Summary
Stryker Corporation (SYK) announced a significant divestiture and a new board appointment in this December 10, 2010 8-K filing. The company has entered into a definitive agreement to sell its OP-1 product family, which includes OP-1 Implant, OP-1 Putty, Opgenra, and Osigraft, to Olympus Corporation for $60 million. This sale is expected to result in a one-time, non-cash impairment charge of approximately $75 to $80 million, impacting diluted earnings per share by an estimated $0.19 to $0.20 in the fourth quarter of 2010.
Key Highlights
- 1Stryker to sell OP-1 product family to Olympus Corporation for $60 million.
- 2Expected non-cash impairment charge of $75-$80 million related to the sale.
- 3The sale is anticipated to reduce diluted EPS by $0.19-$0.20 in Q4 2010.
- 4Allan C. Golston elected to the Board of Directors, effective January 1, 2011.
- 5Mr. Golston brings experience as President of the Bill & Melinda Gates Foundation and as a director for Malt-O-Meal.
- 6Mr. Golston will receive standard compensation and equity awards for non-employee directors.
- 7The filing includes a press release detailing the OP-1 divestiture agreement.
Frequently Asked Questions
While the 8-K doesn't explicitly state the reason for the sale, divestitures like this often occur when a product line no longer aligns with a company's core strategic focus or growth objectives, or if it requires significant investment that the company wishes to reallocate. Investors should look to future earnings calls or investor presentations for further commentary from management.
The sale will result in a one-time, non-cash impairment charge of approximately $75 million to $80 million (net of tax benefit). This charge is expected to reduce diluted earnings per share by approximately $0.19 to $0.20 in the fourth quarter of 2010.
Allan C. Golston is the President of the United States Program for the Bill & Melinda Gates Foundation and a director for Malt-O-Meal. His appointment likely reflects the board's desire to leverage his extensive financial and administrative experience, particularly from his previous roles at the Gates Foundation and Swedish Health Services. His background suggests a focus on financial oversight and strategic direction.
Mr. Golston will receive the standard compensation for non-employee directors, which includes a fixed annual fee of $60,000, plus an additional $55,000 if he serves on a committee. He will also receive the annual equity award granted to all non-employee directors in February 2011, and will enter into the standard director indemnification agreement.