2013 Form 10-K

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1 Dollar amounts in millions except per share amounts or as otherwise specified PART I ITEM 1. BUSINESS. General Stryker Corporation is one of the world's leading medical technology companies with 2013 revenues of $9,021 and net earnings of $1,006. Stryker's products include implants used in joint replacement and trauma surgeries; surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling and emergency medical equipment; neurosurgical, neurovascular and spinal devices; as well as other medical device products used in a variety of medical specialties. Stryker was incorporated in Michigan in 1946 as the successor company to a business founded in 1941 by Dr. Homer H. Stryker, a prominent orthopaedic surgeon and the inventor of several orthopaedic products. In the United States, most of our products are marketed directly to doctors, hospitals and other healthcare facilities. Internationally, our products are sold in over 100 countries through company-owned sales subsidiaries and branches as well as third-party dealers and distributors. As used herein, and except where the context otherwise requires, "Stryker," "we," "us," and "our" refer to Stryker Corporation and its consolidated subsidiaries. Business Segments and Geographic Information We segregate our reporting into three reportable business segments: Reconstructive, MedSurg, and Neurotechnology and Spine. Financial information regarding our reportable business segments and certain geographic information is included under "Results of Operations" in Item 7 of this report and Note 13 to the Consolidated Financial Statements in Item 8 of this report. The net sales for each reportable segment over the last three years was: 2013 2012 2011 Reconstructive $ 4,004 44 % $ 3,823 44 % $ 3,710 45 % MedSurg 3,359 37 % 3,265 38 % 3,160 38 % Neurotechnology and Spine 1,658 19 % 1,569 18 % 1,437 17 % Total $ 9,021 100% $ 8,657 100% $ 8,307 100% Reconstructive Reconstructive products consist primarily of implants used in hip and knee joint replacements and trauma and extremities surgeries. We bring patients and physicians advanced implant designs and specialized instrumentation that make orthopaedic surgery and recovery simpler, faster and more effective. We support surgeons with the technology and services they need as they develop new surgical techniques. The composition of net sales of Reconstructive products over the last three years was: 2013 2012 2011 Knees $ 1,371 34 % $ 1,356 35 % $ 1,316 35 % Hips 1,272 32 % 1,233 32 % 1,228 33 % Trauma and Extremities 1,116 28 % 989 26 % 931 25 % Other 245 6 % 245 7 % 235 7 % Total $ 4,004 100% $ 3,823 100% $ 3,710 100% In December 2013 we acquired MAKO Surgical Corp. (MAKO). The acquisition of MAKO, combined with our strong history in joint reconstruction, capital equipment (operating room integration and surgical navigation) and surgical instruments, will help further advance the growth of robotic arm assisted surgery. Our combined expertise offers the potential to simplify joint reconstruction procedures, reduce variability and enhance the surgeon and patient experience. In March 2013 we acquired Trauson Holdings Company Limited (Trauson). The acquisition of Trauson will enhance our product offerings, primarily within our Reconstructive segment, broaden our presence in China and enable us to expand into the fast growing value segment of the emerging markets. In 2013 we launched the Tritanium Cementless Baseplate for our Triathlon Knee System (TKA), which combines biologic fixation with Triathlon's ideal kinematics to provide surgeons with a superior option for cementless TKA. We also launched the Secur- Fit Advanced Femoral Hip Stem aimed at accurately restoring biomechanics by leveraging our new and unique Stryker Orthopaedics Modeling and Analytics system. In June 2012 we voluntarily recalled our Rejuvenate and ABG II modular-neck hip stems and terminated global distribution of these hip products. We notified healthcare professionals and regulatory bodies of this recall, which was taken due to potential risks associated with fretting and/or corrosion that may lead to adverse local tissue reactions. We continue to work with the medical community to evaluate the data and further understand this matter and the associated costs as more fully described in Note 7 to the Consolidated Financial Statements in Item 8 of this report; this information is incorporated herein by reference. In 2012 we launched Accolade II, the first hip stem with a Morphometric Wedge design, an evolution of the tapered wedge stem. In 2011 we acquired Memometal Technologies, which develops, manufactures and markets products for extremity (hand and foot) indications that enhance the offerings in our trauma and extremities product line. Stryker is one of five leading competitors in the United States for joint replacement and trauma products; the other four are Zimmer Holdings, Inc. (Zimmer), DePuy Synthes Company (DePuy Synthes, a subsidiary of Johnson & Johnson), Biomet, Inc. and

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