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Stryker Operating Results for Quarter Ended December 31, 2008
Date:1/27/2009

KALAMAZOO, Mich., Jan. 27 /PRNewswire-FirstCall/ -- Stryker Corporation (NYSE: SYK) reported operating results for the quarter and year ended December 31, 2008 as follows:

    Fourth Quarter Highlights

    -- Net sales increased 3.6% (7.7% constant currency) to $1,718 million
    -- Orthopaedic Implant sales increased 4.2% (8.9% constant currency)
    -- MedSurg Equipment sales increased 2.8% (6.2% constant currency)
    -- Net earnings from continuing operations increased 0.6% to $278 million
       and adjusted net earnings from continuing operations increased 8.4% to
       $299 million
    -- Diluted net earnings per share from continuing operations increased
       4.5% to $0.69 from $0.66 and adjusted diluted net earnings per share
       from continuing operations increased 12.1% to $0.74 from $0.66
    -- $250 million share repurchase program was initiated and completed
       during the quarter

    Highlights for the Year Ended December 31, 2008

    -- Net sales increased 12.0% (10.5% constant currency) to $6,718 million
    -- Orthopaedic Implant sales increased 10.6% (8.8% constant currency)
    -- MedSurg Equipment sales increased 14.0% (13.2% constant currency)
    -- Net earnings from continuing operations increased 16.3% to $1,148
       million and adjusted net earnings from continuing operations increased
       17.0% to $1,170 million
    -- Diluted net earnings per share from continuing operations increased
       17.3% to $2.78 from $2.37 and adjusted diluted net earnings per share
       from continuing operations increased 17.9% to $2.83 from $2.40
    -- $1.0 billion of share repurchase programs were initiated and completed
       during the year resulting in 17.4 million shares being purchased in the
       open market

"We are pleased to report our eighth consecutive year of double-digit sales growth for 2008 despite the slowdown in capital purchases by our hospital customers during the fourth quarter," commented Stephen P. MacMillan, President and Chief Executive Officer. "Six of our eight major product franchises achieved double-digit sales growth in 2008 demonstrating the strength of our diversified business model. As a result, we were able to deliver 18% adjusted diluted net earnings per share from continuing operations growth in a year that included significant internal and external challenges."

Net sales increased 3.6% to $1,718 million in the fourth quarter of 2008, and increased 12.0% to $6,718 million for the year ended December 31, 2008. On a constant currency basis, net sales increased 7.7% in the fourth quarter and 10.5% for the year.

Net earnings from continuing operations for the fourth quarter and year ended December 31, 2008 were reduced by $22 million of restructuring charges (net of income tax benefits) related to the decisions to simplify the structure of the Company's Japanese distribution business and to substantially reduce development efforts associated with the 2006 acquisition of Sightline Technologies, Ltd. Net earnings from continuing operations for the year ended December 31, 2007 were reduced by a $13 million intangible asset impairment charge (net of income tax benefit).

Excluding the impact of the 2008 restructuring charges, adjusted net earnings from continuing operations for the fourth quarter of 2008 of $299 million increased 8.4% over net earnings from continuing operations of $276 million for the fourth quarter of 2007 and adjusted diluted net earnings per share from continuing operations for the fourth quarter of 2008 of $0.74 increased 12.1% over diluted net earnings per share from continuing operations of $0.66 for the fourth quarter of 2007. Excluding the impacts of the 2008 restructuring charges and the 2007 intangible asset impairment charge, adjusted net earnings from continuing operations of $1,170 million for the year ended December 31, 2008 increased 17.0% over adjusted net earnings from continuing operations of $999 million for the year ended December 31, 2007 and adjusted diluted net earnings per share from continuing operations for the year ended December 31, 2008 of $2.83 increased 17.9% over adjusted diluted net earnings per share from continuing operations of $2.40 for the year ended December 31, 2007.

Net earnings for the fourth quarter of 2008 were $278 million, representing a 0.6% increase over net earnings of $276 million for the fourth quarter of 2007. Diluted net earnings per share for the fourth quarter of 2008 increased 4.5% to $0.69 compared to $0.66 for the fourth quarter of 2007.

Net earnings for the year ended December 31, 2007 included a gain of $26 million (net of income taxes) to reflect the divestiture of the Company's outpatient physical therapy business, Physiotherapy Associates, and net earnings from discontinued operations of $5 million.

Net earnings for the year ended December 31, 2008 were $1,148 million, representing a 12.8% increase over net earnings of $1,017 million for the year ended December 31, 2007. Diluted net earnings per share for the year ended December 31, 2008 increased 13.9% to $2.78 compared to $2.44 for the year ended December 31, 2007.

Sales Analysis

Domestic sales increased 7.0% in the fourth quarter and 11.2% for the year. International sales decreased 2.3% in the fourth quarter and increased 13.3% for the year. The impact of foreign currency comparisons to the dollar value of international sales was unfavorable by $68 million in the fourth quarter and favorable by $85 million for the year. On a constant currency basis, international sales increased 9.0% in the fourth quarter and 9.4% for the year.

Worldwide sales of Orthopaedic Implants increased 4.2% in the fourth quarter and 10.6% for the year. On a constant currency basis, sales of Orthopaedic Implants increased 8.9% in the fourth quarter and 8.8% for the year.

Worldwide sales of MedSurg Equipment increased 2.8% in the fourth quarter and 14.0% for the year. On a constant currency basis, sales of MedSurg Equipment increased 6.2% in the fourth quarter and 13.2% for the year.

Income Taxes

The Company's effective income tax rates on earnings from continuing operations for the fourth quarter and year ended December 31, 2008 were 26.9% and 27.4%, respectively, as compared to effective income tax rates on such earnings for the fourth quarter and year ended December 31, 2007 of 28.1% and 28.0%, respectively. The effective income tax rates for the fourth quarter and year ended December 31, 2008 reflect the impact of the restructuring charges of $22 million (net of $13 million income tax benefits). The effective income tax rate for the year ended December 31, 2007 reflects the impact of the intangible asset impairment charge of $13 million (net of $7 million income tax benefit).

Outlook for 2009

The Company projects that diluted net earnings per share for 2009 will be in the range of $3.12 to $3.22, an increase of 10% to 14% over adjusted diluted net earnings per share from continuing operations of $2.83 in 2008. The financial forecast for 2009 anticipates a constant currency net sales increase in the range of 6% to 9%. If foreign currency exchange rates hold near current levels, the Company anticipates an unfavorable impact on net sales of approximately 4.5% to 5.5% in the first quarter of 2009 and an unfavorable impact on net sales of approximately 3.5% to 4.5% for the full year of 2009.

Conference Call

As previously announced, the Company will conduct a conference call for financial analysts at 4:30 p.m., Eastern Time, today. To participate in the conference call dial 800-510-9661 (domestic) or 617-614-3452 (international) and enter the participant passcode 38897062. 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 6:30 p.m., Eastern Time, today, until 6:30 p.m. on Tuesday, February 3, 2009. To hear this recording, dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter the passcode 44664788.

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 the Company's actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: further 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; 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; 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 Corporation is one of the world's leading medical technology companies with the most broadly based range of products in orthopaedics and a significant presence in other medical specialties. Stryker works with respected medical professionals to help people lead more active and more satisfying lives. The Company's products include implants used in joint replacement, trauma, craniomaxillofacial and spinal surgeries; biologics; surgical, neurologic, ear, nose & throat and interventional pain equipment; endoscopic, surgical navigation, communications and digital imaging systems; as well as patient handling and emergency medical equipment. For more information about Stryker, please visit www.stryker.com.



                              STRYKER CORPORATION
          For the Three Month Period and Year Ended December 31, 2008
              (Unaudited - In Millions Except Per Share Amounts)

                                                    Fourth Quarter
    CONDENSED STATEMENTS OF EARNINGS             2008         2007  % Change

      Net sales                              $1,718.2     $1,658.1       3.6
      Cost of sales                             556.0        524.5       6.0

       GROSS PROFIT                           1,162.2      1,133.6       2.5
         % of Sales                              67.6         68.4

      Research, development and
       engineering expenses                      99.8        101.8      (2.0)
      Selling, general and
       administrative expenses                  647.6        658.9      (1.7)
      Intangibles amortization                    9.6         10.0      (4.0)
      Restructuring charges                      34.9          -           -
      Intangible asset impairment                 -            -           -

                                                791.9        770.7       2.8

       OPERATING INCOME                         370.3        362.9       2.0
         % of Sales                              21.6         21.9

      Other income (expense)                      9.8         21.1     (53.6)

       EARNINGS FROM CONTINUING
        OPERATIONS BEFORE INCOME TAXES          380.1        384.0      (1.0)

      Income taxes                              102.4        107.9      (5.1)

       NET EARNINGS FROM CONTINUING
        OPERATIONS                              277.7        276.1       0.6

      Net earnings from discontinued
       operations                                 -            -         -
      Net gain on sale of discontinued
       operations                                 -            -         -

       NET EARNINGS                            $277.7       $276.1       0.6

      Basic net earnings per share
       Net earnings from continuing
        operations                              $0.70        $0.67       4.5
       Net earnings from discontinued
        operations                               $-           $-         -
       Net gain on sale of discontinued
        operations                               $-           $-         -
       Basic net earnings per share             $0.70        $0.67       4.5

      Diluted net earnings per share
       Net earnings from continuing
        operations                              $0.69        $0.66       4.5
       Net earnings from discontinued
        operations                               $-           $-         -
       Net gain on sale of discontinued
        operations                               $-           $-         -
       Diluted net earnings per share           $0.69        $0.66       4.5

      Average Shares Outstanding
       Basic                                    399.5        410.7
       Diluted                                  402.9        418.2



                              STRYKER CORPORATION
          For the Three Month Period and Year Ended December 31, 2008
              (Unaudited - In Millions Except Per Share Amounts)

                                                Year Ended December 31
    CONDENSED STATEMENTS OF EARNINGS             2008         2007  % Change

      Net sales                              $6,718.2     $6,000.5       12.0
      Cost of sales                           2,131.4      1,865.2       14.3

       GROSS PROFIT                           4,586.8      4,135.3       10.9
         % of Sales                              68.3         68.9

      Research, development and
       engineering expenses                     367.8        375.3       (2.0)
      Selling, general and
       administrative expenses                2,625.1      2,391.5        9.8
      Intangibles amortization                   40.0         41.4       (3.4)
      Restructuring charges                      34.9          -         -
      Intangible asset impairment                 -           19.8     (100.0)

                                              3,067.8      2,828.0        8.5

       OPERATING INCOME                       1,519.0      1,307.3       16.2
         % of Sales                              22.6         21.8

      Other income (expense)                     61.2         62.8       (2.5)

       EARNINGS FROM CONTINUING
        OPERATIONS BEFORE INCOME TAXES        1,580.2      1,370.1       15.3

      Income taxes                              432.4        383.4       12.8

       NET EARNINGS FROM CONTINUING
        OPERATIONS                            1,147.8        986.7       16.3

      Net earnings from discontinued
       operations                                 -            5.0     (100.0)
      Net gain on sale of discontinued
       operations                                 -           25.7     (100.0)

       NET EARNINGS                          $1,147.8     $1,017.4       12.8

      Basic net earnings per share
       Net earnings from continuing
        operations                              $2.81        $2.41       16.6
       Net earnings from discontinued
        operations                               $-          $0.01     (100.0)
       Net gain on sale of discontinued
        operations                               $-          $0.06     (100.0)
       Basic net earnings per share             $2.81        $2.48       13.3

      Diluted net earnings per share
       Net earnings from continuing
        operations                              $2.78        $2.37       17.3
       Net earnings from discontinued
        operations                               $-          $0.01     (100.0)
       Net gain on sale of discontinued
        operations                               $-          $0.06     (100.0)
       Diluted net earnings per share           $2.78        $2.44       13.9

      Average Shares Outstanding
       Basic                                    408.1        409.7
       Diluted                                  413.6        417.2


    RECONCILIATION OF REPORTED NET EARNINGS FROM CONTINUING OPERATIONS TO
    ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS

                                  Fourth Quarter      Year Ended December 31
                                                %                        %
                               2008    2007   Change  2008     2007    Change
     NET EARNINGS FROM
      CONTINUING OPERATIONS
     Reported net earnings
      from continuing
      operations               $277.7  $276.1   0.6  $1,147.8  $986.7    16.3
     Restructuring charges       21.7     -     -        21.7     -       -
     Intangible asset
      impairment                  -       -     -         -      12.7  (100.0)
     Adjusted net earnings
      from continuing
      operations               $299.4  $276.1   8.4  $1,169.5  $999.4    17.0


     DILUTED NET EARNINGS PER
      SHARE FROM CONTINUING
      OPERATIONS
     Reported diluted net
      earnings per share from
      continuing operations     $0.69   $0.66   4.5     $2.78   $2.37    17.3
     Restructuring charges      $0.05    $-     -       $0.05    $-       -
     Intangible asset
      impairment                 $-      $-     -        $-     $0.03  (100.0)
     Adjusted diluted net
      earnings per share from
      continuing operations     $0.74   $0.66  12.1     $2.83   $2.40    17.9



                               STRYKER CORPORATION
           For the Three Month Period and Year Ended December 31, 2008
                            (Unaudited - In Millions)

                                                   Fourth Quarter
                                                                  % Change
                                                                      Constant
    CONDENSED SALES ANALYSIS                  2008     2007  Reported Currency


      Domestic                            $1,128.7   $1,054.6    7.0    7.0
      International                          589.5      603.5   (2.3)   9.0

       NET SALES                          $1,718.2   $1,658.1    3.6    7.7

      Orthopaedic Implants                $1,016.9     $976.1    4.2    8.9
      MedSurg Equipment                      701.3      682.0    2.8    6.2

       NET SALES                          $1,718.2   $1,658.1    3.6    7.7



                               STRYKER CORPORATION
           For the Three Month Period and Year Ended December 31, 2008
                            (Unaudited - In Millions)

                                               Year Ended December 31

                                                                  % Change
                                                                      Constant
    CONDENSED SALES ANALYSIS                  2008     2007  Reported Currency


      Domestic                            $4,282.2   $3,850.3   11.2   11.2
      International                        2,436.0    2,150.2   13.3    9.4

       NET SALES                          $6,718.2   $6,000.5   12.0   10.5

      Orthopaedic Implants                $3,967.5   $3,587.3   10.6    8.8
      MedSurg Equipment                    2,750.7    2,413.2   14.0   13.2

       NET SALES                          $6,718.2   $6,000.5   12.0   10.5



                                                     Fourth Quarter
                                                        % Change

                                   Domestic    International      Total

                                    Report-  Report- Constant Report- Constant
                                      ed       ed    Currency   ed    Currency
    SUPPLEMENTAL SALES GROWTH ANALYSIS

    Orthopaedic Implants sales:
      Hips                             0      (12)       0      (6)       0
      Knees                           16       (1)      13       9       15
      Trauma                          18        3        8       9       12
      Spine                           20        2       10      15       17
      Craniomaxillofacial             13       (2)      11       8       12
      Total Orthopaedic Implants      10       (4)       7       4        9

    MedSurg Equipment sales:
      Surgical equipment and surgical
       navigation systems             18       (8)       3       9       13
      Endoscopic, communications and
       digital imaging systems        (7)       1       15      (5)      (2)
      Patient handling and emergency
       medical equipment              (2)      35       54       4        7
      Total MedSurg Equipment          3        1       14       3        6



                                                Year Ended December 31
                                                       % Change

                                   Domestic    International      Total

                                    Report-  Report- Constant Report- Constant
                                      ed       ed    Currency   ed    Currency
    Orthopaedic Implants sales:
       Hips                            2        3        0       3        1
       Knees                          15       13       10      14       13
       Trauma                         20       17       10      18       14
       Spine                          22       14        8      19       18
       Craniomaxillofacial            21        6        3      16       15
       Total Orthopaedic Implants     11       10        6      11        9

    MedSurg Equipment sales:
       Surgical equipment and surgical
        navigation systems            16       18       14      17       15
       Endoscopic, communications and
        digital imaging systems        6       18       15       9        8
       Patient handling and emergency
        medical equipment             13       43       41      18       17
       Total MedSurg Equipment        11       22       18      14       13



                               STRYKER CORPORATION
                            (Unaudited - In Millions)

                                                December 31       December 31
    CONDENSED BALANCE SHEETS                        2008              2007

       ASSETS

       Cash and cash equivalents                    $701.1            $290.5

       Marketable securities                       1,494.5           2,120.3

       Accounts receivable (net)                   1,129.5           1,030.7

       Inventories                                   952.7             796.2

       Other current assets                          701.5             667.2

         TOTAL CURRENT ASSETS                      4,979.3           4,904.9

       Property, Plant and Equipment
        (net)                                        963.8             991.6

       Goodwill and Other Intangibles
        (net)                                        935.5             925.5

       Other Assets                                  724.7             532.0

         TOTAL ASSETS                             $7,603.3          $7,354.0


       LIABILITIES AND SHAREHOLDERS'
        EQUITY

       Current Liabilities                        $1,462.1          $1,333.0

       Other Liabilities                             734.5             642.5

       Shareholders' Equity                        5,406.7           5,378.5

         TOTAL LIABILITIES AND
          SHAREHOLDERS' EQUITY                    $7,603.3          $7,354.0



                             STRYKER CORPORATION
         For the Three Month Period and Year Ended December 31, 2008
                          (Unaudited - In Millions)

                                          Fourth Quarter   Year Ended Dec. 31
    CONDENSED STATEMENTS OF CASH FLOWS    2008      2007     2008       2007

      OPERATING ACTIVITIES

      Net earnings from continuing
       operations                         $277.7    $276.1  $1,147.8   $986.7

      Depreciation                          37.4      36.4     155.4    137.1

      Amortization                          55.7      59.1     232.2    229.5

      Restructuring charges                 34.9         -      34.9        -

      Intangible asset impairment              -         -       -       19.8

      Gain on sale of discontinued
       operations                              -         -       -      (40.7)

      Changes in working capital and
       other                                13.6      (4.1)   (394.4)  (304.1)

         NET CASH PROVIDED BY OPERATING
          ACTIVITIES                       419.3     367.5   1,175.9  1,028.3


      INVESTING ACTIVITIES

      Acquisitions, net of cash acquired    (3.4)     (8.5)    (14.2)   (54.8)

      Proceeds from sale of discontinued
       operations                              -         -       -      144.7

      Proceeds from (purchases of)
       marketable securities, net           36.3    (207.2)    470.9 (1,079.5)

      Purchases of property, plant and
       equipment                           (46.1)    (65.0)   (155.2)  (187.7)

      Proceeds from sales of property,
       plant and equipment                   8.2       0.3       8.6      0.7

      Other                                    -         -       -       (1.6)

         NET CASH  PROVIDED BY (USED IN)
          INVESTING ACTIVITIES              (5.0)   (280.4)    310.1 (1,178.2)

      FINANCING ACTIVITIES

      Borrowings (repayments) of debt,
       net                                   0.8      (0.9)      6.7      0.8

      Dividends paid                           -         -    (135.6)   (89.7)

      Repurchase and retirement of common
       stock                              (404.0)        -  (1,000.0)     -

      Other                                 38.1      31.3      82.8    102.5

         NET CASH PROVIDED BY (USED IN)
          FINANCING ACTIVITIES            (365.1)     30.4  (1,046.1)    13.6

      Effect of exchange rate changes on
       cash and cash equivalents           (16.1)      2.1     (29.3)    10.2

         CHANGE IN CASH AND CASH
          EQUIVALENTS                      $33.1    $119.6    $410.6  $(126.1)


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SOURCE Stryker Corporation
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