Stryker Corporation : Stryker Reports First Quarter 2013 Results

       Stryker Corporation : Stryker Reports First Quarter 2013 Results

Kalamazoo, Michigan - April 24, 2013 - Stryker Corporation (NYSE:SYK) reported
operating results for the first quarter of 2013:

First Quarter Highlights

  *Net sales growth of 1.3% to $2.2 billion

           *Reconstructive increased 1.2% as reported, 2.8% constant
             currency

           *MedSurg increased 0.3% as reported, 1.0% constant currency

           *Neurotechnology and Spine increased 4.0% as reported, 5.7%
             constant currency

  *Adjusted net earnings^(1) increased 4.0% to $394 million

  *Adjusted diluted net earnings per share^(2) increased 4.0% to $1.03

  *Reported net earnings decreased 13.1% to $304 million

  *Reported diluted net earnings per share decreased 13.2% to $0.79

"We delivered solid sales and earnings performance, and expect this momentum
to continue throughout 2013," commented Kevin A. Lobo, President and Chief
Executive Officer.

Sales Analysis

Consolidated net sales of $2.2 billion increased 1.3% in the quarter compared
to the prior year. Net sales in the quarter grew by 3.8% due to increased
unit volume and changes in product mix and 0.2% as a result of acquisitions.
Net sales in the quarter were unfavorably impacted by 1.3% due to changes in
price and 1.3% due to the unfavorable impact of foreign currency exchange
rates on net sales. Excluding the impact of acquisitions, net sales increased
2.5% in constant currency over the prior year.

Reconstructive net sales of $969 million increased 1.2% in the quarter
compared to the prior year, as reported, and 2.8% in constant currency. Net
sales in the quarter grew by 5.2% due to increased unit volume and changes in
product mix and 0.2% as a result of acquisitions. Net sales in the quarter
were unfavorably impacted by 2.6% due to changes in price and 1.6% due to the
unfavorable impact of foreign currency exchange rates on net sales. Excluding
the impact of acquisitions, Reconstructive net sales increased 2.6% in
constant currency over the prior year.

MedSurg net sales of $824 million increased 0.3% in the quarter compared to
the prior year, as reported, and 1.0% in constant currency. Net sales in the
quarter grew by 0.5% due to increased unit volume and changes in product mix
and 0.5% due to changes in price. Net sales in the quarter were unfavorably
impacted by 0.7% due to the impact of foreign currency exchange rates on net
sales. 

Neurotechnology and Spine net sales of $397 million increased 4.0% in the
quarter compared to the prior year, as reported, and 5.7% in constant
currency. Net sales in the quarter grew by 7.5% due to increased unit volume
and changes in product mix and 0.3% as a result of acquisitions. Net sales in
the quarter were unfavorably impacted by 2.0% due to changes in price and
1.8% due to the unfavorable impact of foreign currency exchange rates on net
sales. Excluding the impact of acquisitions, Neurotechnology and Spine net
sales increased 5.5% in constant currency over the prior year.

Earnings Analysis

Reported net earnings of $304 million decreased 13.1% in the quarter compared
to the prior year. Diluted net earnings per share of $0.79 decreased 13.2% in
the quarter over the prior year. Reported net earnings in the quarter
includes an additional charge of $40 million ($32 million net of tax or $0.08
per diluted share) related to the previously disclosed voluntary recall of the
Rejuvenate and ABG II modular-neck hip stems, bringing total charges recorded
for this recall to $230 million. In addition, a charge of $40 million ($30
million net of tax or $0.08 per diluted share) was recorded in the quarter
related to two previously disclosed United States regulatory matters.
Reported net earnings in the quarter also includes acquisition and
integration related charges of $20 million ($17 million net of taxes or $0.05
per diluted share) related to the Neurovascular, Surpass and Trauson
acquisitions and restructuring and related charges of $14 million ($11 million
net of taxes or $0.03 per diluted share) . These charges reduced the reported
gross profit margin from 67.5% to 67.4% and the reported operating income
margin from 22.9% to 17.6%.

Excluding the charges described above, adjusted net earnings^(1) of $394
million increased 4.0% in the quarter over the prior year and adjusted diluted
net earnings per share^(2) of $1.03 increased 4.0% in the quarter over the
prior year. Adjusted net earnings^(1) in 2013 includes $23 million ($14
million net of taxes or $0.04 per diluted share) of costs associated with the
new Medical Device Excise Tax and $17 million of income tax benefits ($0.04
per diluted share) related to the American Taxpayer Relief Act of 2012 that
was signed into law on January 2, 2013.

In March  2013,  Stryker completed  its  previously announced  acquisition  of 
Trauson Holdings Company Limited (Trauson).  The acquisition of Trauson  will 
expand the  Company's  presence  in  a key  emerging  market  with  a  product 
portfolio and pipeline that is targeted  at the fast growing value segment  of 
the Chinese orthopaedic market.

In March 2013, the Company also completed a public offering of $600 million in
1.30% Notes due April 1, 2018 (2018 Notes) and $400 million in 4.10% Notes due
April 1,  2043 (2043  Notes and,  together with  the 2018  Notes, the  Notes). 
Interest on the  Notes is  payable on  April 1 and  October 1  of each  year, 
commencing on October  1, 2013.  Unless previously redeemed,  the 2018  Notes 
will mature on April 1, 2018 and the 2043 Notes will mature on April 1,  2043. 
The Company  intends to  use the  net  proceeds from  the Notes  for  working 
capital and other  general corporate purposes,  including acquisitions,  stock 
repurchases and other business opportunities.

During the quarter, Stryker repurchased approximately 3.6 million shares.
This repurchase activity was attributable to the initial delivery of shares
under the Company's $250 million Accelerated Share Repurchase (ASR) program. 
The ASR program was completed in April of 2013 and resulted in the receipt of
0.2 million additional shares.

2013 Outlook

For the full year 2013, Stryker is projecting constant currency sales growth
in a range of 4.0% to 6.5%. If foreign currency exchange rates hold near
current levels, the Company anticipates net sales will be negatively impacted
by approximately 1% to 2% in both the second quarter and full year of 2013.
Excluding the expected impact of foreign currency and acquisitions, projected
2013 sales growth is 3.0% to 5.5% for the full year.

The Company continues to project 2013 adjusted diluted net earnings per
share^(2) to be in a range of $4.25 to $4.40. 

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, April 24, 2013

As previously announced, the Company will host a conference call on Wednesday,
April 24, 2013 at 4:30 p.m., Eastern Time, to discuss the Company's operating
results for the quarter ended March 31, 2013.

To participate in the conference call dial (866) 436-9172 (domestic) or (630)
691-2760 (international) and be prepared to provide confirmation number
34454633 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, April 24, 2013, until 11:59 p.m., Eastern Time, on Wednesday,
May 1, 2013. To hear this recording you may dial (888) 843-7419 (domestic) or
630-652-3042 (international) and enter the passcode 34454633#.

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; changes in
financial markets; changes in the competitive environment; our ability to
integrate acquisitions; 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
                                                   First Quarter
                                               2013      2012    % Change
Net sales                                    $ 2,190   $ 2,161      1.3
Cost of sales                                    713       709      0.6
GROSS PROFIT                                   1,477     1,452      1.7
% of sales                                      67.4 %    67.2 %
Research, development & engineering expenses     129       112     15.2
Selling general & administrative expenses        916       819     11.8
Intangibles amortization                          32        31      3.2
Restructuring charges                             14        14        -
                                               1,091       976     11.8
OPERATING INCOME                                 386       476    (18.9 )
% of sales                                      17.6 %    22.0 %
Other income (expense)                           (11 )      (8 )   37.5
EARNINGS BEFORE INCOME TAXES                     375       468    (19.9 )
Income Taxes                                      71       118    (39.8 )
NET EARNINGS                                 $   304   $   350    (13.1 )
Net earnings per share
Basic                                            $0.80     $0.92  (13.0 )
Diluted                                          $0.79     $0.91  (13.2 )
Average shares outstanding
Basic                                          379.7     381.0
Diluted                                        383.0     383.8

                   CONDENSED BALANCE SHEETS
                                             March    December
                                             2013       2012
ASSETS
Cash and cash equivalents                  $  1,913   $  1,395
Marketable securities                         2,574      2,890
Accounts receivable (net)                     1,408      1,430
Inventories                                   1,323      1,265
Other current assets                          1,203      1,168
TOTAL CURRENT ASSETS                          8,421      8,148
Property, plant and equipment (net)           1,002        948
Goodwill and other intangibles (net)          4,112      3,566
Other assets                                    554        544
TOTAL ASSETS                               $ 14,089   $ 13,206
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities                        $  1,808   $  1,876
Other liabilities                             1,087        987
Long-term debt                                2,738      1,746
Shareholders' equity                          8,456      8,597
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 14,089   $ 13,206

                     CONDENSED STATEMENTS OF CASH FLOWS
                                                               First Quarter
                                                               2013    2012
OPERATING ACTIVITIES
Net earnings                                                  $ 304   $  350
Depreciation                                                     38       39
Intangibles amortization                                         32       31
Restructuring charges                                            14       14
Changes in operating assets and liabilities and other, net     (152 )   (399 )
NET CASH PROVIDED BY OPERATING ACTIVITIES                       236       35
INVESTING ACTIVITIES
Acquisitions, net of cash acquired                             (600 )     (9 )
Proceeds from sales of (purchases of) marketable securities,
net                                                             289      (62 )
Purchases of property, plant and equipment                      (49 )    (52 )
NET CASH USED IN INVESTING ACTIVITIES                          (360 )   (123 )
FINANCING ACTIVITIES
Borrowings (repayments) of debt, net                          1,009        6
Dividends paid                                                 (101 )    (81 )
Repurchase and retirement of common stock                      (250 )    (50 )
Other                                                            (7 )     (3 )
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES             651     (128 )
Effect of exchange rate changes on cash and cash equivalents     (9 )      1
CHANGE IN CASH AND CASH EQUIVALENTS                           $ 518   $ (215 )

                           STRYKER CORPORATION
                For the Three Months Ended March 31, 2013
                    (Unaudited - Millions of Dollars)

                         CONDENSED SALES ANALYSIS
                                         First Quarter
                                                     % Change
                            2013     2012    As Reported Constant Currency
Geographic sales
U.S.                      $ 1,441   $ 1,384        4.0            4.0
International                 749       777       (3.4 )          0.2
NET SALES                 $ 2,190   $ 2,161        1.3            2.6
Worldwide sales
Reconstructive            $   969   $   958        1.2            2.8
MedSurg                       824       821        0.3            1.0
Neurotechnology and Spine     397       382        4.0            5.7
NET SALES                 $ 2,190   $ 2,161        1.3            2.6

SUPPLEMENTAL SALES GROWTH ANALYSIS
                                        First Quarter
                                         % Change
                                                     U.S.    International
                                    As    Constant    As       As    Constant
                   2013   2012   Reported Currency Reported Reported Currency
Reconstructive
Hips              $ 308   $ 312     (1.2 )    0.8      3.7     (6.4 )   (2.4 )
Knees               345     352     (2.0 )   (1.0 )   (0.4 )   (5.0 )   (2.2 )
Trauma and
Extremities         266     243      9.3     11.6     26.2     (5.0 )   (0.8 )
TOTAL
RECONSTRUCTIVE      969     958      1.2      2.8      6.5     (5.6 )   (1.9 )
MedSurg
Instruments         312     314     (0.7 )    0.2     (1.3 )    1.0      4.1
Endoscopy           278     279     (0.2 )    0.6     (0.9 )    1.5      4.3
Medical             182     179      1.3      1.5      4.3     (7.6 )   (6.6 )
TOTAL MEDSURG       824     821      0.3      1.0      0.7     (0.7 )    1.9
Neurotechnology
and Spine
Neurotechnology     221     201     10.2     12.6     14.5      4.5     10.0
Spine               176     181     (3.0 )   (1.8 )      -    (10.1 )   (6.2 )
TOTAL
NEUROTECHNOLOGY
AND SPINE           397     382      4.0      5.7      6.9     (1.1 )    3.7

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 Months Ended March 31, 2013
         (Unaudited - Millions of Dollars, Except Per Share Amounts)

           RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS
                                                          First Quarter
                                               Notes   2013   2012   % Change
NET EARNINGS                                          $ 304   $ 350    (13.1 )
Acquisition and integration related charges,
net of tax                                      (a)
Inventory stepped up to fair value                        -      10   (100.0 )
Acquisition and integration related                      17       7    142.9
Restructuring and related charges               (b)      11      12     (8.3 )
Rejuvenate / ABG II hip recall charges          (c)      32       -        -
Regulatory matter charges                       (d)      30       -        -
ADJUSTED NET EARNINGS                                 $ 394   $ 379      4.0

RECONCILIATION OF DILUTED NET EARNINGS PER SHARE TO ADJUSTED DILUTED NET
EARNINGS PER SHARE
                                                         First Quarter
                                             Notes   2013     2012   % Change
DILUTED NET EARNINGS PER SHARE                      $ 0.79   $ 0.91    (13.2 )
Acquisition and integration related charges,
net of tax                                    (a)
Inventory stepped up to fair value                       -     0.03   (100.0 )
Acquisition and integration related                   0.05     0.02    150.0
Restructuring and related charges             (b)     0.03     0.03        -
Rejuvenate / ABG II hip recall charges        (c)     0.08        -        -
Regulatory matter charges                     (d)     0.08        -        -
ADJUSTED DILUTED NET EARNINGS PER SHARE             $ 1.03   $ 0.99      4.0

(a) In 2011 the Company completed the acquisition of the Neurovascular
    division of Boston Scientific Corporation, Orthovita, Inc., Memometal
    Technologies S.A., and Concentric Medical, Inc. In 2012 the Company
    completed the acquisition of Surpass Medical, Ltd. In 2013 the Company
    completed the acquisition of Trauson Holdings Company Limited. As a
    result, the Company has incurred certain acquisition and integration
    related charges.
(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) Charges representing our best estimate of the minimum of the range of
    probable loss to resolve the recall of Rejuvenate / ABG II modular-neck
    hip stems.
(d) Charges representing our best estimate of the minimum of the range of
    probable loss to resolve certain previously disclosed regulatory matters.

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Source: Stryker Corporation via Thomson Reuters ONE
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