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Stryker Corporation : Stryker Reports Fourth Quarter and Full Year 2012 Results

   Stryker Corporation : Stryker Reports Fourth Quarter and Full Year 2012
                                   Results

Kalamazoo, Michigan - January 23, 2013 - Stryker Corporation (NYSE:SYK)
reported operating results for the fourth quarter and full year 2012:

Quarter Highlights

  *Net sales growth of 5.5% to $2.3 billion

       *Reconstructive increased 6.7% as reported, 7.4% constant currency

       *MedSurg increased 2.4% as reported, 2.7% constant currency

       *Neurotechnology and Spine increased 9.7% as reported, 10.8% constant
         currency

  *Adjusted net earnings^(1) increased 11.8% to $436 million

  *Adjusted diluted net earnings per share^(2) increased 11.8% to $1.14

  *Reported net earnings decreased 32.7% to $270 million

  *Reported diluted net earnings per share decreased 32.4% to $0.71

Full Year Highlights

  *Net sales growth of 4.2% to $8.7 billion

     1.Reconstructive increased 3.1% as reported, 4.4% constant currency

     2.MedSurg increased 3.3% as reported, 4.2% constant currency

     3.Neurotechnology and Spine increased 9.2% as reported, 10.5% constant
         currency

  *Adjusted net earnings^(1) increased 7.7% to $1,560 million

  *Adjusted diluted net earnings per share^(2) increased 9.4% to $4.07

  *Reported net earnings decreased 3.5% to $1,298 million

  *Reported diluted net earnings per share decreased 1.7% to $3.39

"We are pleased with our fourth quarter results and look to build on this
momentum in 2013," commented Kevin A. Lobo, President and Chief Executive
Officer.

Sales Analysis

Consolidated net sales of $2.3 billion and $8.7 billion increased 5.5% and
4.2% in the quarter and full year over the prior year, respectively. Net
sales in the quarter grew by 7.5% due to increased unit volume and changes in
product mix. Net sales in the quarter were unfavorably impacted by 1.4% due to
changes in price and 0.6% due to the unfavorable impact of foreign currency
exchange rates on net sales.

Reconstructive net sales of $1,046 million increased 6.7% in the quarter over
the prior year, as reported, and 7.4% in constant currency. Net sales in the
quarter grew by 9.8% due to increased unit volume and changes in product mix.
Net sales in the quarter were unfavorably impacted by 2.4% due to changes in
price and 0.7% due to the unfavorable impact of foreign currency exchange
rates on net sales.

MedSurg net sales of $877 million increased 2.4% in the quarter over the prior
year, as reported, and 2.7% in constant currency. Net sales in the quarter
grew by 2.2% due to increased unit volume and changes in product mix and a
favorable impact of 0.5% due to changes in price. Net sales in the quarter
were unfavorably impacted by 0.3% due to the unfavorable impact of foreign
currency exchange rates on net sales.

Neurotechnology and Spine net sales of $414 million increased 9.7% in the
quarter over the prior year, as reported, and 10.8% in constant currency. Net
sales in the quarter grew by 13.5% due to increased unit volume and changes in
product mix and 0.1% as a result of acquisitions. Net sales in the quarter
were unfavorably impacted by 2.8% due to changes in price and 1.1% due to the
unfavorable impact of foreign currency exchange rates on net sales.

Earnings Analysis

Reported net earnings in the quarter and full year include a charge of $133
million (net of taxes) related to the previously disclosed voluntary recall of
the Company's Rejuvenate and ABG II modular-neck hip stems. Reported net
earnings in the quarter and full year also include restructuring and related
charges of $24 million (net of taxes) and $59 million (net of taxes),
respectively, and acquisition and integration related charges of $9 million
(net of taxes) and $37 million (net of taxes), respectively, related to
acquisitions completed in 2011 and 2012. Reported net earnings in the full
year include a $33 million non-tax deductible charge related to the previously
disclosed OtisKnee matter. These charges reduced reported gross profit margin
in the fourth quarter from 68.3% to 68.2% and reported operating income margin
from 25.3% to 15.8%.

Excluding the charges described above, adjusted net earnings^(1) of $436
million and $1,560 increased 11.8% and 7.7% in the quarter and full year over
the prior year, respectively. Adjusted diluted net earnings per share^(2) of
$1.14 and $4.07 increased 11.8% and 9.4% in the quarter and full year over the
prior year, respectively.

Net earnings of $270 million and $1,298 million decreased 32.7% and 3.5% in
the quarter and full year over the prior year, respectively. Diluted net
earnings per share of $0.71 and $3.39 decreased 32.4% and 1.7% in the quarter
and full year over the prior year, respectively.

In 2012 Stryker repurchased 2.1 million shares at a cost of $108 million with
no share repurchase activity in the fourth quarter.

2013 Outlook

For the full year 2013, Stryker is projecting constant currency sales growth
in a range of 3.0% to 5.5%. If foreign currency exchange rates hold near
current levels, the Company anticipates net sales will be negatively impacted
by approximately 0% to 1% in both the first quarter and full year of 2013. 

As previously communicated, the Company projects 2013 adjusted diluted net
earnings per share^(2),including the estimated $100 million (pre-tax) annual
impact from the medical device excise tax, to be in a range of $4.25 to $4.40.

With respect to 2013 quarterly sales and earnings, the Company is highlighting
several factors that are expected to impact the year-over-year growth rates,
including:

1.the first quarter of 2013 having one to two fewer selling days in key
    markets compared to 2012, 

2.the continued negative impact in the first quarter of 2013 of the
    previously disclosed Japanese price reductions that took effect in April
    of 2012,

3.the continued impact of the recall of the Neptune waste management system
    that occurred during the third quarter of 2012, and

4.the adverse year-over-year net earnings comparison in the third quarter as
    a result of favorable income tax adjustments in 2012.

As a result of these factors, the Company projects 2013 adjusted diluted net
earnings per share to be distributed across the year by approximately:

  *23% in the first quarter, 

  *24% in each of the second and third quarters, and

  *29% in the fourth quarter.

1.A reconciliation of reported net earnings to adjusted net earnings, a
    non-GAAP financial measure, and other important information, appears
    below.

2.A reconciliation of reported diluted net earnings per share to adjusted
    diluted net earnings per share, a non-GAAP financial measure, and other
    important information, appears below.

Conference Call on Wednesday, January 23, 2013

As previously announced, the Company will host a conference call on Wednesday,
January 23, 2013 at 4:30 p.m., Eastern Time, to discuss the Company's
operating results for the quarter and year ended December 31, 2012.

To participate in the conference call dial 800-446-2782 (domestic) or
847-413-3235 (international) and be prepared to provide confirmation number
34031905 to the operator.

A simultaneous webcast of the call will be accessible via the Company's
website at www.stryker.com. The call will be archived on this site for 90
days.

A recording of the call will also be available from 7:30 p.m., Eastern Time,
on Wednesday, January 23, 2013, until 11:59 p.m., Eastern Time, on Wednesday,
January 30, 2013. To hear this recording you may dial 888-843-7419 (domestic)
or 630-652-3042 (international) and enter the passcode 34031905#.

Forward-Looking Statements

This press release contains information that includes or is based on
forward-looking statements within the meaning of the federal securities law
that are subject to various risks and uncertainties that could cause our
actual results to differ materially from those expressed or implied in such
statements. Such factors include, but are not limited to: weakening of
economic conditions that could adversely affect the level of demand for our
products; pricing pressures generally, including cost-containment measures
that could adversely affect the price of or demand for our products; changes
in foreign exchange markets; legislative and regulatory actions; unanticipated
issues arising in connection with clinical studies and otherwise that affect
U.S. Food and Drug Administration approval of new products; changes in
reimbursement levels from third-party payors; a significant increase in
product liability claims; the ultimate total cost with respect to the
Rejuvenate and ABG II matter; the impact of investigative and legal
proceedings and compliance risks; resolution of tax audits; the impact of the
federal legislation to reform the United States healthcare system and the 2.3
percent medical device excise tax; changes in financial markets; changes in
the competitive environment; our ability to integrate acquisitions, including
the acquisition of Trauson Holdings Company Limited; and our ability to
realize anticipated cost savings as a result of workforce reductions and other
restructuring activities. Additional information concerning these and other
factors are contained in our filings with the U.S. Securities and Exchange
Commission, including our Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q.

Stryker is one of the world's leading medical technology companies and is
dedicated to helping healthcare professionals perform their jobs more
efficiently while enhancing patient care. We offer a diverse array of
innovative medical technologies, including reconstructive, medical and
surgical, and neurotechnology and spine products to help people lead more
active and more satisfying lives. For more information about Stryker, please
visit www.stryker.com.

For investor inquiries please contact:
Katherine A. Owen, Stryker Corporation, 269-385-2600 or
katherine.owen@stryker.com

                             STRYKER CORPORATION
         (Unaudited - Millions of Dollars, Except Per Share Amounts)
                       CONDENSED STATEMENTS OF EARNINGS
                          Fourth Quarter           Year Ended December 31
                      2012      2011    % Change    2012      2011    % Change
Net sales           $ 2,337   $ 2,215      5.5    $ 8,657   $ 8,307     4.2
Cost of sales           744       740      0.5      2,781     2,811    (1.1 )
GROSS PROFIT          1,593     1,475      8.0      5,876     5,496     6.9
% of sales             68.2 %    66.6 %              67.9 %    66.2 %
Research,
development &
engineering
expenses                129       115     12.2        471       462     1.9
Selling general &
administrative
expenses              1,033       834     23.9      3,466     3,150    10.0
Intangibles
amortization             31        32     (3.1 )      123       122     0.8
Restructuring
charges                  30        76    (60.5 )       75        76    (1.3 )
                      1,223     1,057     15.7      4,135     3,810     8.5
OPERATING INCOME        370       418    (11.5 )    1,741     1,686     3.3
% of sales             15.8 %    18.9 %              20.1 %    20.3 %
Other income
(expense)               (12 )      15   (180.0 )      (36 )       -       -
EARNINGS BEFORE
INCOME TAXES            358       433    (17.3 )    1,705     1,686     1.1
Income Taxes             88        32    175.0        407       341    19.4
NET EARNINGS        $   270   $   401    (32.7 )  $ 1,298   $ 1,345    (3.5 )
Net earnings per
share
Basic                  0.71      1.05    (32.4 )     3.41      3.48    (2.0 )
Diluted                0.71      1.05    (32.4 )     3.39      3.45    (1.7 )
Average shares
outstanding
Basic                 380.3     381.7               380.6     386.5
Diluted               382.7     383.3               383.0     389.5

                   CONDENSED BALANCE SHEETS
                                           December  December
                                             2012      2011
ASSETS
Cash and cash equivalents                  $  1,395  $    905
Marketable securities                         2,890     2,513
Accounts receivable (net)                     1,430     1,417
Inventories                                   1,265     1,283
Other current assets                          1,138     1,093
TOTAL CURRENT ASSETS                          8,118     7,211
Property, plant and equipment (net)             948       888
Goodwill and other intangibles (net)          3,566     3,514
Other assets                                    835       792
TOTAL ASSETS                               $ 13,467  $ 12,405
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities                        $  1,837  $  1,828
Other liabilities                             1,287     1,143
Long-term debt                                1,746     1,751
Shareholders' equity                          8,597     7,683
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,467  $ 12,405

                      CONDENSED STATEMENTS OF CASH FLOWS
                                       Fourth Quarter   Year Ended December 31
                                        2012    2011        2012       2011
OPERATING ACTIVITIES
Net earnings                           $ 270   $ 401    $   1,298    $ 1,345
Depreciation                              39      41          154        160
Amortization                              83      81          332        321
Restructuring charges                     30      76           75         76
Changes in operating assets and
liabilities and other, net               174      28         (202 )     (468 )
NET CASH PROVIDED BY OPERATING
ACTIVITIES                               596     627        1,657      1,434
INVESTING ACTIVITIES
Acquisitions, net of cash acquired      (107 )  (144 )       (154 )   (2,066 )
Proceeds from sales of property, plant
and equipment                              -       -            -         67
Proceeds from sales of (purchases of)
marketable securities, net              (413 )  (172 )       (372 )       90
Purchases of property, plant and
equipment                                (49 )   (64 )       (210 )     (226 )
NET CASH USED IN INVESTING ACTIVITIES   (569 )  (380 )       (736 )   (2,135 )
FINANCING ACTIVITIES
Borrowings (repayments) of debt, net      (6 )   (10 )         (4 )      737
Dividends paid                           (81 )   (69 )       (324 )     (279 )
Repurchase and retirement of common
stock                                      -     (83 )       (108 )     (622 )
Other                                     24      23          (13 )        3
NET CASH USED IN FINANCING ACTIVITIES    (63 )  (139 )       (449 )     (161 )
Effect of exchange rate changes on
cash and cash equivalents                  8     (13 )         18          9
CHANGE IN CASH AND CASH EQUIVALENTS    $ (28 ) $  95    $     490    $  (853 )

                                  STRYKER CORPORATION
                  For the Three Month and Year Ended December 31, 2012
                           (Unaudited - Millions of Dollars)

                                CONDENSED SALES ANALYSIS
                         Fourth Quarter                   Year Ended December 31
                                     % Change                             % Change
                                     As    Constant                       As    Constant
                  2012     2011   Reported Currency    2012     2011   Reported Currency
Geographic
sales
United States   $ 1,529  $ 1,407     8.7      8.7    $ 5,658  $ 5,269    7.4       7.4
International       808      808     0.1      1.7      2,999    3,038   (1.3 )     1.9
NET SALES       $ 2,337  $ 2,215     5.5      6.1    $ 8,657  $ 8,307    4.2       5.4
Worldwide sales
Reconstructive  $ 1,046  $   981     6.7      7.4    $ 3,823  $ 3,710    3.1       4.4
MedSurg             877      857     2.4      2.7      3,265    3,160    3.3       4.2
Neurotechnology
and Spine           414      377     9.7     10.8      1,569    1,437    9.2      10.5
NET SALES       $ 2,337  $ 2,215     5.5      6.1    $ 8,657  $ 8,307    4.2       5.4

SUPPLEMENTAL SALES GROWTH ANALYSIS
                                        Fourth Quarter
                                         % Change
                                                      U.S.   International
                                     As    Constant    As       As    Constant
                     2012   2011  Reported Currency Reported Reported Currency
Reconstructive
Hips                $ 325  $ 314    3.6      4.1      7.4     (0.4 )    0.7
Knees                 360    341    5.4      5.7      9.2     (1.5 )   (0.6 )
Trauma and
Extremities           278    253   10.2     11.7     26.4     (3.3 )   (0.4 )
TOTAL
RECONSTRUCTIVE      1,046    981    6.7      7.4     13.9     (2.2 )   (0.7 )
MedSurg
Instruments           330    319    3.5      4.0      5.1        -      1.6
Endoscopy             309    292    6.0      6.3      6.9      4.0      5.0
Medical               185    200   (7.4 )   (7.4 )   (8.6 )   (2.0 )   (2.2 )
TOTAL MEDSURG         877    857    2.4      2.7      2.8      1.2      2.3
Neurotechnology and
Spine
Spine                 190    178    6.4      7.2     10.1     (1.2 )    1.1
Neurotechnology       224    199   12.7     14.0     14.6     10.0     13.0
TOTAL
NEUROTECHNOLOGY AND
SPINE                 414    377    9.7     10.8     12.3      5.4      8.2

                                  Year Ended December 31
                                         % Change
                                                      U.S.   International
                                     As    Constant    As       As    Constant
                  2012     2011   Reported Currency Reported Reported Currency
Reconstructive
Hips            $ 1,233  $ 1,228    0.4      1.5      5.2     (4.5 )   (2.3 )
Knees             1,356    1,316    3.0      4.0      6.0     (2.4 )    0.4
Trauma and
Extremities         989      931    6.2      8.4     18.0     (3.5 )    0.4
TOTAL
RECONSTRUCTIVE    3,823    3,710    3.1      4.4      9.2     (4.3 )   (1.4 )
MedSurg
Instruments       1,261    1,187    6.2      7.3      9.1     (0.4 )    3.1
Endoscopy         1,111    1,080    2.9      3.9      2.6      3.7      7.1
Medical             691      722   (4.3 )   (3.7 )   (7.8 )   11.1     14.8
TOTAL MEDSURG     3,265    3,160    3.3      4.2      3.4      3.0      6.5
Neurotechnology
and Spine
Spine               727      687    5.8      6.9      9.2     (1.7 )    1.7
Neurotechnology     842      750   12.3     13.9     19.0      3.9      7.6
TOTAL
NEUROTECHNOLOGY
AND SPINE         1,569    1,437    9.2     10.5     13.8      1.7      5.3

SUPPLEMENTAL INFORMATION - CONDENSED STATEMENTS OF EARNINGS RECONCILIATION OF
GAAP TO NON-GAAP FINANCIAL MEASURES

We supplement the reporting of our financial information determined under GAAP
with certain non-GAAP financial measures, including percentage sales growth in
constant currency, adjusted net earnings and adjusted diluted net earnings per
share. We believe that these non-GAAP measures provide meaningful  information 
to assist investors  and shareholders in  understanding our financial  results 
and assessing  our  prospects  for  future  performance.  Management  believes 
percentage sales  growth  in  constant currency,  adjusted  net  earnings  and 
adjusted net  earnings  per diluted  share  are important  indicators  of  our 
operations because they  exclude items that  may not be  indicative of or  are 
unrelated to our core operating results  and provide a baseline for  analyzing 
trends in our underlying businesses. Management uses these non-GAAP  financial 
measures for reviewing the operating results of reportable business  segments, 
and for  analyzing potential  future business  trends in  connection with  our 
budget process  and  bases  certain  annual  bonus  plans  on  these  non-GAAP 
financial measures. To measure percentage  sales growth in constant  currency, 
we remove the impact of changes in foreign currency exchange rates that affect
the comparability  and trend  of sales.  Percentage sales  growth in  constant 
currency is  calculated by  translating  current year  results at  prior  year 
average foreign currency exchange rates. To measure earnings performance on  a 
consistent and  comparable basis,  we exclude  certain items  that affect  the 
comparability of operating results and the trend of earnings. Because non-GAAP
financial measures are  not standardized, it  may not be  possible to  compare 
these financial  measures with  other companies'  non-GAAP financial  measures 
having the same or similar names. These adjusted financial measures should not
be considered in isolation or as  a substitute for reported sales growth,  net 
earnings and diluted net earnings per share, the most directly comparable GAAP
financial measures. These non-GAAP financial measures are an additional way of
viewing aspects of our operations that, when viewed with our GAAP results  and 
the reconciliations to corresponding GAAP financial measures below, provide  a 
more complete understanding of our  business. We strongly encourage  investors 
and shareholders to review our financial statements and publicly-filed reports
in their entirety and not to rely on any single financial measure.

The  following  reconciles  the  non-GAAP  financial  measures,  adjusted  net 
earnings and adjusted diluted net earnings  per share, with the most  directly 
comparable GAAP  financial measures,  reported net  earnings and  diluted  net 
earnings per share:

                             STRYKER CORPORATION
             For the Three Month and Year Ended December 31, 2012
         (Unaudited - Millions of Dollars, Except Per Share Amounts)

           RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS
                             Fourth Quarter         Year Ended December 31
                   Notes   2012   2011   % Change    2012     2011    % Change
NET EARNINGS              $ 270  $ 401    (32.7 )  $ 1,298  $ 1,345     (3.5 )
Acquisition and
integration
related charges,
net of tax          (a)
Inventory "step
up" to fair value             2     12    (83.3 )       13       97    (86.6 )
Acquisition and
integration
related                       7     16    (56.3 )       24       45    (46.7 )
Restructuring and
related charges     (b)      24     60    (60.0 )       59       60     (1.7 )
Uncertain income
tax position
adjustments         (c)       -    (99 ) (100.0 )        -      (99 ) (100.0 )
OtisKnee matter     (d)       -      -        -         33        -        -
Rejuvenate and
ABGII recall        (e)     133      -        -        133        -        -
ADJUSTED NET
EARNINGS                  $ 436  $ 390     11.8    $ 1,560  $ 1,448      7.7

RECONCILIATION OF DILUTED NET EARNINGS PER SHARE TO ADJUSTED DILUTED NET
EARNINGS PER SHARE
                              Fourth Quarter         Year Ended December 31
                   Notes   2012     2011   % Change   2012     2011   % Change
DILUTED NET
EARNINGS PER SHARE        $ 0.71  $ 1.05    (32.4 )  $ 3.39  $ 3.45     (1.7 )
Acquisition and
integration
related charges,
net of tax          (a)
Inventory "step
up" to fair value              -    0.03   (100.0 )    0.03    0.25    (88.0 )
Acquisition and
integration
related                     0.02    0.04    (50.0 )    0.06    0.12    (50.0 )
Restructuring and
related charges     (b)     0.06    0.16    (62.5 )    0.15    0.16     (6.3 )
Uncertain income
tax position
adjustments         (c)        -   (0.26 ) (100.0 )       -   (0.26 ) (100.0 )
OtisKnee matter     (d)        -       -        -      0.09       -        -
Rejuvenate and
ABGII recall        (e)     0.35       -        -      0.35       -        -
ADJUSTED DILUTED
NET EARNINGS PER
SHARE                     $ 1.14  $ 1.02     11.8    $ 4.07  $ 3.72      9.4

(a) The Company has incurred and will incur certain acquisition and
    integration related charges in connection with the acquisition of Surpass
    Medical, Ltd. in 2012 and of the Neurovascular division of Boston
    Scientific Corporation, Orthovita, Inc., Memometal Technologies S.A., and
    Concentric Medical,Inc. in 2011.
(b) In 2011 the Company announced focused workforce reductions and other
    restructuring activities and has incurred and will continue to incur
    certain restructuring and related charges.
(c) In 2011 the Company reached a settlement with the United States Internal
    Revenue Service regarding a proposed adjustment and recorded charges for
    other uncertain income tax positions.
(d) In 2012 the Company announced entering into discussions with the DOJ
    regarding the settlement of the allegations of violations of Federal law
    related to sales of the OtisKnee device not cleared by the United States
    Food and Drug Administration. The Company recorded a non-tax deductible
    charge representing the Company's best estimate of the minimum of the
    range of probable loss to resolve this matter.
(e) In the fourth quarter of 2012 the Company recorded a charge representing
    the Company's best estimate of the minimum of the range of probable loss
    to resolve the previously disclosed voluntarily recall of its Rejuvenate
    and ABG II modular-neck hip stems over previously recorded reserves.

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Source: Stryker Corporation via Thomson Reuters ONE
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