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Third Quarter Highlights
-- Net sales of $1,653 million increased 1.2% on a constant currency basis
(flat as reported)
-- Orthopaedic Implants sales increased 6.9% on a constant currency basis
(5.5% increase as reported)
-- MedSurg Equipment sales decreased 6.7% on a constant currency basis
(7.7% decrease as reported)
-- Recorded restructuring charges of $48 million (net of income tax
benefits)
-- Adjusted net earnings increased 1.3% from $274 million to $277 million
and adjusted diluted net earnings per share increased 4.5% from $0.66 to
$0.69
-- Reported net earnings decreased 16.4% from $274 million to $229 million
and reported diluted net earnings per share decreased 13.6% from $0.66
to $0.57
"We are pleased to deliver solid results in a challenging environment with all of our orthopaedic implant businesses posting accelerated worldwide revenue growth, led by strong performances in the U.S. In addition, both our Endoscopy and Medical franchises showed a modest rebound with sequentially higher sales over the second quarter of 2009 despite continued softness in hospital spending," commented Stephen P. MacMillan, President and Chief Executive Officer.
Net sales were $1,653 million in both the third quarter of 2009 and the third quarter of 2008. On a constant currency basis, net sales increased 1.2% for the third quarter.
Net earnings for the third quarter of 2009 were reduced by $48 million of restructuring charges (net of income tax benefits) related to decisions to terminate certain third-party agent agreements at the Company's EMEA Division, to simplify the organization structure at its Biotech, EMEA, Japan and Canada divisions and to discontinue selling certain products.
Excluding the impact of the 2009 restructuring charges, adjusted net earnings for the third quarter of 2009 were $277 million, representing a 1.3% increase compared to net earnings of $274 million for the third quarter of 2008. Adjusted diluted net earnings per share for the third quarter of 2009 were $0.69, representing a 4.5% increase compared to $0.66 for the third quarter of 2008.
Net earnings for the third quarter of 2009 were $229 million, representing a 16.4% decrease compared to net earnings of $274 million for the third quarter of 2008. Diluted net earnings per share for the third quarter of 2009 were $0.57, representing a 13.6% decrease compared to $0.66 for the third quarter of 2008.
Sales Analysis
Domestic sales were $1,070 million for the third quarter of 2009, representing an increase of 0.2%, as a 7.9% increase in shipments of Orthopaedic Implants was partially offset by an 8.3% decrease in shipments of MedSurg Equipment.
International sales were $584 million for the third quarter of 2009, representing a decrease of 0.3%. On a constant currency basis, international sales increased 3.1% in the third quarter of 2009, as a result of a 5.5% increase in shipments of Orthopaedic Implants partially offset by a 2.3% decrease in shipments of MedSurg Equipment.
Worldwide sales of Orthopaedic Implants were $1,017 million for the third quarter of 2009, representing an increase of 5.5% as reported and 6.9% on a constant currency basis. Worldwide sales of MedSurg Equipment were $637 million for the third quarter of 2009, representing a decrease of 7.7% as reported and 6.7% on a constant currency basis.
Outlook for 2009
The Company projects that adjusted diluted net earnings per share for 2009 will be in the range of $2.90 to $3.00, an increase of 2% to 6% 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 1.0% to 2.0%. If foreign currency exchange rates hold near September 30, 2009 levels, the Company anticipates a favorable impact on net sales of approximately 3.2% to 4.2% in the fourth quarter of 2009 and an unfavorable impact on net sales of approximately 1.6% to 2.0% 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 800-706-7745 (domestic) or 617-614-3472 (international) and enter the participant passcode 89830336. A simultaneous webcast of the call will be accessible via the Company's website at www.stryker.com. The webcast 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 Tuesday, October 20, 2009, until 7:30 p.m. on Tuesday, October 27, 2009. To hear this recording, dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter the passcode 66937880.
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 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 Nine Month Periods Ended September 30, 2009
(Unaudited - In Millions Except Per Share Amounts)
Third Quarter Nine Months
CONDENSED STATEMENTS % %
OF EARNINGS 2009 2008 Change 2009 2008 Change
Net sales $1,653.3 $1,653.0 0.0 $4,888.9 $5,000.0 (2.2)
Cost of sales 538.7 541.7 (0.6) 1,590.5 1,575.4 1.0
GROSS PROFIT 1,114.6 1,111.3 0.3 3,298.4 3,424.6 (3.7)
% of Sales 67.4 67.2 67.5 68.5
Research,
development and
engineering
expenses 83.7 92.6 (9.6) 246.7 268.0 (7.9)
Selling, general and
administrative
expenses 643.9 644.8 (0.1) 1,877.6 1,977.5 (5.1)
Intangibles
amortization 8.6 9.8 (12.2) 26.7 30.4 (12.2)
Restructuring
charges 67.0 - - 67.0 - -
803.2 747.2 7.5 2,218.0 2,275.9 (2.5)
OPERATING INCOME 311.4 364.1 (14.5) 1,080.4 1,148.7 (5.9)
% of Sales 18.8 22.0 22.1 23.0
Other income (expense) 3.0 11.9 (74.8) 20.4 51.4 (60.3)
EARNINGS BEFORE
INCOME TAXES 314.4 376.0 (16.4) 1,100.8 1,200.1 (8.3)
Income taxes 85.4 102.2 (16.4) 299.4 330.0 (9.3)
NET EARNINGS $229.0 $273.8 (16.4) $801.4 $870.1 (7.9)
Net earnings per
share
Basic $0.58 $0.67 (13.4) $2.02 $2.12 (4.7)
Diluted net
earnings per
share $0.57 $0.66 (13.6) $2.01 $2.09 (3.8)
Average Shares
Outstanding
Basic 397.6 409.7 397.2 411.0
Diluted 399.6 415.8 399.1 417.2
RECONCILIATION OF
REPORTED NET EARNINGS
TO ADJUSTED NET
EARNINGS
Third Quarter Nine Months
% %
2009 2008 Change 2009 2008 Change
NET EARNINGS
Reported net
earnings $229.0 $273.8 (16.4) $801.4 $870.1 (7.9)
Restructuring charges 48.4 - - 48.4 - -
Adjusted net
earnings $277.4 $273.8 1.3 $849.8 $870.1 (2.3)
DILUTED NET EARNINGS
PER SHARE
Reported diluted net
earnings per share $0.57 $0.66 (13.6) $2.01 $2.09 (3.8)
Restructuring charges $0.12 $- - $0.12 $- -
Adjusted diluted net
earnings per share $0.69 $0.66 4.5 $2.13 $2.09 1.9
STRYKER CORPORATION
For the Three Month and Nine Month Periods Ended September 30, 2009
(Unaudited - In Millions)
Third Quarter
% Change
Constant
CONDENSED SALES ANALYSIS 2009 2008 Reported Currency
Domestic $1,069.6 $1,067.8 0.2 0.2
International 583.7 585.2 (0.3) 3.1
NET SALES $1,653.3 $1,653.0 0.0 1.2
Orthopaedic Implants $1,016.7 $963.3 5.5 6.9
MedSurg Equipment 636.6 689.7 (7.7) (6.7)
NET SALES $1,653.3 $1,653.0 0.0 1.2
Nine Months
% Change
Constant
CONDENSED SALES ANALYSIS 2009 2008 Reported Currency
Domestic $3,158.8 $3,153.5 0.2 0.2
International 1,730.1 1,846.5 (6.3) 3.6
NET SALES $4,888.9 $5,000.0 (2.2) 1.4
Orthopaedic Implants $3,004.1 $2,950.6 1.8 6.1
MedSurg Equipment 1,884.8 2,049.4 (8.0) (5.2)
NET SALES $4,888.9 $5,000.0 (2.2) 1.4
Third Quarter
% Change
Domestic International Total
SUPPLEMENTAL SALES Constant Constant
GROWTH ANALYSIS Reported Reported Currency Reported Currency
Orthopaedic
Implants sales:
Hips 7 1 5 4 6
Knees 10 (3) 1 5 7
Trauma 6 5 6 5 6
Spine 13 14 16 14 14
Craniomaxillofacial 12 9 12 11 12
Total Orthopaedic
Implants 8 2 5 6 7
MedSurg Equipment sales:
Surgical equipment
and surgical
navigation systems 3 1 5 2 3
Endoscopic,
communications and
digital imaging
systems (10) 11 16 (5) (4)
Patient handling
and emergency
medical equipment (23) (45) (43) (28) (27)
Total MedSurg Equipment (8) (6) (2) (8) (7)
Nine Months
% Change
Domestic International Total
Constant Constant
Reported Reported Currency Reported Currency
Orthopaedic
Implants sales:
Hips 6 (6) 5 0 6
Knees 10 (10) 1 2 6
Trauma 9 (2) 4 2 6
Spine 13 4 12 10 13
Craniomaxillofacial 12 (9) 1 5 8
Total Orthopaedic
Implants 8 (6) 4 2 6
MedSurg Equipment sales:
Surgical equipment
and surgical
navigation systems 3 (8) 2 0 3
Endoscopic,
communications and
digital imaging
systems (8) 1 13 (6) (3)
Patient handling
and emergency
medical equipment (27) (24) (14) (26) (24)
Total MedSurg Equipment (8) (8) 3 (8) (5)
STRYKER CORPORATION
(Unaudited - In Millions)
September 30 December 31
CONDENSED BALANCE SHEETS 2009 2008
ASSETS
Cash and cash equivalents $960.3 $701.1
Marketable securities 1,969.1 1,494.5
Accounts receivable (net) 1,113.5 1,129.5
Inventories 977.3 952.7
Other current assets 741.6 701.5
TOTAL CURRENT ASSETS 5,761.8 4,979.3
Property, Plant and Equipment (net) 954.1 963.8
Goodwill and Other Intangibles (net) 954.9 935.5
Other Assets 788.4 724.7
TOTAL ASSETS $8,459.2 $7,603.3
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities $1,198.0 $1,462.1
Other Liabilities 820.3 734.5
Shareholders' Equity 6,440.9 5,406.7
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $8,459.2 $7,603.3
STRYKER CORPORATION
For the Three Month and Nine Month Periods Ended September 30, 2009
(Unaudited - In Millions)
Third Quarter Nine Months
CONDENSED STATEMENTS OF CASH FLOWS 2009 2008 2009 2008
OPERATING ACTIVITIES
Net earnings $229.0 $273.8 $801.4 $870.1
Depreciation 41.1 39.5 117.9 118.0
Amortization 55.5 58.1 162.6 176.5
Restructuring charges 67.0 - 67.0 -
Changes in working capital and other 73.2 (45.9) (228.3) (408.0)
NET CASH PROVIDED BY OPERATING
ACTIVITIES 465.8 325.5 920.6 756.6
INVESTING ACTIVITIES
Acquisitions, net of cash acquired (6.0) (2.2) (17.7) (10.8)
Proceeds from (purchases of)
marketable securities, net (146.3) 545.1 (397.8) 434.6
Purchases of property, plant and
equipment (28.6) (37.0) (89.6) (109.1)
Proceeds from sales of property,
plant and equipment 0.6 0.2 1.5 0.4
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (180.3) 506.1 (503.6) 315.1
FINANCING ACTIVITIES
Borrowings (repayments) of debt, net (1.9) (1.2) (2.8) 5.9
Dividends paid - - (158.6) (135.6)
Repurchase and retirement of common
stock - (596.0) - (596.0)
Other (17.1) 39.7 (17.9) 44.7
NET CASH USED IN FINANCING
ACTIVITIES (19.0) (557.5) (179.3) (681.0)
Effect of exchange rate changes on
cash and cash equivalents 27.5 (27.7) 21.5 (13.2)
CHANGE IN CASH AND CASH EQUIVALENTS $294.0 $246.4 $259.2 $377.5
SOURCE Stryker Corporation
http://www.stryker.com
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