10-KPeriod: FY2010

STRYKER CORP Annual Report, Year Ended Dec 31, 2010

Filed February 18, 2011For Securities:SYK

Summary

Stryker Corporation's 2010 Form 10-K highlights a year of solid growth, with total net sales increasing by 9% to $7.32 billion. This growth was driven by a combination of increased unit volume, strategic acquisitions, and favorable foreign currency exchange rates, partially offset by pricing changes. The company's performance was supported by strong sales in both its Orthopaedic Implants and MedSurg Equipment segments. The Orthopaedic Implants segment saw a 5% increase in sales, primarily driven by hip, knee, and trauma implant systems, while the MedSurg Equipment segment experienced a significant 16% jump, bolstered by surgical equipment, navigation systems, and patient handling products. The company also made strategic acquisitions throughout the year, including key assets in the neurovascular market, which are expected to enhance its product portfolio and market presence. Financially, Stryker demonstrated robust operational cash flow and a strong balance sheet, enabling it to fund acquisitions, dividends, and stock repurchases. Despite some ongoing legal and regulatory matters, the company maintained effective internal controls and expressed confidence in its ability to fund future operations and growth initiatives.

Financial Highlights

54 data points
Beta

Revenue

$7.32B

68.8% Gross Margin

Net Income

$1.27B

17.4% Net Margin

EPS (Diluted)

$3.19

Total Assets

$10.66B

Cash & Equivalents

$1.76B

Free Cash Flow

$1.36B

Financial Statements
Beta
Revenue$7.32B
Cost of Revenue$2.29B
Gross Profit$5.03B
R&D Expenses$394.00M
SG&A Expenses$2.71B
Operating Expenses$3.28B
Operating Income$1.75B
Interest Expense$53.00M
Net Income$1.27B
EPS (Basic)$3.21
EPS (Diluted)$3.19
Shares Outstanding (Basic)396.40M
Shares Outstanding (Diluted)399.50M

Key Highlights

  • 1Stryker reported a 9% increase in net sales for 2010, reaching $7.32 billion, driven by strong performance in both major business segments.
  • 2The MedSurg Equipment segment showed particularly robust growth, with sales up 16%, driven by surgical equipment and patient handling products.
  • 3The company completed several strategic acquisitions during 2010, including significant assets in the neurovascular market, bolstering its product offerings.
  • 4Net earnings increased by 15% year-over-year, reaching $1.27 billion, with diluted EPS growing to $3.19.
  • 5Operational cash flow remained strong, providing ample resources for investments in R&D, acquisitions, and shareholder returns (dividends and share repurchases).
  • 6Research and development expenses increased to 5.4% of sales, indicating a continued focus on innovation and new product development.

Frequently Asked Questions

Stryker's revenue in 2010 was primarily driven by its two core segments: Orthopaedic Implants and MedSurg Equipment. Within Orthopaedic Implants, growth was seen in hip, knee, and trauma implant systems. The MedSurg Equipment segment's strong performance was led by surgical equipment, navigation systems, endoscopic and communications systems, and patient handling and emergency medical equipment.

In 2010, Stryker completed several acquisitions, including assets for the Sonopet Ultrasonic Aspirator, Gaymar Industries, and the bioimplantable implants product line from Porex Surgical. Notably, they announced and subsequently completed the acquisition of the Neurovascular division of Boston Scientific Corporation for $1.45 billion in early 2011, significantly expanding their presence in the neurovascular market. They also announced the sale of their OP-1 product family, which was completed in February 2011.

Stryker demonstrated strong financial performance in 2010. Net sales increased 9% to $7.32 billion, and net earnings grew 15% to $1.27 billion, with diluted EPS at $3.19. The company generated robust net cash from operating activities of $1.55 billion, providing flexibility for its strategic initiatives, including acquisitions and returning capital to shareholders through dividends and share repurchases.

Stryker highlighted several risks, including the potential negative impact of economic and political developments in countries where it operates, stricter pricing guidelines in the medical technology industry, product liability claims and regulatory compliance issues, the ability to maintain relationships with healthcare professionals, potential changes in income tax allocations, and the successful capitalization on R&D spending and previous or future acquisitions.