10-QPeriod: Q1 FY2012

STRYKER CORP Quarterly Report for Q1 Ended Mar 31, 2012

Filed April 24, 2012For Securities:SYK

Summary

Stryker Corporation reported a solid first quarter for 2012, demonstrating year-over-year growth in net sales and net earnings. Net sales increased by 7.2% to $2.16 billion, driven by strong performance in the Neurotechnology and Spine segment, and moderate growth in Reconstructive and MedSurg segments. Diluted earnings per share saw a significant increase of 16.7% to $0.91. The company's financial health remains robust, with total assets standing at $12.46 billion and shareholders' equity at $8.02 billion. While operating cash flow decreased significantly compared to the prior year, this was largely influenced by working capital movements and specific legal settlement payments. Stryker continues to focus on strategic investments and operational efficiencies, including ongoing workforce reductions, to prepare for future market dynamics such as the upcoming medical device excise tax.

Financial Highlights

50 data points
Beta

Revenue

$2.16B

67.2% Gross Margin

Net Income

$350.00M

16.2% Net Margin

EPS (Diluted)

$0.91

Total Assets

$12.46B

Cash & Equivalents

$690.00M

Free Cash Flow

-$17.00M

Financial Statements
Beta
Revenue$2.16B
Cost of Revenue$709.00M
Gross Profit$1.45B
R&D Expenses$112.00M
SG&A Expenses$819.00M
Operating Expenses$976.00M
Operating Income$476.00M
Net Income$350.00M
EPS (Basic)$0.92
EPS (Diluted)$0.91
Shares Outstanding (Basic)381.00M
Shares Outstanding (Diluted)383.80M

Key Highlights

  • 1Net sales increased 7.2% to $2.16 billion in Q1 2012 compared to $2.01 billion in Q1 2011.
  • 2Net earnings grew 14.0% to $350 million, with diluted EPS rising 16.7% to $0.91 from $0.78.
  • 3Neurotechnology and Spine segment showed the strongest growth at 12.4% year-over-year.
  • 4Operating cash flow decreased significantly to $35 million from $204 million in the prior year, primarily due to working capital changes and legal settlements.
  • 5The company recorded $14 million in restructuring charges related to a planned 5% global workforce reduction.
  • 6Stryker repurchased $50 million of its common stock in Q1 2012 under its share repurchase program.

Frequently Asked Questions

Stryker's net sales increased by 7.2% to $2.16 billion, driven by a combination of increased unit volume, favorable product mix, and contributions from acquisitions. The Neurotechnology and Spine segment was a key performer, showing 12.4% growth.

Operating cash flow decreased by 82.8% to $35 million in the first quarter of 2012 compared to the same period in 2011. This decline was primarily attributed to unfavorable changes in working capital, including increases in accounts receivable and inventory, as well as payments related to legal settlements and loaner instrumentation.

Stryker recorded $14 million in restructuring charges related to a focused reduction of its global workforce, aiming for approximately a 5% reduction by the end of 2012. These actions were initiated to enhance efficiencies, realign resources in anticipation of the 2013 Medical Device Excise Tax, and to continue investment in strategic growth areas.

Stryker maintains a strong liquidity position with $3.3 billion in cash and marketable securities. The company has ample borrowing capacity under its credit facilities and expects to meet its short-term liquidity needs through operational cash flow. Long-term debt remained stable at $1.75 billion.