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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Stryker Corp | NYSE:SYK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
2.37 | 0.73% | 329.00 | 331.7625 | 326.701 | 328.65 | 1,588,817 | 01:00:00 |
|
|
☒
|
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
|
Michigan
|
|
|
|
|
|
38-1239739
|
|
(State of incorporation)
|
|
|
|
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
|
|
|
|
|
2825 Airview Boulevard
|
Kalamazoo,
|
Michigan
|
|
49002
|
|||
(Address of principal executive offices)
|
|
(Zip Code)
|
|||||
|
|
|
|
|
|
|
|
|
|
(269)
|
385-2600
|
|
|
||
(Registrant’s telephone number, including area code)
|
Securities registered pursuant to Section 12(b) of the Act:
|
||
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common Stock, $.10 Par Value
|
SYK
|
New York Stock Exchange
|
1.125% Notes due 2023
|
SYK23
|
New York Stock Exchange
|
0.250% Notes due 2024
|
SYK24A
|
New York Stock Exchange
|
2.125% Notes due 2027
|
SYK27
|
New York Stock Exchange
|
0.750% Notes due 2029
|
SYK29
|
New York Stock Exchange
|
2.625% Notes due 2030
|
SYK30
|
New York Stock Exchange
|
1.000% Notes due 2031
|
SYK31
|
New York Stock Exchange
|
Floating Rate Notes due 2020
|
SYK20A
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
|
Accelerated filer
|
☐
|
|
Emerging growth company
|
☐
|
Non-accelerated filer
|
☐
|
|
Small reporting company
|
☐
|
|
|
|
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
ITEM 1.
|
FINANCIAL STATEMENTS
|
|
Three Months
|
||||||
|
2020
|
|
2019
|
||||
Net sales
|
$
|
3,588
|
|
|
$
|
3,516
|
|
Cost of sales
|
1,257
|
|
|
1,233
|
|
||
Gross profit
|
$
|
2,331
|
|
|
$
|
2,283
|
|
Research, development and engineering expenses
|
254
|
|
|
225
|
|
||
Selling, general and administrative expenses
|
1,330
|
|
|
1,403
|
|
||
Recall charges
|
(6
|
)
|
|
13
|
|
||
Amortization of intangible assets
|
118
|
|
|
114
|
|
||
Total operating expenses
|
$
|
1,696
|
|
|
$
|
1,755
|
|
Operating income
|
$
|
635
|
|
|
$
|
528
|
|
Other income (expense), net
|
(45
|
)
|
|
(48
|
)
|
||
Earnings before income taxes
|
$
|
590
|
|
|
$
|
480
|
|
Income taxes
|
97
|
|
|
68
|
|
||
Net earnings
|
$
|
493
|
|
|
$
|
412
|
|
|
|
|
|
||||
Net earnings per share of common stock:
|
|
|
|
||||
Basic
|
$
|
1.32
|
|
|
$
|
1.10
|
|
Diluted
|
$
|
1.30
|
|
|
$
|
1.09
|
|
|
|
|
|
||||
Weighted-average shares outstanding (in millions):
|
|
|
|
||||
Basic
|
374.8
|
|
|
373.3
|
|
||
Effect of dilutive employee stock compensation
|
4.9
|
|
|
6.0
|
|
||
Diluted
|
379.7
|
|
|
379.3
|
|
||
|
|
|
|
||||
Cash dividends declared per share of common stock
|
$
|
0.575
|
|
|
$
|
0.52
|
|
|
Three Months
|
||||||
|
2020
|
|
2019
|
||||
Net earnings
|
$
|
493
|
|
|
$
|
412
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
||||
Marketable securities
|
—
|
|
|
1
|
|
||
Pension plans
|
(4
|
)
|
|
(4
|
)
|
||
Unrealized gains (losses) on designated hedges
|
(26
|
)
|
|
(16
|
)
|
||
Financial statement translation
|
13
|
|
|
85
|
|
||
Total other comprehensive income (loss), net of tax
|
$
|
(17
|
)
|
|
$
|
66
|
|
Comprehensive income
|
$
|
476
|
|
|
$
|
478
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
1
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
March 31
|
|
December 31
|
||||
|
2020
|
|
2019
|
||||
|
(Unaudited)
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
3,964
|
|
|
$
|
4,337
|
|
Marketable securities
|
84
|
|
|
88
|
|
||
Accounts receivable, less allowance of $100 ($88 in 2019)
|
2,646
|
|
|
2,893
|
|
||
Inventories:
|
|
|
|
||||
Materials and supplies
|
738
|
|
|
677
|
|
||
Work in process
|
187
|
|
|
178
|
|
||
Finished goods
|
2,434
|
|
|
2,427
|
|
||
Total inventories
|
$
|
3,359
|
|
|
$
|
3,282
|
|
Prepaid expenses and other current assets
|
683
|
|
|
760
|
|
||
Total current assets
|
$
|
10,736
|
|
|
$
|
11,360
|
|
Property, plant and equipment:
|
|
|
|
||||
Land, buildings and improvements
|
1,419
|
|
|
1,263
|
|
||
Machinery and equipment
|
3,357
|
|
|
3,451
|
|
||
Total property, plant and equipment
|
$
|
4,776
|
|
|
$
|
4,714
|
|
Less accumulated depreciation
|
2,169
|
|
|
2,147
|
|
||
Property, plant and equipment, net
|
$
|
2,607
|
|
|
$
|
2,567
|
|
Goodwill
|
9,025
|
|
|
9,069
|
|
||
Other intangibles, net
|
4,107
|
|
|
4,227
|
|
||
Noncurrent deferred income tax assets
|
1,537
|
|
|
1,575
|
|
||
Other noncurrent assets
|
1,428
|
|
|
1,369
|
|
||
Total assets
|
$
|
29,440
|
|
|
$
|
30,167
|
|
|
|
|
|
||||
Liabilities and shareholders' equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
736
|
|
|
$
|
675
|
|
Accrued compensation
|
430
|
|
|
955
|
|
||
Income taxes
|
227
|
|
|
171
|
|
||
Dividends payable
|
216
|
|
|
213
|
|
||
Accrued expenses and other liabilities
|
1,450
|
|
|
1,527
|
|
||
Current maturities of debt
|
1,103
|
|
|
859
|
|
||
Total current liabilities
|
$
|
4,162
|
|
|
$
|
4,400
|
|
Long-term debt, excluding current maturities
|
9,404
|
|
|
10,231
|
|
||
Income taxes
|
1,026
|
|
|
1,068
|
|
||
Other noncurrent liabilities
|
1,733
|
|
|
1,661
|
|
||
Total liabilities
|
$
|
16,325
|
|
|
$
|
17,360
|
|
Shareholders' equity
|
|
|
|
||||
Common stock, $0.10 par value
|
38
|
|
|
37
|
|
||
Additional paid-in capital
|
1,676
|
|
|
1,628
|
|
||
Retained earnings
|
12,024
|
|
|
11,748
|
|
||
Accumulated other comprehensive loss
|
(623
|
)
|
|
(606
|
)
|
||
Total shareholders' equity
|
$
|
13,115
|
|
|
$
|
12,807
|
|
Total liabilities and shareholders' equity
|
$
|
29,440
|
|
|
$
|
30,167
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
2
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
Three Months
|
||||||
|
2020
|
|
2019
|
||||
Common stock shares outstanding (in millions)
|
|
|
|
||||
Beginning
|
374.5
|
|
|
374.4
|
|
||
Issuance of common stock under stock compensation and benefit plans
|
0.9
|
|
|
1.3
|
|
||
Repurchase of common stock
|
—
|
|
|
(1.9
|
)
|
||
Ending
|
375.4
|
|
|
373.8
|
|
||
|
|
|
|
||||
Common stock
|
|
|
|
||||
Beginning
|
$
|
37
|
|
|
$
|
37
|
|
Issuance of common stock under stock compensation and benefit plans
|
1
|
|
|
—
|
|
||
Ending
|
$
|
38
|
|
|
$
|
37
|
|
Additional paid-in capital
|
|
|
|
||||
Beginning
|
$
|
1,628
|
|
|
$
|
1,559
|
|
Issuance of common stock under stock compensation and benefit plans
|
(8
|
)
|
|
(48
|
)
|
||
Repurchase of common stock
|
—
|
|
|
(8
|
)
|
||
Share-based compensation
|
56
|
|
|
35
|
|
||
Ending
|
$
|
1,676
|
|
|
$
|
1,538
|
|
Retained earnings
|
|
|
|
||||
Beginning
|
$
|
11,748
|
|
|
$
|
10,765
|
|
Net earnings
|
493
|
|
|
412
|
|
||
Repurchase of common stock
|
—
|
|
|
(299
|
)
|
||
Cash dividends declared
|
(217
|
)
|
|
(195
|
)
|
||
Ending
|
$
|
12,024
|
|
|
$
|
10,683
|
|
Accumulated other comprehensive (loss) income
|
|
|
|
||||
Beginning
|
$
|
(606
|
)
|
|
$
|
(631
|
)
|
Other comprehensive income (loss)
|
(17
|
)
|
|
66
|
|
||
Ending
|
$
|
(623
|
)
|
|
$
|
(565
|
)
|
Total Stryker shareholders' equity
|
$
|
13,115
|
|
|
$
|
11,693
|
|
Non-controlling interest
|
—
|
|
|
—
|
|
||
Total shareholders' equity
|
$
|
13,115
|
|
|
$
|
11,693
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
3
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
Three Months
|
||||||
|
2020
|
|
2019
|
||||
Operating activities
|
|
|
|
||||
Net earnings
|
$
|
493
|
|
|
$
|
412
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
||||
Depreciation
|
80
|
|
|
76
|
|
||
Amortization of intangible assets
|
118
|
|
|
114
|
|
||
Share-based compensation
|
56
|
|
|
35
|
|
||
Recall charges
|
(6
|
)
|
|
13
|
|
||
Sale of inventory stepped-up to fair value at acquisition
|
6
|
|
|
24
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
204
|
|
|
50
|
|
||
Inventories
|
(122
|
)
|
|
(139
|
)
|
||
Accounts payable
|
63
|
|
|
(12
|
)
|
||
Accrued expenses and other liabilities
|
(550
|
)
|
|
(166
|
)
|
||
Recall-related payments
|
(4
|
)
|
|
(20
|
)
|
||
Income taxes
|
84
|
|
|
9
|
|
||
Other, net
|
169
|
|
|
(83
|
)
|
||
Net cash provided by operating activities
|
$
|
591
|
|
|
$
|
313
|
|
Investing activities
|
|
|
|
||||
Acquisitions, net of cash acquired
|
(23
|
)
|
|
(180
|
)
|
||
Purchases of marketable securities
|
(8
|
)
|
|
(20
|
)
|
||
Proceeds from sales of marketable securities
|
12
|
|
|
19
|
|
||
Purchases of property, plant and equipment
|
(144
|
)
|
|
(122
|
)
|
||
Net cash used in investing activities
|
$
|
(163
|
)
|
|
$
|
(303
|
)
|
Financing activities
|
|
|
|
||||
Proceeds (payments) on short-term borrowings, net
|
4
|
|
|
(12
|
)
|
||
Payments on long-term debt
|
(500
|
)
|
|
(1,341
|
)
|
||
Dividends paid
|
(215
|
)
|
|
(195
|
)
|
||
Repurchases of common stock
|
—
|
|
|
(307
|
)
|
||
Cash paid for taxes from withheld shares
|
(56
|
)
|
|
(97
|
)
|
||
Other financing, net
|
(1
|
)
|
|
5
|
|
||
Net cash provided by (used in) financing activities
|
$
|
(768
|
)
|
|
$
|
(1,947
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
(33
|
)
|
|
(5
|
)
|
||
Change in cash and cash equivalents
|
$
|
(373
|
)
|
|
$
|
(1,942
|
)
|
Cash and cash equivalents at beginning of period
|
4,337
|
|
|
3,616
|
|
||
Cash and cash equivalents at end of period
|
$
|
3,964
|
|
|
$
|
1,674
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
4
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
Net Sales by Product Line
|
|
|
||||
|
Three Months
|
|||||
|
2020
|
2019
|
||||
Orthopaedics:
|
|
|
||||
Knees
|
$
|
432
|
|
$
|
439
|
|
Hips
|
316
|
|
336
|
|
||
Trauma and Extremities
|
392
|
|
396
|
|
||
Other
|
82
|
|
79
|
|
||
|
$
|
1,222
|
|
$
|
1,250
|
|
MedSurg:
|
|
|
||||
Instruments
|
$
|
513
|
|
$
|
461
|
|
Endoscopy
|
455
|
|
470
|
|
||
Medical
|
587
|
|
531
|
|
||
Sustainability
|
67
|
|
65
|
|
||
|
$
|
1,622
|
|
$
|
1,527
|
|
Neurotechnology and Spine:
|
|
|
||||
Neurotechnology
|
$
|
483
|
|
$
|
469
|
|
Spine
|
261
|
|
270
|
|
||
|
$
|
744
|
|
$
|
739
|
|
Total
|
$
|
3,588
|
|
$
|
3,516
|
|
Net Sales by Geography
|
|
|
|
|
|
||||||||
|
Three Months 2020
|
|
Three Months 2019
|
||||||||||
|
United States
|
International
|
|
United States
|
International
|
||||||||
Orthopaedics:
|
|
|
|
|
|
||||||||
Knees
|
$
|
322
|
|
$
|
110
|
|
|
$
|
320
|
|
$
|
119
|
|
Hips
|
201
|
|
115
|
|
|
213
|
|
123
|
|
||||
Trauma and Extremities
|
260
|
|
132
|
|
|
254
|
|
142
|
|
||||
Other
|
69
|
|
13
|
|
|
63
|
|
16
|
|
||||
|
$
|
852
|
|
$
|
370
|
|
|
$
|
850
|
|
$
|
400
|
|
MedSurg:
|
|
|
|
|
|
||||||||
Instruments
|
$
|
410
|
|
$
|
103
|
|
|
$
|
365
|
|
$
|
96
|
|
Endoscopy
|
364
|
|
91
|
|
|
376
|
|
94
|
|
||||
Medical
|
454
|
|
133
|
|
|
416
|
|
115
|
|
||||
Sustainability
|
66
|
|
1
|
|
|
64
|
|
1
|
|
||||
|
$
|
1,294
|
|
$
|
328
|
|
|
$
|
1,221
|
|
$
|
306
|
|
Neurotechnology and Spine:
|
|
|
|
|
|
||||||||
Neurotechnology
|
$
|
301
|
|
$
|
182
|
|
|
$
|
300
|
|
$
|
169
|
|
Spine
|
196
|
|
65
|
|
|
208
|
|
62
|
|
||||
|
$
|
497
|
|
$
|
247
|
|
|
$
|
508
|
|
$
|
231
|
|
Total
|
$
|
2,643
|
|
$
|
945
|
|
|
$
|
2,579
|
|
$
|
937
|
|
Three Months 2020
|
Marketable Securities
|
Pension Plans
|
Hedges
|
Financial Statement Translation
|
Total
|
||||||||||
Beginning
|
$
|
(3
|
)
|
$
|
(179
|
)
|
$
|
47
|
|
$
|
(471
|
)
|
$
|
(606
|
)
|
OCI
|
1
|
|
(6
|
)
|
(39
|
)
|
55
|
|
11
|
|
|||||
Income taxes
|
—
|
|
—
|
|
11
|
|
(37
|
)
|
(26
|
)
|
|||||
Reclassifications to:
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
—
|
|
3
|
|
—
|
|
3
|
|
|||||
Other (income) expense
|
(1
|
)
|
3
|
|
(1
|
)
|
(7
|
)
|
(6
|
)
|
|||||
Income taxes
|
—
|
|
(1
|
)
|
—
|
|
2
|
|
1
|
|
|||||
Net OCI
|
$
|
—
|
|
$
|
(4
|
)
|
$
|
(26
|
)
|
$
|
13
|
|
$
|
(17
|
)
|
Ending
|
$
|
(3
|
)
|
$
|
(183
|
)
|
$
|
21
|
|
$
|
(458
|
)
|
$
|
(623
|
)
|
Three Months 2019
|
Marketable Securities
|
Pension Plans
|
Hedges
|
Financial Statement Translation
|
Total
|
||||||||||
Beginning
|
$
|
(4
|
)
|
$
|
(137
|
)
|
$
|
50
|
|
$
|
(540
|
)
|
$
|
(631
|
)
|
OCI
|
1
|
|
(6
|
)
|
(19
|
)
|
94
|
|
70
|
|
|||||
Income taxes
|
—
|
|
1
|
|
6
|
|
(9
|
)
|
(2
|
)
|
|||||
Reclassifications to:
|
|
|
|
|
|
||||||||||
Cost of sales
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
(2
|
)
|
|||||
Other (income) expense
|
—
|
|
1
|
|
—
|
|
—
|
|
1
|
|
|||||
Income taxes
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|||||
Net OCI
|
$
|
1
|
|
$
|
(4
|
)
|
$
|
(16
|
)
|
$
|
85
|
|
$
|
66
|
|
Ending
|
$
|
(3
|
)
|
$
|
(141
|
)
|
$
|
34
|
|
$
|
(455
|
)
|
$
|
(565
|
)
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
5
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
March 2020
|
Cash Flow
|
Net Investment
|
Non-Designated
|
Total
|
||||||||
Gross notional amount
|
$
|
837
|
|
$
|
1,094
|
|
$
|
5,275
|
|
$
|
7,206
|
|
Maximum term in days
|
|
|
|
1555
|
|
|||||||
Fair value:
|
|
|
|
|
||||||||
Other current assets
|
$
|
30
|
|
$
|
—
|
|
$
|
100
|
|
$
|
130
|
|
Other noncurrent assets
|
5
|
|
105
|
|
—
|
|
110
|
|
||||
Other current liabilities
|
(2
|
)
|
—
|
|
(27
|
)
|
(29
|
)
|
||||
Other noncurrent liabilities
|
—
|
|
—
|
|
—
|
|
—
|
|
||||
Total fair value
|
$
|
33
|
|
$
|
105
|
|
$
|
73
|
|
$
|
211
|
|
December 2019
|
Cash Flow
|
Net Investment
|
Non-Designated
|
Total
|
||||||||
Gross notional amount
|
$
|
801
|
|
$
|
1,113
|
|
$
|
6,174
|
|
$
|
8,088
|
|
Maximum term in days
|
|
|
|
1646
|
|
|||||||
Fair value:
|
|
|
|
|
||||||||
Other current assets
|
$
|
5
|
|
$
|
—
|
|
$
|
180
|
|
$
|
185
|
|
Other noncurrent assets
|
1
|
|
40
|
|
—
|
|
41
|
|
||||
Other current liabilities
|
(10
|
)
|
—
|
|
(11
|
)
|
(21
|
)
|
||||
Other noncurrent liabilities
|
(2
|
)
|
—
|
|
—
|
|
(2
|
)
|
||||
Total fair value
|
$
|
(6
|
)
|
$
|
40
|
|
$
|
169
|
|
$
|
203
|
|
|
|
Three Months
|
|||||
Derivative instrument
|
Recorded in:
|
2020
|
2019
|
||||
Cash Flow
|
Cost of sales
|
$
|
(3
|
)
|
$
|
2
|
|
Net Investment
|
Other income (expense), net
|
7
|
|
—
|
|
||
Non-Designated
|
Other income (expense), net
|
(7
|
)
|
(2
|
)
|
||
|
Total
|
$
|
(3
|
)
|
$
|
—
|
|
Assets Measured at Fair Value
|
March
|
December
|
||||
2020
|
2019
|
|||||
Cash and cash equivalents
|
$
|
3,964
|
|
$
|
4,337
|
|
Trading marketable securities
|
127
|
|
149
|
|
||
Level 1 - Assets
|
$
|
4,091
|
|
$
|
4,486
|
|
Available-for-sale marketable securities:
|
|
|
||||
Corporate and asset-backed debt securities
|
$
|
32
|
|
$
|
32
|
|
United States agency debt securities
|
3
|
|
2
|
|
||
United States Treasury debt securities
|
45
|
|
49
|
|
||
Certificates of deposit
|
4
|
|
5
|
|
||
Total available-for-sale marketable securities
|
$
|
84
|
|
$
|
88
|
|
Foreign currency exchange forward contracts
|
240
|
|
226
|
|
||
Interest rate swap asset
|
—
|
|
17
|
|
||
Level 2 - Assets
|
$
|
324
|
|
$
|
331
|
|
Total assets measured at fair value
|
$
|
4,415
|
|
$
|
4,817
|
|
Liabilities Measured at Fair Value
|
March
|
December
|
||||
2020
|
2019
|
|||||
Deferred compensation arrangements
|
$
|
127
|
|
$
|
149
|
|
Level 1 - Liabilities
|
$
|
127
|
|
$
|
149
|
|
Foreign currency exchange forward contracts
|
$
|
29
|
|
$
|
23
|
|
Interest rate swap liability
|
62
|
|
—
|
|
||
Level 2 - Liabilities
|
$
|
91
|
|
$
|
23
|
|
Contingent consideration:
|
|
|
||||
Beginning
|
$
|
306
|
|
$
|
117
|
|
Additions
|
—
|
|
298
|
|
||
Change in estimate
|
—
|
|
(10
|
)
|
||
Settlements
|
—
|
|
(99
|
)
|
||
Ending
|
$
|
306
|
|
$
|
306
|
|
Level 3 - Liabilities
|
$
|
306
|
|
$
|
306
|
|
Total liabilities measured at fair value
|
$
|
524
|
|
$
|
478
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
6
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
Fair Value of Available for Sale Securities by Maturity
|
||||||
|
March 2020
|
December 2019
|
||||
Due in one year or less
|
$
|
46
|
|
$
|
50
|
|
Due after one year through three years
|
$
|
38
|
|
$
|
38
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
7
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
Purchase Price Allocation of Acquired Net Assets
|
|||||||
|
2019
|
||||||
|
Mobius
|
|
OrthoSpace
|
||||
Tangible assets:
|
|
|
|
||||
Accounts receivable
|
$
|
3
|
|
|
$
|
1
|
|
Inventory
|
6
|
|
|
1
|
|
||
Other assets
|
2
|
|
|
1
|
|
||
Contingent consideration
|
(4
|
)
|
|
—
|
|
||
Other liabilities
|
(10
|
)
|
|
(29
|
)
|
||
Intangible assets:
|
|
|
|
||||
Customer relationship
|
7
|
|
|
—
|
|
||
Developed technology and patents
|
59
|
|
|
120
|
|
||
In-process research and development
|
98
|
|
|
—
|
|
||
Non-compete agreements
|
9
|
|
|
—
|
|
||
Goodwill
|
303
|
|
|
114
|
|
||
Purchase price, net of cash acquired
|
$
|
473
|
|
|
$
|
208
|
|
Weighted-average life of intangible assets
|
12
|
|
|
18
|
|
Estimated Amortization Expense
|
||||||||||||||
Remainder of 2020
|
2021
|
2022
|
2023
|
2024
|
||||||||||
$
|
341
|
|
$
|
440
|
|
$
|
438
|
|
$
|
417
|
|
$
|
386
|
|
|
March 2020
|
|
December 2019
|
|||||||
Unamortized debt issuance costs
|
$
|
56
|
|
|
$
|
58
|
|
|||
Available secured borrowing capacity
|
$
|
1,403
|
|
|
$
|
1,403
|
|
|||
Fair value of senior unsecured notes
|
$
|
10,904
|
|
|
$
|
11,910
|
|
|
Three Months
|
|||||
|
2020
|
2019
|
||||
Orthopaedics
|
$
|
1,222
|
|
$
|
1,250
|
|
MedSurg
|
1,622
|
|
1,527
|
|
||
Neurotechnology and Spine
|
744
|
|
739
|
|
||
Net sales
|
$
|
3,588
|
|
$
|
3,516
|
|
Orthopaedics
|
$
|
392
|
|
$
|
437
|
|
MedSurg
|
401
|
|
377
|
|
||
Neurotechnology and Spine
|
206
|
|
199
|
|
||
Segment operating income
|
$
|
999
|
|
$
|
1,013
|
|
Items not allocated to segments:
|
|
|
||||
Corporate and other
|
(137
|
)
|
(132
|
)
|
||
Acquisition and integration-related charges
|
(37
|
)
|
(138
|
)
|
||
Amortization of intangible assets
|
(118
|
)
|
(114
|
)
|
||
Restructuring-related charges
|
(54
|
)
|
(56
|
)
|
||
Medical device regulations
|
(24
|
)
|
(7
|
)
|
||
Recall-related matters
|
6
|
|
(13
|
)
|
||
Regulatory and legal matters
|
—
|
|
(25
|
)
|
||
Consolidated operating income
|
$
|
635
|
|
$
|
528
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
8
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
9
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
|
Three Months
|
|||||||||||
|
|
|
Percent Net Sales
|
Percentage
|
||||||||
|
2020
|
2019
|
2020
|
2019
|
Change
|
|||||||
Net sales
|
$
|
3,588
|
|
$
|
3,516
|
|
100.0
|
%
|
100.0
|
%
|
2.0
|
%
|
Gross profit
|
2,331
|
|
2,283
|
|
65.0
|
|
64.9
|
|
2.1
|
|
||
Research, development and engineering expenses
|
254
|
|
225
|
|
7.1
|
|
6.4
|
|
12.9
|
|
||
Selling, general and administrative expenses
|
1,330
|
|
1,403
|
|
37.1
|
|
39.9
|
|
(5.2
|
)
|
||
Recall charges
|
(6
|
)
|
13
|
|
(0.2
|
)
|
0.4
|
|
nm
|
|
||
Amortization of intangible assets
|
118
|
|
114
|
|
3.3
|
|
3.2
|
|
3.5
|
|
||
Other income (expense), net
|
(45
|
)
|
(48
|
)
|
(1.3
|
)
|
(1.4
|
)
|
(6.3
|
)
|
||
Income taxes
|
97
|
|
68
|
|
|
|
42.6
|
|
||||
Net earnings
|
$
|
493
|
|
$
|
412
|
|
13.7
|
%
|
11.7
|
%
|
19.7
|
%
|
|
|
|
|
|
|
|||||||
Net earnings per diluted share
|
$
|
1.30
|
|
$
|
1.09
|
|
|
|
19.3
|
%
|
||
Adjusted net earnings per diluted share(1)
|
$
|
1.84
|
|
$
|
1.88
|
|
|
|
(2.1
|
)%
|
Geographic and Segment Net Sales
|
Three Months
|
|||||||||
|
|
|
Percentage Change
|
|||||||
|
2020
|
2019
|
As Reported
|
Constant
Currency |
||||||
Geographic:
|
|
|
|
|
||||||
United States
|
$
|
2,643
|
|
$
|
2,579
|
|
2.5
|
%
|
2.5
|
%
|
International
|
945
|
|
937
|
|
0.8
|
|
4.2
|
|
||
Total
|
$
|
3,588
|
|
$
|
3,516
|
|
2.0
|
%
|
2.9
|
%
|
Segment:
|
|
|
|
|
||||||
Orthopaedics
|
$
|
1,222
|
|
$
|
1,250
|
|
(2.1
|
)%
|
(1.2
|
)%
|
MedSurg
|
1,622
|
|
1,527
|
|
6.2
|
|
7.0
|
|
||
Neurotechnology and Spine
|
744
|
|
739
|
|
0.7
|
|
1.5
|
|
||
Total
|
$
|
3,588
|
|
$
|
3,516
|
|
2.0
|
%
|
2.9
|
%
|
Supplemental Net Sales Growth Information
|
||||||||||||||||
|
Three Months
|
|||||||||||||||
|
|
Percentage Change
|
||||||||||||||
|
|
|
|
United States
|
International
|
|||||||||||
|
2020
|
2019
|
As Reported
|
Constant Currency
|
As Reported
|
As Reported
|
Constant Currency
|
|||||||||
Orthopaedics:
|
|
|
|
|
|
|
|
|||||||||
Knees
|
$
|
432
|
|
$
|
439
|
|
(1.7
|
)%
|
(0.8
|
)%
|
0.6
|
%
|
(7.8
|
)%
|
(4.5
|
)%
|
Hips
|
316
|
|
336
|
|
(5.9
|
)
|
(4.8
|
)
|
(5.7
|
)
|
(6.4
|
)
|
(3.2
|
)
|
||
Trauma and Extremities
|
392
|
|
396
|
|
(0.8
|
)
|
0.2
|
|
2.7
|
|
(6.9
|
)
|
(4.3
|
)
|
||
Other
|
82
|
|
79
|
|
4.7
|
|
5.3
|
|
9.4
|
|
(14.3
|
)
|
(11.5
|
)
|
||
|
$
|
1,222
|
|
$
|
1,250
|
|
(2.1
|
)%
|
(1.2
|
)%
|
0.3
|
%
|
(7.3
|
)%
|
(4.3
|
)%
|
MedSurg:
|
|
|
|
|
|
|
|
|||||||||
Instruments
|
$
|
513
|
|
$
|
461
|
|
11.1
|
%
|
11.9
|
%
|
12.0
|
%
|
7.8
|
%
|
11.4
|
%
|
Endoscopy
|
455
|
|
470
|
|
(3.2
|
)
|
(2.4
|
)
|
(2.9
|
)
|
(4.1
|
)
|
(0.4
|
)
|
||
Medical
|
587
|
|
531
|
|
10.5
|
|
11.5
|
|
9.1
|
|
15.5
|
|
20.3
|
|
||
Sustainability
|
67
|
|
65
|
|
2.8
|
|
2.8
|
|
3.1
|
|
nm
|
|
nm
|
|
||
|
$
|
1,622
|
|
$
|
1,527
|
|
6.2
|
%
|
7.0
|
%
|
6.0
|
%
|
6.9
|
%
|
11.1
|
%
|
Neurotechnology and Spine:
|
|
|
|
|
|
|
||||||||||
Neurotechnology
|
$
|
483
|
|
$
|
469
|
|
3.1
|
%
|
4.0
|
%
|
0.2
|
%
|
8.1
|
%
|
10.8
|
%
|
Spine
|
261
|
|
270
|
|
(3.5
|
)
|
(2.8
|
)
|
(5.6
|
)
|
3.3
|
|
6.4
|
|
||
|
$
|
744
|
|
$
|
739
|
|
0.7
|
%
|
1.5
|
%
|
(2.1
|
)%
|
6.8
|
%
|
9.6
|
%
|
Total
|
$
|
3,588
|
|
$
|
3,516
|
|
2.0
|
%
|
2.9
|
%
|
2.5
|
%
|
0.8
|
%
|
4.2
|
%
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
10
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
|
Percent Net Sales
|
||||||||
Three Months
|
2020
|
2019
|
2020
|
2019
|
||||||
Reported
|
$
|
2,331
|
|
$
|
2,283
|
|
65.0
|
%
|
64.9
|
%
|
Inventory stepped-up to fair value
|
6
|
|
24
|
|
0.2
|
|
0.7
|
|
||
Restructuring-related and other charges
|
4
|
|
5
|
|
0.1
|
|
0.2
|
|
||
Medical device regulations
|
1
|
|
—
|
|
—
|
|
—
|
|
||
Adjusted
|
$
|
2,342
|
|
$
|
2,312
|
|
65.3
|
%
|
65.8
|
%
|
|
|
Percent Net Sales
|
||||||||
Three Months
|
2020
|
2019
|
2020
|
2019
|
||||||
Reported
|
$
|
254
|
|
$
|
225
|
|
7.1
|
%
|
6.4
|
%
|
Medical device regulations
|
(23
|
)
|
(7
|
)
|
(0.7
|
)
|
(0.2
|
)
|
||
Adjusted
|
$
|
231
|
|
$
|
218
|
|
6.4
|
%
|
6.2
|
%
|
|
|
Percent Net Sales
|
||||||||
Three Months
|
2020
|
2019
|
2020
|
2019
|
||||||
Reported
|
$
|
1,330
|
|
$
|
1,403
|
|
37.1
|
%
|
39.9
|
%
|
Other acquisition and integration-related
|
(31
|
)
|
(114
|
)
|
(0.9
|
)
|
(3.3
|
)
|
||
Restructuring-related and other charges
|
(49
|
)
|
(52
|
)
|
(1.4
|
)
|
(1.5
|
)
|
||
Regulatory and legal matters
|
—
|
|
(25
|
)
|
—
|
|
(0.7
|
)
|
||
Adjusted
|
$
|
1,250
|
|
$
|
1,212
|
|
34.8
|
%
|
34.4
|
%
|
|
|
Percent Net Sales
|
||||||||
Three Months
|
2020
|
2019
|
2020
|
2019
|
||||||
Reported
|
$
|
635
|
|
$
|
528
|
|
17.7
|
%
|
15.0
|
%
|
Inventory stepped-up to fair value
|
6
|
|
24
|
|
0.2
|
|
0.7
|
|
||
Other acquisition and integration-related
|
31
|
|
114
|
|
0.9
|
|
3.2
|
|
||
Amortization of purchased intangible assets
|
118
|
|
114
|
|
3.2
|
|
3.2
|
|
||
Restructuring-related and other charges
|
54
|
|
56
|
|
1.5
|
|
1.6
|
|
||
Medical device regulations
|
24
|
|
7
|
|
0.7
|
|
0.2
|
|
||
Recall-related matters
|
(6
|
)
|
13
|
|
(0.2
|
)
|
0.4
|
|
||
Regulatory and legal matters
|
—
|
|
25
|
|
—
|
|
0.8
|
|
||
Adjusted
|
$
|
862
|
|
$
|
881
|
|
24.0
|
%
|
25.1
|
%
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
11
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
|
Percent Net Sales
|
||||||||
Three Months
|
2020
|
2019
|
2020
|
2019
|
||||||
Reported
|
$
|
493
|
|
$
|
412
|
|
13.7
|
%
|
11.7
|
%
|
Inventory stepped-up to fair value
|
5
|
|
19
|
|
0.1
|
|
0.5
|
|
||
Other acquisition and integration-related
|
24
|
|
88
|
|
0.7
|
|
2.5
|
|
||
Amortization of purchased intangible assets
|
96
|
|
91
|
|
2.7
|
|
2.6
|
|
||
Restructuring-related and other charges
|
42
|
|
50
|
|
1.2
|
|
1.5
|
|
||
Medical device regulations
|
18
|
|
6
|
|
0.5
|
|
0.2
|
|
||
Recall-related matters
|
(4
|
)
|
10
|
|
(0.1
|
)
|
0.3
|
|
||
Regulatory and legal matters
|
—
|
|
19
|
|
—
|
|
0.5
|
|
||
Tax matters
|
25
|
|
19
|
|
0.7
|
|
0.5
|
|
||
Adjusted
|
$
|
699
|
|
$
|
714
|
|
19.5
|
%
|
20.3
|
%
|
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.
|
Medical Device Regulations. 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 and China regulations for medical devices.
|
5.
|
Recall-related matters. Our best estimate of the minimum of the range of probable loss to resolve the Rejuvenate, LFIT V40 and other product recalls.
|
6.
|
Regulatory and legal matters. Our best estimate of the minimum of the range of probable loss to resolve certain regulatory matters and other legal settlements.
|
7.
|
Tax matters. Charges represent the impact of accounting for certain significant and discrete tax items.
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
12
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
Three Months 2019
|
Gross Profit
|
Selling, General & Administrative Expenses
|
Research, Development & Engineering Expenses
|
Operating Income
|
Other income (expense), net
|
Net Earnings
|
Effective
Tax Rate |
Diluted EPS
|
|||||||||||||||
Reported
|
$
|
2,283
|
|
$
|
1,403
|
|
$
|
225
|
|
$
|
528
|
|
$
|
(48
|
)
|
$
|
412
|
|
14.2
|
%
|
$
|
1.09
|
|
Reported percent net sales
|
64.9
|
%
|
39.9
|
%
|
6.4
|
%
|
15.0
|
%
|
(1.4
|
)%
|
11.7
|
%
|
|
|
|||||||||
Acquisition and integration-related charges:
|
|
|
|
|
|
|
|
|
|||||||||||||||
Inventory stepped-up to fair value
|
24
|
|
—
|
|
—
|
|
24
|
|
—
|
|
19
|
|
0.3
|
|
0.05
|
|
|||||||
Other acquisition and integration-related
|
—
|
|
(114
|
)
|
—
|
|
114
|
|
—
|
|
88
|
|
2.0
|
|
0.23
|
|
|||||||
Amortization of purchased intangible assets
|
—
|
|
—
|
|
—
|
|
114
|
|
—
|
|
91
|
|
1.3
|
|
0.24
|
|
|||||||
Restructuring-related and other charges
|
5
|
|
(52
|
)
|
—
|
|
56
|
|
—
|
|
50
|
|
(0.3
|
)
|
0.13
|
|
|||||||
Medical device regulations
|
—
|
|
—
|
|
(7
|
)
|
7
|
|
—
|
|
6
|
|
0.1
|
|
0.01
|
|
|||||||
Recall-related matters
|
—
|
|
—
|
|
—
|
|
13
|
|
—
|
|
10
|
|
0.3
|
|
0.03
|
|
|||||||
Regulatory and legal matters
|
—
|
|
(25
|
)
|
—
|
|
25
|
|
—
|
|
19
|
|
0.4
|
|
0.05
|
|
|||||||
Tax matters
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
19
|
|
(3.9
|
)
|
0.05
|
|
|||||||
Adjusted
|
$
|
2,312
|
|
$
|
1,212
|
|
$
|
218
|
|
$
|
881
|
|
$
|
(48
|
)
|
$
|
714
|
|
14.4
|
%
|
$
|
1.88
|
|
Adjusted percent net sales
|
65.8
|
%
|
34.4
|
%
|
6.2
|
%
|
25.1
|
%
|
(1.4
|
)%
|
20.3
|
%
|
|
|
|
Three Months
|
2020
|
2019
|
||||
Net cash provided by operating activities
|
$
|
591
|
|
$
|
313
|
|
Net cash used in investing activities
|
(163
|
)
|
(303
|
)
|
||
Net cash provided by (used in) financing activities
|
(768
|
)
|
(1,947
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(33
|
)
|
(5
|
)
|
||
Change in cash and cash equivalents
|
$
|
(373
|
)
|
$
|
(1,942
|
)
|
Three Months
|
2020
|
2019
|
||||
Total dividends paid to common shareholders
|
$
|
215
|
|
$
|
195
|
|
Total amount paid to repurchase common stock
|
$
|
—
|
|
$
|
307
|
|
Shares of repurchased common stock (in millions)
|
—
|
|
1.9
|
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
13
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1A.
|
RISK FACTORS
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
14
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
15
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Dollar amounts are in millions except per share amounts or as otherwise specified.
|
16
|
STRYKER CORPORATION
|
|
2020 First Quarter Form 10-Q
|
|
|
|
STRYKER CORPORATION
|
|
|
|
(Registrant)
|
|
|
|
|
|
|
|
|
Date:
|
May 1, 2020
|
|
/s/ KEVIN A. LOBO
|
|
|
|
Kevin A. Lobo
|
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
|
Date:
|
May 1, 2020
|
|
/s/ GLENN S. BOEHNLEIN
|
|
|
|
Glenn S. Boehnlein
|
|
|
|
Vice President, Chief Financial Officer
|
|
|
17
|
1 Year Stryker Chart |
1 Month Stryker Chart |
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