STRYKER

2016 FORM 10-K

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STRYKER CORPORATION 2016 Form 10-K Dollar amounts in millions except per share amounts or as otherwise specified. 12 examples of the types of adjustments that may be included in a period: 1. Acquisition and integration related costs. Costs related to integrating recently acquired businesses and specific 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 charges. Costs associated with workforce reductions and other restructuring-related activities. 4. Rejuvenate and other recall matters. Our best estimate of the minimum of the range of probable loss to resolve certain product recalls. 5. 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. 6. Tax matters. Certain significant and discrete tax items and adjustments to interest expense related to the settlement of certain tax matters. 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, cost of sales, selling, general and administrative expenses, amortization of intangible assets, 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 at the end of the discussion of Results of Operations 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 weighted-average basic and diluted shares outstanding used in the calculation of non-GAAP earnings per share are the same as those used in the calculation of the reported per share amounts. Reconciliation of the Most Directly Comparable GAAP Financial Measure to Non-GAAP Financial Measures 2016 Gross Profit Selling, General & Administrative Expenses Amortization of Intangible Assets Operating Income Net Earnings Effective Tax Rate Diluted EPS Reported $ 7,495 $ 4,137 $ 319 $ 2,166 $ 1,647 14.3% $ 4.35 Acquisition and integration related charges: Inventory stepped up to fair value 36 — — 36 23 0.4 0.06 Other acquisition and integration related — (95) — 95 77 0.1 0.20 Amortization of purchased intangible assets — — (319) 319 221 2.2 0.59 Restructuring-related charges 15 (110) — 125 98 0.3 0.26 Rejuvenate and other recall matters — — — 158 127 0.1 0.34 Legal matters — 12 — (12) (7) (0.2) (0.02) Tax Matters — — — — 8 0.1 0.02 Adjusted $ 7,546 $ 3,944 $ — $ 2,887 $ 2,194 17.3% $ 5.80 2015 Gross Profit Selling, General & Administrative Expenses Amortization of Intangible Assets Operating Income Net Earnings Effective Tax Rate Diluted EPS Reported $ 6,602 $ 3,610 $ 210 $ 1,861 $ 1,439 17.1% $ 3.78 Acquisition and integration related charges: Inventory stepped up to fair value 7 — — 7 4 0.1 0.01 Other acquisition and integration related — (28) — 28 20 0.2 0.05 Amortization of purchased intangible assets — — (210) 210 147 1.5 0.39 Restructuring-related charges 7 (125) — 132 97 0.7 0.26 Rejuvenate and other recall matters — — — 296 210 2.0 0.55 Legal matters — 53 — (53) (46) 0.1 (0.12) Tax Matters — — — — 78 (4.4) 0.20 Adjusted $ 6,616 $ 3,510 $ — $ 2,481 $ 1,949 17.3% $ 5.12 2014 Gross Profit Selling, General & Administrative Expenses Amortization of Intangible Assets Operating Income Net Earnings Effective Tax Rate Diluted EPS Reported $ 6,356 $ 3,547 $ 188 $ 1,246 $ 515 55.6% $ 1.34 Acquisition and integration related charges: Inventory stepped up to fair value 27 — — 27 15 0.5 0.04 Other acquisition and integration related — (75) — 75 50 0.7 0.13 Amortization of purchased intangible assets — — (188) 188 133 1.1 0.35 Restructuring-related charges 1 (116) — 117 78 1.1 0.20 Rejuvenate and other recall matters — — — 761 628 (3.1) 1.65 Tax Matters — — — — 391 (33.6) 1.02 Adjusted $ 6,384 $ 3,356 $ — $ 2,414 $ 1,810 22.3% $ 4.73

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