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Stryker Reports 8% Sales Growth, 10% Net Earnings Growth for Quarter Ended June 30, 2010


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KALAMAZOO, Mich., July 20, 2010 /PRNewswire via COMTEX/ --

Stryker Corporation (NYSE: SYK) reported operating results for the quarter ended June 30, 2010 as follows:

Second Quarter Highlights

  • Net sales increased 6.9% on a constant currency basis (7.6% as reported) to $1,758 million
  • Orthopaedic Implants sales increased 1.4% on a constant currency basis (2.2% as reported)
  • MedSurg Equipment sales increased 15.9% on a constant currency basis (16.4% as reported)
  • Net earnings increased 9.5% from $291 million to $319 million
  • Diluted net earnings per share increased 9.6% from $0.73 to $0.80

"Our second quarter results reflect the underlying strength of our diverse product offering and global presence, which is allowing us to continue to deliver on the goals we outlined at the start of 2010," commented Stephen P. MacMillan, Chairman, President and Chief Executive Officer.

Net sales increased 7.6% to $1,758 million for the second quarter of 2010. On a constant currency basis, net sales increased 6.9% in the quarter.

Net earnings for the second quarter of 2010 were $319 million, representing a 9.5% increase over net earnings of $291 million for the second quarter of 2009. Diluted net earnings per share for the second quarter of 2010 increased 9.6% to $0.80 compared to $0.73 for the second quarter of 2009.

Sales Analysis

Domestic sales were $1,160 million for the second quarter of 2010, representing an increase of 10.8%, as a result of higher shipments of Orthopaedic Implants and MedSurg Equipment.

International sales were $598 million for the second quarter of 2010, representing an increase of 1.8%. The impact of foreign currency comparisons to the dollar value of international sales was favorable by $11 million in the second quarter of 2010. On a constant currency basis, international sales were flat in the second quarter of 2010, as a result of higher shipments of MedSurg Equipment partially offset by lower shipments of Orthopaedic Implants.

Worldwide sales of Orthopaedic Implants were $1,036 million for the second quarter of 2010, representing an increase of 2.2%. On a constant currency basis, sales of Orthopaedic Implants increased 1.4% in the second quarter of 2010, based on higher domestic shipments of hips, knees, and trauma implant systems.

Worldwide sales of MedSurg Equipment were $722 million for the second quarter of 2010, representing an increase of 16.4%. On a constant currency basis, sales of MedSurg Equipment increased 15.9% in the second quarter of 2010, based on higher shipments of surgical equipment and surgical navigation systems, endoscopic and communications systems and patient handling and emergency medical equipment as well as sales growth through acquisitions.

2010 Outlook

The financial forecast for 2010 remains unchanged and includes a constant currency net sales increase of 5% to 8% as a result of growth in shipments of Orthopaedic Implants and MedSurg Equipment. If foreign currency exchange rates hold near June 30, 2010 levels, the Company anticipates an unfavorable impact on net sales of approximately 1% to 2% in the third quarter of 2010 and approximately 0% to 1% for the full year of 2010. The Company projects that diluted net earnings per share for 2010 will be in the range of $3.20 to $3.30, an increase of 8% to 12% over adjusted diluted net earnings per share of $2.95 in 2009.

Conference Call

As previously announced the Company will host a conference call for financial analysts at 4:30 p.m., Eastern Time, today to discuss the Company's operating results for the quarter ended June 30, 2010 and provide an operational update. To participate in the conference call dial 800-901-5217 (domestic)or 617-786-2964 (international)and enter the participant passcode 27026085. 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 8:30 p.m., Eastern Time, on Tuesday, July 20, 2010, until 8:30 p.m. on Tuesday, July 27, 2010. To hear this recording, dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter the passcode 20717533.

Forward Looking Statements

Certain statements made in the presentation may constitute forward-looking statements. They will be based upon management's current expectations and will be subject to various risks and uncertainties that could cause the Company's 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 the Company's products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for the Company's 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; unfavorable resolution of tax audits; changes in financial markets; and changes in the competitive environment. Additional information concerning these and other factors is contained in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's 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. The Company provides innovative orthopaedic implants as well as state-of-the-art medical and surgical equipment to help people lead more active and more satisfying lives. For more information about Stryker, please visit www.stryker.com.

                          STRYKER CORPORATION
     For the Three Month and Six Month Periods Ended June 30, 2010
          (Unaudited - In Millions Except Per Share Amounts)



                                                      Second Quarter
    CONDENSED STATEMENTS OF EARNINGS          2010          2009      % Change

      Net sales                           $1,758.2      $1,634.3           7.6
      Cost of sales                          539.3         536.3           0.6


        GROSS PROFIT                       1,218.9       1,098.0          11.0
         % of Sales                           69.3          67.2

      Research, development and
        engineering expenses                  94.6          82.6          14.5
      Selling, general and
        administrative expenses              661.8         617.1           7.2
      Intangibles amortization                14.4           8.5          69.4

                                             770.8         708.2           8.8

        OPERATING INCOME                     448.1         389.8          15.0
         % of Sales                           25.5          23.9


      Other income (expense)                  (5.5)         10.2            --


          EARNINGS BEFORE INCOME TAXES       442.6         400.0          10.7

      Income taxes                           123.6         108.7          13.7


        NET EARNINGS                        $319.0        $291.3           9.5


       Net earnings per share
          Basic                              $0.80         $0.73           9.6
          Diluted net earnings per share     $0.80         $0.73           9.6

      Average Shares Outstanding
        Basic                                396.9         397.4
        Diluted                              399.2         399.0





                                                        Six Months
    CONDENSED STATEMENTS OF EARNINGS          2010          2009      % Change

      Net sales                           $3,557.3      $3,235.6           9.9
      Cost of sales                        1,120.7       1,051.8           6.6


        GROSS PROFIT                       2,436.6       2,183.8          11.6
         % of Sales                           68.5          67.5

      Research, development and
        engineering expenses                 184.6         163.0          13.3
      Selling, general and
        administrative expenses            1,329.6       1,233.7           7.8
      Intangibles amortization                27.9          18.1          54.1

                                           1,542.1       1,414.8           9.0

        OPERATING INCOME                     894.5         769.0          16.3
         % of Sales                           25.1          23.8


      Other income (expense)                  (6.1)         17.4            --


          EARNINGS BEFORE INCOME TAXES       888.4         786.4          13.0

      Income taxes                           247.7         214.0          15.7


        NET EARNINGS                        $640.7        $572.4          11.9


       Net earnings per share
          Basic                              $1.61         $1.44          11.8
          Diluted net earnings per share     $1.60         $1.44          11.1

      Average Shares Outstanding
        Basic                                397.0         397.1
        Diluted                              399.7         398.8


                          STRYKER CORPORATION
     For the Three Month and Six Month Periods Ended June 30, 2010
                       (Unaudited - In Millions)



                                           Second Quarter
                                                            % Change
                                                                    Constant
    CONDENSED SALES ANALYSIS     2010     2009      Reported      Currency

      Domestic               $1,160.4 $1,047.2          10.8          10.8
      International             597.8    587.1           1.8             -


        NET SALES            $1,758.2 $1,634.3           7.6           6.9


      Orthopaedic Implants   $1,036.4 $1,014.2           2.2           1.4
      MedSurg Equipment         721.8    620.1          16.4          15.9


        NET SALES            $1,758.2 $1,634.3           7.6           6.9





                                             Six Months
                                                            % Change
                                                                    Constant
    CONDENSED SALES ANALYSIS     2010     2009      Reported      Currency

      Domestic               $2,333.4 $2,089.2          11.7          11.7
      International           1,223.9  1,146.4           6.8           0.7


        NET SALES            $3,557.3 $3,235.6           9.9           7.8


      Orthopaedic Implants   $2,113.3 $1,987.4           6.3           3.9
      MedSurg Equipment       1,444.0  1,248.2          15.7          14.0


        NET SALES            $3,557.3 $3,235.6           9.9           7.8



                                    Second Quarter
                                       % Change
                       Domestic      International               Total
                                                Constant              Constant
    SUPPLEMENTAL
     SALES GROWTH
     ANALYSIS          Reported   Reported      Currency     Reported Currency

    Orthopaedic
     Implants
     sales:
      Hips                   2         4             1            3        2
      Knees                  4        (5)           (7)           1        0
      Trauma                13         2             3            7        7
      Spine                 (3)        7             7            0        0
      Total
       Orthopaedic
       Implants              3         1            (1)           2        1

    MedSurg
     Equipment
     sales:
      Surgical
       equipment and
       surgical
       navigation
       systems              12         1             0            9        8
      Endoscopic and
       communications
       systems               9         5             3            8        7
      Patient
       handling and
       emergency
       medical
       equipment            22        14             9           20       19
      Total MedSurg
       Equipment            21         4             2           16       16



                                               Six Months
                                                % Change
                          Domestic     International              Total
                                                Constant              Constant
                          Reported  Reported    Currency    Reported  Currency

    Orthopaedic
     Implants sales:
      Hips                     5        7            0           6        3
      Knees                    8        3           (4)          6        4
      Trauma                  13        9            6          11        9
      Spine                    1       16           11           5        4
      Total Orthopaedic
       Implants                6        7            1           6        4

    MedSurg Equipment
     sales:
      Surgical
       equipment and
       surgical
       navigation
       systems                 7        1           (4)          5        3
      Endoscopic and
       communications
       systems                 8       10            4           8        7
      Patient handling
       and emergency
       medical
       equipment              28       14            5          25       23
      Total MedSurg
       Equipment              19        6            0          16       14

                      STRYKER CORPORATION
                   (Unaudited - In Millions)



                                                     December
                                          June 30        31
    CONDENSED BALANCE SHEETS                  2010        2009

      ASSETS

      Cash and cash equivalents             $785.2      $658.7

      Marketable securities                3,243.3     2,296.1

      Accounts receivable (net)            1,108.2     1,147.1

      Inventories                            968.2       943.0

      Other current assets                   794.9       806.3

        TOTAL CURRENT ASSETS               6,899.8     5,851.2

      Property, plant and equipment
       (net)                                 898.7       947.6

      Goodwill and other intangibles
       (net)                               1,586.9     1,591.5

      Other assets                           674.7       681.0

        TOTAL ASSETS                     $10,060.1    $9,071.3


      LIABILITIES AND SHAREHOLDERS'
       EQUITY

      Current liabilities                 $1,295.1    $1,441.0

      Other liabilities                    1,023.2     1,035.2

      Long-term debt                         996.3           -

      Shareholders' equity                 6,745.5     6,595.1

        TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY             $10,060.1    $9,071.3


                                    STRYKER CORPORATION
               For the Three Month and Six Month Periods Ended June 30, 2010
                                 (Unaudited - In Millions)



                                    Second Quarter      Six Months
    CONDENSED STATEMENTS OF CASH
     FLOWS                            2010     2009      2010     2009

      OPERATING ACTIVITIES

      Net earnings                  $319.0   $291.3    $640.7   $572.4

      Depreciation                    39.1     38.9      79.9     76.8

      Amortization                    59.5     53.3     117.9    107.1

      Changes in working capital
       and other                     (90.9) (201.1)    (237.0) (301.5)

        NET CASH PROVIDED BY
         OPERATING ACTIVITIES        326.7    182.4     601.5    454.8


      INVESTING ACTIVITIES

      Acquisitions, net of cash
       acquired                       (4.0)    (9.1)    (61.4)   (11.7)

      Purchases of marketable
       securities, net              (655.4) (153.3)  (1,172.3) (251.5)

      Purchases of property, plant
       and equipment                 (37.4)   (30.4)    (68.5)   (61.0)

      Proceeds from sales of
       property, plant and
       equipment                       0.2      0.2       0.2      0.9


      NET CASH USED IN INVESTING
       ACTIVITIES                   (696.6) (192.6)  (1,302.0) (323.3)


      FINANCING ACTIVITIES

      Proceeds from borrowings,
       net                            (7.3)    (1.8)    999.0     (0.9)

      Dividends paid                 (59.5)       -    (119.2) (158.6)

      Repurchase and retirement of
       common stock                      -        -    (111.1)       -

      Other                           51.7    (24.8)    114.2     (0.8)

        NET CASH PROVIDED BY (USED
         IN) FINANCING ACTIVITIES    (15.1)   (26.6)    882.9  (160.3)

      Effect of exchange rate
       changes on cash and cash
       equivalents                   (32.3)    17.3     (55.9)    (6.0)

        CHANGE IN CASH AND CASH
         EQUIVALENTS               $(417.3)  $(19.5)   $126.5   $(34.8)


SOURCE Stryker Corporation