|
FORM 10-K
|
ý
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Michigan
|
|
38-1239739
|
(State of incorporation)
|
|
(I.R.S. Employer Identification No.)
|
2825 Airview Boulevard, Kalamazoo, Michigan
|
|
49002
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, $.10 par value
|
|
New York Stock Exchange
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
|
|
|
|
PART I
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|
||
Item 1.
|
Business
|
1
|
|
Item 1A.
|
Risk Factors
|
5
|
|
Item 1B.
|
Unresolved Staff Comments
|
7
|
|
Item 2.
|
Properties
|
8
|
|
Item 3.
|
Legal Proceedings
|
8
|
|
Item 4.
|
Mine Safety
|
8
|
|
|
|
||
PART II
|
|
||
Item 5.
|
Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
9
|
|
Item 6.
|
Selected Financial Data
|
10
|
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
11
|
|
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
20
|
|
Item 8.
|
Financial Statements and Supplementary Data
|
21
|
|
|
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
|
21
|
|
|
Consolidated Statements of Earnings
|
22
|
|
|
Consolidated Statements of Comprehensive Income
|
22
|
|
|
Consolidated Balance Sheets
|
23
|
|
|
Consolidated Statements of Shareholders’ Equity
|
24
|
|
|
Consolidated Statements of Cash Flows
|
25
|
|
|
Notes to Consolidated Financial Statements
|
26
|
|
Item 9.
|
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
|
41
|
|
Item 9A.
|
Controls and Procedures
|
42
|
|
Item 9B.
|
Other Information
|
43
|
|
|
|
||
PART III
|
|
||
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
43
|
|
Item 11.
|
Executive Compensation
|
43
|
|
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
43
|
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence
|
44
|
|
Item 14.
|
Principal Accounting Fees and Services
|
44
|
|
|
|
||
PART IV
|
|
||
Item 15.
|
Exhibits, Financial Statement Schedules
|
44
|
|
ITEM 1.
|
BUSINESS.
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||
Reconstructive
|
$
|
3,823
|
|
44
|
%
|
|
$
|
3,710
|
|
45
|
%
|
|
$
|
3,549
|
|
48
|
%
|
MedSurg
|
3,265
|
|
38
|
%
|
|
3,160
|
|
38
|
%
|
|
2,803
|
|
38
|
%
|
|||
Neurotechnology and Spine
|
1,569
|
|
18
|
%
|
|
1,437
|
|
17
|
%
|
|
968
|
|
14
|
%
|
|||
Total
|
$
|
8,657
|
|
100
|
%
|
|
$
|
8,307
|
|
100
|
%
|
|
$
|
7,320
|
|
100
|
%
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||
Knees
|
$
|
1,356
|
|
35
|
%
|
|
$
|
1,316
|
|
35
|
%
|
|
$
|
1,306
|
|
37
|
%
|
Hips
|
1,233
|
|
32
|
%
|
|
1,228
|
|
33
|
%
|
|
1,154
|
|
33
|
%
|
|||
Trauma and Extremities
|
989
|
|
26
|
%
|
|
931
|
|
25
|
%
|
|
845
|
|
24
|
%
|
|||
Other
|
245
|
|
7
|
%
|
|
235
|
|
7
|
%
|
|
244
|
|
6
|
%
|
|||
Total
|
$
|
3,823
|
|
100
|
%
|
|
$
|
3,710
|
|
100
|
%
|
|
$
|
3,549
|
|
100
|
%
|
1
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
2012
|
|
2011
|
|
2010
|
||||||||||||
Instruments
|
$
|
1,261
|
|
39
|
%
|
|
$
|
1,187
|
|
38
|
%
|
|
$
|
1,085
|
|
39
|
%
|
Endoscopy
|
1,111
|
|
34
|
%
|
|
1,080
|
|
34
|
%
|
|
985
|
|
35
|
%
|
|||
Medical
|
691
|
|
21
|
%
|
|
722
|
|
23
|
%
|
|
583
|
|
21
|
%
|
|||
Other
|
202
|
|
6
|
%
|
|
171
|
|
5
|
%
|
|
150
|
|
5
|
%
|
|||
Total
|
$
|
3,265
|
|
100
|
%
|
|
$
|
3,160
|
|
100
|
%
|
|
$
|
2,803
|
|
100
|
%
|
2
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
3
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
4
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 1A.
|
RISK FACTORS.
|
5
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
6
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 1B.
|
UNRESOLVED STAFF COMMENTS.
|
7
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 2.
|
PROPERTIES.
|
Location
|
|
Segment
|
|
Square
Feet
|
|
Owned/
Leased
|
|
Mahwah, New Jersey
|
|
Reconstructive
|
|
531,000
|
|
|
Owned
|
Kiel, Germany
|
|
Reconstructive
|
|
173,000
|
|
|
Owned
|
Suzhou, China
|
|
Reconstructive, Neurotechnology and Spine
|
|
158,000
|
|
|
Owned
|
Selzach, Switzerland
|
|
Reconstructive
|
|
137,000
|
|
|
Owned
|
Freiburg, Germany
|
|
Reconstructive
|
|
119,000
|
|
|
Owned
|
Malvern, Pennsylvania
|
|
Reconstructive
|
|
88,000
|
|
|
Leased
|
Carrigtwohill, Ireland
|
|
Reconstructive
|
|
72,000
|
|
|
Owned
|
Freiburg, Germany
|
|
Reconstructive, MedSurg
|
|
68,000
|
|
|
Leased
|
Limerick, Ireland
|
|
Reconstructive
|
|
58,000
|
|
|
Owned
|
Stetten, Germany
|
|
Reconstructive
|
|
33,000
|
|
|
Owned
|
Rennes, France
|
|
Reconstructive
|
|
31,000
|
|
|
Leased
|
Portage, Michigan
|
|
MedSurg
|
|
1,034,000
|
|
|
Owned
|
Arroyo, Puerto Rico
|
|
MedSurg
|
|
220,000
|
|
|
Leased
|
San Jose, California
|
|
MedSurg
|
|
185,000
|
|
|
Leased
|
Lakeland, Florida
|
|
MedSurg
|
|
125,000
|
|
|
Leased
|
Flower Mound, Texas
|
|
MedSurg
|
|
114,000
|
|
|
Leased
|
Phoenix, Arizona
|
|
MedSurg
|
|
93,000
|
|
|
Leased
|
Guayama, Puerto Rico
|
|
MedSurg
|
|
46,000
|
|
|
Leased
|
Neuchâtel, Switzerland
|
|
Neurotechnology and Spine
|
|
88,000
|
|
|
Owned
|
Cestas, France
|
|
Neurotechnology and Spine
|
|
79,000
|
|
|
Owned
|
Mountain View, California
|
|
Neurotechnology and Spine
|
|
62,000
|
|
|
Owned
|
Cestas, France
|
|
Neurotechnology and Spine
|
|
35,000
|
|
|
Leased
|
West Valley, Utah
|
|
Neurotechnology and Spine
|
|
29,000
|
|
|
Leased
|
ITEM 3.
|
LEGAL PROCEEDINGS.
|
ITEM 4.
|
MINE SAFETY.
|
8
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 5.
|
MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
|
|
|
2012 Quarter Ended
|
|
2011 Quarter Ended
|
||||||||||||||||||||||||||||
|
|
Mar. 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
|
Mar. 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||||||||||
Dividends declared per share of common stock
|
|
$
|
0.2125
|
|
|
$
|
0.2125
|
|
|
$
|
0.2125
|
|
|
$
|
0.265
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.2125
|
|
Market price of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
High
|
|
55.90
|
|
|
57.14
|
|
|
56.79
|
|
|
56.75
|
|
|
65.20
|
|
|
64.61
|
|
|
60.64
|
|
|
51.13
|
|
||||||||
Low
|
|
50.41
|
|
|
49.43
|
|
|
50.05
|
|
|
51.60
|
|
|
53.50
|
|
|
56.58
|
|
|
43.73
|
|
|
44.56
|
|
Company / Index
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
||||||
Stryker Corporation
|
|
100.00
|
|
|
54.01
|
|
|
68.44
|
|
|
73.84
|
|
|
69.32
|
|
|
77.71
|
|
S&P 500 Index
|
|
100.00
|
|
|
63.00
|
|
|
79.68
|
|
|
91.68
|
|
|
93.61
|
|
|
108.59
|
|
S&P 500 Health Care Index
|
|
100.00
|
|
|
77.19
|
|
|
92.40
|
|
|
95.08
|
|
|
107.18
|
|
|
126.35
|
|
9
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 6.
|
SELECTED FINANCIAL DATA.
|
CONSOLIDATED OPERATIONS
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||
Net sales
|
|
$
|
8,657
|
|
|
$
|
8,307
|
|
|
$
|
7,320
|
|
|
$
|
6,723
|
|
|
$
|
6,718
|
|
Cost of sales
|
|
2,781
|
|
|
2,811
|
|
|
2,286
|
|
|
2,184
|
|
|
2,131
|
|
|||||
Gross profit
|
|
5,876
|
|
|
5,496
|
|
|
5,034
|
|
|
4,539
|
|
|
4,587
|
|
|||||
Research, development and engineering expenses
|
|
471
|
|
|
462
|
|
|
394
|
|
|
336
|
|
|
368
|
|
|||||
Selling, general and administrative expenses
|
|
3,466
|
|
|
3,150
|
|
|
2,707
|
|
|
2,506
|
|
|
2,625
|
|
|||||
Intangibles amortization
|
|
123
|
|
|
122
|
|
|
58
|
|
|
36
|
|
|
40
|
|
|||||
Other (a)
|
|
75
|
|
|
76
|
|
|
124
|
|
|
67
|
|
|
35
|
|
|||||
|
|
4,135
|
|
|
3,810
|
|
|
3,283
|
|
|
2,945
|
|
|
3,068
|
|
|||||
Operating income
|
|
1,741
|
|
|
1,686
|
|
|
1,751
|
|
|
1,594
|
|
|
1,519
|
|
|||||
Other income (expense)
|
|
(36
|
)
|
|
—
|
|
|
(22
|
)
|
|
30
|
|
|
61
|
|
|||||
Earnings from continuing operations before income taxes
|
|
1,705
|
|
|
1,686
|
|
|
1,729
|
|
|
1,624
|
|
|
1,580
|
|
|||||
Income taxes
|
|
407
|
|
|
341
|
|
|
456
|
|
|
517
|
|
|
432
|
|
|||||
Net earnings
|
|
$
|
1,298
|
|
|
$
|
1,345
|
|
|
$
|
1,273
|
|
|
$
|
1,107
|
|
|
$
|
1,148
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
PER SHARE DATA
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net earnings per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
3.41
|
|
|
$
|
3.48
|
|
|
$
|
3.21
|
|
|
$
|
2.79
|
|
|
$
|
2.81
|
|
Diluted
|
|
$
|
3.39
|
|
|
$
|
3.45
|
|
|
$
|
3.19
|
|
|
$
|
2.77
|
|
|
$
|
2.78
|
|
Dividends per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Declared
|
|
$
|
0.9025
|
|
|
$
|
0.7525
|
|
|
$
|
0.63
|
|
|
$
|
0.25
|
|
|
$
|
0.40
|
|
Paid
|
|
$
|
0.85
|
|
|
$
|
0.72
|
|
|
$
|
0.60
|
|
|
$
|
0.50
|
|
|
$
|
0.33
|
|
Average number of shares outstanding—in millions:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
380.6
|
|
|
386.5
|
|
|
396.4
|
|
|
397.4
|
|
|
408.1
|
|
|||||
Diluted
|
|
383.0
|
|
|
389.5
|
|
|
399.5
|
|
|
399.4
|
|
|
413.6
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
CONSOLIDATED FINANCIAL POSITION
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents and current marketable securities
|
|
$
|
4,285
|
|
|
$
|
3,418
|
|
|
$
|
4,380
|
|
|
$
|
2,955
|
|
|
$
|
2,196
|
|
Accounts receivable—net
|
|
1,430
|
|
|
1,417
|
|
|
1,252
|
|
|
1,147
|
|
|
1,130
|
|
|||||
Inventory—net
|
|
1,265
|
|
|
1,283
|
|
|
1,057
|
|
|
943
|
|
|
953
|
|
|||||
Property, plant and equipment—net
|
|
948
|
|
|
888
|
|
|
798
|
|
|
948
|
|
|
964
|
|
|||||
Capital expenditures
|
|
210
|
|
|
226
|
|
|
182
|
|
|
131
|
|
|
155
|
|
|||||
Depreciation and amortization
|
|
486
|
|
|
481
|
|
|
410
|
|
|
385
|
|
|
388
|
|
|||||
Total assets
|
|
13,206
|
|
|
12,146
|
|
|
10,895
|
|
|
9,071
|
|
|
7,603
|
|
|||||
Accounts payable—net
|
|
288
|
|
|
345
|
|
|
292
|
|
|
200
|
|
|
274
|
|
|||||
Long-term debt, including current maturities
|
|
1,762
|
|
|
1,768
|
|
|
1,021
|
|
|
18
|
|
|
21
|
|
|||||
Shareholders’ equity
|
|
8,597
|
|
|
7,683
|
|
|
7,174
|
|
|
6,595
|
|
|
5,407
|
|
|||||
Net cash provided by operating activities
|
|
1,657
|
|
|
1,434
|
|
|
1,547
|
|
|
1,461
|
|
|
1,176
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
OTHER DATA
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Number of shareholders of record
|
|
4,258
|
|
|
4,508
|
|
|
4,586
|
|
|
4,607
|
|
|
4,500
|
|
|||||
Number of employees
|
|
22,010
|
|
|
21,241
|
|
|
20,036
|
|
|
18,582
|
|
|
17,594
|
|
10
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|
11
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
|
|
|
Percentage Change
|
||||||
|
2012
|
2011
|
2010
|
|
2012/2011
|
2011/2010
|
|||||
Net Sales
|
$8,657
|
$8,307
|
$7,320
|
|
4.2
|
|
13.5
|
|
|||
Gross Profit
|
5,876
|
5,496
|
5,034
|
|
6.9
|
|
9.2
|
|
|||
Research, development & engineering expenses
|
471
|
462
|
394
|
|
1.9
|
|
17.3
|
|
|||
Selling, general & administrative expenses
|
3,466
|
3,150
|
2,707
|
|
10.0
|
|
16.4
|
|
|||
Intangible amortization
|
123
|
122
|
58
|
|
0.8
|
|
110.3
|
|
|||
Property, plant and equipment impairment
|
—
|
|
—
|
|
124
|
|
—
|
|
(100.0
|
)
|
|
Restructuring charges
|
75
|
76
|
—
|
|
|
(1.3
|
)
|
—
|
|
||
Other income (expense)
|
(36
|
)
|
—
|
|
(22)
|
|
—
|
|
(100.0
|
)
|
|
Income taxes
|
407
|
341
|
456
|
|
19.4
|
|
(25.2
|
)
|
|||
Net Earnings
|
$1,298
|
$1,345
|
$1,273
|
|
(3.5
|
)
|
5.7
|
|
|||
Diluted Net Earnings per share
|
$3.39
|
$3.45
|
$3.19
|
|
(1.7
|
)
|
8.2
|
|
|
|
|
|
Percentage Change
|
|||||||||||||||||||
|
|
|
|
2012/2011
|
|
2011/2010
|
|||||||||||||||||
|
|
Net Sales
|
|
|
|
Constant
Currency |
|
|
|
Constant
Currency |
|||||||||||||
|
|
2012
|
|
2011
|
|
2010
|
|
Reported
|
|
|
Reported
|
|
|||||||||||
Geographic sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
United States
|
|
$
|
5,658
|
|
|
$
|
5,269
|
|
|
$
|
4,793
|
|
|
7.4
|
|
|
7.4
|
|
|
9.9
|
|
9.9
|
|
International
|
|
2,999
|
|
|
3,038
|
|
|
2,527
|
|
|
(1.3
|
)
|
|
1.9
|
|
|
20.2
|
|
13.4
|
|
|||
Total net sales
|
|
$
|
8,657
|
|
|
$
|
8,307
|
|
|
$
|
7,320
|
|
|
4.2
|
|
|
5.4
|
|
|
13.5
|
|
11.1
|
|
Segment sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Reconstructive
|
|
$
|
3,823
|
|
|
$
|
3,710
|
|
|
$
|
3,549
|
|
|
3.1
|
|
|
4.4
|
|
|
4.5
|
|
1.5
|
|
MedSurg
|
|
3,265
|
|
|
3,160
|
|
|
2,803
|
|
|
3.3
|
|
|
4.2
|
|
|
12.7
|
|
11.2
|
|
|||
Neurotechnology and Spine
|
|
1,569
|
|
|
1,437
|
|
|
968
|
|
|
9.2
|
|
|
10.5
|
|
|
48.5
|
|
46.4
|
|
|||
Total net sales
|
|
$
|
8,657
|
|
|
$
|
8,307
|
|
|
$
|
7,320
|
|
|
4.2
|
|
|
5.4
|
|
|
13.5
|
|
11.1
|
|
|
Year Ended December 31, 2012
|
|
Year Ended December 31, 2011
|
|||||||||||||||||||||||||||
|
|
|
Percentage Change
|
|
|
|
Percentage Change
|
|||||||||||||||||||||||
|
|
|
|
|
U.S.
|
International
|
|
|
|
|
|
U.S.
|
International
|
|||||||||||||||||
|
2012
|
2011
|
As Reported
|
Constant Currency
|
As Reported
|
As Reported
|
Constant Currency
|
|
2011
|
2010
|
As Reported
|
Constant Currency
|
As Reported
|
As Reported
|
Constant Currency
|
|||||||||||||||
Reconstructive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Hips
|
$
|
1,233
|
|
$
|
1,228
|
|
0.4
|
|
1.5
|
|
5.2
|
|
(4.5
|
)
|
(2.3
|
)
|
|
$
|
1,228
|
|
$
|
1,154
|
|
6.4
|
2.9
|
|
2.1
|
|
11.2
|
3.8
|
Knees
|
1,356
|
|
1,316
|
|
3.0
|
|
4.0
|
|
6.0
|
|
(2.4
|
)
|
0.4
|
|
|
1,316
|
|
1,306
|
|
0.8
|
(1.5
|
)
|
(2.3
|
)
|
6.8
|
0.1
|
||||
Trauma and Extremities
|
989
|
|
931
|
|
6.2
|
|
8.4
|
|
18.0
|
|
(3.5
|
)
|
0.4
|
|
|
931
|
|
845
|
|
10.2
|
6.5
|
|
10.2
|
|
10.2
|
3.4
|
||||
Total Reconstructive
|
3,823
|
|
3,710
|
|
3.1
|
|
4.4
|
|
9.2
|
|
(4.3
|
)
|
(1.4
|
)
|
|
3,710
|
|
3,549
|
|
4.5
|
1.5
|
|
0.9
|
|
9.3
|
2.3
|
||||
MedSurg
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Instruments
|
1,261
|
|
1,187
|
|
6.2
|
|
7.3
|
|
9.1
|
|
(0.4
|
)
|
3.1
|
|
|
1,187
|
|
1,085
|
|
9.4
|
7.4
|
|
9.4
|
|
9.5
|
2.9
|
||||
Endoscopy
|
1,111
|
|
1,080
|
|
2.9
|
|
3.9
|
|
2.6
|
|
3.7
|
|
7.1
|
|
|
1,080
|
|
985
|
|
9.6
|
7.9
|
|
7.5
|
|
15.4
|
9.1
|
||||
Medical
|
691
|
|
722
|
|
(4.3
|
)
|
(3.7
|
)
|
(7.8
|
)
|
11.1
|
|
14.8
|
|
|
722
|
|
583
|
|
23.8
|
22.8
|
|
25.5
|
|
16.7
|
11.5
|
||||
Total MedSurg
|
3,265
|
|
3,160
|
|
3.3
|
|
4.2
|
|
3.4
|
|
3.0
|
|
6.5
|
|
|
3,160
|
|
2,803
|
|
12.7
|
11.2
|
|
12.6
|
|
13.2
|
6.9
|
||||
Neurotechnology and Spine
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Spine
|
727
|
|
687
|
|
5.8
|
|
6.9
|
|
9.2
|
|
(1.7
|
)
|
1.7
|
|
|
687
|
|
648
|
|
6.0
|
4.0
|
|
2.5
|
|
14.4
|
7.6
|
||||
Neurotechnology
|
842
|
|
750
|
|
12.3
|
|
13.9
|
|
19.0
|
|
3.9
|
|
7.6
|
|
|
750
|
|
320
|
|
134.4
|
132.3
|
|
78.6
|
|
283.6
|
275.7
|
||||
Total Neurotechnology and Spine
|
1,569
|
|
1,437
|
|
9.2
|
|
10.5
|
|
13.8
|
|
1.7
|
|
5.3
|
|
|
1,437
|
|
968
|
|
48.5
|
46.4
|
|
28.1
|
|
99.6
|
92.4
|
12
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
13
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Reported net earnings
|
|
$
|
1,298
|
|
|
$
|
1,345
|
|
|
$
|
1,273
|
|
Acquisition and integration-related charges, net of tax:
|
|
|
|
|
|
|
||||||
Inventory stepped up to fair value
|
|
13
|
|
|
97
|
|
|
—
|
|
|||
Acquisition and integration-related charges
|
|
24
|
|
|
45
|
|
|
—
|
|
|||
Restructuring and related charges
|
|
59
|
|
|
60
|
|
|
—
|
|
|||
Uncertain income tax position adjustments
|
|
—
|
|
|
(99
|
)
|
|
—
|
|
|||
OtisKnee matter
|
|
33
|
|
|
—
|
|
|
—
|
|
|||
Rejuvenate and ABG II recall
|
|
133
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of property, plant and equipment
|
|
—
|
|
|
—
|
|
|
(13
|
)
|
|||
Income taxes on repatriation of foreign earnings
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||
Impairment of property, plant and equipment
|
|
—
|
|
|
—
|
|
|
76
|
|
|||
Adjusted net earnings
|
|
$
|
1,560
|
|
|
$
|
1,448
|
|
|
$
|
1,329
|
|
|
|
|
|
|
|
|
||||||
Diluted net earnings per share of common stock:
|
|
|
|
|
|
|
||||||
Reported diluted net earnings per share
|
|
$
|
3.39
|
|
|
$
|
3.45
|
|
|
$
|
3.19
|
|
Acquisition and integration-related charges, net of tax:
|
|
|
|
|
|
|
||||||
Inventory stepped up to fair value
|
|
0.03
|
|
|
0.25
|
|
|
—
|
|
|||
Acquisition and integration-related charges
|
|
0.06
|
|
|
0.12
|
|
|
—
|
|
|||
Restructuring and related charges
|
|
0.15
|
|
|
0.16
|
|
|
—
|
|
|||
Uncertain income tax position adjustments
|
|
—
|
|
|
(0.26
|
)
|
|
—
|
|
|||
OtisKnee matter
|
|
0.09
|
|
|
—
|
|
|
—
|
|
|||
Rejuvenate and ABG II recall
|
|
0.35
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of property, plant and equipment
|
|
—
|
|
|
—
|
|
|
(0.03
|
)
|
|||
Income taxes on repatriation of foreign earnings
|
|
—
|
|
|
—
|
|
|
(0.02
|
)
|
|||
Impairment of property, plant and equipment
|
|
—
|
|
|
—
|
|
|
0.19
|
|
|||
Adjusted diluted net earnings per share
|
|
$
|
4.07
|
|
|
$
|
3.72
|
|
|
$
|
3.33
|
|
Weighted-average diluted shares outstanding
|
|
383.0
|
|
|
389.5
|
|
|
399.5
|
|
14
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
15
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
Payment Period
|
||||||||||||||||||||||||||
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
After 2017
|
|
Total
|
||||||||||||||
Short-term and Long-term debt
|
$
|
16
|
|
|
$
|
—
|
|
|
$
|
500
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,246
|
|
|
$
|
1,762
|
|
Unconditional purchase obligations
|
454
|
|
|
119
|
|
|
53
|
|
|
8
|
|
|
1
|
|
|
2
|
|
|
637
|
|
|||||||
Operating leases
|
47
|
|
|
37
|
|
|
32
|
|
|
26
|
|
|
23
|
|
|
37
|
|
|
202
|
|
|||||||
Contributions to defined benefit plans
|
19
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|||||||
Other
|
4
|
|
|
3
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
49
|
|
|
62
|
|
|||||||
|
$
|
540
|
|
|
$
|
159
|
|
|
$
|
587
|
|
|
$
|
36
|
|
|
$
|
26
|
|
|
$
|
1,334
|
|
|
$
|
2,682
|
|
16
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
17
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
18
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
19
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
20
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
|
21
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Years Ended December 31
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net sales
|
|
$
|
8,657
|
|
|
$
|
8,307
|
|
|
$
|
7,320
|
|
Cost of sales
|
|
2,781
|
|
|
2,811
|
|
|
2,286
|
|
|||
Gross profit
|
|
5,876
|
|
|
5,496
|
|
|
5,034
|
|
|||
Research, development and engineering expenses
|
|
471
|
|
|
462
|
|
|
394
|
|
|||
Selling, general and administrative expenses
|
|
3,466
|
|
|
3,150
|
|
|
2,707
|
|
|||
Intangible asset amortization
|
|
123
|
|
|
122
|
|
|
58
|
|
|||
Property, plant and equipment impairment
|
|
—
|
|
|
—
|
|
|
124
|
|
|||
Restructuring charges
|
|
75
|
|
|
76
|
|
|
—
|
|
|||
Total operating expenses
|
|
4,135
|
|
|
3,810
|
|
|
3,283
|
|
|||
Operating income
|
|
1,741
|
|
|
1,686
|
|
|
1,751
|
|
|||
Other income (expense), net
|
|
(36
|
)
|
|
—
|
|
|
(22
|
)
|
|||
Earnings before income taxes
|
|
1,705
|
|
|
1,686
|
|
|
1,729
|
|
|||
Income taxes
|
|
407
|
|
|
341
|
|
|
456
|
|
|||
Net earnings
|
|
$
|
1,298
|
|
|
$
|
1,345
|
|
|
$
|
1,273
|
|
|
|
|
|
|
|
|
||||||
Net earnings per share of common stock:
|
|
|
|
|
|
|
||||||
Basic net earnings per share of common stock
|
|
$
|
3.41
|
|
|
$
|
3.48
|
|
|
$
|
3.21
|
|
Diluted net earnings per share of common stock
|
|
$
|
3.39
|
|
|
$
|
3.45
|
|
|
$
|
3.19
|
|
|
|
|
|
|
|
|
||||||
Weighted-average shares outstanding—in millions:
|
|
|
|
|
|
|
||||||
Basic
|
|
380.6
|
|
|
386.5
|
|
|
396.4
|
|
|||
Net effect of dilutive employee stock options
|
|
2.4
|
|
|
3.0
|
|
|
3.1
|
|
|||
Diluted
|
|
383.0
|
|
|
389.5
|
|
|
399.5
|
|
|||
Anti-dilutive shares excluded from the calculation of net effect of dilutive employee stock options
|
|
6.4
|
|
|
7.8
|
|
|
7.5
|
|
|
|
Years Ended December 31
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net earnings
|
|
$
|
1,298
|
|
|
$
|
1,345
|
|
|
$
|
1,273
|
|
Unrealized gains (losses) on securities, net of income tax benefit (expense) [($1) in 2012, $1 in 2011, $0 in 2010)]
|
|
4
|
|
|
(2
|
)
|
|
(2
|
)
|
|||
Unfunded pension gains (losses), net of income tax benefit (expense) [$25 in 2012, $8 in 2011, $14 in 2010]
|
|
(69
|
)
|
|
12
|
|
|
(21
|
)
|
|||
Foreign currency translation adjustments
|
|
50
|
|
|
(20
|
)
|
|
(81
|
)
|
|||
Total other comprehensive loss
|
|
(15
|
)
|
|
(10
|
)
|
|
(104
|
)
|
|||
Comprehensive income
|
|
$
|
1,283
|
|
|
$
|
1,335
|
|
|
$
|
1,169
|
|
22
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
December 31
|
||||||
|
2012
|
|
2011
|
|||||
ASSETS
|
|
|
|
|
||||
Current assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
1,395
|
|
|
$
|
905
|
|
Marketable securities
|
|
2,890
|
|
|
2,513
|
|
||
Accounts receivable, less allowance of $58 ($56 in 2011)
|
|
1,430
|
|
|
1,417
|
|
||
Inventories
|
|
|
|
|
||||
Materials and supplies
|
|
202
|
|
|
185
|
|
||
Work in process
|
|
71
|
|
|
46
|
|
||
Finished goods
|
|
992
|
|
|
1,052
|
|
||
Total inventories
|
|
1,265
|
|
|
1,283
|
|
||
Deferred income taxes
|
|
811
|
|
|
777
|
|
||
Prepaid expenses and other current assets
|
|
357
|
|
|
312
|
|
||
Total current assets
|
|
8,148
|
|
|
7,207
|
|
||
Property, plant and equipment
|
|
|
|
|
||||
Land, buildings and improvements
|
|
625
|
|
|
600
|
|
||
Machinery and equipment
|
|
1,607
|
|
|
1,455
|
|
||
Total property, plant and equipment
|
|
2,232
|
|
|
2,055
|
|
||
Less allowance for depreciation
|
|
1,284
|
|
|
1,167
|
|
||
Net property, plant and equipment
|
|
948
|
|
|
888
|
|
||
Other assets
|
|
|
|
|
||||
Goodwill
|
|
2,142
|
|
|
2,072
|
|
||
Other intangibles, net
|
|
1,424
|
|
|
1,442
|
|
||
Other
|
|
544
|
|
|
537
|
|
||
Total assets
|
|
$
|
13,206
|
|
|
$
|
12,146
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
||||
Current liabilities
|
|
|
|
|
||||
Accounts payable
|
|
288
|
|
|
345
|
|
||
Accrued compensation
|
|
467
|
|
|
444
|
|
||
Income taxes
|
|
70
|
|
|
155
|
|
||
Dividend payable
|
|
101
|
|
|
81
|
|
||
Accrued expenses and other liabilities
|
|
934
|
|
|
798
|
|
||
Current maturities of debt
|
|
16
|
|
|
17
|
|
||
Total current liabilities
|
|
1,876
|
|
|
1,840
|
|
||
Long-term debt, excluding current maturities
|
|
1,746
|
|
|
1,751
|
|
||
Other liabilities
|
|
987
|
|
|
872
|
|
||
Shareholders' equity
|
|
|
|
|
||||
Common stock, $0.10 par value:
|
|
|
|
|
||||
Authorized: 1 billion shares, outstanding: 380 million shares (381 million in 2011)
|
|
38
|
|
|
38
|
|
||
Additional paid-in capital
|
|
1,098
|
|
|
1,022
|
|
||
Retained earnings
|
|
7,332
|
|
|
6,479
|
|
||
Accumulated other comprehensive income
|
|
129
|
|
|
144
|
|
||
Total shareholders' equity
|
|
8,597
|
|
|
7,683
|
|
||
Total liabilities & shareholders' equity
|
|
$
|
13,206
|
|
|
$
|
12,146
|
|
23
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Common
Stock |
|
Additional
Paid-In Capital |
|
Retained
Earnings |
|
Accumulated
Other Comprehensive Income |
|
Total
|
||||||||||
Balances at January 1, 2010
|
|
$
|
40
|
|
|
$
|
900
|
|
|
$
|
5,398
|
|
|
$
|
258
|
|
|
$
|
6,596
|
|
Net earnings
|
|
|
|
|
|
1,273
|
|
|
|
|
1,273
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(104
|
)
|
|
(104
|
)
|
||||||||
Issuance of 1.5 million shares of common stock under stock option and benefit plans, including $11 excess income tax benefit
|
|
|
|
15
|
|
|
|
|
|
|
15
|
|
||||||||
Repurchase and retirement of 8.3 million shares of common stock
|
|
(1
|
)
|
|
(20
|
)
|
|
(405
|
)
|
|
|
|
(426
|
)
|
||||||
Share-based compensation
|
|
|
|
69
|
|
|
|
|
|
|
69
|
|
||||||||
Cash dividends declared of $0.63 per share of common stock
|
|
|
|
|
|
(249
|
)
|
|
|
|
(249
|
)
|
||||||||
Balances at December 31, 2010
|
|
39
|
|
|
964
|
|
|
6,017
|
|
|
154
|
|
|
7,174
|
|
|||||
Net earnings
|
|
|
|
|
|
1,345
|
|
|
|
|
1,345
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(10
|
)
|
|
(10
|
)
|
||||||||
Issuance of 1.6 million shares of common stock under stock option and benefit plans, including $6 excess income tax benefit
|
|
|
|
13
|
|
|
|
|
|
|
13
|
|
||||||||
Repurchase and retirement of 11.8 million shares of common stock
|
|
(1
|
)
|
|
(30
|
)
|
|
(591
|
)
|
|
|
|
(622
|
)
|
||||||
Share-based compensation
|
|
|
|
75
|
|
|
|
|
|
|
75
|
|
||||||||
Cash dividends declared of $0.7525 per share of common stock
|
|
|
|
|
|
(292
|
)
|
|
|
|
(292
|
)
|
||||||||
Balances at December 31, 2011
|
|
38
|
|
|
1,022
|
|
|
6,479
|
|
|
144
|
|
|
7,683
|
|
|||||
Net earnings
|
|
|
|
|
|
1,298
|
|
|
|
|
1,298
|
|
||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
(15
|
)
|
|
(15
|
)
|
||||||||
Issuance of 1.5 million shares of common stock under stock option and benefit plans, including $1 excess income tax benefit
|
|
|
|
7
|
|
|
|
|
|
|
7
|
|
||||||||
Repurchase and retirement of 2.1 million shares of common stock
|
|
|
|
(6
|
)
|
|
(102
|
)
|
|
|
|
(108
|
)
|
|||||||
Share-based compensation
|
|
|
|
75
|
|
|
|
|
|
|
75
|
|
||||||||
Cash dividends declared of $0.9025 per share of common stock
|
|
|
|
|
|
(343
|
)
|
|
|
|
(343
|
)
|
||||||||
Balances at December 31, 2012
|
|
$
|
38
|
|
|
$
|
1,098
|
|
|
$
|
7,332
|
|
|
$
|
129
|
|
|
$
|
8,597
|
|
24
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Years Ended December 31
|
||||||||||
|
|
2012
|
|
2011
|
|
2010
|
||||||
Operating activities
|
|
|
|
|
|
|
||||||
Net earnings
|
|
$
|
1,298
|
|
|
$
|
1,345
|
|
|
$
|
1,273
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
|
||||||
Depreciation
|
|
154
|
|
|
160
|
|
|
165
|
|
|||
Intangibles amortization
|
|
123
|
|
|
122
|
|
|
58
|
|
|||
Share-based compensation
|
|
75
|
|
|
75
|
|
|
69
|
|
|||
Restructuring charges
|
|
75
|
|
|
76
|
|
|
—
|
|
|||
Property, plant and equipment impairment
|
|
—
|
|
|
—
|
|
|
124
|
|
|||
Sale of inventory stepped up to fair value at acquisition
|
|
18
|
|
|
143
|
|
|
7
|
|
|||
Deferred income tax credit
|
|
(39
|
)
|
|
(164
|
)
|
|
(104
|
)
|
|||
Changes in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
(20
|
)
|
|
(152
|
)
|
|
(121
|
)
|
|||
Inventories
|
|
18
|
|
|
(166
|
)
|
|
(131
|
)
|
|||
Accounts payable
|
|
(48
|
)
|
|
44
|
|
|
96
|
|
|||
Accrued expenses and other liabilities
|
|
180
|
|
|
158
|
|
|
91
|
|
|||
Income taxes
|
|
(159
|
)
|
|
(95
|
)
|
|
(24
|
)
|
|||
Other
|
|
(18
|
)
|
|
(112
|
)
|
|
44
|
|
|||
Net cash provided by operating activities
|
|
1,657
|
|
|
1,434
|
|
|
1,547
|
|
|||
|
|
|
|
|
|
|
||||||
Investing activities
|
|
|
|
|
|
|
||||||
Acquisitions, net of cash acquired
|
|
(154
|
)
|
|
(2,066
|
)
|
|
(265
|
)
|
|||
Purchases of marketable securities
|
|
(3,480
|
)
|
|
(6,779
|
)
|
|
(5,619
|
)
|
|||
Proceeds from sales of marketable securities
|
|
3,108
|
|
|
6,869
|
|
|
5,210
|
|
|||
Purchases of property, plant and equipment
|
|
(210
|
)
|
|
(226
|
)
|
|
(182
|
)
|
|||
Proceeds from sales of property, plant and equipment
|
|
—
|
|
|
67
|
|
|
61
|
|
|||
Net cash used in investing activities
|
|
(736
|
)
|
|
(2,135
|
)
|
|
(795
|
)
|
|||
|
|
|
|
|
|
|
||||||
Financing activities
|
|
|
|
|
|
|
||||||
Proceeds from borrowings
|
|
178
|
|
|
178
|
|
|
100
|
|
|||
Payments on borrowings
|
|
(182
|
)
|
|
(190
|
)
|
|
(81
|
)
|
|||
Proceeds from issuance of long-term debt, net
|
|
—
|
|
|
749
|
|
|
996
|
|
|||
Dividends paid
|
|
(324
|
)
|
|
(279
|
)
|
|
(238
|
)
|
|||
Repurchase and retirement of common stock
|
|
(108
|
)
|
|
(622
|
)
|
|
(426
|
)
|
|||
Other
|
|
(13
|
)
|
|
3
|
|
|
59
|
|
|||
Net cash (used in) provided by financing activities
|
|
(449
|
)
|
|
(161
|
)
|
|
410
|
|
|||
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
|
18
|
|
|
9
|
|
|
(63
|
)
|
|||
Change in cash and cash equivalents
|
|
490
|
|
|
(853
|
)
|
|
1,099
|
|
|||
|
|
|
|
|
|
|
||||||
Cash and cash equivalents at beginning of year
|
|
905
|
|
|
1,758
|
|
|
659
|
|
|||
Cash and cash equivalents at end of year
|
|
$
|
1,395
|
|
|
$
|
905
|
|
|
$
|
1,758
|
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow disclosure:
|
|
|
|
|
|
|
||||||
Cash paid for income taxes, net of refunds
|
|
$
|
599
|
|
|
$
|
574
|
|
|
$
|
579
|
|
25
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
26
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
27
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
2012
|
|
2011
|
|
2010
|
|||
Risk-free interest rate
|
|
1.3
|
%
|
|
2.9
|
%
|
|
3.0
|
%
|
Expected dividend yield
|
|
1.5
|
%
|
|
1.4
|
%
|
|
1.4
|
%
|
Expected stock price volatility
|
|
27.6
|
%
|
|
26.9
|
%
|
|
28.6
|
%
|
Expected option life
|
|
7.1 years
|
|
|
6.9 years
|
|
|
6.8 years
|
|
|
|
Unrealized
Gains (Losses) on Securities |
|
Unfunded
Pension Gains (Losses) |
|
Foreign
Currency Translation Adjustments |
|
Accumulated
Other Comprehensive Income |
||||||||
Balances at January 1, 2011
|
|
$
|
2
|
|
|
$
|
(44
|
)
|
|
$
|
196
|
|
|
$
|
154
|
|
Other comprehensive income (loss)
|
|
(2
|
)
|
|
12
|
|
|
(20
|
)
|
|
(10
|
)
|
||||
Balances at December 31, 2011
|
|
—
|
|
|
(32
|
)
|
|
176
|
|
|
144
|
|
||||
Other comprehensive income (loss)
|
|
4
|
|
|
(69
|
)
|
|
50
|
|
|
(15
|
)
|
||||
Balances at December 31, 2012
|
|
$
|
4
|
|
|
$
|
(101
|
)
|
|
$
|
226
|
|
|
$
|
129
|
|
28
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||||||||||||
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Cash and cash equivalents
|
$
|
1,395
|
|
$
|
905
|
|
|
$
|
1,395
|
|
$
|
905
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
Available-for-sale marketable securities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate and asset-backed debt securities
|
1,280
|
|
1,350
|
|
|
—
|
|
—
|
|
|
1,280
|
|
1,349
|
|
|
—
|
|
1
|
|
||||||||
Foreign government debt securities
|
848
|
|
747
|
|
|
—
|
|
—
|
|
|
848
|
|
747
|
|
|
—
|
|
—
|
|
||||||||
United States agency debt securities
|
288
|
|
241
|
|
|
—
|
|
—
|
|
|
288
|
|
241
|
|
|
—
|
|
—
|
|
||||||||
Certificates of deposit
|
114
|
|
36
|
|
|
—
|
|
—
|
|
|
114
|
|
36
|
|
|
—
|
|
—
|
|
||||||||
Other
|
360
|
|
140
|
|
|
—
|
|
—
|
|
|
360
|
|
140
|
|
|
—
|
|
—
|
|
||||||||
Total available-for-sale marketable securities
|
2,890
|
|
2,514
|
|
|
—
|
|
—
|
|
|
2,890
|
|
2,513
|
|
|
—
|
|
1
|
|
||||||||
Trading marketable securities
|
57
|
|
50
|
|
|
57
|
|
50
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Foreign currency exchange contracts
|
3
|
|
1
|
|
|
—
|
|
—
|
|
|
3
|
|
1
|
|
|
—
|
|
—
|
|
||||||||
|
$
|
4,345
|
|
$
|
3,470
|
|
|
$
|
1,452
|
|
$
|
955
|
|
|
$
|
2,893
|
|
$
|
2,514
|
|
|
$
|
—
|
|
$
|
1
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Deferred compensation arrangements
|
$
|
57
|
|
$
|
50
|
|
|
$
|
57
|
|
$
|
50
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
Contingent consideration
|
103
|
|
115
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
103
|
|
115
|
|
||||||||
Foreign currency exchange contracts
|
1
|
|
9
|
|
|
—
|
|
—
|
|
|
1
|
|
9
|
|
|
—
|
|
—
|
|
||||||||
|
$
|
161
|
|
$
|
174
|
|
|
$
|
57
|
|
$
|
50
|
|
|
$
|
1
|
|
$
|
9
|
|
|
$
|
103
|
|
$
|
115
|
|
|
Total
|
|
Corporate and Asset-Backed Debt Securities
|
|
Foreign Government Debt Securities
|
|
Contingent Consideration
|
||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
||||||||||||||||
Balance at the beginning of the period
|
$
|
(114
|
)
|
$
|
(113
|
)
|
|
$
|
1
|
|
$
|
1
|
|
|
$
|
—
|
|
$
|
1
|
|
|
$
|
(115
|
)
|
$
|
(115
|
)
|
Transfers into Level 3
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Transfers out of Level 3
|
—
|
|
(1
|
)
|
|
—
|
|
—
|
|
|
—
|
|
(1
|
)
|
|
—
|
|
—
|
|
||||||||
Gains or (losses) included in earnings
|
6
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
6
|
|
—
|
|
||||||||
Sales
|
(1
|
)
|
—
|
|
|
(1
|
)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Settlements
|
39
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
39
|
|
—
|
|
||||||||
Other
|
(33
|
)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
(33
|
)
|
—
|
|
||||||||
Balance at the end of the period
|
$
|
(103
|
)
|
$
|
(114
|
)
|
|
$
|
—
|
|
$
|
1
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
(103
|
)
|
$
|
(115
|
)
|
29
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
|
|
Range (Weighted Average)
|
||
|
Fair Value
|
Valuation Technique
|
Unobservable Input
|
Minimum
|
Maximum
|
Weighted Average
|
Contingent consideration
|
$103
|
Discounted cash flow
|
Probability of occurrence
|
47
|
100
|
91
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized (Losses)
|
|
Estimated Fair Value
|
||||||||||||||||||||
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
||||||||||||||||
Available-for-sale marketable securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate and asset-backed debt securities
|
$
|
1,277
|
|
$
|
1,353
|
|
|
$
|
4
|
|
$
|
2
|
|
|
$
|
(1
|
)
|
$
|
(5
|
)
|
|
$
|
1,280
|
|
$
|
1,350
|
|
Foreign government debt securities
|
846
|
|
745
|
|
|
2
|
|
3
|
|
|
—
|
|
(1
|
)
|
|
848
|
|
747
|
|
||||||||
United States agency debt securities
|
288
|
|
241
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
288
|
|
241
|
|
||||||||
Certificates of deposit
|
114
|
|
36
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
114
|
|
36
|
|
||||||||
Other
|
360
|
|
140
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
360
|
|
140
|
|
||||||||
Total available-for-sale marketable securities
|
$
|
2,885
|
|
$
|
2,515
|
|
|
$
|
6
|
|
$
|
5
|
|
|
$
|
(1
|
)
|
$
|
(6
|
)
|
|
2,890
|
|
2,514
|
|
||
Trading marketable securities
|
|
|
|
|
|
|
|
|
|
57
|
|
50
|
|
||||||||||||||
Total marketable securities
|
|
|
|
|
|
|
|
|
|
$
|
2,947
|
|
$
|
2,564
|
|
||||||||||||
Reported as:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Current assets-marketable securities
|
|
|
|
|
|
|
|
|
|
$
|
2,890
|
|
$
|
2,513
|
|
||||||||||||
Noncurrent assets-other
|
|
|
|
|
|
|
|
|
|
57
|
|
51
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
$
|
2,947
|
|
$
|
2,564
|
|
|
|
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
|
$
|
470
|
|
|
$
|
470
|
|
Due after one year through three years
|
|
2,324
|
|
|
2,328
|
|
||
Due after three years
|
|
91
|
|
|
92
|
|
||
|
|
$
|
2,885
|
|
|
$
|
2,890
|
|
|
|
Corporate and Asset-Backed Debt Securities
|
|
Foreign Government Debt Securities
|
|
U.S. Agency Debt Securities
|
|
Other
|
|
Total
|
|||||||||||||||||||||||||
|
|
Less Than 12 Months
|
Total
|
|
Less Than 12 Months
|
Total
|
|
Less Than 12 Months
|
Total
|
|
Less Than 12 Months
|
Total
|
|
Less Than 12 Months
|
Total
|
||||||||||||||||||||
Number of investments
|
2012
|
216
|
|
216
|
|
|
67
|
|
67
|
|
|
27
|
|
27
|
|
|
15
|
|
15
|
|
|
325
|
|
325
|
|
||||||||||
2011
|
266
|
|
266
|
|
|
58
|
|
58
|
|
|
60
|
|
60
|
|
|
33
|
|
33
|
|
|
417
|
|
417
|
|
|||||||||||
Fair value
|
2012
|
$
|
425
|
|
$
|
425
|
|
|
$
|
324
|
|
$
|
324
|
|
|
$
|
87
|
|
$
|
87
|
|
|
$
|
27
|
|
$
|
27
|
|
|
$
|
863
|
|
$
|
863
|
|
2011
|
573
|
|
573
|
|
|
285
|
|
285
|
|
|
145
|
|
145
|
|
|
88
|
|
88
|
|
|
1,091
|
|
1,091
|
|
|||||||||||
Unrealized losses
|
2012
|
1
|
|
1
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
1
|
|
1
|
|
||||||||||
2011
|
5
|
|
5
|
|
|
1
|
|
1
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
6
|
|
6
|
|
30
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Notional Amount
|
|
Assets
|
|
Liabilities
|
|
Maximum Term (Days)
|
||||||||||||||||||||
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
||||||||||||
Forward currency exchange contracts
|
|
$
|
1,352
|
|
|
$
|
1,577
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
9
|
|
|
183
|
|
119
|
|
|
2012
|
|
2011
|
||||||||||||||||
|
|
Surpass
|
|
Concentric
|
|
Memometal
|
|
Orthovita
|
|
Neurovascular
|
||||||||||
Purchase price paid
|
|
$
|
100
|
|
|
$
|
135
|
|
|
$
|
141
|
|
|
$
|
316
|
|
|
$
|
1,450
|
|
Contingent consideration
|
|
33
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
49
|
|
|||||
Net debt assumed
|
|
—
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|||||
Total purchase consideration
|
|
$
|
133
|
|
|
$
|
135
|
|
|
$
|
161
|
|
|
$
|
316
|
|
|
$
|
1,499
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Tangible assets acquired:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Inventory
|
|
2
|
|
|
7
|
|
|
16
|
|
|
39
|
|
|
145
|
|
|||||
Other assets
|
|
1
|
|
|
17
|
|
|
20
|
|
|
105
|
|
|
31
|
|
|||||
Other liabilities
|
|
(44
|
)
|
|
(27
|
)
|
|
(43
|
)
|
|
(73
|
)
|
|
—
|
|
|||||
Identifiable intangible assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Customer relationship
|
|
—
|
|
|
10
|
|
|
4
|
|
|
26
|
|
|
100
|
|
|||||
In-process research and development
|
|
62
|
|
|
17
|
|
|
4
|
|
|
8
|
|
|
19
|
|
|||||
Developed technology
|
|
45
|
|
|
7
|
|
|
57
|
|
|
66
|
|
|
479
|
|
|||||
Other
|
|
—
|
|
|
12
|
|
|
30
|
|
|
5
|
|
|
29
|
|
|||||
Goodwill
|
|
67
|
|
|
92
|
|
|
73
|
|
|
140
|
|
|
696
|
|
|||||
|
|
$
|
133
|
|
|
$
|
135
|
|
|
$
|
161
|
|
|
$
|
316
|
|
|
$
|
1,499
|
|
31
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Reconstructive
|
|
MedSurg
|
|
Neurotechnology and Spine
|
|
Total
|
||||||||
Balance as of January 1, 2011
|
|
$
|
464
|
|
|
$
|
508
|
|
|
$
|
100
|
|
|
$
|
1,072
|
|
Goodwill acquired
|
|
225
|
|
|
11
|
|
|
788
|
|
|
1,024
|
|
||||
Foreign currency translation effects and other
|
|
(4
|
)
|
|
(9
|
)
|
|
(11
|
)
|
|
(24
|
)
|
||||
Balance as of December 31, 2011
|
|
685
|
|
|
510
|
|
|
877
|
|
|
2,072
|
|
||||
Goodwill acquired
|
|
8
|
|
|
—
|
|
|
67
|
|
|
75
|
|
||||
Foreign currency translation effects and other
|
|
(2
|
)
|
|
3
|
|
|
(6
|
)
|
|
(5
|
)
|
||||
Balance as of December 31, 2012
|
|
$
|
691
|
|
|
$
|
513
|
|
|
$
|
938
|
|
|
$
|
2,142
|
|
|
|
Gross
Carrying Amount |
|
Less
Accumulated Amortization |
|
Net
Carrying Amount |
|||||||||||||||
|
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
||||||||||||
Intangible assets:
|
|
|
|
|
|
|
|
|
|
||||||||||||
Developed technologies
|
|
$
|
1,069
|
|
990
|
|
|
$
|
282
|
|
222
|
|
|
$
|
787
|
|
768
|
|
|||
Customer relationships
|
|
563
|
|
562
|
|
|
147
|
|
115
|
|
|
416
|
|
447
|
|
||||||
Patents
|
|
230
|
|
224
|
|
|
182
|
|
169
|
|
|
48
|
|
55
|
|
||||||
Trademarks
|
|
69
|
|
69
|
|
|
31
|
|
32
|
|
|
38
|
|
37
|
|
||||||
In-process research and development
|
|
86
|
|
47
|
|
|
—
|
|
—
|
|
|
86
|
|
47
|
|
||||||
Other
|
|
105
|
|
127
|
|
|
56
|
|
39
|
|
|
49
|
|
88
|
|
||||||
|
|
$
|
2,122
|
|
$
|
2,019
|
|
|
$
|
698
|
|
$
|
577
|
|
|
$
|
1,424
|
|
$
|
1,442
|
|
|
2013
|
2014
|
2015
|
2016
|
2017
|
||||||||||
Estimated amortization expense
|
$
|
117
|
|
$
|
116
|
|
$
|
114
|
|
$
|
114
|
|
$
|
113
|
|
32
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
2013
|
2014
|
2015
|
2016
|
2017
|
Thereafter
|
||||||||||||
Purchase obligations
|
$
|
454
|
|
$
|
119
|
|
$
|
53
|
|
$
|
8
|
|
$
|
1
|
|
$
|
2
|
|
Minimum lease payments
|
47
|
|
37
|
|
32
|
|
26
|
|
23
|
|
37
|
|
33
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
December 31
|
||||||
|
|
2012
|
|
2011
|
||||
3.00% senior unsecured notes, due January 15, 2015
|
|
$
|
500
|
|
|
$
|
500
|
|
4.375% senior unsecured notes, due January 15, 2020
|
|
497
|
|
|
497
|
|
||
2.00% senior unsecured notes, due September 30, 2016
|
|
749
|
|
|
749
|
|
||
Other
|
|
16
|
|
|
22
|
|
||
Total debt
|
|
1,762
|
|
|
1,768
|
|
||
Less current maturities
|
|
(16
|
)
|
|
(17
|
)
|
||
Long-term debt
|
|
$
|
1,746
|
|
|
$
|
1,751
|
|
34
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Shares (in millions)
|
|
Weighted
Average Exercise Price |
|
Weighted-Average
Remaining Contractual Term (in years) |
|
Aggregate
Intrinsic Value |
|||||
Options outstanding at January 1, 2012
|
|
22.8
|
|
|
$
|
50.32
|
|
|
|
|
|
||
Granted
|
|
2.6
|
|
|
53.71
|
|
|
|
|
|
|||
Exercised
|
|
(3.7
|
)
|
|
40.07
|
|
|
|
|
|
|||
Cancelled
|
|
(2.0
|
)
|
|
54.71
|
|
|
|
|
|
|||
Options outstanding at December 31, 2012
|
|
19.7
|
|
|
$
|
52.23
|
|
|
5.2
|
|
$
|
105.2
|
|
Exercisable at December 31, 2012
|
|
12.9
|
|
|
$
|
51.72
|
|
|
3.9
|
|
$
|
81.3
|
|
Options expected to vest
|
|
6.4
|
|
|
$
|
53.13
|
|
|
7.7
|
|
$
|
23.0
|
|
|
|
Shares
(in millions) |
|
Weighted
Average Grant date Fair value |
||||||||||
|
|
RSUs
|
|
PSUs
|
|
RSUs
|
|
PSUs
|
||||||
Nonvested at January 1, 2012
|
|
1.2
|
|
|
0.1
|
|
|
$
|
54.17
|
|
|
$
|
59.70
|
|
Granted
|
|
1.0
|
|
|
0.1
|
|
|
50.90
|
|
|
54.13
|
|
||
Vested
|
|
(0.5
|
)
|
|
—
|
|
|
53.17
|
|
|
—
|
|
||
Cancelled
|
|
(0.2
|
)
|
|
—
|
|
|
52.69
|
|
|
58.07
|
|
||
Nonvested at December 31, 2012
|
|
1.5
|
|
|
0.2
|
|
|
$
|
52.53
|
|
|
$
|
54.78
|
|
35
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
Total
|
|
Agent Conversion
|
|
Asset Impairment
|
|
Severance and Related Costs
|
|
Contractual Obligations and Other
|
||||||||||||||||||||||||||||||||||||||||
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
||||||||||||||||||||||||||||||
January 1 Balance
|
|
$
|
28
|
|
$
|
3
|
|
$
|
12
|
|
|
$
|
9
|
|
$
|
—
|
|
$
|
6
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
10
|
|
$
|
1
|
|
$
|
3
|
|
|
$
|
9
|
|
$
|
2
|
|
$
|
3
|
|
Charges to earnings
|
|
75
|
|
76
|
|
—
|
|
|
3
|
|
6
|
|
—
|
|
|
7
|
|
25
|
|
—
|
|
|
40
|
|
38
|
|
—
|
|
|
25
|
|
7
|
|
—
|
|
|||||||||||||||
Cash paid
|
|
(59
|
)
|
(29
|
)
|
(9
|
)
|
|
(7
|
)
|
—
|
|
(6
|
)
|
|
—
|
|
—
|
|
—
|
|
|
(32
|
)
|
(29
|
)
|
(2
|
)
|
|
(20
|
)
|
—
|
|
(1
|
)
|
|||||||||||||||
Other adjustments
|
|
(4
|
)
|
(22
|
)
|
—
|
|
|
—
|
|
3
|
|
—
|
|
|
(7
|
)
|
(25
|
)
|
—
|
|
|
2
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
—
|
|
|||||||||||||||
December 31 Balance
|
|
$
|
40
|
|
$
|
28
|
|
$
|
3
|
|
|
$
|
5
|
|
$
|
9
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
20
|
|
$
|
10
|
|
$
|
1
|
|
|
$
|
15
|
|
$
|
9
|
|
$
|
2
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
United States
|
|
$
|
591
|
|
|
$
|
613
|
|
|
$
|
566
|
|
International
|
|
1,114
|
|
|
1,073
|
|
|
1,163
|
|
|||
|
|
$
|
1,705
|
|
|
$
|
1,686
|
|
|
$
|
1,729
|
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Current income tax expense
|
|
|
|
|
|
|
||||||
United States federal
|
|
$
|
227
|
|
|
$
|
100
|
|
|
$
|
308
|
|
United States state and local
|
|
41
|
|
|
33
|
|
|
21
|
|
|||
International
|
|
178
|
|
|
372
|
|
|
231
|
|
|||
Total current income tax expense
|
|
446
|
|
|
505
|
|
|
560
|
|
|||
Deferred income tax expense (benefit)
|
|
|
|
|
|
|
||||||
United States federal
|
|
(12
|
)
|
|
(16
|
)
|
|
(81
|
)
|
|||
United States state and local
|
|
(9
|
)
|
|
(9
|
)
|
|
(2
|
)
|
|||
International
|
|
(18
|
)
|
|
(139
|
)
|
|
(21
|
)
|
|||
Total deferred income tax benefit
|
|
(39
|
)
|
|
(164
|
)
|
|
(104
|
)
|
|||
Total income tax expense
|
|
407
|
|
|
341
|
|
|
456
|
|
|||
|
|
|
|
|
|
|
||||||
Interest expense and penalties included in other income (expense)
|
|
$
|
(4
|
)
|
|
$
|
36
|
|
|
$
|
(24
|
)
|
|
|
2012
|
|
2011
|
|
2010
|
|||
United States federal statutory income tax rate
|
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
Add (deduct):
|
|
|
|
|
|
|
|||
United States state and local income taxes, less federal deduction
|
|
1.7
|
|
|
0.9
|
|
|
0.9
|
|
International operations
|
|
(12.1
|
)
|
|
(13.7
|
)
|
|
(12.1
|
)
|
Repatriation of foreign earnings
|
|
(0.4
|
)
|
|
1.1
|
|
|
(0.4
|
)
|
Other
|
|
(0.3
|
)
|
|
(3.1
|
)
|
|
3.0
|
|
|
|
23.9
|
%
|
|
20.2
|
%
|
|
26.4
|
%
|
36
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
December 31
|
||||||
|
|
2012
|
|
2011
|
||||
Deferred income tax assets:
|
|
|
|
|
||||
Inventories
|
|
$
|
623
|
|
|
$
|
652
|
|
Other accrued expenses
|
|
212
|
|
|
185
|
|
||
Depreciation and amortization
|
|
41
|
|
|
46
|
|
||
State income taxes
|
|
54
|
|
|
39
|
|
||
Share-based compensation
|
|
115
|
|
|
115
|
|
||
Net operating loss carryforwards
|
|
90
|
|
|
72
|
|
||
Other
|
|
77
|
|
|
54
|
|
||
Total deferred income tax assets
|
|
1,212
|
|
|
1,163
|
|
||
Less valuation allowances
|
|
(13
|
)
|
|
(26
|
)
|
||
Total deferred income tax assets after valuation allowances
|
|
1,199
|
|
|
1,137
|
|
||
Deferred income tax liabilities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
(450
|
)
|
|
(444
|
)
|
||
Other
|
|
(57
|
)
|
|
(34
|
)
|
||
Total deferred income tax liabilities
|
|
(507
|
)
|
|
(478
|
)
|
||
Net deferred income tax assets
|
|
$
|
692
|
|
|
$
|
659
|
|
Reported as:
|
|
|
|
|
||||
Current assets—Deferred income taxes
|
|
$
|
811
|
|
|
$
|
777
|
|
Noncurrent assets—Deferred income taxes
|
|
63
|
|
|
62
|
|
||
Current liabilities—Accrued expenses and other liabilities
|
|
—
|
|
|
—
|
|
||
Noncurrent liabilities—Other liabilities
|
|
(182
|
)
|
|
(180
|
)
|
||
|
|
$
|
692
|
|
|
$
|
659
|
|
|
|
|
|
|
||||
Accrued interest and penalties reported as accrued expenses and other liabilities
|
|
$
|
49
|
|
|
$
|
50
|
|
|
|
December 31
|
||||||
|
|
2012
|
|
2011
|
||||
Balance at beginning of year
|
|
$
|
249
|
|
|
$
|
366
|
|
Increases related to current year income tax positions
|
|
17
|
|
|
25
|
|
||
Increases related to prior year income tax positions
|
|
3
|
|
|
66
|
|
||
Decreases related to prior year income tax positions:
|
|
|
|
|
||||
Settlements and resolutions of income tax audits
|
|
(19
|
)
|
|
(155
|
)
|
||
Statute of limitations expirations
|
|
(23
|
)
|
|
(53
|
)
|
||
Balance at end of year
|
|
$
|
227
|
|
|
$
|
249
|
|
Reported as:
|
|
|
|
|
||||
Current liabilities—Income taxes
|
|
$
|
11
|
|
|
$
|
21
|
|
Noncurrent liabilities—Other liabilities
|
|
216
|
|
|
228
|
|
||
|
|
$
|
227
|
|
|
$
|
249
|
|
37
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Defined contribution retirement plan expense
|
|
$
|
112
|
|
|
$
|
106
|
|
|
$
|
102
|
|
Defined contribution plan expense funded with Stryker common stock
|
|
15
|
|
|
12
|
|
|
11
|
|
|||
Stryker common stock held by defined contribution plan
|
|
|
|
|
|
|
||||||
Dollar amount
|
|
104
|
|
|
91
|
|
|
96
|
|
|||
Shares (in millions of shares)
|
|
1.9
|
|
|
1.8
|
|
|
1.8
|
|
|||
Value as a percentage of total plan assets
|
|
9
|
%
|
|
9
|
%
|
|
10
|
%
|
|
|
December 31
|
||||||
|
|
2012
|
|
2011
|
||||
Funded status
|
|
|
|
|
||||
Fair value of plan assets
|
|
$
|
254
|
|
|
$
|
210
|
|
Benefit obligations
|
|
447
|
|
|
316
|
|
||
Funded status
|
|
$
|
(193
|
)
|
|
$
|
(106
|
)
|
Amounts recognized in the Consolidated Balance Sheets
|
|
|
|
|
||||
Noncurrent assets—other
|
|
$
|
—
|
|
|
$
|
—
|
|
Current liabilities—accrued compensation
|
|
(1
|
)
|
|
(1
|
)
|
||
Noncurrent liabilities—other liabilities
|
|
(192
|
)
|
|
(105
|
)
|
||
Pre-tax amounts recognized in accumulated other comprehensive income
|
|
|
|
|
||||
Unrecognized net actuarial loss
|
|
$
|
(150
|
)
|
|
$
|
(68
|
)
|
Unrecognized prior service cost
|
|
12
|
|
|
12
|
|
||
Unrecognized transition amount
|
|
—
|
|
|
—
|
|
||
|
|
$
|
(138
|
)
|
|
$
|
(56
|
)
|
|
|
December 31
|
||||||
2012
|
|
2011
|
||||||
Change in projected benefit obligations:
|
|
|
|
|
||||
Projected benefit obligations at beginning of year
|
|
$
|
316
|
|
|
$
|
308
|
|
Service cost
|
|
21
|
|
|
20
|
|
||
Interest cost
|
|
13
|
|
|
13
|
|
||
Foreign exchange impact
|
|
2
|
|
|
3
|
|
||
Employee contributions
|
|
6
|
|
|
4
|
|
||
Actuarial (gains) losses
|
|
110
|
|
|
(7
|
)
|
||
Plan amendments
|
|
(1
|
)
|
|
(13
|
)
|
||
Benefits paid
|
|
(20
|
)
|
|
(12
|
)
|
||
Projected benefit obligations at end of year
|
|
$
|
447
|
|
|
$
|
316
|
|
Accumulated benefit obligations at end of year
|
|
417
|
|
|
$
|
305
|
|
|
|
|
|
|
|
||||
|
|
December 31
|
||||||
2012
|
|
2011
|
||||||
Change in plan assets:
|
|
|
|
|
||||
Fair value of plan assets at beginning of year
|
|
210
|
|
|
200
|
|
||
Actual return
|
|
33
|
|
|
(4
|
)
|
||
Employer contributions
|
|
21
|
|
|
18
|
|
||
Employee contributions
|
|
6
|
|
|
5
|
|
||
Foreign exchange impact
|
|
2
|
|
|
2
|
|
||
Benefits paid
|
|
(18
|
)
|
|
(11
|
)
|
||
Fair value of plan assets at end of year
|
|
$
|
254
|
|
|
$
|
210
|
|
38
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
2012
|
|
2011
|
|
2010
|
||||||
Net periodic benefit cost:
|
|
|
|
|
|
|
||||||
Service cost
|
|
$
|
(21
|
)
|
|
$
|
(20
|
)
|
|
$
|
(16
|
)
|
Interest cost
|
|
(13
|
)
|
|
(13
|
)
|
|
(12
|
)
|
|||
Expected return on plan assets
|
|
9
|
|
|
10
|
|
|
9
|
|
|||
Amortization of prior service cost and transition amount
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Recognized actuarial loss
|
|
(5
|
)
|
|
(2
|
)
|
|
(1
|
)
|
|||
Net periodic benefit cost
|
|
(29
|
)
|
|
(25
|
)
|
|
(20
|
)
|
|||
Other changes in plan assets and benefit obligations, recognized in other comprehensive income:
|
|
|
|
|
|
|
||||||
Net actuarial gain (loss)
|
|
(87
|
)
|
|
(10
|
)
|
|
(37
|
)
|
|||
Recognized net actuarial loss
|
|
5
|
|
|
2
|
|
|
1
|
|
|||
Prior service cost and transition amount
|
|
—
|
|
|
12
|
|
|
1
|
|
|||
Total recognized in other comprehensive income
|
|
(82
|
)
|
|
4
|
|
|
(35
|
)
|
|||
Total recognized in net periodic benefit cost and other comprehensive income
|
|
$
|
(111
|
)
|
|
$
|
(21
|
)
|
|
$
|
(55
|
)
|
|
|
|
|
|
|
|
||||||
Assumptions
|
|
|
|
|
|
|
||||||
Weighted-average rates used in the determination of net periodic benefit cost:
|
|
|
|
|
|
|
||||||
Discount rate
|
|
4.2
|
%
|
|
4.2
|
%
|
|
4.9
|
%
|
|||
Expected return on plan assets
|
|
4.2
|
%
|
|
4.6
|
%
|
|
5.2
|
%
|
|||
Rate of compensation increase
|
|
3.0
|
%
|
|
1.5
|
%
|
|
2.8
|
%
|
|||
Weighted-average discount rate used in the determination of the projected benefit obligations
|
|
2.9
|
%
|
|
4.2
|
%
|
|
4.2
|
%
|
|
Target
|
|
December 31
|
|||||
|
2012
|
|
2012
|
|
2011
|
|||
Equity securities
|
31.8
|
%
|
|
31.2
|
%
|
|
39.0
|
%
|
Debt securities
|
50.0
|
|
|
47.9
|
|
|
48.0
|
|
Other
|
18.2
|
|
|
20.9
|
|
|
13.0
|
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||||||||||||||
|
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
|
2012
|
2011
|
||||||||||||||||
Cash and cash equivalents
|
|
$
|
5
|
|
5
|
|
|
$
|
5
|
|
$
|
5
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
United States companies equity securities
|
|
77
|
|
71
|
|
|
77
|
|
71
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
International companies equity securities
|
|
23
|
|
10
|
|
|
23
|
|
10
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||||
Corporate debt securities
|
|
93
|
|
102
|
|
|
93
|
|
100
|
|
|
—
|
|
2
|
|
|
—
|
|
—
|
|
||||||||
Other
|
|
56
|
|
22
|
|
|
22
|
|
5
|
|
|
11
|
|
—
|
|
|
23
|
|
17
|
|
||||||||
Total
|
|
$
|
254
|
|
$
|
210
|
|
|
$
|
220
|
|
$
|
191
|
|
|
$
|
11
|
|
$
|
2
|
|
|
$
|
23
|
|
$
|
17
|
|
39
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
2012
|
|
2011
|
||||
Balance at January 1
|
|
$
|
17
|
|
|
$
|
18
|
|
Actual return on plan assets held at the reporting date
|
|
—
|
|
|
—
|
|
||
Purchases, sales, and settlements
|
|
6
|
|
|
(1
|
)
|
||
Balance at December 31
|
|
$
|
23
|
|
|
$
|
17
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018-2022
|
||||||||||||
Expected benefit payments
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
14
|
|
|
$
|
76
|
|
|
Reconstructive
|
|
MedSurg
|
|
Neurotechnology and Spine
|
|
Other
|
|
Total
|
||||||||||||||||||||||||||||||||||||||||
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
||||||||||||||||||||||||||||||
Net sales
|
$
|
3,823
|
|
$
|
3,710
|
|
$
|
3,549
|
|
|
$
|
3,265
|
|
$
|
3,160
|
|
$
|
2,803
|
|
|
$
|
1,569
|
|
$
|
1,437
|
|
$
|
968
|
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
8,657
|
|
$
|
8,307
|
|
$
|
7,320
|
|
Depreciation and amortization
|
271
|
|
267
|
|
250
|
|
|
85
|
|
84
|
|
77
|
|
|
122
|
|
119
|
|
61
|
|
|
8
|
|
11
|
|
22
|
|
|
486
|
|
481
|
|
410
|
|
|||||||||||||||
Income taxes (credit)
|
344
|
|
375
|
|
332
|
|
|
177
|
|
165
|
|
178
|
|
|
76
|
|
63
|
|
60
|
|
|
(110
|
)
|
(106
|
)
|
(71
|
)
|
|
487
|
|
497
|
|
499
|
|
|||||||||||||||
Segment net earnings (loss)
|
936
|
|
926
|
|
818
|
|
|
603
|
|
535
|
|
481
|
|
|
267
|
|
221
|
|
188
|
|
|
(246
|
)
|
(234
|
)
|
(158
|
)
|
|
1,560
|
|
1,448
|
|
1,329
|
|
|||||||||||||||
Other (net of income taxes):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
Less acquisition and integration-related charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(37
|
)
|
(142
|
)
|
—
|
|
|||||||||||||||||||||||||||
Less restructuring charges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(59
|
)
|
(60
|
)
|
—
|
|
|||||||||||||||||||||||||||
Add income tax adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
99
|
|
7
|
|
|||||||||||||||||||||||||||
Less legal matters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(166
|
)
|
—
|
|
—
|
|
|||||||||||||||||||||||||||
Property, plant and equipment (impairments) / gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
—
|
|
—
|
|
(63
|
)
|
|||||||||||||||||||||||||||
Net earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,298
|
|
1,345
|
|
1,273
|
|
|||||||||||||||||||||||||||
Total assets
|
3,654
|
|
3,758
|
|
3,098
|
|
|
2,996
|
|
2,358
|
|
2,287
|
|
|
2,600
|
|
2,245
|
|
764
|
|
|
3,956
|
|
3,785
|
|
4,509
|
|
|
13,206
|
|
12,146
|
|
10,658
|
|
|||||||||||||||
Capital spending
|
87
|
|
119
|
|
106
|
|
|
51
|
|
56
|
|
47
|
|
|
53
|
|
27
|
|
13
|
|
|
19
|
|
24
|
|
16
|
|
|
210
|
|
226
|
|
182
|
|
|
|
Net Sales
|
|
Net Property, Plant & Equipment
|
||||||||||||||||
|
|
2012
|
2011
|
2010
|
|
2012
|
2011
|
2010
|
||||||||||||
United States
|
|
$
|
5,658
|
|
$
|
5,269
|
|
$
|
4,793
|
|
|
$
|
473
|
|
$
|
434
|
|
$
|
396
|
|
Europe, Middle East, Africa
|
|
1,266
|
|
1,382
|
|
1,228
|
|
|
410
|
|
390
|
|
350
|
|
||||||
Asia Pacific
|
|
1,336
|
|
1,285
|
|
991
|
|
|
58
|
|
57
|
|
42
|
|
||||||
Other foreign countries
|
|
397
|
|
371
|
|
308
|
|
|
7
|
|
7
|
|
10
|
|
||||||
|
|
$
|
8,657
|
|
$
|
8,307
|
|
$
|
7,320
|
|
|
$
|
948
|
|
$
|
888
|
|
$
|
798
|
|
40
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
2012 Quarter Ended
|
|
2011 Quarter Ended
|
||||||||||||||||||||||||||||
|
|
Mar. 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
|
Mar. 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||||||||||
Net sales
|
|
$
|
2,161
|
|
|
$
|
2,106
|
|
|
$
|
2,052
|
|
|
$
|
2,337
|
|
|
$
|
2,015
|
|
|
$
|
2,046
|
|
|
$
|
2,031
|
|
|
$
|
2,215
|
|
Gross profit
|
|
1,452
|
|
|
1,434
|
|
|
1,397
|
|
|
1,593
|
|
|
1,326
|
|
|
1,333
|
|
|
1,362
|
|
|
1,475
|
|
||||||||
Earnings before income taxes
|
|
468
|
|
|
435
|
|
|
444
|
|
|
358
|
|
|
412
|
|
|
410
|
|
|
431
|
|
|
433
|
|
||||||||
Net earnings
|
|
350
|
|
|
325
|
|
|
353
|
|
|
270
|
|
|
308
|
|
|
309
|
|
|
327
|
|
|
401
|
|
||||||||
Net earnings per share of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
|
0.92
|
|
|
0.85
|
|
|
0.93
|
|
|
0.71
|
|
|
0.79
|
|
|
0.80
|
|
|
0.85
|
|
|
1.05
|
|
||||||||
Diluted
|
|
0.91
|
|
|
0.85
|
|
|
0.92
|
|
|
0.71
|
|
|
0.78
|
|
|
0.79
|
|
|
0.84
|
|
|
1.05
|
|
||||||||
Market price of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
High
|
|
55.90
|
|
|
57.14
|
|
|
56.79
|
|
|
56.75
|
|
|
65.20
|
|
|
64.61
|
|
|
60.64
|
|
|
51.13
|
|
||||||||
Low
|
|
50.41
|
|
|
49.43
|
|
|
50.05
|
|
|
51.60
|
|
|
53.50
|
|
|
56.58
|
|
|
43.73
|
|
|
44.56
|
|
||||||||
Dividends declared per share of common stock
|
|
$
|
0.2125
|
|
|
$
|
0.2125
|
|
|
$
|
0.2125
|
|
|
$
|
0.265
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.18
|
|
|
$
|
0.2125
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|
ITEM 9A.
|
CONTROLS AND PROCEDURES.
|
41
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
42
|
|
|
ITEM 9B.
|
OTHER INFORMATION.
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.
|
Name
|
Age
|
Position
|
First Became an Executive Officer
|
Kevin A. Lobo
|
47
|
President and Chief Executive Officer
|
2011
|
Steven P. Benscoter
|
45
|
Vice President, Human Resources
|
2012
|
Dean H. Bergy
|
53
|
Interim Chief Financial Officer and Vice President, Corporate Secretary
|
2003
|
Lonny J. Carpenter
|
51
|
Group President, Global Quality and Operations
|
2008
|
David K. Floyd
|
52
|
Group President, Orthopaedics
|
2012
|
Curtis E. Hall
|
56
|
Vice President and General Counsel
|
2004
|
Tony M. McKinney
|
43
|
Vice President, Chief Accounting Officer
|
2008
|
Katherine A. Owen
|
42
|
Vice President, Strategy and Investor Relations
|
2007
|
Timothy J. Scannell
|
48
|
Group President, MedSurg and Neurotechnology
|
2008
|
Ramesh Subrahmanian
|
51
|
Group President, International
|
2011
|
ITEM 11.
|
EXECUTIVE COMPENSATION.
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
43
|
|
|
Plan category
|
|
Number of shares of common
stock to be issued upon exercise of outstanding options, warrants and rights |
|
Weighted-average
exercise price of outstanding options, warrants and rights |
|
Number of shares of common
stock remaining available for future issuance under equity compensation plans (excluding shares reflected in the first column) |
Equity compensation plans approved by shareholders
|
|
21,552,922
|
|
$47.89
|
|
33,066,151
|
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.
|
ITEM 14.
|
PRINCIPAL ACCOUNTING FEES AND SERVICES.
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
|
(a) 1.
|
Financial Statements
|
|
|
|
The following Consolidated Financial Statements are set forth in Part II, Item 8 of this report.
|
|
|
|
Report of Independent Registered Public Accounting Firm on Financial Statements
|
21
|
|
|
Consolidated Statements of Earnings for the Years Ended December 31, 2012, 2011 and 2010
|
22
|
|
|
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2012, 2011 and 2010
|
22
|
|
|
Consolidated Balance Sheets as of December 31, 2012 and 2011
|
23
|
|
|
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2012, 2011 and 2010
|
24
|
|
|
Consolidated Statements of Cash Flows for the Years Ended December 31, 2012, 2011 and 2010
|
25
|
|
|
Notes to Consolidated Financial Statements
|
26
|
|
(a) 2.
|
Financial Statement Schedules
|
|
|
|
The consolidated financial statement schedule (Schedule II) of Stryker Corporation and its subsidiaries has been submitted as a separate section of this report following the signature page. All other schedules for which provision is made in the applicable accounting regulation of the U.S. Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted.
|
|
|
(a) 3.
|
Exhibits
|
|
|
|
A list of exhibits required to be filed as part of this report is set forth in the Exhibit Index, which immediately precedes such exhibits, and is incorporated herein by reference.
|
|
|
(c)
|
Financial Statement Schedules
|
|
44
|
|
|
|
|
|
|
|
STRYKER CORPORATION
|
|
|
|
Date: February 27, 2013
|
|
/s/ DEAN H. BERGY
|
|
|
Dean H. Bergy, Interim Chief Financial Officer and Vice President, Corporate Secretary
|
|
|
|
/s/ KEVIN A. LOBO
|
|
/s/ DEAN H. BERGY
|
Kevin A. Lobo, President and Chief Executive Officer (Principal Executive Officer)
|
|
Dean H. Bergy, Interim Chief Financial Officer and Vice President, Corporate Secretary (Principal Financial Officer)
|
|
|
|
/s/ TONY M. MCKINNEY
|
|
|
Tony M. McKinney, Vice President, Chief Accounting Officer (Principal Accounting Officer)
|
|
|
|
|
|
/s/ WILLIAM U. PARFET
|
|
/s/ RONDA E. STRYKER
|
William U. Parfet—Director, Non-Executive Chairman
|
|
Ronda E. Stryker—Director
|
|
|
|
/s/ ROCH DOLIVEUX
|
|
/s/ SRIKANT M. DATAR
|
Roch Doliveux—Director
|
|
Srikant M. Datar, Ph.D.—Director
|
|
|
|
/s/ LOUISE L. FRANCESCONI
|
|
/s/ ALLAN C. GOLSTON
|
Louise L. Francesconi—Director
|
|
Allan C. Golston—Director
|
|
|
|
/s/ HOWARD L. LANCE
|
|
/s/ HOWARD E. COX, JR.
|
Howard L. Lance—Director
|
|
Howard E. Cox, Jr.—Director
|
|
|
|
|
|
|
|
|
|
45
|
|
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
Column F
|
||||||||||
|
|
|
|
Additions
|
|
Deductions
|
|
|
||||||||||||
Description
|
|
Balance at
Beginning of Period |
|
Charged to
Costs & Expenses |
|
Describe (a)
|
|
Describe (b)
|
|
Balance
at End of Period |
||||||||||
DEDUCTED FROM ASSET ACCOUNTS
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for Doubtful Accounts:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year ended December 31, 2012
|
|
$
|
56
|
|
|
$
|
10
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
58
|
|
Year ended December 31, 2011
|
|
$
|
57
|
|
|
$
|
9
|
|
|
$
|
9
|
|
|
$
|
1
|
|
|
$
|
56
|
|
Year ended December 31, 2010
|
|
$
|
66
|
|
|
$
|
19
|
|
|
$
|
30
|
|
|
$
|
(2
|
)
|
|
$
|
57
|
|
(a)
|
Uncollectible amounts written off, net of recoveries.
|
(b)
|
Effect of changes in foreign exchange rates.
|
46
|
|
Dollar amounts in millions except per share amounts or as otherwise specified
|
|
|
|
Exhibit 3—
|
|
Articles of Incorporation and By-Laws
|
(i)
|
|
Restated Articles of Incorporation
|
(ii)
|
|
By-Laws — Incorporated by reference to Exhibit 3(ii) to our Form 8-K dated October 28, 2008 (Commission File No. 000-09165).
|
|
|
|
Exhibit 4—
|
|
Instruments defining the rights of security holders, including indentures—We agree to furnish to the Commission upon request a copy of each instrument pursuant to which long-term debt of Stryker Corporation and its subsidiaries not exceeding 10% of the total assets of Stryker Corporation and its consolidated subsidiaries is authorized.
|
(i)
|
|
Credit Agreement, dated as of August 22, 2012, among Stryker Corporation and certain subsidiaries, as designated borrowers; the lenders party thereto; and JPMorgan Chase Bank, N.A., as administrative agent—Incorporated by reference to Exhibit 4.1 to our Form 8-K dated August 27, 2012 (Commission File No. 000-09165).
|
(ii)
|
|
Indenture, dated January 15, 2010, between Stryker Corporation and U.S. Bank National Association.—Incorporated by reference to Exhibit 4.1 to our Form 8-K dated January 15, 2010 (Commission File No. 000-09165).
|
(iii)
|
|
First Supplemental Indenture (including the form of 2015 note), dated January 15, 2010, between Stryker Corporation and U.S. Bank National Association.—Incorporated by reference to Exhibit 4.2 to our Form 8-K dated January 15, 2010 (Commission File No. 000-09165).
|
(iv)
|
|
Second Supplemental Indenture (including the form of 2020 note), dated January 15, 2010, between Stryker Corporation and U.S. Bank National Association.—Incorporated by reference to Exhibit 4.3 to our Form 8-K dated January 15, 2010 (Commission File No. 000-09165).
|
(v)
|
|
Third Supplemental Indenture (including the form of 2016 note), dated September 16, 2011, between Stryker Corporation and U.S. Bank National Association —Incorporated by reference to Exhibit 4.2 to our Form 8-K dated September 16, 2011 (Commission File No. 000-09165).
|
|
|
|
Exhibit 10—
|
|
Material contracts
|
(i)*
|
|
2011 Long-Term Incentive Plan (as amended effective July 26, 2011)—Incorporated by reference to Exhibit 4(i) to Amendment No. 1 to our Registration Statement on Form S-8, File No. 333-179142 (Commission File No. 000-09165).
|
(ii)*
|
|
2006 Long-Term Incentive Plan (as amended effective February 8, 2011)—Incorporated by reference to Exhibit 10(i) to our Form 10-K for the year ended December 31, 2010 (Commission File No. 000-09165).
|
(iii)*
|
|
Form of grant notice and terms and conditions for stock options granted in 2013 under the 2006 Long-Term Incentive Plan.
|
(iv)*
|
|
Form of grant notice and terms and conditions for restricted stock units granted in 2013 under the 2006 Long-Term Incentive Plan.
|
(v)*
|
|
Form of grant notice and terms and conditions for performance stock units granted in 2013 under the 2011 Long-
Term Incentive Plan.
|
(vi)*
|
|
Form of grant notice and terms and conditions for stock options granted in 2012 under the 2006 Long-Term Incentive Plan—Incorporated by reference to Exhibit 10(i) to our Form 10-Q for the quarter ended March 31, 2012 (Commission File No. 000-09165).
|
(vii)*
|
|
Form of grant notice and terms and conditions for restricted stock units granted in 2012 under the 2006 Long-Term Incentive Plan—Incorporated by reference to Exhibit 10(ii) to our Form 10-Q for the quarter ended March 31, 2012 (Commission File No. 000-09165).
|
(viii)*
|
|
Form of grant notice and terms and conditions for performance stock units granted in 2012 under the 2011 Long-Term Incentive Plan—Incorporated by reference to Exhibit 10(iii) to our Form 10-Q for the quarter ended March 31, 2012 (Commission File No. 000-09165).
|
(ix)*
|
|
Form of grant notice and terms and conditions for stock options granted in 2011 under the 2006 Long-Term Incentive Plan—Incorporated by reference to Exhibit 10(ii) to our Form 10-K for the year ended December 31, 2010 (Commission File No. 000-09165).
|
(x)*
|
|
Form of grant notice and terms and conditions for restricted stock units granted in 2011 under the 2006 Long-Term Incentive Plan—Incorporated by reference to Exhibit 10(iii) to our Form 10-K for the year ended December 31, 2010 (Commission File No. 000-09165).
|
(xi)*
|
|
Form of grant notice and terms and conditions for performance stock units granted in 2011 under the 2006 Long-Term Incentive Plan—Incorporated by reference to Exhibit 10(iv) to our Form 10-K for the year ended December 31, 2010 (Commission File No. 000-09165).
|
(xii)*
|
|
Form of terms and conditions for restricted stock units granted in 2010 under the 2006 Long-Term Incentive Plan.—Incorporated by reference to Exhibit 10(iii) to our Form 10-K for the year ended December 31, 2009 (Commission File No.000-09165).
|
47
|
|
|
(xiii)*
|
|
1998 Stock Option Plan (as amended effective July 23, 2008)—Incorporated by reference to Exhibit 10(ii) to our Form 10-Q for the quarter ended June 30, 2008 (Commission File No. 000-09165).
|
(xiv)*
|
|
Supplemental Savings and Retirement Plan (as amended effective January 1, 1995)—Incorporated by reference to Exhibit 10(iii) to our Form 10-K for the year ended December 31, 1994 (Commission File No.000-09165).
|
(xv)*
|
|
Stryker Corporation Executive Bonus Plan—Incorporated by reference to Exhibit 10.1 to our Form 8-K dated February 21, 2007 (Commission File No. 000-09165).
|
(xvi)
|
|
Form of Indemnification Agreement for Directors—Incorporated by reference to Exhibit 10 (xiv) to our Form 10-K for the year ended December 31, 2008 (Commission File No. 000-09165).
|
(xvii)
|
|
Form of Indemnification Agreement for Certain Officers—Incorporated by reference to Exhibit 10 (xv) to our Form 10-K for the year ended December 31, 2008 (Commission File No. 000-09165).
|
(xviii)
|
|
Sale and Purchase Agreement, dated January 3, 2011, between Boston Scientific Corporation and Stryker Corporation—Incorporated by reference to Exhibit 10(xv) to our Form 10-K for the year ended December 31, 2010 (Commission File No. 000-09165).
|
(xix)
|
|
Resignation Agreement and General Release dated February 21, 2012 by and between Stryker Corporation and Stephen P. MacMillan— Incorporated by reference to Exhibit 10.1 to our Form 8-K dated February 24, 2012 (Commission File No. 000-09165).
|
(xx)
|
|
Letter Agreement dated September 28, 2012 between Stryker Corporation and Kevin A. Lobo— Incorporated by reference to Exhibit 10.1 to our Form 8-K dated October 3, 2012 (Commission File No. 000-09165).
|
(xxi)
|
|
Letter Agreement dated October 1, 2012 between Stryker Corporation and Dean H. Bergy— Incorporated by reference to Exhibit 10.2 to our Form 8-K dated October 3, 2012 (Commission File No. 000-09165).
|
(xxii)
|
|
Transition Services and Separation Agreement dated as of October 1, 2012 between Stryker Corporation and Curt R. Hartman— Incorporated by reference to Exhibit 10.1 to our Amendment No. 1 to Form 8-K dated October 17, 2012 (Commission File No. 000-09165).
|
|
|
|
Exhibit 11—
|
|
Statement re: computation of per share earnings
|
(i)
|
|
Consolidated Statement of Earnings in Item 8 of this report.
|
|
|
|
Exhibit 21—
|
|
Subsidiaries of the registrant
|
(i)
|
|
List of Subsidiaries.
|
|
|
|
Exhibit 23—
|
|
Consent of experts and counsel
|
(i)
|
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
|
Exhibit 31—
|
|
Rule 13a-14(a) Certifications
|
(i)
|
|
Certification by Principal Executive Officer of Stryker Corporation.
|
(ii)
|
|
Certification by Principal Financial Officer of Stryker Corporation.
|
|
|
|
Exhibit 32—
|
|
18 U.S.C. Section 1350 Certifications
|
(i) †
|
|
Certification by Principal Executive Officer of Stryker Corporation.
|
(ii) †
|
|
Certification by Principal Financial Officer of Stryker Corporation.
|
|
|
|
Exhibit 99—
|
|
Additional exhibits
|
(i)*
|
|
2008 Employee Stock Purchase Plan as amended on February 10, 2009—Incorporated by reference to Exhibit 99 (i) to our Form 10-K for the year ended December 31, 2008 (Commission File No. 000-09165).
|
|
|
|
Exhibit 101—
|
|
XBRL (Extensible Business Reporting Language) Documents
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Schema Document
|
101.CAL
|
|
XBRL Calculation Linkbase Document
|
101.DEF
|
|
XBRL Definition Linkbase Document
|
101.LAB
|
|
XBRL Label Linkbase Document
|
101.PRE
|
|
XBRL Presentation Linkbase Document
|
*
|
compensation arrangement
|
†
|
furnished with this Form 10-K
|
48
|
|
|
1.
|
The present name of the corporation is Stryker Corporation.
|
2.
|
The identification number assigned by the Bureau is 148492.
|
3.
|
The only former name of the corporation was Orthopedic Frame Company.
|
4.
|
The date of filing the original Articles of Incorporation was February 20, 1946.
|
5.
|
The following Restated Articles of Incorporation supersede the original Articles of Incorporation as amended and restated to date and shall be the Articles of Incorporation for the corporation.
|
A.
|
The aggregate number of shares of all classes of stock which the corporation shall have authority to issue is 1,000,500,000 to be divided into two classes consisting of 500,000 shares of a class designated “Preferred Stock,” of the par value of One Dollar ($1) per share, and 1,000,000,000 shares of a class designated “Common Stock,” of the par value of Ten Cents ($0.10) per share.
|
B.
|
The relative rights, preferences and limitations of the shares of each class are as follows:
|
1.
|
Preferred Stock
. The Preferred Stock may be issued from time to time in one or more series, with such distinctive designation or title and in such number of shares as may be fixed by resolution of the Board of Directors without further action by shareholders. The Board of Directors is expressly granted authority to prescribe, by resolution or resolutions adopted before the issuance of any shares of a particular series of Preferred Stock, the relative rights and preferences of each series, and the limitations applicable thereto, including but not limited to the following:
|
a.
|
The voting powers, full, special or limited, or no voting powers of each such series;
|
b.
|
The rate, terms and conditions on which dividends shall be paid, whether such dividends will be cumulative, and what preference such dividends shall have in relation to the dividends on other series or classes of stock;
|
c.
|
The rights, terms and conditions, if any, for conversion of such series of Preferred Stock into shares of other series or classes of stock;
|
d.
|
Any right of the corporation to redeem the shares of such series of Preferred Stock, and the price, time and conditions of such redemption, including the provisions for any sinking fund; and
|
e.
|
The rights of holders of such series of Preferred Stock in relation to the rights of other series and classes of stock upon the liquidation, dissolution or distribution of the assets of the corporation.
|
2.
|
Common Stock
.
|
a.
|
Subject to the prior payment or provision therefor of dividends on the Preferred Stock, the holders of the Common Stock shall be entitled to receive out of the funds of the corporation legally available for such purpose dividends as and when declared by the Board of Directors.
|
b.
|
In the event of any liquidation, dissolution or distribution of the assets of the corporation and after satisfaction of the preferential requirements of the Preferred Stock, the holders of Common Stock shall be entitled to share ratably in the distribution of all remaining assets of the corporation available for distribution.
|
c.
|
The holders of the Common Stock shall be entitled to one vote for each share held by them of record on the books of the corporation.
|
6.
|
These Restated Articles of Incorporation were duly adopted on the 19th day of June, 2012, by the Board of Directors without a vote of the shareholders. These Restated Articles of Incorporation only restate and integrate and do not further amend the provisions of the Articles of Incorporation as heretofore amended and there is no material discrepancy between those provisions and the provisions of these Restated Articles.
|
By
/s/ Dean H. Bergy
|
Dean H. Bergy, Secretary
|
/s/ KEVIN A. LOBO
|
Kevin A. Lobo, President and Chief Executive Officer (Principal Executive Officer)
|
/s/ KEVIN A. LOBO
|
Kevin A. Lobo, President and Chief Executive Officer (Principal Executive Officer)
|
/s/ KEVIN A. LOBO
|
Kevin A. Lobo, President and Chief Executive Officer (Principal Executive Officer)
|
|
< Minimum
|
Minimum
|
Target
|
Maximum
|
Adjusted EPS Growth
|
Less than 6.0%
|
6%
|
8.5%
|
11% or more
|
Vested Percent of EPS PSUs
|
—%
|
50%
|
100%
|
200%
|
Sales Growth Percentile Ranking
|
86
th
and Above
|
62
nd
|
33
rd
|
Below 33
rd
|
Vested Percent of Sales Growth PSUs
|
200%
|
100%
|
50%
|
—%
|
▪
|
Abbott Laboratories
|
▪
|
ArthroCare Corporation
|
▪
|
CR Bard Inc.
|
▪
|
Baxter International Inc.
|
▪
|
Becton, Dickinson and Co.
|
▪
|
Biomet, Inc.
|
▪
|
Boston Scientific Corporation
|
▪
|
CareFusion Corporation
|
▪
|
Conmed Corporation
|
▪
|
Covidien plc
|
▪
|
General Electric (Healthcare)
|
▪
|
Hill-Rom Holdings, Inc.
|
▪
|
Intuitive Surgical, Inc.
|
▪
|
Johnson & Johnson
|
▪
|
Medtronic, Inc.
|
▪
|
Nuvasive, Inc.
|
▪
|
Smith & Nephew plc
|
▪
|
St. Jude Medical Inc.
|
▪
|
Thermo Fisher Scientific, Inc.
|
▪
|
Wright Medical Group, Inc.
|
▪
|
Zimmer Holdings, Inc.
|
Stryker (Beijing) Healthcare Products Co. Ltd.
|
China
|
Stryker Beteiligungs GmbH
|
Germany
|
Stryker Biotech LLC
|
Michigan
|
Stryker Canada Holding Company
|
Canada
|
Stryker Canada LP
|
Canada
|
Stryker Canadian Management ULC
|
Canada
|
Stryker Capital BV
|
The Netherlands
|
Stryker China Limited
|
Hong Kong
|
Stryker Colombia SAS
|
Colombia
|
Stryker Communications, Inc.
|
Delaware
|
Stryker Corporation (Chile) y Compania Limitada
|
Chile
|
Stryker Corporation (Malaysia) Sdn. Bhd.
|
Malaysia
|
Stryker Czech Republic s.r.o.
|
Czech Republic
|
Stryker do Brasil Ltda.
|
Brazil
|
Stryker EMEA Supply Chain Services BV
|
The Netherlands
|
Stryker Far East, Inc.
|
Delaware
|
Stryker Financial Services CV
|
The Netherlands
|
Stryker Foreign Acquisitions BV
|
The Netherlands
|
Stryker Foreign Acquisitions, Inc.
|
Delaware
|
Stryker France Holding SNC
|
France
|
Stryker France MM Holdings SAS
|
France
|
Stryker France SAS
|
France
|
Stryker GI Ltd.
|
Israel
|
Stryker GI Services CV
|
The Netherlands
|
Stryker Global Technology Center Private Limited
|
India
|
Stryker GmbH
|
Austria
|
Stryker GmbH & Co. KG
|
Germany
|
Stryker Hellas Limited Liability Company Trading in Medical Devices EPE
|
Greece
|
Stryker Holdings BV
|
The Netherlands
|
Stryker Hong Kong Holding Ltd
|
Hong Kong
|
Stryker Iberia, SL
|
Spain
|
Stryker IFSC Limited
|
Ireland
|
Stryker (India) Private Limited
|
India
|
Stryker International Holdings BV
|
The Netherlands
|
Stryker Ireland Holding
|
Ireland
|
Stryker Ireland Limited
|
Ireland
|
Stryker Italia SRL
|
Italy
|
Stryker Japan Holdings BV
|
The Netherlands
|
Stryker Japan Holding KK
|
Japan
|
Stryker Japan KK
|
Japan
|
Stryker Korea Ltd.
|
Korea
|
Stryker Lebanon (Offshore) SAL
|
Lebanon
|
Stryker Leibinger GmbH & Co. KG
|
Germany
|
Stryker Luxembourg Holdings SARL
|
Luxembourg
|
Stryker Luxembourg SARL
|
Luxembourg
|
Stryker Mauritius Holding Ltd.
|
Mauritius
|
Stryker Medical Quebec LP
|
Canada
|
Stryker Medtech KK
|
Japan
|
Stryker Mexico, S.A. de C.V.
|
Mexico
|
Stryker Nederland BV
|
The Netherlands
|
Stryker Newplant AG
|
Switzerland
|
Stryker New Zealand Limited
|
New Zealand
|
Stryker NV Operations Limited
|
Ireland
|
Stryker-Osteonics SA
|
Switzerland
|
Stryker Pacific Limited
|
Hong Kong
|
Stryker Polska Sp.z.o.o.
|
Poland
|
Stryker Portugal - Produtos Medicos Unipessoal, Lda.
|
Portugal
|
Stryker Puerto Rico Limited
|
Ireland
|
Stryker Real Estate BV
|
The Netherlands
|
Stryker Romania SRL
|
Romania
|
Stryker SA
|
Switzerland
|
Stryker Sales Corporation
|
Michigan
|
Stryker Servicios Administrativos S. de R.L. de C.V.
|
Mexico
|
Stryker Singapore Private Limited
|
Singapore
|
Stryker South Africa (Proprietary) Limited
|
South Africa
|
Stryker Spain Holding, SL
|
Spain
|
Stryker Spine SA
|
Switzerland
|
Stryker Spine SAS
|
France
|
Stryker Sustainability Solutions, Inc.
|
Delaware
|
Stryker (Suzhou) Medical Technology Co Ltd.
|
China
|
Stryker Tibbi Cihazlan Sanayi Ve Ticaret Limited
|
Turkey
|
Stryker Trauma GmbH
|
Germany
|
Stryker Trauma SA
|
Switzerland
|
Stryker Trauma SAS
|
France
|
Stryker UK Limited
|
United Kingdom
|
Stryker U.S. Holding LLC
|
Delaware
|
Stryker Verwaltungs GmbH
|
Germany
|
Surpass Medical, Ltd.
|
Isreal
|
Waterloo Bedding Co.
|
Canada
|
/s/ KEVIN A. LOBO
|
Kevin A. Lobo
|
President and Chief Executive Officer
|
/s/ DEAN H. BERGY
|
Dean H. Bergy
|
Interim Chief Financial Officer and Vice President, Corporate Secretary
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ KEVIN A. LOBO
|
Kevin A. Lobo
|
President and Chief Executive Officer
|
February 27, 2013
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ DEAN H. BERGY
|
Dean H. Bergy
|
Interim Chief Financial Officer and Vice President, Corporate Secretary
|
February 27, 2013
|