Fourth Quarter Net Sales Growth Overview | |||||||||||||||||||||||||||||
Reported | Foreign Currency Exchange | Constant Currency | Acquisitions / Divestitures | Organic | |||||||||||||||||||||||||
MedSurg and Neurotechnology | 12.3 | % | 0.3 | % | 12.0 | % | 0.2 | % | 11.8 | % | |||||||||||||||||||
Orthopaedics and Spine | 11.0 | 0.3 | 10.7 | — | 10.7 | ||||||||||||||||||||||||
Total | 11.8 | % | 0.3 | % | 11.5 | % | 0.1 | % | 11.4 | % |
Full Year Net Sales Growth Overview | |||||||||||||||||||||||||||||
Reported | Foreign Currency Exchange | Constant Currency | Acquisitions / Divestitures | Organic | |||||||||||||||||||||||||
MedSurg and Neurotechnology | 11.5 | % | (0.6) | % | 12.1 | % | 0.3 | % | 11.8 | % | |||||||||||||||||||
Orthopaedics and Spine | 10.5 | (0.6) | 11.1 | — | 11.1 | ||||||||||||||||||||||||
Total | 11.1 | % | (0.5) | % | 11.6 | % | 0.1 | % | 11.5 | % |
STRYKER CORPORATION | |||||||||||||||||||||||||||||||||||
For the Three Months and Full Year December 31 | |||||||||||||||||||||||||||||||||||
(Unaudited - Millions of Dollars, Except Per Share Amounts) | |||||||||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF EARNINGS | |||||||||||||||||||||||||||||||||||
Three Months | Full Year | ||||||||||||||||||||||||||||||||||
2023 | 2022 | % Change | 2023 | 2022 | % Change | ||||||||||||||||||||||||||||||
Net sales | $ | 5,815 | $ | 5,202 | 11.8 | % | $ | 20,498 | $ | 18,449 | 11.1 | % | |||||||||||||||||||||||
Cost of sales | 2,112 | 1,966 | 7.4 | 7,440 | 6,871 | 8.3 | |||||||||||||||||||||||||||||
Gross profit | $ | 3,703 | $ | 3,236 | 14.4 | % | $ | 13,058 | $ | 11,578 | 12.8 | % | |||||||||||||||||||||||
% of sales | 63.7 | % | 62.2 | % | 63.7 | % | 62.8 | % | |||||||||||||||||||||||||||
Research, development and engineering expenses | 350 | 326 | 7.4 | 1,388 | 1,454 | (4.5) | |||||||||||||||||||||||||||||
Selling, general and administrative expenses | 1,941 | 1,751 | 10.9 | 7,129 | 6,455 | 10.4 | |||||||||||||||||||||||||||||
Recall charges, net | 6 | (29) | nm | 18 | (15) | nm | |||||||||||||||||||||||||||||
Amortization of intangible assets | 149 | 158 | (5.7) | 635 | 627 | 1.3 | |||||||||||||||||||||||||||||
Goodwill impairment | — | 216 | nm | — | 216 | nm | |||||||||||||||||||||||||||||
Total operating expenses | $ | 2,446 | $ | 2,422 | 1.0 | % | $ | 9,170 | $ | 8,737 | 5.0 | % | |||||||||||||||||||||||
Operating income | $ | 1,257 | $ | 814 | 54.4 | % | $ | 3,888 | $ | 2,841 | 36.9 | % | |||||||||||||||||||||||
% of sales | 21.6 | % | 15.6 | % | 19.0 | % | 15.4 | % | |||||||||||||||||||||||||||
Other income (expense), net | (31) | (53) | (41.5) | (215) | (158) | 36.1 | |||||||||||||||||||||||||||||
Earnings before income taxes | $ | 1,226 | $ | 761 | 61.1 | % | $ | 3,673 | $ | 2,683 | 36.9 | % | |||||||||||||||||||||||
Income taxes | 83 | 198 | (58.1) | 508 | 325 | 56.3 | |||||||||||||||||||||||||||||
Net earnings | $ | 1,143 | $ | 563 | 103.0 | % | $ | 3,165 | $ | 2,358 | 34.2 | % | |||||||||||||||||||||||
Net earnings per share of common stock: | |||||||||||||||||||||||||||||||||||
Basic | $ | 3.01 | $ | 1.48 | 103.4 | % | $ | 8.34 | $ | 6.23 | 33.9 | % | |||||||||||||||||||||||
Diluted | $ | 2.98 | $ | 1.47 | 102.7 | % | $ | 8.25 | $ | 6.17 | 33.7 | % | |||||||||||||||||||||||
Weighted-average shares outstanding (in millions): | |||||||||||||||||||||||||||||||||||
Basic | 380.0 | 378.5 | 379.6 | 378.2 | |||||||||||||||||||||||||||||||
Diluted | 383.9 | 382.3 | 383.7 | 382.2 |
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||||
December 31 | |||||||||||
2023 | 2022 | ||||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 2,940 | $ | 1,844 | |||||||
Marketable securities | 82 | 84 | |||||||||
Accounts receivable, net | 3,765 | 3,565 | |||||||||
Inventories | 4,843 | 3,995 | |||||||||
Prepaid expenses and other current assets | 857 | 787 | |||||||||
Total current assets | $ | 12,487 | $ | 10,275 | |||||||
Property, plant and equipment, net | 3,215 | 2,970 | |||||||||
Goodwill and other intangibles, net | 19,836 | 19,765 | |||||||||
Noncurrent deferred income tax assets | 1,670 | 1,410 | |||||||||
Other noncurrent assets | 2,673 | 2,464 | |||||||||
Total assets | $ | 39,881 | $ | 36,884 | |||||||
Liabilities and shareholders' equity | |||||||||||
Current liabilities | $ | 7,890 | $ | 6,303 | |||||||
Long-term debt, excluding current maturities | 10,901 | 11,857 | |||||||||
Income taxes | 567 | 641 | |||||||||
Other noncurrent liabilities | 1,930 | 1,467 | |||||||||
Shareholders' equity | 18,593 | 16,616 | |||||||||
Total liabilities and shareholders' equity | $ | 39,881 | $ | 36,884 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
December 31 | |||||||||||
2023 | 2022 | ||||||||||
Operating activities | |||||||||||
Net earnings | $ | 3,165 | $ | 2,358 | |||||||
Depreciation | 393 | 371 | |||||||||
Amortization of intangible assets | 635 | 627 | |||||||||
Changes in operating assets, liabilities, income taxes payable and other, net | (513) | (732) | |||||||||
Net cash provided by operating activities | $ | 3,680 | $ | 2,624 | |||||||
Investing activities | |||||||||||
Acquisitions, net of cash acquired | $ | (390) | $ | (2,563) | |||||||
Purchases of property, plant and equipment | (575) | (588) | |||||||||
Other investing, net | 3 | 227 | |||||||||
Net cash used in investing activities | $ | (962) | $ | (2,924) | |||||||
Financing activities | |||||||||||
Borrowings (payments) of debt, net | $ | (277) | $ | 472 | |||||||
Payments of dividends | (1,139) | (1,051) | |||||||||
Other financing, net | (178) | (170) | |||||||||
Net cash provided by (used in) financing activities | $ | (1,594) | $ | (749) | |||||||
Effect of exchange rate changes on cash and cash equivalents | (28) | (51) | |||||||||
Change in cash and cash equivalents | $ | 1,096 | $ | (1,100) |
STRYKER CORPORATION | ||
For the Three Months and Full Year December 31 | ||
(Unaudited - Millions of Dollars) |
SALES GROWTH ANALYSIS | |||||||||||||||||||||||||||||||||||
Three Months | Full Year | ||||||||||||||||||||||||||||||||||
Percentage Change | Percentage Change | ||||||||||||||||||||||||||||||||||
2023 | 2022 | As Reported | Constant Currency | 2023 | 2022 | As Reported | Constant Currency | ||||||||||||||||||||||||||||
Geographic: | |||||||||||||||||||||||||||||||||||
United States | $ | 4,356 | $ | 3,862 | 12.8 | % | 12.8 | % | $ | 15,257 | $ | 13,638 | 11.9 | % | 11.9 | % | |||||||||||||||||||
International | 1,459 | 1,340 | 8.9 | 7.8 | 5,241 | 4,811 | 8.9 | 10.9 | |||||||||||||||||||||||||||
Total | $ | 5,815 | $ | 5,202 | 11.8 | % | 11.5 | % | $ | 20,498 | $ | 18,449 | 11.1 | % | 11.6 | % | |||||||||||||||||||
Segment: | |||||||||||||||||||||||||||||||||||
MedSurg and Neurotechnology | $ | 3,427 | $ | 3,051 | 12.3 | % | 12.0 | % | $ | 11,836 | $ | 10,611 | 11.5 | % | 12.1 | % | |||||||||||||||||||
Orthopaedics and Spine | 2,388 | 2,151 | 11.0 | 10.7 | 8,662 | 7,838 | 10.5 | 11.1 | |||||||||||||||||||||||||||
Total | $ | 5,815 | $ | 5,202 | 11.8 | % | 11.5 | % | $ | 20,498 | $ | 18,449 | 11.1 | % | 11.6 | % |
SUPPLEMENTAL SALES GROWTH ANALYSIS | ||||||||||||||||||||||||||||||||
Three Months | ||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||
Percentage Change | ||||||||||||||||||||||||||||||||
2023 | 2022 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | ||||||||||||||||||||||||||
MedSurg and Neurotechnology: | ||||||||||||||||||||||||||||||||
Instruments | $ | 736 | $ | 653 | 12.5 | % | 12.0 | % | 12.5 | % | 12.3 | % | 10.0 | % | ||||||||||||||||||
Endoscopy | 892 | 779 | 14.6 | 14.4 | 17.9 | 1.1 | 0.6 | |||||||||||||||||||||||||
Medical | 1,042 | 936 | 11.4 | 11.2 | 12.9 | 6.0 | 4.9 | |||||||||||||||||||||||||
Neurovascular | 320 | 299 | 6.7 | 6.6 | 7.6 | 6.2 | 6.1 | |||||||||||||||||||||||||
Neuro Cranial | 437 | 384 | 14.1 | 13.8 | 14.0 | 14.4 | 12.7 | |||||||||||||||||||||||||
$ | 3,427 | $ | 3,051 | 12.3 | % | 12.0 | % | 14.0 | % | 6.9 | % | 5.9 | % | |||||||||||||||||||
Orthopaedics and Spine: | ||||||||||||||||||||||||||||||||
Knees | $ | 630 | $ | 552 | 14.2 | % | 13.9 | % | 12.9 | % | 18.0 | % | 16.9 | % | ||||||||||||||||||
Hips | 414 | 375 | 10.2 | 10.3 | 12.9 | 5.5 | 5.8 | |||||||||||||||||||||||||
Trauma and Extremities | 860 | 774 | 11.0 | 10.3 | 12.1 | 8.3 | 5.5 | |||||||||||||||||||||||||
Spine | 318 | 297 | 7.0 | 6.5 | 6.0 | 9.9 | 7.7 | |||||||||||||||||||||||||
Other | 166 | 153 | 9.3 | 10.4 | 3.0 | 25.5 | 29.0 | |||||||||||||||||||||||||
$ | 2,388 | $ | 2,151 | 11.0 | % | 10.7 | % | 10.9 | % | 11.3 | % | 10.1 | % | |||||||||||||||||||
Total | $ | 5,815 | $ | 5,202 | 11.8 | % | 11.5 | % | 12.8 | % | 8.9 | % | 7.8 | % |
Full Year | ||||||||||||||||||||||||||||||||
United States | International | |||||||||||||||||||||||||||||||
Percentage Change | ||||||||||||||||||||||||||||||||
2023 | 2022 | As Reported | Constant Currency | As Reported | As Reported | Constant Currency | ||||||||||||||||||||||||||
MedSurg and Neurotechnology: | ||||||||||||||||||||||||||||||||
Instruments | $ | 2,569 | $ | 2,279 | 12.7 | % | 13.0 | % | 13.3 | % | 10.4 | % | 11.8 | % | ||||||||||||||||||
Endoscopy | 3,033 | 2,725 | 11.3 | 11.7 | 12.1 | 7.6 | 9.9 | |||||||||||||||||||||||||
Medical | 3,459 | 3,031 | 14.1 | 14.4 | 15.0 | 10.8 | 12.3 | |||||||||||||||||||||||||
Neurovascular | 1,226 | 1,200 | 2.1 | 4.0 | 8.1 | (1.4) | 1.5 | |||||||||||||||||||||||||
Neuro Cranial | 1,549 | 1,376 | 12.6 | 13.0 | 11.9 | 16.1 | 18.4 | |||||||||||||||||||||||||
$ | 11,836 | $ | 10,611 | 11.5 | % | 12.1 | % | 13.0 | % | 7.0 | % | 9.1 | % | |||||||||||||||||||
Orthopaedics and Spine: | ||||||||||||||||||||||||||||||||
Knees | $ | 2,273 | $ | 1,997 | 13.9 | % | 14.4 | % | 12.2 | % | 18.8 | % | 20.9 | % | ||||||||||||||||||
Hips | 1,544 | 1,413 | 9.2 | 10.4 | 10.1 | 7.7 | 10.7 | |||||||||||||||||||||||||
Trauma and Extremities | 3,147 | 2,807 | 12.1 | 12.2 | 12.9 | 10.1 | 10.5 | |||||||||||||||||||||||||
Spine | 1,189 | 1,146 | 3.8 | 4.0 | 5.7 | (1.6) | (0.9) | |||||||||||||||||||||||||
Other | 509 | 475 | 7.1 | 8.8 | (2.0) | 33.8 | 40.9 | |||||||||||||||||||||||||
$ | 8,662 | $ | 7,838 | 10.5 | % | 11.1 | % | 10.2 | % | 11.2 | % | 13.0 | % | |||||||||||||||||||
Total | $ | 20,498 | $ | 18,449 | 11.1 | % | 11.6 | % | 11.9 | % | 8.9 | % | 10.9 | % |
STRYKER CORPORATION | |||||||||||||||||||||||||||||
For the Three Months and Full Year December 31 | |||||||||||||||||||||||||||||
(Unaudited - Millions of Dollars, Except Per Share Amounts) | |||||||||||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures to the Most Directly Comparable GAAP Financial Measures | |||||||||||||||||||||||||||||
Three Months 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 3,703 | $ | 1,941 | $ | 350 | $ | 1,257 | $ | (31) | $ | 83 | $ | 1,143 | 6.8 | % | $ | 2.98 | |||||||||||
Reported percent net sales | 63.7 | % | 33.4 | % | 6.0 | % | 21.6 | % | (0.5) | % | nm | 19.7 | % | ||||||||||||||||
Acquisition and integration-related costs | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (13) | — | 13 | — | — | 13 | (0.2) | 0.04 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 149 | — | 28 | 121 | 0.6 | 0.31 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 9 | (54) | (1) | 64 | — | 15 | 49 | 0.5 | 0.13 | ||||||||||||||||||||
Goodwill impairment | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Medical device regulations (c) | 1 | — | (21) | 22 | — | 5 | 17 | 0.1 | 0.04 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | 6 | — | 1 | 5 | — | 0.02 | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (73) | — | 73 | — | 25 | 48 | 1.2 | 0.12 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | — | 70 | (70) | 5.6 | (0.18) | ||||||||||||||||||||
Adjusted | $ | 3,713 | $ | 1,801 | $ | 328 | $ | 1,584 | $ | (31) | $ | 227 | $ | 1,326 | 14.6 | % | $ | 3.46 | |||||||||||
Adjusted percent net sales | 63.9 | % | 31.0 | % | 5.6 | % | 27.2 | % | (0.5) | % | nm | 22.8 | % |
Three Months 2022 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 3,236 | $ | 1,751 | $ | 326 | $ | 814 | $ | (53) | $ | 198 | $ | 563 | 26.0 | % | $ | 1.47 | |||||||||||
Reported percent net sales | 62.2 | % | 33.7 | % | 6.3 | % | 15.6 | % | (1.0) | % | nm | 10.8 | % | ||||||||||||||||
Acquisition and integration-related costs | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (42) | — | 42 | — | (16) | 58 | (2.9) | 0.15 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 158 | — | 34 | 124 | 1.5 | 0.33 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 27 | (93) | — | 120 | — | 27 | 93 | 1.6 | 0.24 | ||||||||||||||||||||
Goodwill impairment | — | — | — | 216 | — | — | 216 | (3.9) | 0.57 | ||||||||||||||||||||
Medical device regulations (c) | — | — | (42) | 42 | — | 9 | 33 | 0.4 | 0.09 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | (29) | — | (7) | (22) | (0.4) | (0.06) | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (23) | — | 23 | — | (7) | 30 | (1.5) | 0.08 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | (1) | (55) | 54 | (7.0) | 0.13 | ||||||||||||||||||||
Adjusted | $ | 3,263 | $ | 1,593 | $ | 284 | $ | 1,386 | $ | (54) | $ | 183 | $ | 1,149 | 13.8 | % | $ | 3.00 | |||||||||||
Adjusted percent net sales | 62.7 | % | 30.6 | % | 5.5 | % | 26.6 | % | (1.0) | % | nm | 22.1 | % |
(a) | Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($3 in 2023, $5 in 2022), employee retention and workforce reductions ($3 in 2023, $4 in 2022), changes in the fair value of contingent consideration ($6 in 2023, ($3) in 2022), manufacturing integration costs ($0 in 2023, $9 in 2022), adjustments to acquisition-related tax provisions (charge of $2 included in Income Taxes for 2023, $0 for 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($1 in 2023, $27 in 2022). | ||||
(b) | Charges represent the costs associated with employee retention and workforce reductions ($6 in 2023, $38 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($14 in 2023, $21 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($16 in 2023, $73 in 2022), certain long-lived and intangible asset write-offs and impairments ($16 in 2023, ($8) in 2022) and other charges ($12 in 2023, ($4) in 2022). | ||||
(c) | Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union. | ||||
(d) | Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain recall-related matters. | ||||
(e) | Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements. | ||||
(f) | Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (benefit of $49 in 2023 and charge of $44 in 2022). |
Full Year 2023 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 13,058 | $ | 7,129 | $ | 1,388 | $ | 3,888 | $ | (215) | $ | 508 | $ | 3,165 | 13.8 | % | $ | 8.25 | |||||||||||
Reported percent net sales | 63.7 | % | 34.8 | % | 6.8 | % | 19.0 | % | (1.0) | % | nm | 15.4 | % | ||||||||||||||||
Acquisition and integration-related costs | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (20) | — | 20 | — | (25) | 45 | (0.8) | 0.12 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 635 | — | 132 | 503 | 1.2 | 1.31 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 39 | (166) | (1) | 206 | — | 47 | 159 | 0.5 | 0.42 | ||||||||||||||||||||
Goodwill impairment | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Medical device regulations (c) | 2 | — | (94) | 96 | — | 22 | 74 | 0.2 | 0.19 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | 18 | — | 4 | 14 | — | 0.04 | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (92) | — | 92 | — | 29 | 63 | 0.4 | 0.16 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | (8) | (51) | 43 | (1.2) | 0.11 | ||||||||||||||||||||
Adjusted | $ | 13,099 | $ | 6,851 | $ | 1,293 | $ | 4,955 | $ | (223) | $ | 666 | $ | 4,066 | 14.1 | % | $ | 10.60 | |||||||||||
Adjusted percent net sales | 63.9 | % | 33.4 | % | 6.3 | % | 24.2 | % | (1.1) | % | nm | 19.8 | % |
Full Year 2022 | Gross Profit | Selling, General & Administrative Expenses | Research, Development & Engineering Expenses | Operating Income | Other Income (Expense), Net | Income Taxes | Net Earnings | Effective Tax Rate | Diluted EPS | ||||||||||||||||||||
Reported | $ | 11,578 | $ | 6,455 | $ | 1,454 | $ | 2,841 | $ | (158) | $ | 325 | $ | 2,358 | 12.1 | % | $ | 6.17 | |||||||||||
Reported percent net sales | 62.8 | % | 35.0 | % | 7.9 | % | 15.4 | % | (0.9) | % | nm | 12.8 | % | ||||||||||||||||
Acquisition and integration-related costs | |||||||||||||||||||||||||||||
Inventory stepped-up to fair value | 12 | — | — | 12 | — | 3 | 9 | — | 0.02 | ||||||||||||||||||||
Other acquisition and integration-related (a) | — | (138) | — | 138 | — | 34 | 104 | 0.5 | 0.27 | ||||||||||||||||||||
Amortization of purchased intangible assets | — | — | — | 627 | — | 132 | 495 | 1.7 | 1.30 | ||||||||||||||||||||
Structural optimization and other special charges (b) | 56 | (206) | (87) | 349 | — | 66 | 283 | 0.7 | 0.74 | ||||||||||||||||||||
Goodwill impairment | — | — | — | 216 | — | — | 216 | (1.1) | 0.57 | ||||||||||||||||||||
Medical device regulations (c) | 3 | — | (137) | 140 | — | 25 | 115 | 0.2 | 0.30 | ||||||||||||||||||||
Recall-related matters (d) | — | — | — | (15) | — | (3) | (12) | — | (0.03) | ||||||||||||||||||||
Regulatory and legal matters (e) | — | (76) | — | 76 | — | 7 | 69 | (0.2) | 0.18 | ||||||||||||||||||||
Tax matters (f) | — | — | — | — | (75) | (9) | (66) | 0.1 | (0.18) | ||||||||||||||||||||
Adjusted | $ | 11,649 | $ | 6,035 | $ | 1,230 | $ | 4,384 | $ | (233) | $ | 580 | $ | 3,571 | 14.0 | % | $ | 9.34 | |||||||||||
Adjusted percent net sales | 63.1 | % | 32.7 | % | 6.7 | % | 23.8 | % | (1.3) | % | nm | 19.4 | % |
(a) | Charges represent certain acquisition and integration-related costs associated with acquisitions, including charges for termination of sales relationships ($5 in 2023, $21 in 2022), employee retention and workforce reductions ($6 in 2023, $33 in 2022), changes in the fair value of contingent consideration (($1) in 2023, ($135) in 2022), manufacturing integration costs ($2 in 2023, $32 in 2022), stock compensation payments upon a change in control ($0 in 2023, $132 in 2022), adjustments to acquisition-related tax provisions (charges of $30 included in Income Taxes for 2023, $0 for 2022) and other integration-related activities such as deal costs and costs associated with legal entity rationalization ($8 in 2023, $55 in 2022). | ||||
(b) | Charges represent the costs associated with employee retention and workforce reductions ($69 in 2023, $74 in 2022), the closure/transfer of manufacturing and other facilities, including site closure costs, contract termination costs and redundant employee costs during the work transfers ($50 in 2023, $83 in 2022), product line exits (primarily inventory, long-lived asset and specifically-identified intangible asset write-offs) ($32 in 2023, $80 in 2022), certain long-lived and intangible asset write-offs and impairments ($28 in 2023, $96 in 2022) and other charges ($27 in 2023, $16 in 2022). | ||||
(c) | Charges represent the costs specific to updating our quality system, product labeling, asset write-offs and product remanufacturing to comply with the medical device reporting regulations and other requirements of the new medical device regulations in the European Union. | ||||
(d) | Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain recall-related matters. | ||||
(e) | Charges represent changes in our best estimate of the minimum of the range of probable loss to resolve certain regulatory or other legal matters and the amount of favorable awards from settlements. | ||||
(f) | Benefits and charges represent the accounting impact of certain significant and discrete tax items, including adjustments related to the transfer of certain intellectual properties between tax jurisdictions (charges of $89 in 2023 and $182 in 2022), certain tax audit settlements (benefit of $9 included in Other Income (Expense), Net for 2023 and benefit of $24 included in Income Taxes for 2023, benefit of $45 included in Other Income (Expense) and benefit of $162 included in Income Taxes for 2022) and the reversal of deferred income tax on undistributed earnings of foreign subsidiaries ($0 for 2023, benefit of $71 for 2022). |