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Stryker Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS Years Ended December 31, 2014 2013 2012 Net sales $ 9,675 $ 9,021 $ 8,657 Cost of sales 3,291 2,977 2,781 Gross profit 6,384 6,044 5,876 Research, development and engineering expenses 614 536 471 Selling, general and administrative expenses 3,575 3,492 3,367 Recall charges, net of insurance recoveries 761 622 174 Intangible asset amortization 188 138 123 Total operating expenses 5,138 4,788 4,135 Operating income 1,246 1,256 1,741 Other income (expense), net (86 ) (44 ) (36 ) Earnings before income taxes 1,160 1,212 1,705 Income taxes 645 206 407 Net earnings $ 515 $ 1,006 $ 1,298 Net earnings per share of common stock: Basic net earnings per share of common stock $ 1.36 $ 2.66 $ 3.41 Diluted net earnings per share of common stock $ 1.34 $ 2.63 $ 3.39 Weighted-average shares outstanding—in millions: Basic 378.5 378.6 380.6 Net effect of dilutive employee stock options 4.3 3.5 2.4 Diluted 382.8 382.1 383.0 Anti-dilutive shares excluded from the calculation of net effect of dilutive employee stock options — — 6.4 STRYKER CORPORATION 2014 Form 10-K 19 Dollar amounts in millions except per share amounts or as otherwise specified. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31, 2014 2013 2012 Net earnings $ 515 $ 1,006 $ 1,298 Other comprehensive income (loss), net of tax Marketable securities 3 (4 ) 4 Pension plans (55 ) 20 (69 ) Unrealized gains on designated hedges 6 7 — Financial statement translation (440 ) 80 50 Total other comprehensive (loss) income, net of tax (486 ) 103 (15 ) Comprehensive income $ 29 $ 1,109 $ 1,283 See accompanying notes to Consolidated Financial Statements.