | (2 | ) | 8 | (50 | ) | (43 | ) | |||||||
Income taxes | — | (2 | ) | (2 | ) | — | (4 | ) | |||||||
Reclassifications
to: | |||||||||||||||
Cost of sales | — | 2 | (2 | ) | — | — | |||||||||
Other
expense | (1 | ) | — | 1 | — | — | |||||||||
Income taxes | — | (1 | ) | 1 | — | — | |||||||||
Net
OCI | $ | — | $ | (3 | ) | $ | 6 | $ | (50 | ) | $ | (47 | ) | ||
Ending | $ | (5 | ) | $ | (135 | ) | $ | 51 | $ | (515 | ) | $ | (604 | ) |
Three
Months 2017 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||
Beginning | $ | — | $ | (142 | ) | $ | 23 | $ | (471 | ) | $ | (590 | ) | ||
OCI
| (6 | ) | 16 | (7 | ) | 74 | 77 | ||||||||
Income taxes | 2 | (4 | ) | 2 | 13 | 13 | |||||||||
Reclassifications
to: | |||||||||||||||
Cost of sales | — | 2 | (1 | ) | — | 1 | |||||||||
Other
income | 1 | — | — | — | 1 | ||||||||||
Net OCI | $ | (3 | ) | $ | 14 | $ | (6 | ) | $ | 87 | $ | 92 | |||
Ending | $ | (3 | ) | $ | (128 | ) | $ | 17 | $ | (384 | ) | $ | (498 | ) |
Nine
Months 2018 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||
Beginning | $ | (4 | ) | $ | (134 | ) | $ | 28 | $ | (443 | ) | $ | (553 | ) | |
OCI
| (1 | ) | (6 | ) | 32 | (84 | ) | (59 | ) | ||||||
Income taxes | — | 1 | (8 | ) | 12 | 5 | |||||||||
Reclassifications
to: | |||||||||||||||
Cost of sales | — | 6 | (4 | ) | — | 2 | |||||||||
Other
expense | — | — | 1 | — | 1 | ||||||||||
Income taxes | — | (2 | ) | 2 | — | — | |||||||||
Net
OCI | $ | (1 | ) | $ | (1 | ) | $ | 23 | $ | (72 | ) | $ | (51 | ) | |
Ending | $ | (5 | ) | $ | (135 | ) | $ | 51 | $ | (515 | ) | $ | (604 | ) |
Nine
Months 2017 | Marketable Securities | Pension Plans | Hedges | Financial Statement Translation | Total | ||||||||||
Beginning | $ | — | $ | (132 | ) | $ | 24 | $ | (653 | ) | $ | (761 | ) | ||
OCI
| (6 | ) | 1 | (17 | ) | 227 | 205 | ||||||||
Income taxes | 2 | (1 | ) | 5 | 42 | 48 | |||||||||
Reclassifications
to: | |||||||||||||||
Cost of sales | — | 5 | 7 | — | 12 | ||||||||||
Other
income | 1 | — | — | — | 1 | ||||||||||
Income taxes | — | (1 | ) | (2 | ) | — | (3 | ) | |||||||
Net
OCI | $ | (3 | ) | $ | 4 | $ | (7 | ) | $ | 269 | $ | 263 | |||
Ending | $ | (3 | ) | $ | (128 | ) | $ | 17 | $ | (384 | ) | $ | (498 | ) |
September
2018 | Designated | Non-Designated | Total | ||||||
Gross notional amount | $ | 828 | $ | 4,611 | $ | 5,439 | |||
Maximum
term in days | 586 | ||||||||
Fair value: | |||||||||
Other current assets | $ | 16 | $ | 22 | $ | 38 | |||
Other
noncurrent assets | 1 | 1 | 2 | ||||||
Other current liabilities | (3 | ) | (15 | ) | (18 | ) | |||
Total
fair value | $ | 14 | $ | 8 | $ | 22 |
December
2017 | Designated | Non-Designated | Total | ||||||
Gross notional amount | $ | 1,104 | $ | 4,767 | $ | 5,871 | |||
Maximum
term in days | 548 | ||||||||
Fair value: | |||||||||
Other current assets | $ | 11 | $ | 4 | $ | 15 | |||
Other
noncurrent assets | 1 | — | 1 | ||||||
Other current liabilities | (7 | ) | (29 | ) | (36 | ) | |||
Other
noncurrent liabilities | (1 | ) | — | (1 | ) | ||||
Total fair value | $ | 4 | $ | (25 | ) | $ | (21 | ) |
Dollar amounts are in millions except
per share amounts or as otherwise specified. | 6 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Three
Months | Nine Months | ||||||||||||
Recorded in: | 2018 | 2017 | 2018 | 2017 | |||||||||
Cost of sales | $ | 2 | $ | 1 | $ | 4 | $ | (7 | ) | ||||
Other
income (expense), net | 1 | (2 | ) | (3 | ) | (6 | ) | ||||||
Total | $ | 3 | $ | (1 | ) | $ | 1 | $ | (13 | ) |
Assets Measured at Fair
Value | September | December | ||||
2018 | 2017 | |||||
Cash and cash equivalents | $ | 1,918 | $ | 2,542 | ||
Trading marketable securities | 130 | 121 | ||||
Level
1 - Assets | $ | 2,048 | $ | 2,663 | ||
Available-for-sale marketable securities: | ||||||
Corporate and asset-backed debt securities | $ | 53 | $ | 125 | ||
Foreign
government debt securities | 112 | 2 | ||||
United States agency debt securities | 2 | 27 | ||||
United States Treasury debt securities | 33 | 70 | ||||
Certificates
of deposit | 92 | 27 | ||||
Total available-for-sale marketable securities | $ | 292 | $ | 251 | ||
Foreign currency exchange forward contracts | 40 | 15 | ||||
Interest
rate swap asset | — | 49 | ||||
Level 2 - Assets | $ | 332 | $ | 315 | ||
Total assets measured at fair value | $ | 2,380 | $ | 2,978 |
Liabilities
Measured at Fair Value | September | December | ||||
2018 | 2017 | |||||
Deferred compensation arrangements | $ | 130 | $ | 121 | ||
Level 1 - Liabilities | $ | 130 | $ | 121 | ||
Foreign
currency exchange forward contracts | $ | 18 | $ | 37 | ||
Level 2 - Liabilities | $ | 18 | $ | 37 | ||
Contingent
consideration: | ||||||
Beginning | $ | 32 | $ | 86 | ||
Additions | 78 | 3 | ||||
Change
in estimate | — | 2 | ||||
Settlements | (9 | ) | (59 | ) | ||
Ending | $ | 101 | $ | 32 | ||
Level
3 - Liabilities | $ | 101 | $ | 32 | ||
Total liabilities measured at fair value | $ | 249 | $ | 190 |
Fair
Value of Available for Sale Securities by Maturity | ||||||
September 2018 | December 2017 | |||||
Due in one year or less | $ | 140 | $ | 107 | ||
Due after one year through three years | $ | 152 | $ | 144 |
Securities
in a Continuous Unrealized Loss Position | ||||
Number of Investments | Fair Value | |||
Corporate and asset-backed | 116 | $ | 87 | |
Foreign government | 1 | 2 | ||
United
States agency | 14 | 24 | ||
United States Treasury | 39 | 86 | ||
Certificates of deposit | 32 | 48 | ||
Total | 202 | $ | 247 |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 7 |
STRYKER CORPORATION | 2018
Third Quarter Form 10-Q |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 8 |
STRYKER
CORPORATION | 2018 Third Quarter Form 10-Q |
Purchase Price Allocation of Acquired Net Assets | |||||||
2018 | 2017 | ||||||
Entellus | NOVADAQ | ||||||
Tangible
assets: | |||||||
Accounts receivable | $ | 17 | $ | 11 | |||
Inventory | 14 | 25 | |||||
Other
assets | 72 | 7 | |||||
Contingent consideration | (78 | ) | — | ||||
Other liabilities | (92 | ) | (56 | ) | |||
Intangible
assets: | |||||||
Customer relationship | 33 | 18 | |||||
Trade name | — | 1 | |||||
Developed
technology and patents | 256 | 141 | |||||
Goodwill | 475 | 527 | |||||
Purchase price, net of cash acquired | $ | 697 | $ | 674 | |||
Weighted-average
life of intangible assets | 16 | 15 |
Estimated Amortization Expense | ||||||||||||||
Remainder
of 2018 | 2019 | 2020 | 2021 | 2022 | ||||||||||
$ | 105 | $ | 384 | $ | 349 | $ | 338 | $ | 331 |
Summary of Total Debt | September 2018 | December 2017 | ||||||||
Senior unsecured notes: | ||||||||||
Rate | Due | |||||||||
1.300% | $ | — | $ | 600 | ||||||
1.800% | 500 | 499 | ||||||||
2.000% | 749 | 748 | ||||||||
4.375% | 499 | 498 | ||||||||
2.625% | 747 | 746 | ||||||||
3.375% | 584 | 598 | ||||||||
3.375% | 746 | 745 | ||||||||
3.500% | 989 | 988 | ||||||||
3.650% | 595 | — | ||||||||
4.100% | April 1, 2043 | 391 | 391 | |||||||
4.375% | May 15,
2044 | 395 | 394 | |||||||
4.625% | March 15, 2046 | 980 | 980 | |||||||
Other | 28 | 35 | ||||||||
Total
debt | $ | 7,203 | $ | 7,222 | ||||||
Less current maturities of debt | 1,275 | 632 | ||||||||
Total
long-term debt | $ | 5,928 | $ | 6,590 | ||||||
Unamortized debt issuance costs | $ | 39 | $ | 39 | ||||||
Available
borrowing capacity | $ | 1,553 | $ | 1,547 | ||||||
Fair value of senior unsecured notes | $ | 7,118 | $ | 7,521 |
Three Months | Nine
Months | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Orthopaedics | $ | 1,171 | $ | 1,132 | $ | 3,615 | $ | 3,408 | |||||
MedSurg | 1,443 | 1,336 | 4,325 | 3,977 | |||||||||
Neurotechnology
and Spine | 628 | 538 | 1,865 | 1,588 | |||||||||
Net sales | $ | 3,242 | $ | 3,006 | $ | 9,805 | $ | 8,973 | |||||
Orthopaedics | $ | 397 | $ | 390 | $ | 1,263 | $ | 1,178 | |||||
MedSurg | 341 | 272 | 968 | 841 | |||||||||
Neurotechnology
and Spine | 173 | 157 | 532 | 446 | |||||||||
Segment operating income | $ | 911 | $ | 819 | $ | 2,763 | $ | 2,465 | |||||
Items
not allocated to segments: | |||||||||||||
Corporate and other | (104 | ) | (89 | ) | (291 | ) | (265 | ) | |||||
Acquisition
and integration-related charges | (8 | ) | (11 | ) | (49 | ) | (29 | ) | |||||
Amortization of purchased intangible assets | (112 | ) | (92 | ) | (324 | ) | (275 | ) | |||||
Restructuring-related
and other charges | (39 | ) | (36 | ) | (124 | ) | (119 | ) | |||||
European Medical Devices Regulation | (2 | ) | — | (5 | ) | — | |||||||
Rejuvenate
and other recall-related matters | (4 | ) | (66 | ) | (10 | ) | (164 | ) | |||||
Regulatory and legal matters | (66 | ) | — | (121 | ) | (30 | ) | ||||||
Consolidated
operating income | $ | 576 | $ | 525 | $ | 1,839 | $ | 1,583 |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 9 |
STRYKER CORPORATION | 2018
Third Quarter Form 10-Q |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three
Months | Nine Months | ||||||||||||||||||||||||
Percent Net Sales | Percentage | Percent Net Sales | Percentage | ||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | Change | 2018 | 2017 | 2018 | 2017 | Change | ||||||||||||||||
Net
sales | $ | 3,242 | $ | 3,006 | 100.0 | % | 100.0 | % | 7.9 | % | $ | 9,805 | $ | 8,973 | 100.0 | % | 100.0 | % | 9.3 | % | |||||
Gross
profit | 2,155 | 1,984 | 66.5 | 66.0 | 8.6 | 6,482 | 5,939 | 66.1 | 66.2 | 9.1 | |||||||||||||||
Research,
development and engineering expenses | 221 | 198 | 6.8 | 6.6 | 11.6 | 641 | 582 | 6.5 | 6.5 | 10.1 | |||||||||||||||
Selling,
general and administrative expenses | 1,242 | 1,103 | 38.3 | 36.7 | 12.6 | 3,668 | 3,335 | 37.4 | 37.2 | 10.0 | |||||||||||||||
Recall
charges | 4 | 66 | 0.1 | 2.2 | (93.9 | ) | 10 | 164 | 0.1 | 1.8 | (93.9 | ) | |||||||||||||
Amortization
of intangible assets | 112 | 92 | 3.5 | 3.1 | 21.7 | 324 | 275 | 3.3 | 3.1 | 17.8 | |||||||||||||||
Other
income (expense), net | (42 | ) | (54 | ) | (1.3 | ) | (1.8 | ) | (22.2 | ) | (140 | ) | (169 | ) | (1.4 | ) | (1.9 | ) | (17.2 | ) | |||||
Income
taxes | (56 | ) | 37 | (251.4 | ) | 214 | 145 | 47.6 | |||||||||||||||||
Net
earnings | $ | 590 | $ | 434 | 18.2 | % | 14.4 | % | 35.9 | % | $ | 1,485 | $ | 1,269 | 15.1 | % | 14.1 | % | 17.0 | % | |||||
Net
earnings per diluted share | $ | 1.55 | $ | 1.14 | 36.0 | % | $ | 3.90 | $ | 3.34 | 16.8 | % | |||||||||||||
Adjusted
net earnings per diluted share(1) | $ | 1.69 | $ | 1.52 | 11.2 | % | $ | 5.13 | $ | 4.53 | 13.2 | % |
Dollar
amounts are in millions except per share amounts or as otherwise specified. | 10 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Geographic
and Segment Net Sales | Three Months | Nine Months | |||||||||||||||||||
Percentage Change | Percentage Change | ||||||||||||||||||||
2018 | 2017 | As
Reported | Constant Currency | 2018 | 2017 | As Reported | Constant Currency | ||||||||||||||
Geographic: | |||||||||||||||||||||
United
States | $ | 2,381 | $ | 2,182 | 9.1 | % | 9.1 | % | $ | 7,080 | $ | 6,546 | 8.2 | % | 8.2 | % | |||||
International | 861 | 824 | 4.5 | 7.8 | 2,725 | 2,427 | 12.3 | 8.9 | |||||||||||||
Total | $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | $ | 9,805 | $ | 8,973 | 9.3 | % | 8.4 | % | |||||
Segment: | |||||||||||||||||||||
Orthopaedics | $ | 1,171 | $ | 1,132 | 3.4 | % | 4.5 | % | $ | 3,615 | $ | 3,408 | 6.1 | % | 5.0 | % | |||||
MedSurg | 1,443 | 1,336 | 8.0 | 8.8 | 4,325 | 3,977 | 8.8 | 8.2 | |||||||||||||
Neurotechnology
and Spine | 628 | 538 | 16.7 | 17.7 | 1,865 | 1,588 | 17.4 | 16.2 | |||||||||||||
Total | $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | $ | 9,805 | $ | 8,973 | 9.3 | % | 8.4 | % |
Supplemental
Net Sales Growth Information | |||||||||||||||||||||||||||||||||
Three Months | Nine Months | ||||||||||||||||||||||||||||||||
Percentage
Change | Percentage Change | ||||||||||||||||||||||||||||||||
United States | International | United
States | International | ||||||||||||||||||||||||||||||
2018 | 2017 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | 2018 | 2017 | As
Reported | Constant Currency | As Reported | As Reported | Constant Currency | ||||||||||||||||||||
Orthopaedics: | |||||||||||||||||||||||||||||||||
Knees | $ | 395 | $ | 369 | 7.0 | % | 8.3 | % | 7.8 | % | 5.1 | % | 9.2 | % | $ | 1,236 | $ | 1,149 | 7.6 | % | 6.7 | % | 6.9 | % | 9.3 | % | 6.2 | % | |||||
Hips | 316 | 313 | 1.0 | 2.2 | 2.1 | (0.8 | ) | 2.5 | 983 | 955 | 2.9 | 1.9 | 1.5 | 5.4 | 2.4 | ||||||||||||||||||
Trauma
and Extremities | 376 | 367 | 2.5 | 3.2 | 2.1 | 3.1 | 5.1 | 1,152 | 1,070 | 7.7 | 6.0 | 5.2 | 12.2 | 7.5 | |||||||||||||||||||
Other | 84 | 83 | 1.2 | 2.7 | (1.5 | ) | 13.3 | 19.1 | 244 | 234 | 4.3 | 3.9 | 4.2 | 4.5 | 4.1 | ||||||||||||||||||
$ | 1,171 | $ | 1,132 | 3.4 | % | 4.5 | % | 3.8 | % | 2.8 | % | 6.0 | % | $ | 3,615 | $ | 3,408 | 6.1 | % | 5.0 | % | 4.8 | % | 8.8 | % | 5.4 | % | ||||||
MedSurg: | |||||||||||||||||||||||||||||||||
Instruments | $ | 442 | $ | 404 | 9.4 | % | 10.0 | % | 11.4 | % | 2.3 | % | 4.2 | % | $ | 1,292 | $ | 1,190 | 8.6 | % | 7.8 | % | 8.6 | % | 8.4 | % | 4.9 | % | |||||
Endoscopy | 443 | 404 | 9.7 | 10.8 | 9.5 | 10.2 | 15.0 | 1,335 | 1,183 | 12.8 | 12.4 | 13.2 | 11.7 | 9.3 | |||||||||||||||||||
Medical | 492 | 464 | 6.0 | 6.8 | 10.1 | (8.3 | ) | (4.4 | ) | 1,508 | 1,413 | 6.7 | 6.1 | 5.4 | 11.5 | 8.5 | |||||||||||||||||
Sustainability | 66 | 64 | 3.1 | 3.9 | 4.8 | — | 15.0 | 190 | 191 | (0.5 | ) | (0.6 | ) | (0.5 | ) | — | 15.7 | ||||||||||||||||
$ | 1,443 | $ | 1,336 | 8.0 | % | 8.8 | % | 10.0 | % | 0.7 | % | 4.3 | % | $ | 4,325 | $ | 3,977 | 8.8 | % | 8.2 | % | 8.3 | % | 10.6 | % | 7.6 | % | ||||||
Neurotechnology
and Spine: | |||||||||||||||||||||||||||||||||
Neurotechnology | $ | 435 | $ | 353 | 23.2 | % | 24.1 | % | 27.9 | % | 14.5 | % | 18.1 | % | $ | 1,282 | $ | 1,036 | 23.7 | % | 22.3 | % | 24.2 | % | 22.9 | % | 18.9 | % | |||||
Spine | 193 | 185 | 4.3 | 5.5 | 2.2 | 13.0 | 15.8 | 583 | 552 | 5.6 | 4.8 | 0.7 | 21.4 | 17.5 | |||||||||||||||||||
$ | 628 | $ | 538 | 16.7 | % | 17.7 | % | 18.0 | % | 14.1 | % | 17.5 | % | $ | 1,865 | $ | 1,588 | 17.4 | % | 16.2 | % | 15.1 | % | 22.5 | % | 18.6 | % | ||||||
Total
| $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | 9.1 | % | 4.5 | % | 7.8 | % | $ | 9,805 | $ | 8,973 | 9.3 | % | 8.4 | % | 8.2 | % | 12.3 | % | 8.9 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 11 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Three
Months | |||||||||||||||||||
Percentage Change Excluding ASC 606 Impact | |||||||||||||||||||
Percentage Change | International | ||||||||||||||||||
2018 | 2017 | As
Reported | Excluding ASC 606 Impact | Constant Currency | United States | Excluding ASC 606 Impact | Constant Currency | ||||||||||||
Orthopaedics: | |||||||||||||||||||
Knees | $ | 395 | $ | 369 | 7.0 | % | 7.7 | % | 8.7 | % | 8.4 | % | 5.7 | % | 9.6 | % | |||
Hips | 316 | 313 | 1.0 | 1.2 | 2.5 | 2.4 | (0.6 | ) | 2.8 | ||||||||||
Trauma
and Extremities | 376 | 367 | 2.5 | 3.2 | 4.0 | 3.2 | 3.1 | 5.5 | |||||||||||
Other | 84 | 83 | 1.2 | 1.6 | 2.7 | (0.9 | ) | 13.1 | 19.3 | ||||||||||
$ | 1,171 | $ | 1,132 | 3.4 | % | 4.0 | % | 5.0 | % | 4.4 | % | 3.0 | % | 6.3 | % | ||||
MedSurg: | |||||||||||||||||||
Instruments | $ | 442 | $ | 404 | 9.4 | % | 10.7 | % | 11.6 | % | 13.7 | % | 0.3 | % | 4.3 | % | |||
Endoscopy | 443 | 404 | 9.7 | 10.8 | 11.9 | 11.0 | 10.4 | 15.2 | |||||||||||
Medical | 492 | 464 | 6.0 | 7.5 | 8.5 | 12.4 | (8.1 | ) | (4.2 | ) | |||||||||
Sustainability | 66 | 64 | 3.1 | 7.0 | 7.0 | 7.0 | 10.9 | 15.0 | |||||||||||
$ | 1,443 | $ | 1,336 | 8.0 | % | 9.5 | % | 10.4 | % | 12.0 | % | 0.2 | % | 4.5 | % | ||||
Neurotechnology
and Spine: | |||||||||||||||||||
Neurotechnology | $ | 435 | $ | 353 | 23.2 | % | 23.8 | % | 24.8 | % | 28.7 | % | 15.4 | % | 18.2 | % | |||
Spine | 193 | 185 | 4.3 | 5.2 | 5.9 | 2.4 | 13.4 | 16.5 | |||||||||||
$ | 628 | $ | 538 | 16.7 | % | 17.4 | % | 18.3 | % | 18.6 | % | 14.9 | % | 17.8 | % | ||||
Total
| $ | 3,242 | $ | 3,006 | 7.9 | % | 8.8 | % | 9.8 | % | 10.4 | % | 4.6 | % | 8.1 | % |
Dollar
amounts are in millions except per share amounts or as otherwise specified. | 12 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Nine
Months | |||||||||||||||||||
Percentage Change Excluding ASC 606 Impact | |||||||||||||||||||
Percentage Change | International | ||||||||||||||||||
2018 | 2017 | As
Reported | Excluding ASC 606 Impact | Constant Currency | United States | Excluding ASC 606 Impact | Constant Currency | ||||||||||||
Orthopaedics: | |||||||||||||||||||
Knees | $ | 1,236 | $ | 1,149 | 7.6 | % | 8.0 | % | 7.1 | % | 7.3 | % | 9.8 | % | 6.6 | % | |||
Hips | 983 | 955 | 2.9 | 3.3 | 2.2 | 1.9 | 5.5 | 2.6 | |||||||||||
Trauma
and Extremities | 1,152 | 1,070 | 7.7 | 8.5 | 6.9 | 6.3 | 12.5 | 8.0 | |||||||||||
Other | 244 | 234 | 4.3 | 4.2 | 3.9 | 3.9 | 5.4 | 4.2 | |||||||||||
$ | 3,615 | $ | 3,408 | 6.1 | % | 6.6 | % | 5.4 | % | 5.3 | % | 9.2 | % | 5.7 | % | ||||
MedSurg: | |||||||||||||||||||
Instruments | $ | 1,292 | $ | 1,190 | 8.6 | % | 10.2 | % | 9.5 | % | 10.8 | % | 8.0 | % | 5.0 | % | |||
Endoscopy | 1,335 | 1,183 | 12.8 | 14.2 | 13.6 | 14.8 | 11.8 | 9.5 | |||||||||||
Medical | 1,508 | 1,413 | 6.7 | 8.3 | 7.7 | 7.4 | 11.5 | 8.7 | |||||||||||
Sustainability | 190 | 191 | (0.5 | ) | 2.5 | 2.5 | 2.4 | 17.3 | 15.7 | ||||||||||
$ | 4,325 | $ | 3,977 | 8.8 | % | 10.4 | % | 9.8 | % | 10.3 | % | 10.5 | % | 7.8 | % | ||||
Neurotechnology
and Spine: | |||||||||||||||||||
Neurotechnology | $ | 1,282 | $ | 1,036 | 23.7 | % | 24.5 | % | 23.0 | % | 25.3 | % | 23.1 | % | 19.1 | % | |||
Spine | 583 | 552 | 5.6 | 6.1 | 5.2 | 1.1 | 22.1 | 18.2 | |||||||||||
$ | 1,865 | $ | 1,588 | 17.4 | % | 18.1 | % | 16.8 | % | 15.8 | % | 22.9 | % | 18.9 | % | ||||
Total | $ | 9,805 | $ | 8,973 | 9.3 | % | 10.3 | % | 9.4 | % | 9.4 | % | 12.5 | % | 9.1 | % |
Percent Net Sales | ||||||||||
Three Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 2,155 | $ | 1,984 | 66.5 | % | 66.0 | % | ||
Inventory
stepped-up to fair value | (11 | ) | 2 | (0.3 | ) | 0.1 | ||||
Restructuring-related and other charges | 4 | 1 | 0.1 | — | ||||||
Adjusted | $ | 2,148 | $ | 1,987 | 66.3 | % | 66.1 | % |
Dollar
amounts are in millions except per share amounts or as otherwise specified. | 13 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Percent
Net Sales | ||||||||||
Nine Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 6,482 | $ | 5,939 | 66.1 | % | 66.2 | % | ||
Inventory
stepped-up to fair value | — | 2 | — | — | ||||||
Restructuring-related and other charges | 9 | 12 | 0.1 | 0.1 | ||||||
European
Medical Devices Regulation | 1 | — | — | — | ||||||
Adjusted | $ | 6,492 | $ | 5,953 | 66.2 | % | 66.3 | % |
Percent
Net Sales | ||||||||||
Three Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 1,242 | $ | 1,103 | 38.3 | % | 36.7 | % | ||
Other
acquisition and integration-related | (19 | ) | (9 | ) | (0.6 | ) | (0.3 | ) | ||
Restructuring-related and other charges | (35 | ) | (35 | ) | (1.1 | ) | (1.2 | ) | ||
Regulatory
and legal matters | (66 | ) | — | (2.0 | ) | — | ||||
Adjusted | $ | 1,122 | $ | 1,059 | 34.6 | % | 35.2 | % |
Percent
Net Sales | ||||||||||
Nine Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 3,668 | $ | 3,335 | 37.4 | % | 37.2 | % | ||
Other
acquisition and integration-related | (49 | ) | (27 | ) | (0.5 | ) | (0.3 | ) | ||
Restructuring-related and other charges | (115 | ) | (107 | ) | (1.2 | ) | (1.2 | ) | ||
Regulatory
and legal matters | (121 | ) | (30 | ) | (1.2 | ) | (0.4 | ) | ||
Adjusted | $ | 3,383 | $ | 3,171 | 34.5 | % | 35.3 | % |
Percent
Net Sales | ||||||||||
Three Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 576 | $ | 525 | 17.8 | % | 17.5 | % | ||
Inventory
stepped-up to fair value | (11 | ) | 2 | (0.3 | ) | 0.1 | ||||
Other acquisition and integration-related | 19 | 9 | 0.6 | 0.3 | ||||||
Amortization
of purchased intangible assets | 112 | 92 | 3.4 | 3.0 | ||||||
Restructuring-related and other charges | 39 | 36 | 1.2 | 1.2 | ||||||
European
Medical Devices Regulation | 2 | — | 0.1 | — | ||||||
Rejuvenate and other recall-related matters | 4 | 66 | 0.1 | 2.2 | ||||||
Regulatory
and legal matters | 66 | — | 2.0 | — | ||||||
Adjusted | $ | 807 | $ | 730 | 24.9 | % | 24.3 | % |
Percent
Net Sales | ||||||||||
Nine Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 1,839 | $ | 1,583 | 18.8 | % | 17.6 | % | ||
Inventory
stepped-up to fair value | — | 2 | — | — | ||||||
Other acquisition and integration-related | 49 | 27 | 0.5 | 0.3 | ||||||
Amortization
of purchased intangible assets | 324 | 275 | 3.3 | 3.1 | ||||||
Restructuring-related and other charges | 124 | 119 | 1.3 | 1.3 | ||||||
European
Medical Devices Regulation | 5 | — | — | — | ||||||
Rejuvenate and other recall-related matters | 10 | 164 | 0.1 | 1.8 | ||||||
Regulatory
and legal matters | 121 | 30 | 1.2 | 0.4 | ||||||
Adjusted | $ | 2,472 | $ | 2,200 | 25.2 | % | 24.5 | % |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 14 |
STRYKER
CORPORATION | 2018 Third Quarter Form 10-Q |
Percent
Net Sales | ||||||||||
Three Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 590 | $ | 434 | 18.2 | % | 14.4 | % | ||
Inventory
stepped-up to fair value | (11 | ) | 2 | (0.3 | ) | 0.1 | ||||
Other acquisition and integration-related | 17 | 6 | 0.5 | 0.2 | ||||||
Amortization
of purchased intangible assets | 92 | 66 | 2.8 | 2.2 | ||||||
Restructuring-related and other charges | 31 | 27 | 0.9 | 0.9 | ||||||
European
Medical Devices Regulation | 2 | — | 0.1 | — | ||||||
Rejuvenate and other recall-related matters | 2 | 48 | 0.1 | 1.6 | ||||||
Regulatory
and legal matters | 50 | (5 | ) | 1.5 | (0.2 | ) | ||||
Tax matters | (130 | ) | — | (4.0 | ) | — | ||||
Adjusted | $ | 643 | $ | 578 | 19.8 | % | 19.2 | % |
Percent
Net Sales | ||||||||||
Nine Months | 2018 | 2017 | 2018 | 2017 | ||||||
Reported | $ | 1,485 | $ | 1,269 | 15.1 | % | 14.1 | % | ||
Inventory
stepped-up to fair value | (4 | ) | 2 | — | — | |||||
Other acquisition and integration-related | 41 | 20 | 0.4 | 0.2 | ||||||
Amortization
of purchased intangible assets | 263 | 190 | 2.7 | 2.1 | ||||||
Restructuring-related and other charges | 98 | 95 | 1.0 | 1.1 | ||||||
European
Medical Devices Regulation | 4 | — | 0.1 | — | ||||||
Rejuvenate and other recall-related matters | 7 | 123 | 0.1 | 1.4 | ||||||
Regulatory
and legal matters | 92 | 20 | 0.9 | 0.3 | ||||||
Tax matters | (35 | ) | — | (0.4 | ) | — | ||||
Adjusted | $ | 1,951 | $ | 1,719 | 19.9 | % | 19.2 | % |
1. | Acquisition
and integration-related costs. Costs related to integrating recently acquired businesses and specific costs (e.g., inventory step-up and deal costs) related to the consummation of the acquisition process. |
2. | Amortization of purchased intangible assets. Periodic amortization expense related to purchased intangible assets. |
3. | Restructuring-related and other charges. Costs associated with the termination of sales relationships in certain countries, workforce
reductions, elimination of product lines, weather-related asset impairments and associated costs and other restructuring-related activities. |
4. | European Medical Devices Regulation. Costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the European Union's regulation for medical devices. |
5. | Rejuvenate and other recall-related matters.
Our best estimate of the minimum end of the range of probable loss to resolve the Rejuvenate recall and other recall-related matters. |
6. | Regulatory and legal matters. Our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements. |
7. | Tax matters. Charges represent the impact of accounting for certain significant and discrete tax items, including adjustments related to
the Act. |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 15 |
STRYKER
CORPORATION | 2018 Third Quarter Form 10-Q |
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | ||||||||||||||||||||
Three
Months 2018 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 2,155 | $ | 1,242 | $ | 112 | $ | 576 | $ | 590 | (10.5 | )% | $ | 1.55 | ||||||
Reported
percent net sales | 66.5 | % | 38.3 | % | 3.5 | % | 17.8 | % | 18.2 | % | ||||||||||
Acquisition
and integration-related charges: | ||||||||||||||||||||
Inventory stepped-up to fair value | (11 | ) | — | — | (11 | ) | (11 | ) | 0.3 | (0.03 | ) | |||||||||
Other
acquisition and integration-related | — | (19 | ) | — | 19 | 17 | — | 0.05 | ||||||||||||
Amortization
of purchased intangible assets | — | — | (112 | ) | 112 | 92 | 0.5 | 0.24 | ||||||||||||
Restructuring-related
and other charges | 4 | (35 | ) | — | 39 | 31 | 0.4 | 0.08 | ||||||||||||
European
Medical Devices Regulation | — | — | — | 2 | 2 | — | — | |||||||||||||
Rejuvenate
and other recall-related matters | — | — | — | 4 | 2 | 0.1 | 0.01 | |||||||||||||
Regulatory
and legal matters | — | (66 | ) | — | 66 | 50 | 1.0 | 0.13 | ||||||||||||
Tax
matters | — | — | — | — | (130 | ) | 24.3 | (0.34 | ) | |||||||||||
Adjusted | $ | 2,148 | $ | 1,122 | $ | — | $ | 807 | $ | 643 | 16.1 | % | $ | 1.69 | ||||||
Adjusted
percent net sales | 66.3 | % | 34.6 | % | — | % | 24.9 | % | 19.8 | % |
Three
Months 2017 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 1,984 | $ | 1,103 | $ | 92 | $ | 525 | $ | 434 | 7.9 | % | $ | 1.14 | ||||||
Reported
percent net sales | 66.0 | % | 36.7 | % | 3.1 | % | 17.5 | % | 14.4 | % | ||||||||||
Acquisition
and integration-related charges: | ||||||||||||||||||||
Inventory stepped-up to fair value | 2 | — | — | 2 | 2 | — | 0.01 | |||||||||||||
Other
acquisition and integration-related | — | (9 | ) | — | 9 | 6 | 0.2 | 0.01 | ||||||||||||
Amortization
of purchased intangible assets | — | — | (92 | ) | 92 | 66 | 2.7 | 0.18 | ||||||||||||
Restructuring-related
and other charges | 1 | (35 | ) | — | 36 | 27 | 0.7 | 0.07 | ||||||||||||
Rejuvenate
and other recall-related matters | — | — | — | 66 | 48 | 1.9 | 0.13 | |||||||||||||
Regulatory
and legal matters | — | — | — | — | (5 | ) | 1.2 | (0.02 | ) | |||||||||||
Tax
matters | — | — | — | — | — | — | — | |||||||||||||
Adjusted | $ | 1,987 | $ | 1,059 | $ | — | $ | 730 | $ | 578 | 14.6 | % | $ | 1.52 | ||||||
Adjusted
percent net sales | 66.1 | % | 35.2 | % | — | % | 24.3 | % | 19.2 | % |
Nine
Months 2018 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 6,482 | $ | 3,668 | $ | 324 | $ | 1,839 | $ | 1,485 | 12.6 | % | $ | 3.90 | ||||||
Reported
percent net sales | 66.1 | % | 37.4 | % | 3.3 | % | 18.8 | % | 15.1 | % | ||||||||||
Acquisition
and integration-related charges: | ||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | (4 | ) | 0.2 | (0.01 | ) | |||||||||||
Other
acquisition and integration-related | — | (49 | ) | — | 49 | 41 | — | 0.11 | ||||||||||||
Amortization
of purchased intangible assets | — | — | (324 | ) | 324 | 263 | 0.5 | 0.69 | ||||||||||||
Restructuring-related
and other charges | 9 | (115 | ) | — | 124 | 98 | 0.3 | 0.26 | ||||||||||||
European
Medical Devices Regulation | 1 | — | — | 5 | 4 | — | 0.01 | |||||||||||||
Rejuvenate
and other recall-related matters | — | — | — | 10 | 7 | — | 0.02 | |||||||||||||
Regulatory
and legal matters | — | (121 | ) | — | 121 | 92 | 0.6 | 0.24 | ||||||||||||
Tax
matters | — | — | — | — | (35 | ) | 2.1 | (0.09 | ) | |||||||||||
Adjusted | $ | 6,492 | $ | 3,383 | $ | — | $ | 2,472 | $ | 1,951 | 16.3 | % | $ | 5.13 | ||||||
Adjusted
percent net sales | 66.2 | % | 34.5 | % | — | % | 25.2 | % | 19.9 | % |
Nine
Months 2017 | Gross Profit | Selling, General & Administrative Expenses | Amortization of Intangible Assets | Operating Income | Net Earnings | Effective Tax Rate | Diluted EPS | |||||||||||||
Reported | $ | 5,939 | $ | 3,335 | $ | 275 | $ | 1,583 | $ | 1,269 | 10.3 | % | $ | 3.34 | ||||||
Reported
percent net sales | 66.2 | % | 37.2 | % | 3.1 | % | 17.6 | % | 14.1 | % | ||||||||||
Acquisition
and integration-related charges: | ||||||||||||||||||||
Inventory stepped-up to fair value | 2 | — | — | 2 | 2 | — | 0.01 | |||||||||||||
Other
acquisition and integration-related | — | (27 | ) | — | 27 | 20 | 0.2 | 0.05 | ||||||||||||
Amortization
of purchased intangible assets | — | — | (275 | ) | 275 | 190 | 3.0 | 0.50 | ||||||||||||
Restructuring-related
and other charges | 12 | (107 | ) | — | 119 | 95 | 0.4 | 0.25 | ||||||||||||
Rejuvenate
and other recall-related matters | — | — | — | 164 | 123 | 1.1 | 0.33 | |||||||||||||
Regulatory
and legal matters | — | (30 | ) | — | 30 | 20 | 0.4 | 0.05 | ||||||||||||
Adjusted | $ | 5,953 | $ | 3,171 | $ | — | $ | 2,200 | $ | 1,719 | 15.4 | % | $ | 4.53 | ||||||
Adjusted
percent net sales | 66.3 | % | 35.3 | % | — | % | 24.5 | % | 19.2 | % |
Dollar
amounts are in millions except per share amounts or as otherwise specified. | 16 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
Nine
Months | 2018 | 2017 | ||||
Net cash provided by operating activities | $ | 1,564 | $ | 880 | ||
Net cash used in investing activities | (1,229 | ) | (1,153 | ) | ||
Net
cash used in financing activities | (951 | ) | (522 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | (8 | ) | 71 | |||
Change in cash and cash equivalents | $ | (624 | ) | $ | (724 | ) |
Nine
Months | 2018 | 2017 | ||||
Total dividends paid to common shareholders | $ | 528 | $ | 477 | ||
Total amount paid to repurchase common stock | $ | 300 | $ | 230 | ||
Shares
of repurchased common stock (in millions) | 1.9 | 1.9 |
ITEM 3. | QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
Dollar amounts are in millions except per share amounts or as otherwise specified. | 17 |
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 6. | EXHIBITS |
2(i) | |
3(i)† | |
10(i) | |
31(i)* | |
31(ii)* | |
32(i)* | |
32(ii)* | |
101.INS | XBRL Instance Document |
101.SCH | XBRL Schema Document |
101.CAL | XBRL Calculation Linkbase Document |
101.DEF | XBRL
Definition Linkbase Document |
101.LAB | XBRL Label Linkbase Document |
101.PRE | XBRL Presentation Linkbase Document |
† Filed with this Form 10-Q | |
* Furnished with this Form 10-Q |
Dollar
amounts are in millions except per share amounts or as otherwise specified. | 18 |
STRYKER CORPORATION | 2018 Third Quarter Form 10-Q |
STRYKER CORPORATION | |||
(Registrant) | |||
Date: | /s/ KEVIN A. LOBO | ||
Chairman and Chief Executive Officer | |||
Date: | |||
Vice President, Chief Financial Officer |
19 |
This ‘10-Q’ Filing | Date | Other Filings | ||
---|---|---|---|---|
3/7/28 | ||||
3/15/26 | ||||
11/1/25 | ||||
5/15/24 | ||||
8/19/23 | ||||
3/15/21 | ||||
12/15/20 | ||||
1/15/20 | ||||
3/8/19 | ||||
1/15/19 | 4 | |||
1/1/19 | ||||
12/22/18 | ||||
12/15/18 | ||||
Filed on: | 10/26/18 | |||
10/23/18 | SC TO-T/A | |||
10/1/18 | 4, SC TO-T/A | |||
For Period end: | 9/30/18 | |||
4/1/18 | ||||
1/1/18 | ||||
12/31/17 | 10-K, 5, SD | |||
7/24/17 | ||||
7/12/17 | 4 | |||
12/19/16 | 4 | |||
9/12/16 | 4 | |||
6/13/16 | 4 | |||
11/3/14 | 4, 8-K | |||
List all Filings |
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 2/14/24 Stryker Corp. 10-K 12/31/23 105:14M 12/01/23 Stryker Corp. S-3ASR 12/01/23 6:539K Donnelley … Solutions/FA 2/10/23 Stryker Corp. 10-K 12/31/22 105:15M 2/11/22 Stryker Corp. S-3ASR 2/11/22 6:861K 2/11/22 Stryker Corp. 10-K 12/31/21 102:14M 2/11/21 Stryker Corp. 10-K 12/31/20 101:14M |