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Stryker Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF EARNINGS 2015 2014 2013 Net sales $ 9,946 $ 9,675 $ 9,021 Cost of sales 3,344 3,319 3,002 Gross profit $ 6,602 $ 6,356 $ 6,019 Research, development and engineering expenses 625 614 536 Selling, general and administrative expenses 3,610 3,547 3,467 Recall charges, net of insurance proceeds 296 761 622 Intangible asset amortization 210 188 138 Total operating expenses $ 4,741 $ 5,110 $ 4,763 Operating income 1,861 1,246 1,256 Other income (expense), net (126 ) (86 ) (44 ) Earnings before income taxes $ 1,735 $ 1,160 $ 1,212 Income taxes 296 645 206 Net earnings $ 1,439 $ 515 $ 1,006 Net earnings per share of common stock: Basic net earnings per share of common stock $ 3.82 $ 1.36 $ 2.66 Diluted net earnings per share of common stock $ 3.78 $ 1.34 $ 2.63 Weighted-average shares outstanding - in millions: Basic 376.6 378.5 378.6 Net effect of dilutive employee stock options 4.3 4.3 3.5 Diluted 380.9 382.8 382.1 Anti-dilutive shares excluded from the calculation of net effect of dilutive employee stock options — — — CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2015 2014 2013 Net earnings $ 1,439 $ 515 $ 1,006 Other comprehensive income, net of tax Marketable securities (3 ) 3 (4 ) Pension plans 17 (55 ) 20 Unrealized (losses) gains on designated hedges (9 ) 6 7 Financial statement translation (390 ) (440 ) 80 Total other comprehensive (loss) income, net of tax $ (385 ) $ (486 ) $ 103 Comprehensive income $ 1,054 $ 29 $ 1,109 See accompanying notes to Consolidated Financial Statements. STRYKER CORPORATION 2015 Form 10-K 18 Dollar amounts in millions except per share amounts or as otherwise specified.