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Stryker Operating Results for Quarter Ended June 30, 2009
Date:7/21/2009

KALAMAZOO, Mich., July 21 /PRNewswire-FirstCall/ -- Stryker Corporation (NYSE: SYK) reported operating results for the quarter ended June 30, 2009 as follows:

Second Quarter Highlights

  • Net sales of $1,634 million were flat (0.1% decrease) on a constant currency basis (4.6% decrease as reported)
  • Orthopaedic Implants sales increased 5.1% on a constant currency basis (0.2% decrease as reported)
  • MedSurg Equipment sales decreased 7.7% on a constant currency basis (11.0% decrease as reported)
  • Net earnings decreased 4.7% from $306 million to $291 million
  • Diluted net earnings per share were unchanged at $0.73

"In a challenging environment, we were very pleased with the growth of our U.S. Orthopaedic Implant businesses, which accelerated from last quarter and showed strong year-over-year gains. This performance, combined with our heavy focus on controlling costs across the company preserved our diluted earnings per share results in the face of the steep short term slowdown in our MedSurg businesses, and the foreign currency headwinds in the quarter," commented Stephen P. MacMillan, President and Chief Executive Officer.

Net sales were $1,634 million for the second quarter of 2009, representing a 4.6% decrease compared to net sales of $1,713 million for the second quarter of 2008, and were $3,236 million for the first half of 2009, representing a 3.3% decrease compared to net sales of $3,347 million for the first half of 2008. On a constant currency basis, net sales decreased 0.1% for the second quarter and increased 1.6% for the first half.

Net earnings for the second quarter of 2009 were $291 million, representing a 4.7% decrease compared to net earnings of $306 million for the second quarter of 2008. Diluted net earnings per share for the second quarter of 2009 were unchanged at $0.73 compared to the second quarter of 2008. Net earnings for the first half of 2009 were $572 million, representing a 4.0% decrease compared to net earnings of $596 million for the first half of 2008. Diluted net earnings per share for the first half of 2009 increased 0.7% to $1.44 compared to $1.43 for the first half of 2008.

Sales Analysis

Domestic sales were $1,047 million for the second quarter of 2009, representing a decrease of 0.5%, as a 9.1% increase in shipments of Orthopaedic Implants was offset by an 11.0% decrease in shipments of MedSurg Equipment. Domestic sales were $2,089 million for the first half of 2009, representing an increase of 0.2%, as a result of a 7.5% increase in shipments of Orthopaedic Implants offset by an 8.0% decrease in shipments of MedSurg Equipment.

International sales were $587 million for the second quarter of 2009, representing a decrease of 11.0%. The impact of foreign currency comparisons to the dollar value of international sales was unfavorable by $77 million in the second quarter of 2009. On a constant currency basis, international sales increased 0.6% in the second quarter of 2009, as a result of a 0.4% increase in shipments of Orthopaedic Implants and a 1.1% increase in shipments of MedSurg Equipment. International sales were $1,146 million for the first half of 2009, representing a decrease of 9.1%. The impact of foreign currency comparisons to the dollar value of international sales was unfavorable by $164 million in the first half of 2009. On a constant currency basis, international sales increased 3.9% in the first half of 2009, as a result of a 3.3% increase in shipments of Orthopaedic Implants and a 5.2% increase in shipments of MedSurg Equipment.

Worldwide sales of Orthopaedic Implants were $1,014 million for the second quarter of 2009, representing a decrease of 0.2%, and were $1,987 million for both the first half of 2009 and 2008. On a constant currency basis, sales of Orthopaedic Implants increased 5.1% in the second quarter and 5.7% in the first half of 2009, based on higher shipments of reconstructive, trauma, spinal and craniomaxillofacial implant systems.

Worldwide sales of MedSurg Equipment were $620 million for the second quarter of 2009, representing a decrease of 11.0% as reported and 7.7% on a constant currency basis based on lower shipments of surgical equipment and surgical navigation systems; endoscopic, communications and digital imaging systems; and patient handling and emergency medical equipment. Worldwide sales of MedSurg Equipment were $1,248 million for the first half of 2009, representing a decrease of 8.2% as reported and 4.4% on a constant currency basis as higher shipments of surgical equipment and surgical navigation systems were offset by lower sales of endoscopic, communications and digital imaging systems and patient handling and emergency medical equipment.

Outlook for 2009

The Company projects that diluted net earnings per share for 2009 will be in the range of $2.90 to $3.10, an increase of 2% to 10% over adjusted diluted net earnings per share of $2.83 in 2008. The financial forecast for 2009 anticipates a constant currency net sales increase in the range of 1% to 3%. If foreign currency exchange rates hold near June 30, 2009 levels, the Company anticipates an unfavorable impact on net sales of approximately 1.5% to 2.5% in the third quarter of 2009 and an unfavorable impact on net sales of approximately 2% to 3% 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 866-700-0133 (domestic) or 617-213-8831 (international) and enter the participant passcode 77115009. 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, July 22, 2009, until 7:30 p.m. on Tuesday, July 28, 2009. To hear this recording, dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter the passcode 93166153.

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; 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 income 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 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 and Six Month Periods Ended June 30, 2009
                    (Unaudited - In Millions Except Per Share Amounts)

                                     Second Quarter           Six Months
    CONDENSED STATEMENTS OF
     EARNINGS                2009    2008   %Change   2009     2008  %Change

      Net sales           $1,634.3  $1,712.6  (4.6) $3,235.6  $3,347.0  (3.3)
      Cost of sales          536.3     533.2   0.6   1,051.8   1,033.7   1.8


        GROSS PROFIT       1,098.0   1,179.4  (6.9)  2,183.8   2,313.3  (5.6)
          % of Sales          67.2      68.9            67.5      69.1

      Research, development
       and engineering
       expenses               82.6      90.3  (8.5)    163.0     175.4  (7.1)
      Selling, general
       and administrative
       expenses              617.1     678.2  (9.0)  1,233.7   1,332.7  (7.4)
      Intangibles
       amortization            8.5      10.0 (15.0)     18.1      20.6 (12.1)


                             708.2     778.5  (9.0)  1,414.8   1,528.7  (7.5)


        OPERATING INCOME     389.8     400.9  (2.8)    769.0     784.6  (2.0)
          % of Sales          23.9      23.4            23.8      23.4


      Other income (expense)  10.2      19.2 (46.9)     17.4      39.5 (55.9)


          EARNINGS BEFORE
           INCOME TAXES      400.0     420.1  (4.8)    786.4     824.1  (4.6)

      Income taxes           108.7     114.3  (4.9)    214.0     227.8  (6.1)


        NET EARNINGS        $291.3    $305.8  (4.7)   $572.4    $596.3  (4.0)


       Net earnings
        per share
          Basic              $0.73     $0.74  (1.4)    $1.44     $1.45  (0.7)
          Diluted net
           earnings per
           share             $0.73     $0.73   0.0     $1.44     $1.43   0.7

      Average Shares
       Outstanding
        Basic                397.4     412.0           397.1     411.7
        Diluted              399.0     417.9           398.8     417.9



                          STRYKER CORPORATION
     For the Three Month and Six Month Periods Ended June 30, 2009
                       (Unaudited - In Millions)

                                         Second Quarter
                                                     % Change
                                                           Constant
    CONDENSED SALES ANALYSIS   2009     2008    Reported   Currency

      Domestic               $1,047.2 $1,052.8     (0.5)      (0.5)
      International             587.1    659.8    (11.0)       0.6


        NET SALES            $1,634.3 $1,712.6     (4.6)      (0.1)


      Orthopaedic Implants   $1,014.2 $1,016.2     (0.2)       5.1
      MedSurg Equipment         620.1    696.4    (11.0)      (7.7)


        NET SALES            $1,634.3 $1,712.6     (4.6)      (0.1)



                                           Six Months
                                                     % Change
                                                           Constant
    CONDENSED SALES ANALYSIS   2009     2008    Reported   Currency

      Domestic               $2,089.2 $2,085.7      0.2        0.2
      International           1,146.4  1,261.3     (9.1)       3.9


        NET SALES            $3,235.6 $3,347.0     (3.3)       1.6


      Orthopaedic Implants   $1,987.4 $1,987.3      0.0        5.7
      MedSurg Equipment       1,248.2  1,359.7     (8.2)      (4.4)


        NET SALES            $3,235.6 $3,347.0     (3.3)       1.6



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

    Orthopaedic
     Implants sales:
       Hips              9       (12)        1        (2)        5
       Knees            11       (15)       (3)        0         5
       Trauma           11        (8)        1        (1)        5
       Spine            14        (1)       10         9        13
       Craniomaxillo-
        facial          12       (18)       (8)        1         5
       Total
        Orthopaedic
        Implants         9       (11)        0         0         5

    MedSurg
     Equipment sales:
       Surgical equipment
        and surgical
        navigation
        systems         (4)      (12)       (1)       (7)       (3)
       Endoscopic,
        communications
        and digital
        imaging
        systems         (6)       (6)        7        (6)       (3)
       Patient handling
        and emergency
        medical
        equipment      (30)      (17)       (6)      (28)      (26)
      Total MedSurg
       Equipment       (11)      (11)        1       (11)       (8)



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

    Orthopaedic
     Implants sales:
       Hips                       6        (9)        5        (2)        5
       Knees                     10       (13)        0         0         6
       Trauma                    11        (6)        4         1         6
       Spine                     13        (1)        9         9        12
       Craniomaxillofacial       12       (16)       (4)        2         6
       Total Orthopaedic
        Implants                  8        (9)        3         0         6

    MedSurg Equipment sales:
       Surgical equipment and
        surgical navigation
        systems                   3       (12)        1        (2)        3
       Endoscopic, communications
        and digital imaging
        systems                  (7)       (3)       11        (6)       (2)
       Patient handling and
        emergency medical
        equipment               (29)       (9)        6       (25)      (22)
       Total MedSurg
        Equipment                (8)       (9)        5        (8)       (4)



                         STRYKER CORPORATION
                      (Unaudited - In Millions)


                                             June 30   December 31
    CONDENSED BALANCE SHEETS                   2009        2008

      ASSETS

      Cash and cash equivalents               $666.3      $701.1

      Marketable securities                  1,761.6     1,494.5

      Accounts receivable (net)              1,097.3     1,129.5

      Inventories                              991.7       952.7

      Other current assets                     723.4       701.5

        TOTAL CURRENT ASSETS                 5,240.3     4,979.3

      Property, Plant and Equipment (net)      950.3       963.8

      Goodwill and Other Intangibles (net)     942.0       935.5

      Other Assets                             790.9       724.7

        TOTAL ASSETS                        $7,923.5    $7,603.3


      LIABILITIES AND SHAREHOLDERS' EQUITY

      Current Liabilities                   $1,075.1    $1,462.1

      Other Liabilities                        790.9       734.5

      Shareholders' Equity                   6,057.5     5,406.7

        TOTAL LIABILITIES AND
         SHAREHOLDERS' EQUITY               $7,923.5    $7,603.3



                          STRYKER CORPORATION
     For the Three Month and Six Month Periods Ended June 30, 2009
                       (Unaudited - In Millions)

                                   Second Quarter    Six Months
    CONDENSED STATEMENTS OF
     CASH FLOWS                     2009    2008    2009    2008

      OPERATING ACTIVITIES

      Net earnings                 $291.3  $305.8  $572.4  $596.3

      Depreciation                   38.9    39.8    76.8    78.5

      Amortization                   53.3    58.9   107.1   118.4

      Changes in working
       capital and other           (201.1) (164.2) (301.5) (362.1)

        NET CASH PROVIDED BY
         OPERATING ACTIVITIES       182.4   240.3   454.8   431.1


      INVESTING ACTIVITIES

      Acquisitions, net
       of cash acquired              (9.1)   (2.4)  (11.7)   (8.6)

      Purchases of marketable
       securities, net             (153.3) (202.1) (251.5) (110.5)

      Purchases of property,
       plant and equipment          (30.4)  (41.2)  (61.0)  (72.1)

      Proceeds from sales of
       property, plant and
       equipment                      0.2     0.1     0.9     0.2


      NET CASH USED IN
       INVESTING ACTIVITIES        (192.6) (245.6) (323.3) (191.0)


      FINANCING ACTIVITIES

      Borrowings (repayments)
       of debt, net                  (1.8)    6.3    (0.9)    7.1

      Dividends paid                    -       -  (158.6) (135.6)

      Other                         (24.8)    0.5    (0.8)    5.0

        NET CASH PROVIDED BY (USED
         IN) FINANCING ACTIVITIES   (26.6)    6.8  (160.3) (123.5)

      Effect of exchange rate
       changes on cash and cash
       equivalents                   17.3    (3.4)   (6.0)   14.5

        CHANGE IN CASH AND
         CASH EQUIVALENTS          $(19.5)  $(1.9) $(34.8) $131.1


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SOURCE Stryker Corporation
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