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Stryker Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31, 2014 2013 2012 Operating activities Net earnings $ 515 $ 1,006 $ 1,298 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 190 169 154 Amortization of intangible assets 188 138 123 Share-based compensation 77 76 75 Gross recall charges 940 622 174 Sale of inventory stepped up to fair value at acquisition 27 28 18 Deferred income tax benefit 60 23 (39) Changes in operating assets and liabilities, net of effects of acquisitions: Accounts receivable (89) (89) (20) Inventories (173) (77) 18 Accounts payable 13 1 (48) Accrued expenses and other liabilities 92 41 9 Recall related payments (98) (6) (3) Income taxes 133 (124) (159) Other (93) 78 57 Net cash provided by operating activities 1,782 1,886 1,657 Investing activities Acquisitions, net of cash acquired (916) (2,320) (154) Purchases of marketable securities (4,365) (4,558) (3,480) Proceeds from sales of marketable securities 3,636 4,856 3,108 Purchases of property, plant and equipment (233) (195) (210) Net cash used in investing activities (1,878) (2,217) (736) Financing activities Proceeds from borrowings 1,601 369 178 Payments on borrowings (1,428) (355) (182) Proceeds from issuance of long-term debt, net 986 991 — Dividends paid (462) (401) (324) Repurchase and retirement of common stock (100) (317) (108) Other financing 32 13 (13) Net cash provided by (used in) financing activities 629 300 (449) Effect of exchange rate changes on cash and cash equivalents (77) (25) 18 Change in cash and cash equivalents 456 (56) 490 Cash and cash equivalents at beginning of year 1,339 1,395 905 Cash and cash equivalents at end of year $ 1,795 $ 1,339 $ 1,395 Supplemental cash flow disclosure: Cash paid for income taxes, net of refunds $ 437 $ 321 $ 599 See accompanying notes to Consolidated Financial Statements. STRYKER CORPORATION 2014 Form 10-K 22 Dollar amounts in millions except per share amounts or as otherwise specified.