- Compute the following profitability ratios for Styker and Conmed:
- ROA
- RONA
- ROE
- Compute the following ratios that provide insight into the operations of Stryker and Conmed
- Profit Margin (net)
- Asset turnover (total)
- Gross Margin %
- Compute the effective interest rate that Stryker and Conmed pay on their debt.
1B. The operating spread is defined as the difference between RONA and the effective interest rate. Compute the operating spread for both Stryker and Conmed.
1C.Compute the D/E ratio using average total debt and average total equity for Stryker and Conmed.
2019 2018 28,620 $ 40,854 18,530 18,688 8,302 3,454 53,635 11,779 312 (6,310) 300 1,042 42,231 10,037 4,212 2,063 CONMED CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2020, 2019 and 2018 (In thousands) 2020 Cash flows from operating activities: Net income 9,517 $ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 18,044 Amortization of debt discount 9,692 Amortization of deferred debt issuance costs 3,723 Amortization 54,581 Stock-based compensation 13,111 Impairment charges Deferred income taxes (14,234) Loss on early extinguishment of debt Increase (decrease) in cash flows from changes in assets and liabilities, net of acquired assets: Accounts receivable 13,920 Inventories (30,397) Accounts payable (2,977) Income taxes (1,644) Accrued compensation and benefits (4,123) Other assets (8,170) Other liabilities 3,488 55,014 Net cash provided by operating activities 64,531 Cash flows from investing activities: Payments related to business and asset acquisitions, net of cash acquired (3,852) Proceeds from sale of a facility 3,227 Purchases of property, plant and equipment (13,013) Net cash used in investing activities (13,638) Cash flows from financing activities: Payments on term loan (13,250) Proceeds from term loan Payments on revolving line of credit (212,000) Proceeds from revolving line of credit 199,000 Proceeds from convertible notes Payments on mortgage notes Payments related to contingent consideration (2,671) Payments related to debt issuance costs (3,153) Dividends paid on common stock (22,818) Purchases of convertible notes hedges Proceeds from issuance of warrants Other, net 2,833 Net cash provided by (used in) financing activities (52,059) Effect of exchange rate changes on cash and cash equivalents 2,666 Net increase (decrease) in cash and cash equivalents 1,500 Cash and cash equivalents at beginning of year 25,856 Cash and cash equivalents at end of year $ 27,356 $ (13,943) (117) 38 (1,867) 9,957 (22,263) 4,548 66,513 95,133 (17,460) (15,037) 12,109 (2,193) 9,044 (24,216) (6,515) 33,847 74,701 (367,596) (20,066) (387,662) (16,507) (16,507) (13,125) (168,000) 153,000 (154,312) 265,000 (484,000) 392,000 345,000 (836) (6,466) (16,210) (22,600) (51,198) 30,567 3,936 300,881 (1,574) (21,323) (913) (22,443) 2,113 (72,265) (1,040) (15,111) (7) 8,345 17,511 32,622 25,856 $ 17,511 CONMED CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31, 2020, 2019 and 2018 (In thousands except per share amounts) 2020 2019 2018 Net sales 862,459 $ 955,097 $ 859,634 Cost of sales 402,159 430,382 390,524 460,300 524,715 469,110 Gross profit Selling and administrative expense 373,817 400,141 355,617 Research and development expense 40,473 45,460 42,188 Operating expenses 414,290 445,601 397,805 Income from operations 46,010 79,114 71,305 Interest expense 44,052 42,701 20,652 Other expense 355 5,188 Income before income taxes 1,603 31,225 50,653 Provision (benefit) for income taxes (7,914) 2,605 9,799 Net income $ 9,517 $ 28,620 S 40,854 Per share data: 1.01 $ Basic Diluted $ $ 0.33 $ 0.32 $ $ 0.97 s 1.45 1.41 $ $ Other comprehensive income (loss), before income tax: Foreign currency translation adjustments Pension liability Cash flow hedging Other comprehensive income (loss), before income tax 6,963 (6,499) (8,489) (8,025) 25 35 (4,736) (4,676) (8,369) (885) 10,985 1,731 Provision (benefit) for income taxes related to items in other comprehensive income Other comprehensive income (loss), net of income tax (3,621) (4,404) $ (1,136) (3,540) $ 2,441 (710) $ Comprehensive income 5,113 $ 25,080 $ 40,144 The accompanying notes are an integral part of the consolidated financial statements. Stryker Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS 2020 2019 $ 2,943 $ 81 2,701 4,337 88 2,893 678 251 2,565 3,494 $ 488 9,707 $ 677 178 2,125 2,980 760 11,058 $ $ 1,546 3,636 5,182 2,430 2,752 $ 12,778 5,554 1,530 2,009 34,330 $ 1,263 3,451 4,714 2,147 2,567 9.069 4,227 1,575 1,671 30,167 $ Assets Current assets Cash and cash equivalents Marketable securities Accounts receivable, less allowance of $131 ($88 in 2019) Inventories: Materials and supplies Work in process Finished goods Total inventories Prepaid expenses and other current assets Total current assets Property, plant and equipment: Land, buildings and improvements Machinery and equipment Total property, plant and equipment Less allowance for depreciation Property, plant and equipment, net Goodwill Other intangibles, net Noncurrent deferred income tax assets Other noncurrent assets Total assets Liabilities and shareholders' equity Current liabilities Accounts payable Accrued compensation Income taxes Dividend payable Accrued product liabilities Accrued expenses and other liabilities Current maturities of debt Total current liabilities Long-term debt, excluding current maturities Income taxes Other noncurrent liabilities Total liabilities Shareholders' equity Common stock, $0.10 par value Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total shareholders' equity Total liabilities & shareholders' equity See accompanying notes to Consolidated Financial Statements. $ 810 $ 925 207 237 515 1,586 761 5,041 13,230 990 1,985 21,246 $ 675 955 171 213 331 1,196 859 4,400 10,231 1,068 1,661 17,360 $ 38 1,741 12,462 (1,157) 13,084 $ 34,330 $ 37 1,628 11,748 (606) 12,807 30,167 $ $ Dollar amounts in millions except per share amounts or as otherwise specified. 22 STRYKER CORPORATION 2020 FORM 10-K Stryker Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS 2020 2019 2018 1,599 $ 2,083 $ 3,553 340 472 215 142 17 48 48 314 464 16 127 192 67 126 306 417 14 119 23 16 (1,582) 354 27 100 (54) (17) (16) 2 3,277 $ (563) (400) 63 113 (177) (105) (129) 2,191 (60) (385) 116 289 (90) (156) 30 2,610 en $ $ Operating activities Net earnings Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation Amortization of intangible assets Asset impairments Share-based compensation Recall charges Sale of inventory stepped up to fair value at acquisition Deferred income tax (benefit) expense Changes in operating assets and liabilities: Accounts receivable Inventories Accounts payable Accrued expenses and other liabilities Recall-related payments Income taxes Other, net Net cash provided by operating activities Investing activities Acquisitions, net of cash acquired Purchases of marketable securities Proceeds from sales of marketable securities Purchases of property, plant and equipment Other investing, net Net cash used in investing activities Financing activities Proceeds and payments on short-term borrowings, net Proceeds from issuance of long-term debt Payments on long-term debt Dividends paid Repurchases of common stock Cash paid for taxes from withheld shares Payments to purchase noncontrolling interest Other financing, net Net cash provided by (used in) financing activities Effect of exchange rate changes on cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Supplemental cash flow disclosure: Cash paid for income taxes, net of refunds Cash paid for interest on debt (4,222) (54) 61 (487) (802) (74) 69 (649) 1 (1,455) $ (2,451) (226) 394 (572) (2) (2,857) 1 (4,701) $ (6) 3,292 (2,297) (863) (7) 2,642 (1,342) (778) (307) (136) (110) (1) 3,126 (669) (703) (300) (120) (14) 10 1,329 (8) 1,074 2,542 3,616 (69) $ (27) (11) $ 41 (1,394) $ 4,337 2,943 $ 3 $ (18) 721 $ 3,616 4,337 $ $ $ 323 304 $ $ 457 286 $ $ 539 248 See accompanying notes to Consolidated Financial Statements. Dollar amounts in millions except per share amounts or as otherwise specified. 24 $ Stryker Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS 2020 Net sales 14,351 $ Cost of sales 5,294 Gross profit 9,057 $ Research, development and engineering expenses 984 Selling, general and administrative expenses 5,361 Recall charges 17 Amortization of intangible assets 472 Total operating expenses $ 6,834 $ Operating income 2,223 $ Other income (expense), net (269) Earnings before income taxes 1,954 $ Income taxes 355 Net earnings 1,599 $ 2019 14,884 $ 5,188 9,696 $ 971 5,356 192 464 6,983 $ 2,713 $ (151) 2,562 $ 479 2,083 $ 2018 13,601 4,663 8,938 862 5,099 23 417 6,401 2,537 (181) 2,356 (1,197) 3,553 $ $ $ $ $ 5.57 $ 5.48 $ 9.50 9.34 375.5 4.8 374.0 5.9 374.1 6.2 380.3 380.3 379.9 Net earnings per share of common stock: Basic 4.26 $ Diluted 4.20 $ Weighted-average shares outstanding (in millions): Basic Effect of dilutive employee stock compensation Diluted Anti-dilutive shares excluded from the calculation of dilutive employee stock compensation were de minimis in all periods. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2020 Net earnings 1,599 $ Other comprehensive income (loss), net of tax Marketable securities Pension plans (80) Unrealized gains (losses) on designated hedges (57) Financial statement translation (414) Total other comprehensive income (loss), net of tax (551) $ Comprehensive income $ 1,048 See accompanying notes to Consolidated Financial Statements. 2019 2,083 $ 2018 3,553 rail 1 (42) (3) 69 25 $ 2,108 $ (3) 22 (97) (78) 3,475 $ Dollar amounts in millions except per share amounts or as otherwise specified. 21 2019 2018 $ 28,620 $ 40,854 18,530 18,688 8,302 3,454 53,635 11,779 312 (6,310) 300 1,042 42,231 10,037 4,212 2,063 CONMED CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2020, 2019 and 2018 (In thousands) 2020 Cash flows from operating activities: Net income 9,517 $ Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 18,044 Amortization of debt discount 9,692 Amortization of deferred debt issuance costs 3,723 Amortization 54,581 Stock-based compensation 13,111 Impairment charges Deferred income taxes (14,234) Loss on early extinguishment of debt Increase (decrease) in cash flows from changes in assets and liabilities, net of acquired assets: Accounts receivable 13,920 Inventories (30,397) Accounts payable (2,977) Income taxes (1,644) Accrued compensation and benefits (4,123) Other assets (8,170) Other liabilities 3,488 55,014 Net cash provided by operating activities 64,531 Cash flows from investing activities: Payments related to business and asset acquisitions, net of cash acquired (3,852) Proceeds from sale of a facility 3,227 Purchases of property, plant and equipment (13,013) Net cash used in investing activities (13,638) Cash flows from financing activities: Payments on term loan (13,250) Proceeds from term loan Payments on revolving line of credit (212,000) Proceeds from revolving line of credit 199,000 Proceeds from convertible notes Payments on mortgage notes Payments related to contingent consideration (2,671) Payments related to debt issuance costs (3,153) Dividends paid on common stock (22,818) Purchases of convertible notes hedges Proceeds from issuance of warrants Other, net 2,833 Net cash provided by (used in) financing activities (52,059) Effect of exchange rate changes on cash and cash equivalents 2,666 Net increase (decrease) in cash and cash equivalents 1,500 Cash and cash equivalents at beginning of year 25,856 Cash and cash equivalents at end of year $ 27,356 S (13,943) (117) 38 (1,867) 9,957 (22,263) 4,548 66,513 95,133 (17,460) (15,037) 12,109 (2,193) 9,044 (24,216) (6,515) 33,847 74,701 (367,596) (20,066) (387,662) (16,507) (16,507) (13,125) (168,000) 153,000 (154,312) 265,000 (484,000) 392,000 345,000 (836) (6,466) (16,210) (22,600) (51,198) 30,567 3,936 300,881 (1,574) (21,323) (913) (22,443) 2,113 (72,265) (7) 8,345 (1,040) (15,111) 32,622 17,511 25,856 $ 17,511
