Securities and exchange commission


Download 431.2 Kb.
NameSecurities and exchange commission
page1/6
A typeDocumentation
manual-guide.com > manual > Documentation
  1   2   3   4   5   6



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the fiscal year ended December 31, 1993

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from_________ to __________

Commission file number 0-9165

STRYKER CORPORATION

(Exact name of registrant as specified in its charter)

Michigan 38-1239739

(State or other jurisdiction of (I.R.S. Employer

incorporation or organization) Identification No.)
P.O. Box 4085, Kalamazoo, Michigan 49003-4085

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: 616/385-2600

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock $.10

par value
Indicate by check mark whether the registrant (1) has filed all reports required

to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during

the preceding 12 months (or for such shorter period that the registrant was

required to file such reports), and (2) has been subject to such filing

requirements for the past 90 days. Yes__X__ No_____.
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405

of Regulation S-K is not contained herein, and will not be contained, to the

best of registrant's knowledge, in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-K or any amendment to this

Form 10-K. [ ]
Based on the closing sales price of February 28, 1994 the aggregate market value

of the voting stock held by nonaffiliates of the registrant was approximately

$1,052,000,000.
The number of shares outstanding of the registrant's common stock, $.10 par

value, was 48,415,669 at February 28, 1994.
DOCUMENTS INCORPORATED BY REFERENCE

Portions of the annual stockholders report for the year ended December 31, 1993

are incorporated by reference into Parts II and IV.
Portions of the proxy statement filed with the Securities and Exchange

Commission relating to the 1994 Annual Meeting of Stockholders (the "1994 proxy

statement") are incorporated by reference into Part III.


PART I
ITEM I. BUSINESS
GENERAL
Stryker Corporation and its subsidiaries (the "Company" or "Stryker") develop,

manufacture and market specialty surgical and medical products, including

endoscopic systems, orthopaedic implants, powered surgical instruments, and

patient handling equipment, which are sold to hospitals and physicians

worldwide. In addition, since 1986 the Company has provided physical therapy

services through stand-alone clinics throughout the U.S. Stryker was

incorporated in Michigan on February 20, 1946 as the successor to a business

founded in 1941 by Dr. Homer H. Stryker, a leading orthopaedic surgeon and the

inventor of several innovative orthopaedic products.
In October 1992, the Company's subsidiary, Stryker France S.A., acquired Dimso

S.A. and its subsidiary companies in France and Spain. Dimso designs and

manufactures the Diapason and Stryker 2S spinal implant systems in addition to

other orthopaedic products. The Company's European Division had previously

marketed the Stryker 2S spinal implant system since 1990. In late 1992, the

Company applied to the U.S. Food and Drug Administration (FDA) for approval to

market the Stryker 2S spinal implant system in the U.S.
In August 1993, the Company purchased 20% of the outstanding shares of Matsumoto

Medical Instruments, Inc., Osaka, Japan. Matsumoto began distributing Stryker

products in Japan in 1969 and is the exclusive distributor of most Stryker

products in that country.
PRODUCT SALES
The principal classes of products listed below accounted for the following

amounts ($000's) and percentages of net sales during each of the three years

ended December 31:
1993 1992 1991

$ % $ % $ %
Surgical Products 447,042 80 394,111 83 302,938 83
Medical Products 110,293 20 82,943 17 61,887 17

_______ _______ _______

557,335 100 477,054 100 364,825 100

======= ======= =======
Approximately two-thirds of the Company's sales in 1993, 1992 and 1991 consisted

of products with short lives and service revenues, such as implants (while

implants have a long useful life to the patient, they have a one-time use to the

hospital), physical therapy revenues, disposables, expendable tools and parts,

and service and repair charges. The balance were products that could be

considered capital equipment, having useful lives in excess of one year.
The Company's backlog of firm orders is not considered material to an

understanding of its business.


SURGICAL PRODUCTS
The principal specialty served by the Company's Surgical products is

orthopaedics. Artificial joint replacements, medical video cameras,

arthroscopes, heavy-duty powered instruments, and pulsating irrigation systems

are manufactured and marketed for use by the orthopaedic surgeon.
The Company specializes in the design and manufacture of innovative total and

partial hip and knee replacements. These artificial implants are made of cobalt

chrome or titanium alloys and are implanted in patients whose natural joints

have been damaged by arthritis, other diseases or injury.
The Company also designs and manufactures spinal implant systems. These implant

systems are used by spinal surgeons in the treatment of degenerative spinal

diseases and deformities and to stabilize the spine in trauma cases.
Stryker's broad line of powered surgical drills, saws, fixation and reaming

equipment and other surgical instruments are used by surgeons for drilling,

burring, rasping or curring bone, wiring or pinning bone fractures, preparing

hip or knee surfaces for the placement of artificial hip or knee joints,

performing cranial operations or treating skin defects by surgical abrasion.

Hundreds of different sized and shaped drills bits, burrs, blades, chisels and

other attachments are available to the surgeon.
Small, light, "micro" powered tools are used in such specialties as

maxillofacial surgery, otology, neurosurgery, spinal surgery, podiatry and

plastic surgery. In addition, the oral surgeon is served by the Company's line

of dental implants and powered oral surgery instruments.
The Company also produces a number of other operating room products. The

Company's CBC-Constavac(T) system is a post-operative wound drainage and blood

reinfusion device that enables joint replacement patients to receive their own

blood rather than donor blood. In conjunction with joint replacement surgery,

the Company's High Vacuum Cement Injection System is used to mix and inject

cement under high vacuum for cemented implant applications.
The Company's endoscopic systems include medical video cameras, light sources,

laparoscopes, powered instruments, and manual instruments. These systems are

used in less-invasive surgery, such as arthroscopy and cholecystectomy (gall

bladder removal) in which the surgeon operates on a patient through a series of

small punctures rather than an open incision as required by conventional

surgery.
MEDICAL PRODUCTS
The Company's Medical product line consists primarily of specialty stretchers

and beds, which facilitate the transportation, transfer and treatment of

patients within the hospital. The Company designs and manufactures innovative

specialty stretchers/beds for many departments within the hospital, including

emergency, recovery, intensive care, surgery, maternity and the general patient

room. These products service the particular treatment needs of each department

by providing multiple or custom combinations of hydraulic jacks, removable top

sections, built-in weighing systems, on-board x-ray equipment, patient-warming

systems and a vast number of additional standard or optional features. These

products are assembled on a design-to-order basis.


Also included in Medical product sales is revenue of the Company's Physiotherapy

Associates subsidiary. This organization operates outpatient rehabilitation

centers, which offer physical, occupational and speech therapy to patients who

have suffered orthopaedic or neurological injuries. It focuses, in particular,

on expediting injured workers' return to work.
PRODUCT DEVELOPMENT
Most of the Company's products and product improvements have been developed

internally. In addition, the Company maintains close working relationships with

physicians and medical personnel in hospitals and universities who assist in

product research and development. New and improved products play a critical

role in the Company's sales growth. The Company has placed increased

emphasis on the development of proprietary products and product improvements

to complement and expand its existing product lines.
Total expenditures for product research, development and engineering were

$36,199,000 in 1993; $32,313,000 in 1992; and $23,703,000 in 1991. Research,

development and engineering expenses increased in 1993 and 1992 due principally

to the development of new implant designs (the Series 7000 Total Knee System

introduced in 1992, with modular and posterially stabilized components added to

the line in 1993), the further application of hydroxylapatite (HA) technology

for arthroplasty, the development of advanced powered instruments and video

technology (the Company's third generation 3-Chip and 1-Chip Camera systems

introduced in 1992 and Quadracut ACL/Shaver system for arthroscopy introduced

in 1993), the development of new specialized operating room equipment (the

Company's Surgilav Plus pulsed irrigation system introduced in 1993 and the

High Vacuum Cement Injection system for applying bone cement introduced in

1992), the development of new patient handling and patient care equipment (a

warming stretcher for the recovery room introduced in 1992 and a general patient

hospital bed introduced in 1993) and clinical trials of the Company's Osteogenic

Protein Device.
At the end of 1990, the Company's Osteonics subsidiary became the first company

to receive clearance from the U.S. FDA to commercially release for sale in the

U.S. a hip implant with HA surface treatment. HA is a naturally occurring

calcium phosphate material that demonstrates a high level of biocompatibility

due to its resemblance to human bone. Osteonics' clinical experience with

HA-coated hip implants now extends over five years and on the industry's

standard measure of performance, the Harris Hip Score, these implants earned an

average rating of 97 out of 100--a record unmatched by any other hip prosthesis

reported in the professional literature. These excellent clinical results have

further strengthened the Company's belief that HA has significant potential as a

means of improving the performance and longevity of implants.
In 1991 the Company received FDA approval to begin human clinical trials of its

Osteogenic Protein Device which was developed by Creative BioMolecules, Inc.

(Creative), a biopharmaceutical company, as part of a long-term research program

funded by Stryker since 1985. This device is composed of a recombinant human

osteogenic protein and a bioresorbable carrier. This osteogenic protein is

naturally present in the human body and is directly implicated in a cascade of

cellular events that result in bone growth. In preclinical studies, the

Osteogenic Protein Device has induced the formation of new bone when implanted

into bone defect sites. The human clinical studies, which began in 1992, will

compare the efficacy of the Osteogenic Protein Device to autografts in the

repair of non-union fractures. Stryker owns the patents on its Osteogenic


Protein Device and has the exclusive right to develop, market and sell the

Device for local use in the treatment, repair or replacement of bone and joint

tissue ("orthopaedic reconstruction"). Creative has the right to use the

technology outside the field of orthopaedic reconstruction.
MARKETING
Most of the Company's products are marketed in the United States directly to

more than 7,500 hospitals, and to doctors and other health care facilities, by

the Company's sales force consisting of approximately 375 salespersons. Stryker

maintains separate and dedicated sales forces for each of its principal product

lines to provide focus and a high level of expertise to each medical specialty

served. Certain products, primarily orthopaedic implants, are sold to hospitals

in the United States principally through independent dealer organizations.
Approximately 22% of the Company's domestic revenues in 1993 were accounted for

by sales to hospital cooperative buying groups and other large national accounts

and 2% by sales to the Veterans Administration and other hospitals operated by

the Federal government.

International sales accounted for 32% of total revenues in 1993. Stryker

products are sold in over 100 foreign countries primarily through more than 350

local dealers whose efforts are coordinated by approximately 250 sales and

marketing personnel who are local nationals. Stryker distributes its products

through sales subsidiaries with offices located in The Netherlands, Belgium,

France, Italy, the United Kingdom, Germany, Spain, Hong Kong, China, Singapore,

Korea, India, Taiwan, Japan, Australia, Malaysia, Canada and Moscow. Stryker

exports products to dealers in Latin America, the Middle East and Japan, and to

customers in the CIS (former Soviet Union). Additional information regarding

the Company's foreign and domestic operations andexport sales appearing in

"Note 8--Geographic Data" on page 42 (page 45 of the 1993 Annual Report) is

incorporated herein by reference.
The Company's business is generally not seasonal in nature; however, in 1993 and

1992 sales and earnings have been stronger in the fourth quarter than in the

previous three quarters.
COMPETITION
The Company is one of the two leading competitors in the U.S. market for powered

surgical instruments, the other being Zimmer, USA Inc. (a subsidiary of

Bristol-Myers, Squibb, Inc.). While competition abroad varies from area to

area, the Company believes it is also a leading factor in the international

market, with Aesculap-Werke AG, a large European manufacturer, being its

principal competitor.
In the orthopaedic reconstructive products market Stryker is one of the four

market leaders, with the principal competitors being Zimmer, Howmedica, Inc. (a

subsidiary of Pfizer, Inc.) and DePuy (a subsidiary of Boehringer Mannheim

Corporation, a German company).
In the arthroscopy market, the Company considers itself to be one of the three

market leaders, with the principal competitors being Dyonics, Inc. (a subsidiary

of Smith & Nephew) and Linvatec/Concept, Inc. (a subsidiary of Bristol-Myers,

Squibb, Inc.). In the laparoscopic imaging products market, the Company

considers itself to be one of the four market leaders with the principal


competitors being Karl Stroz GmbH & Co. (a German company), Olympus Optical

Co. Ltd. (a Japanese company) and Circon Corporation.
The Company's primary competitor in the specialty stretcher/bed market and the

general hospital bed market is Hill-Rom (a divison of Hillenbrand Industries).
In the outpatient physical therapy market the Company's primary competitors are

physician owned/independent practices and hospital-based services. There are

also a few national rehabilitation companies, such as HealthSouth Corporation,

NovaCare, Inc./RehabClinics, Inc. and Rehability Corporation.
The principal factors which the Company believes differentiate its products in

these highly competitive markets and enable it to compete effectively are

innovative products, reliability, service and reputation. The Company is not

able to predict the effect that continuing efforts to reduce health care

expenses generally and hospital costs in particular will have on the future

sales of its products or its competitive position. (See "Regulation and Product

Quality.") The Company believes that its competitive position in the future

will depend to a large degree upon the new products and improvements in existing

products it is able to develop. While the Company does not consider patents a

major factor in its overall competitive success, patents and trademarks are

significant to the extent that a product or attribute of a product represents a

unique design or process. Patent or trademark protection of such products

restricts competitors from duplicating these unique product designs and

features. Stryker seeks to obtain patent protection whenever possible on its

products. The Company currently has approximately 70 U.S. patents and 10

foreign patents which generally expire in the next 10-15 years.
MANUFACTURING AND SOURCES OF SUPPLY
The Company's manufacturing processes consist primarily of precision machining,

metal fabrication, assembly operations and the investment casting of cobalt

chrome and finishing of cobalt chrome and titanium. Approximately 15% of the

Company's cost of sales in 1993 represented finished products which were

purchased complete from outside suppliers. The Company also purchases parts

and components, such as forgings, castings, gears, bearings, casters and

electrical components and uses outside sources for certain finishing operations

such as plating, hardening and coating of machined components and sterilization

of certain products. The principal raw materials used by the Company are

stainless steel, aluminum, cobalt chrome and titanium alloys. In all, purchases

from outside sources were approximately 54% of the total cost of sales in 1993.
While the Company relies on single sources for certain purchased materials and

services, it believes alternate sources are available if needed. The Company

has not experienced any significant difficulty in the past in obtaining the

materials necessary to meet its production schedules.
The Company's patient handling products are assembled to order, while other

products are stocked in inventory.


REGULATION AND PRODUCT QUALITY
The Medical Device Amendments of 1976 to the Federal Food, Drug and Cosmetic

Act, the Safe Medical Devices Act of 1990, and regulations issued or proposed

thereunder, provide for regulation by the FDA of the manufacture of medical

devices, including most of the Company's products.
The FDA's "Good Manufacturing Practices" guidelines set forth standards for the

Company's manufacturing processes, require the maintenance of certain records

and provide for unscheduled inspections of the Company's facilities by the FDA.

There are also certain requirements of state, local and foreign governments

which must be complied with in the manufacturing and marketing of the Company's

products. The Company believes that the manufacturing and quality control

procedures it employs meet the requirements of these regulations.
Most of the Company's new products fall into FDA classifications which require

notification of and review by the FDA before marketing (submitted as 510(k)).

Certain of the Company's new implant products and the Osteogenic Protein Device

(see "Product Development") require extensive clinical testing, consisting of

safety and efficacy studies, followed by a Pre-Market Approval (PMA)

application. A panel of industry and medical experts review the results of

clinical studies and make their recommendations to the FDA. Upon positive

recommendation by the panel, the FDA may grant a PMA allowing the product to be

marketed.
Government agencies and legislative bodies in the United States and other

countries are considering various proposals designed to hold down increases in

health care costs. It is impossible to predict at this time the long-term

impact of such cost containment measures on the Company's future business.
EMPLOYEES
At December 31, 1993, the Company had 3,228 employees worldwide, including 1,214

involved in manufacturing, warehousing and distribution operations, 777 in

marketing and sales, 223 in research, development and engineering and the

balance in general management and administration. No employees are covered by

collective bargaining agreements. The Company believes that its employee

relations are satisfactory.
ITEM 2. PROPERTIES
The Company's principal facilities are located in Kalamazoo and Portage,

Michigan. A 190,000 square foot Portage facility completed in 1992 houses

manufacturing (80,000 square feet) and warehousing and distribution (25,000

square feet) for surgical instrument products, with the remaining portion of the

facility used for Division offices. The Medical Division is located in two

facilities, one in Portage which was completed in 1985 and contains

manufacturing and warehousing (122,000 square feet) and Division offices

(23,000 square feet), and another in Kalamazoo which contains manufacturing and

warehousing (64,000 square feet) and offices (22,000 square feet).
The Company leases 185,000 square feet in an industrial park in Allendale, New

Jersey for its orthopaedic implant business; 56,000 square feet in San Jose,

California for its endoscopic systems business; 28,000 square feet in Clackamas,

Oregon for production of maternity beds and furniture; and 40,000 square feet in

Arroyo, Puerto Rico for the assembly of disposable tubing sets and other

manufacturing. The Company's 72 physical therapy clinics are all located in

leased offices.


ITEM 2. PROPERTIES -- continued
The Company's principal European facilities are located in two buildings (one of

which is leased) in Uden, The Netherlands. Of the total 70,000 square feet

(22,000 of which is leased) 41,000 square feet are devoted to production

(principally hospital beds and related equipment) and 11,300 square feet to

warehousing, with the balance used for administrative offices. In addition, the

Company leases 16,000 square feet in Bordeaux, France for its spinal implant

manufacturing operation. Manufacturing and warehousing account for 11,000

square feet of the total and the remainder is used for administrative offices.

The Company also leases other foreign sales and administration offices.
In addition, the Company leases 12,000 square feet in Kalamazoo, Michigan for

its administrative offices.
ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant and plaintiff in various legal actions arising in the

normal course of business. The Company does not anticipate material losses as a

result of these actions.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS
Certain information with respect to the executive officers of the Company is set

forth in Item 10 of this report.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER

MATTERS
The Company's common stock is traded in the over-the-counter market on the

NASDAQ National Market System under the symbol STRY. Quarterly stock prices and

dividend information appearing under the caption "Summary of Quarterly Data" on

page 44 (page 47 of the 1993 Annual Report) are incorporated herein by

reference. The Company's Board of Directors intends to consider a year-end cash

dividend annually at its December meeting.
On December 31, 1993 there were 3,951 stockholders of record of the Company's

common stock.


ITEM 6. SELECTED FINANCIAL DATA
The financial information for each of the five years in the period ended

December 31, 1993 under the caption "Ten Year Review" on page 29 (pages 32 and

33 of the 1993 Annual Report) is incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of

Financial Condition and Results of Operations" on pages 30 through 32 (pages 34

through 36 of the 1993 Annual Report) is incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and its subsidiaries and

report of independent auditors, included on pages 33 through 45 (pages 37

through 48 of the 1993 Annual Report) are incorporated herein by reference.
Quarterly results of operations appearing under the caption "Summary of

Quarterly Data" on page 44 (page 47 of the 1993 Annual Report) are incorporated

herein by reference.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information regarding the directors of the Company appearing under the caption

"Election of Directors" in the 1994 proxy statement is incorporated herein by

reference.
Information regarding the executive officers of the Company appears below. All

officers are elected annually. Reported ages are as of January 31, 1994.
John W. Brown, age 59, has been Chairman of the Board since January 1981, and

President and Chief Executive Officer of the Company since February 1977. He is

also a director of Lunar Corporation, a medical products company, First of

America, a bank, and the Health Industry Manufacturers Association and a Trustee

of Kalamazoo College.
Ronald A. Elenbaas, age 40, was appointed President of the Surgical Group in

1985 and has been a Vice President of the Company since August 1983. Previously

he was the Director of Surgical Sales since May 1982. Since joining the Company

in September 1975 he has held various other positions, including Sales

Representative, Marketing Product Manager, Plant Manager, Canadian Sales

Director, Assistant to the President and Director of Customer Relations.
William T. Laube, III, age 54, was appointed President of Stryker Pacific

Limited in 1985 and has been a Vice President of the Company since March 1979.

Since joining the Company in July 1975 he has held various international sales

management positions.


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS -- continued
Robert D. Monk, age 42, was appointed Treasurer-Controller upon joining the

Company in March 1984. He was also appointed Assistant Secretary in February

1991.
David J. Simpson, age 47, was appointed Vice President, Chief Financial Officer

and Secretary upon joining the Company in June 1987. He had previously been

Vice President and Treasurer of Rexnord Inc., a manufacturer of industrial and

aerospace products, since July 1985.
Thomas R. Winkel, age 41, was appointed President of Stryker Americas/Middle

East in March 1992 and has been a Vice President of the Company since December

1984. He had previously been Vice President, Administration since June 1987.

Since joining the Company in October 1978 he has held various other positions,

including Assistant Controller, Secretary and Corporate Controller.
An amended Form 5 was filed with the Securities and Exchange Commission in

June 1993 by John W. Brown, Chairman of the Board, President and Chief Executive

Officer of the Company, when it was realized that a charitable gift of 2,625

Shares of Common Stock of the Company made by him had been omitted from the

original filing.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding the compensation of the management of the Company

appearing under the captions "Director Compensation" and "Executive

Compensation" in the 1994 proxy statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the captions "Beneficial Ownership of More than 5% of the

Outstanding Common Stock" and "Beneficial Ownership of Management" in the 1994

proxy statement is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.



  1   2   3   4   5   6

Share in:

Related:

Securities and exchange commission iconNeither the Securities and Exchange Commission nor any state securities...

Securities and exchange commission iconNeither the securities and exchange commission nor any state securities...

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and Exchange Commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission

Securities and exchange commission iconSecurities and exchange commission




manual


When copying material provide a link © 2017
contacts
manual-guide.com
search