SYK
$186.83
Stryker
$1.29
.70%
Earnings Details
4th Quarter December 2018
Tuesday, January 29, 2019 4:06:00 PM
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Summary

Stryker Reports In-line

Stryker (SYK) reported 4th Quarter December 2018 earnings of $2.18 per share on revenue of $3.8 billion. The consensus earnings estimate was $2.15 per share on revenue of $3.7 billion. The Earnings Whisper number was $2.18 per share. Revenue grew 9.4% on a year-over-year basis.

The company said it expects first quarter earnings of $1.80 to $1.85 per share and 2019 earnings of $8.00 to $8.20 per share. The current consensus earnings estimate is $1.84 per share for the quarter ending March 31, 2019 and $8.02 per share for the year ending December 31, 2019.

Stryker Corporation is a medical technology company. The Company offers medical technologies, including reconstructive, medical and surgical, and neurotechnology and spine products.

Results
Reported Earnings
$2.18
Earnings Whisper
$2.18
Consensus Estimate
$2.15
Reported Revenue
$3.80 Bil
Revenue Estimate
$3.73 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Stryker reports 2018 results and 2019 outlook

Kalamazoo, Michigan, Jan. 29, 2019 (GLOBE NEWSWIRE) -- Stryker (NYSE:SYK) reported operating results for the fourth quarter and full year of 2018 and 2019 outlook:

Fourth Quarter Highlights

•       Reported net sales increased 9.4% to $3.8 billion

  • Organic net sales increased 8.6%
  • Reported operating income margin of 18.4%
  • Adjusted operating income margin(1) expanded 50 bps (30 bps excluding ASC 606(2)) to 27.5%
  • Reported EPS increased 924.2% to $5.44
  • Adjusted EPS(3) increased 11.2% to $2.18, at the high end of guidance range
 Fourth Quarter Net Sales Growth Overview
 Reported Excluding ASC 606 Adoption(2) Foreign Currency Exchange Constant Currency Acquisitions Organic
Orthopaedics5.4% 5.9% (1.1)% 7.0% % 7.0%
MedSurg8.9  9.9  (1.2) 11.1  1.0  10.1 
Neurotechnology and Spine19.5  20.1  (1.3) 21.4  13.0  8.4 
Total9.4% 10.1% (1.2)% 11.3% 2.7% 8.6%

Full Year Highlights

•       Reported net sales increased 9.3% to $13.6 billion

  • Organic net sales increased 7.9%
  • Reported operating income margin of 18.7%
  • Adjusted operating income margin(1) expanded 70 bps (40 bps excluding ASC 606(2)) to 25.9%
  • Reported EPS increased 248.5% to $9.34
  • Adjusted EPS(3) increased 12.6% to $7.31, exceeding the high end of guidance range
 Full Year Net Sales Growth Overview
 Reported Excluding ASC 606 Adoption(2) Foreign Currency Exchange Constant Currency Acquisitions Organic
Orthopaedics5.9% 6.4% 0.5% 5.9% % 5.9%
MedSurg8.8  10.1  0.1  10.0  1.4  8.6 
Neurotechnology and Spine18.0  18.6  0.6  18.0  7.4  10.6 
Total9.3% 10.2% 0.4% 9.8% 1.9% 7.9%

"We had an excellent finish to 2018 with the best organic sales growth in a decade, and strong adjusted earnings performance," said Kevin A. Lobo, Chairman and Chief Executive Officer. "Our multi-year momentum reflects the strength of our diversified model, progress on globalization and outstanding people and culture. We are well positioned to deliver for our customers, employees and shareholders in 2019 and beyond."

Sales Analysis (percentages exclude ASC 606(2) adoption impact)

Consolidated net sales of $3.8 billion and $13.6 billion increased 10.1% and 10.2% in the quarter and full year and 11.3% and 9.8% in constant currency. Organic net sales increased 8.6% and 7.9% in the quarter and full year including 10.1% and 9.3% from increased unit volume partially offset by 1.5% and 1.4% from lower prices.

Orthopaedics net sales of $1.4 billion and $5.0 billion increased 5.9% and 6.4% in the quarter and full year and 7.0% and 5.9% in constant currency. Organic net sales increased 7.0% and 5.9% in the quarter and full year including 8.9% and 8.1% from increased unit volume partially offset by 1.9% and 2.2% from lower prices.

MedSurg net sales of $1.7 billion and $6.0 billion increased 9.9% and 10.1% in the quarter and full year and 11.1% and 10.0% in constant currency. Organic net sales increased 10.1% and 8.6% in the quarter and full year including 11.3% and 9.3% from increased unit volume partially offset by 1.2% and 0.7% from lower prices.

Neurotechnology and Spine net sales of $0.7 billion and $2.6 billion increased 20.1% and 18.6% in the quarter and full year and 21.4% and 18.0% in constant currency. Organic net sales increased 8.4% and 10.6% in the quarter and full year including 10.2% and 12.2% from increased unit volume partially offset by 1.8% and 1.6% from lower prices.

Earnings Analysis

Reported net earnings of $2.1 billion and $3.6 billion increased 930.5% and 248.3% in the quarter and full year. Reported net earnings per diluted share of $5.44 and $9.34 increased 924.2% and 248.5% in the quarter and full year. Reported net earnings include certain items, such as charges for acquisition and integration-related activities, the amortization of purchased intangible assets, restructuring-related and other charges, costs to comply with certain medical device regulations, the Rejuvenate recall and other recall-related matters, regulatory and legal matters and tax matters. In the quarter the transfer of certain intellectual properties between tax jurisdictions resulted in a $1.5 billion non-cash tax benefit and a corresponding $1.5 billion deferred tax asset.  The benefit of the transaction will be realized as a reduction of cash paid for taxes over a period of nine years and a corresponding charge to tax expense, which consistent with the benefit recognized in the quarter will also be adjusted out of reported net earnings going forward in our non-GAAP financial measure. The effect of each of these matters on reported net earnings and net earnings per diluted share appear in the reconciliation of GAAP to non-GAAP financial measures. Excluding the aforementioned items increases gross profit margin from 64.7% to 65.6% in the quarter and for the full year from 65.7% to 66.0% and increases operating income margin in the quarter from 18.4% to 27.5%(1) and for the full year from 18.7% to 25.9% including a 20 basis point favorable impact related to the adoption of the new revenue recognition standard(2). Excluding the impact of the items described above, adjusted net earnings(4) of $0.8 billion and $2.8 billion increased 11.0% and 12.7% in the quarter and full year. Adjusted net earnings per diluted share(3) of $2.18 and $7.31 increased 11.2% and 12.6% in the quarter and full year.

2019 Outlook

We expect 2019 organic net sales growth to be in the range of 6.5% to 7.5% and expect adjusted net earnings per diluted share(5) to be in the range of $8.00 to $8.20. We expect adjusted net earnings per diluted share(5) to be in the range of $1.80 to $1.85 in the first quarter.

(1) A reconciliation of operating income to adjusted operating income, a non-GAAP financial measure, and other important information accompanies this press release.

(2) Consistent with previous press releases and financial disclosures, we adopted Accounting Standards Update 2014-09, Revenue From Contracts with Customers, as well as related amendments (ASC 606), issued by the Financial Accounting Standards Board on a modified retrospective basis, effective January 1, 2018. The impact of the adoption of ASC 606 related primarily to the reclassification of certain costs previously presented as selling, general and administrative expenses to net sales.

(3) A reconciliation of reported net earnings per diluted share to adjusted net earnings per diluted share, a non-GAAP financial measure, and other important information accompanies this press release.

(4) A reconciliation of reported net earnings to adjusted net earnings, a non-GAAP financial measure, and other important information accompanies this press release.

(5) We are unable to present a quantitative reconciliation of our expected net earnings per diluted share to expected adjusted net earnings per diluted share as we are unable to predict with reasonable certainty and without unreasonable effort the impact and timing of restructuring-related and other charges, acquisition-related expenses and fair value adjustments to inventory and the outcome of certain regulatory, legal and tax matters. The financial impact of these items is uncertain and is dependent upon various factors, including timing, and could be material to our Consolidated Statements of Earnings.


Conference Call on Tuesday, January 29, 2019

As previously announced, Stryker will host a conference call on Tuesday, January 29, 2019 at 4:30 p.m., Eastern Time, to discuss the Company's operating results for the quarter and year ended December 31, 2018 and provide an operational update.

To participate in the conference call dial (866) 393-4306 (domestic) or (734) 385-2616 (international) and be prepared to provide confirmation number 5365367 to the operator.

A simultaneous webcast of the call will be accessible via the Company's website at www.stryker.com. The call will be archived on the Investor Relations page of this site.

A recording of the call will also be available from 8:00 p.m., Eastern Time, on Tuesday, January 29, 2019, until 11:59 p.m., Eastern Time, on Tuesday, February 5, 2019. To hear this recording you may dial (855) 859-2056 (domestic) or (404) 537-3406 (international) and enter conference ID number 5365367.


Caution Concerning Forward-Looking Statements

This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to various risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for our products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for our products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; potential supply disruptions; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; the ultimate total cost with respect to the Rejuvenate recall and other recall-related matters; the impact of investigative and legal proceedings and compliance risks; resolution of tax audits; the impact of the federal legislation to reform the United States healthcare system; costs to comply with medical device regulations; changes in financial markets; changes in the competitive environment; our ability to integrate acquisitions; and our ability to realize anticipated cost savings. Additional information concerning these and other factors is contained in our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Stryker is one of the world’s leading medical technology companies and, together with its customers, is driven to make healthcare better. The company offers innovative products and services in Orthopaedics, Medical and Surgical, and Neurotechnology and Spine that help improve patient and hospital outcomes. More information is available at www.stryker.com.

For investor inquiries please contact:
Katherine A. Owen, Vice President, Strategy and Investor Relations at 269-385-2600 or katherine.owen@stryker.com

For media inquiries please contact:
Yin Becker, Vice President, Communications, Public Affairs and Corporate Marketing at 269-385-2600 or yin.becker@stryker.com


STRYKER CORPORATION
For the Three Months and Full Year Ended December 31
(Unaudited - Millions of Dollars, Except Per Share Amounts)
CONDENSED STATEMENTS OF EARNINGS
 Three Months Full Year
 2018 2017 % Change 2018 2017 % Change
Net sales$3,796  $3,471  9.4% $13,601  $12,444  9.3%
Cost of sales1,340  1,230  8.9  4,663  4,264  9.4 
Gross profit$2,456  $2,241  9.6% $8,938  $8,180  9.3%
% of sales64.7% 64.6%   65.7% 65.7%  
Research, development and engineering expenses221  205  7.8  862  787  9.5 
Selling, general and administrative expenses1,431  1,217  17.6  5,099  4,552  12.0 
Recall charges, net of insurance proceeds13  9  44.4  23  173  (86.7)
Amortization of intangible assets93  96  (3.1) 417  371  12.4 
Total operating expenses$1,758  $1,527  15.1% $6,401  $5,883  8.8%
Operating income$698  $714  (2.2)% $2,537  $2,297  10.4%
% of sales18.4% 20.6%   18.7% 18.5%  
Other income (expense), net(41) (65) (36.9) (181) (234) (22.6)
Earnings before income taxes$657  $649  1.2% $2,356  $2,063  14.2%
Income taxes(1,411) 898  (257.1) (1,197) 1,043  (214.8)
Net earnings (loss)$2,068  $(249) 930.5% $3,553  $1,020  248.3%
Net earnings (loss) per share of common stock:           
Basic$5.52  $(0.66) 936.4% $9.50  $2.73  248.0%
Diluted$5.44  $(0.66) 924.2% $9.34  $2.68  248.5%
Weighted-average shares outstanding - in millions:           
Basic374.3  374.4    374.1  374.0   
Diluted380.2  380.9    380.3  380.1   


CONDENSED BALANCE SHEETS
 December
 2018 2017
Assets   
Cash and cash equivalents$3,616  $2,542 
Marketable securities83  251 
Accounts receivable, net2,332  2,198 
Inventories2,955  2,465 
Prepaid expenses and other current assets747  537 
Total current assets$9,733  $7,993 
Property, plant and equipment, net2,291  1,975 
Goodwill and other intangible assets (net)12,726  10,645 
Other noncurrent assets2,479  1,584 
Total assets$27,229  $22,197 
Liabilities and shareholders' equity   
Current liabilities$4,807  $3,485 
Long-term debt, excluding current maturities8,486  6,590 
Income taxes1,228  1,261 
Other noncurrent liabilities978  881 
Shareholders' equity11,730  9,980 
Total liabilities & shareholders' equity$27,229  $22,197 


CONDENSED STATEMENTS OF CASH FLOWS
 2018 2017
Operating activities   
Net earnings$3,553  $1,020 
Depreciation306  271 
Amortization of intangible assets417  371 
Changes in operating assets, liabilities, income taxes payable and other, net(1,666) (103)
Net cash provided by operating activities$2,610  $1,559 
Investing activities   
Acquisitions, net of cash acquired(2,451) $(831)
Purchases of property, plant and equipment(572) (598)
Change in marketable securities, net168  (183)
Other investing, net(2) (1)
Net cash used in investing activities$(2,857) $(1,613)
Financing activities   
Borrowings/repayments of debt, net$2,456  $299 
Dividends paid(703) (636)
Repurchase of common stock(300) (230)
Payments to purchase noncontrolling interest(14) (99)
Other financing(110) (128)
Net cash provided by (used in) financing activities$1,329  $(794)
Effect of exchange rate changes on cash and cash equivalents(8) 74 
Change in cash and cash equivalents$1,074  $(774)


STRYKER CORPORATION
Three Months and Full Year Ended December 31
(Unaudited - Millions of Dollars)
SALES GROWTH ANALYSIS
 Three Months Full Year
  Percentage Change Percentage Change 
Ex-ASC 606(2)
  Percentage ChangePercentage Change 
Ex-ASC 606(2)
 20182017As Reported Ex-ASC 606(2)Constant
Currency
 20182017As ReportedEx-ASC 606(2) Constant
Currency
Geographic:             
United States$2,768 $2,513 10.1% 11.1%11.1% $9,848 $9,059 8.7%9.8% 9.8%
International1,028 958 7.3  7.6 12.0  3,753 3,385 10.9 11.1  9.9 
Total$3,796 $3,471 9.4% 10.1%11.3% $13,601 $12,444 9.3%10.2% 9.8%
Segment:             
Orthopaedics$1,376 $1,305 5.4% 5.9%7.0% $4,991 $4,713 5.9%6.4% 5.9%
MedSurg1,720 1,580 8.9  9.9 11.1  6,045 5,557 8.8 10.1  10.0 
Neurotechnology and Spine700 586 19.5  20.1 21.4  2,565 2,174 18.0 18.6  18.0 
Total$3,796 $3,471 9.4% 10.1%11.3% $13,601 $12,444 9.3%10.2% 9.8%


SUPPLEMENTAL SALES GROWTH ANALYSIS
 Three Months
     Percentage Change Ex-ASC 606(2)
  Percentage Change   International
 20182017As ReportedEx-ASC 606(2) Constant CurrencyUnited StatesEx-ASC 606(2)Constant Currency
Orthopaedics:         
Knees$465 $446 4.3%4.6% 5.5%5.8%0.9%4.6%
Hips353 348 1.4 1.5  2.8 4.0 (2.6)0.8 
Trauma and Extremities428 408 4.9 6.0  7.2 7.1 4.1 7.5 
Other130 103 26.2 25.9  27.0 19.1 58.8 64.8 
 $1,376 $1,305 5.4%5.9% 7.0%7.0%3.4%7.1%
MedSurg:         
Instruments$530 $488 8.6%10.3% 11.4%12.1%4.2%9.0%
Endoscopy511 469 9.0 8.8  10.6 5.3 20.4 28.2 
Medical610 556 9.7 11.0  12.2 12.3 6.9 11.8 
Sustainability69 67 3.0 4.8  4.9 4.7 27.1 32.1 
 $1,720 $1,580 8.9%9.9% 11.1%9.8%10.2%16.0%
Neurotechnology and Spine:         
Neurotechnology$455 $387 17.6%18.5% 19.8%24.4%8.9%12.6%
Spine245 199 23.1 23.4  24.5 24.7 19.8 23.8 
 $700 $586 19.5%20.1% 21.4%24.5%11.7%15.5%
Total$3,796 $3,471 9.4%10.1% 11.3%11.1%7.6%12.0%


SUPPLEMENTAL SALES GROWTH ANALYSIS
 Full Year
     Percentage Change Ex-ASC 606(2)
  Percentage Change   International
 20182017As ReportedEx-ASC 606(2) Constant CurrencyUnited StatesEx-ASC 606(2)Constant Currency
Orthopaedics:         
Knees$1,701 $1,595 6.6%7.0% 6.7%6.9%7.4%6.1%
Hips1,336 1,303 2.5 2.8  2.3 2.5 3.3 2.2 
Trauma and Extremities1,580 1,478 6.9 7.8  7.0 6.5 10.1 7.8 
Other374 337 11.0 10.8  11.0 8.6 20.9 21.5 
 $4,991 $4,713 5.9%6.4% 5.9%5.8%7.6%6.1%
MedSurg:         
Instruments$1,822 $1,678 8.6%10.2% 10.0%11.2%6.9%6.2%
Endoscopy1,846 1,652 11.7 12.1  12.3 11.5 14.3 14.9 
Medical2,118 1,969 7.6 9.1  9.0 8.8 10.2 9.6 
Sustainability259 258 0.4 3.1  3.1 3.0 19.7 19.5 
 $6,045 $5,557 8.8%10.1% 10.0%10.0%10.4%10.1%
Neurotechnology and Spine:         
Neurotechnology$1,737 $1,423 22.1%22.8% 22.1%25.0%19.1%17.3%
Spine828 751 10.3 10.7  10.3 7.2 21.5 19.8 
 $2,565 $2,174 18.0%18.6% 18.0%18.1%19.7%17.9%
Total$13,601 $12,444 9.3%10.2% 9.8%9.8%11.1%9.9%


SUPPLEMENTAL INFORMATION - RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES

We supplement the reporting of our financial information determined under accounting principles generally accepted in the United States (GAAP) with certain non-GAAP financial measures, including: percentage sales growth excluding the impact of the adoption of ASC 606; percentage sales growth in constant currency; percentage sales growth in constant currency and excluding the impact of the adoption of ASC 606; percentage organic sales growth; adjusted gross profit; adjusted selling, general and administrative expenses; adjusted operating income; adjusted effective income tax rate; adjusted net earnings; and adjusted net earnings per diluted share (Diluted EPS). We believe that these non-GAAP financial measures provide meaningful information to assist investors and shareholders in understanding our financial results and assessing our prospects for future performance. Management believes percentage sales growth in constant currency and the other adjusted measures described above are important indicators of our operations because they exclude items that may not be indicative of or are unrelated to our core operating results and provide a baseline for analyzing trends in our underlying businesses. Management uses these non-GAAP financial measures for reviewing the operating results of reportable business segments and analyzing potential future business trends in connection with our budget process and bases certain management incentive compensation on these non-GAAP financial measures.

To measure percentage sales growth in constant currency, we remove the impact of changes in foreign currency exchange rates that affect the comparability and trend of sales. Percentage sales growth in constant currency is calculated by translating current and prior year results at the same foreign currency exchange rate and excludes the impact of the adoption of ASC 606. To measure percentage organic sales growth, we remove the impact of changes in foreign currency exchange rates, acquisitions and the impact of the adoption of ASC 606, which affect the comparability and trend of sales. Percentage organic sales growth is calculated by translating current year results at prior year average foreign currency exchange rates excluding the impact of acquisitions and the adoption of ASC 606. To measure earnings performance on a consistent and comparable basis, we exclude certain items that affect the comparability of operating results and the trend of earnings.

Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names. These adjusted financial measures should not be considered in isolation or as a substitute for reported sales growth, gross profit, selling, general and administrative expenses, operating income, effective income tax rate, net earnings and net earnings per diluted share, the most directly comparable GAAP financial measures. These non-GAAP financial measures are an additional way of viewing aspects of our operations that, when viewed with our GAAP results and the reconciliations to corresponding GAAP financial measures below, provide a more complete understanding of our business. We strongly encourage investors and shareholders to review our financial statements and publicly-filed reports in their entirety and not to rely on any single financial measure.

The following reconciles the non-GAAP financial measures discussed above with the most directly comparable GAAP financial measures. The weighted-average diluted shares outstanding used in the calculation of non-GAAP earnings per share are the same as those used in the calculation of reported earnings per share for the respective period.

STRYKER CORPORATION
Three Months and Year December 31
(Unaudited - Millions of Dollars, Except Per Share Amounts)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE GAAP FINANCIAL MEASURES
Three months 2018Gross ProfitSelling, General & Administrative ExpensesAmortization of Intangible AssetsOperating IncomeNet EarningsEffective
Tax Rate
Diluted EPS
Reported$2,456 $1,431 $93 $698 $2,068 (214.8)%$5.44 
Reported percent net sales64.7%37.7%2.4%18.4%54.5%  
Acquisition and integration-related charges (a)       
Inventory stepped-up to fair value16   15 13 (0.1)0.03 
Other acquisition and integration-related (59) 59 49 (0.1)0.13 
Amortization of purchased intangible assets  (93)93 75 0.1 0.20 
Restructuring-related and other charges (b)18 (77) 96 81 (0.2)0.21 
Medical device regulations (c)1   7 6 0.1 0.02 
Rejuvenate and other recall-related matters (d)   13 11  0.03 
Regulatory and legal matters (e) (64) 64 49 0.6 0.13 
Tax matters (f)    (1,524)232.0 (4.01)
Adjusted$2,491 $1,231 $ $1,045 $828 17.6%$2.18 
Adjusted percent net sales65.6%32.4%%27.5%21.8%  


Three Months 2017Gross ProfitSelling, General & Administrative ExpensesAmortization of Intangible AssetsOperating IncomeNet EarningsEffective
Tax Rate
Diluted EPS
Reported$2,241 $1,217 $96 $714 $(249)138.4%$(0.66)
Reported percent net sales64.6%35.1%2.8%20.6%(7.2)%  
Acquisition and integration-related charges (a)       
Inventory stepped-up to fair value20   20 18 (0.2)0.04 
Other acquisition and integration-related (15) 15 11 0.3 0.04 
Amortization of purchased intangible assets  (96)96 60 3.1 0.17 
Restructuring-related and other charges (b)45 (30) 75 60 0.4 0.16 
Medical device regulations (c)       
Rejuvenate and other recall-related matters (d)   9 8 (0.1)0.01 
Regulatory and legal matters (e) (9) 9 5 0.3 0.01 
Tax matters (f)    833 (126.1)2.19 
Adjusted$2,306 $1,163 $ $938 $746 16.1%$1.96 
Adjusted percent net sales66.4%33.5%%27.0%21.5%  


Full Year 2018Gross ProfitSelling, General & Administrative ExpensesAmortization of Intangible AssetsOperating IncomeNet EarningsEffective
Tax Rate
Diluted EPS
Reported$8,938 $5,099 $417 $2,537 $3,553 (50.8)%$9.34 
Reported percent net sales65.7%37.5%3.1%18.7%26.1%  
Acquisition and integration-related charges (a)       
Inventory stepped-up to fair value16   15 9 0.2 0.02 
Other acquisition and integration-related (108) 108 90  0.24 
Amortization of purchased intangible assets  (417)417 338 0.4 0.89 
Restructuring-related and other charges (b)27 (192) 220 179 0.1 0.47 
Medical device regulations (c)2   12 10  0.03 
Rejuvenate and other recall-related matters (d)   23 18  0.05 
Regulatory and legal matters (e) (185) 185 141 0.6 0.37 
Tax matters (f)    (1,559)66.2 (4.10)
Adjusted$8,983 $4,614 $ $3,517 $2,779 16.7%$7.31 
Adjusted percent net sales66.0%33.9%%25.9%20.4%  


Full Year 2017Gross ProfitSelling, General & Administrative ExpensesAmortization of Intangible AssetsOperating IncomeNet EarningsEffective
Tax Rate
Diluted EPS
Reported$8,180 $4,552 $371 $2,297 $1,020 50.6%$2.68 
Reported percent net sales65.7%36.6%3.0%18.5%8.2%  
Acquisition and integration-related charges (a)       
Inventory stepped-up to fair value22   22 20 (0.1)0.05 
Other acquisition and integration-related (42) 42 31 0.2 0.09 
Amortization of purchased intangible assets  (371)371 250 3.0 0.67 
Restructuring-related and other charges (b)57 (137) 194 155 0.4 0.41 
Medical device regulations (c)       
Rejuvenate and other recall-related matters (d)   173 131 0.7 0.34 
Regulatory and legal matters (e) (39) 39 25 0.4 0.06 
Tax matters (f)    833 (39.6)2.19 
Adjusted$8,259 $4,334 $ $3,138 $2,465 15.6%$6.49 
Adjusted percent net sales66.4%34.8%%25.2%19.8%  


(a)Charges represent certain acquisition and integration-related costs associated with acquisitions.
(b)Charges represent the costs associated with certain restructuring-related activities associated with workforce reductions and other restructuring-related activities.
(c)Charges represent the 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 new medical device regulations in the European Union and China.
(d)Charges represent changes in our best estimate of the minimum end of the range of probable loss to resolve the Rejuvenate recall and other recall-related matters.
(e)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.
(f)Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the Tax Cuts and Jobs Act of 2017, and the transfer of certain intellectual properties between tax jurisdictions.

Source: Stryker Corporation