STRYKER

2016 FORM 10-K

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STRYKER CORPORATION 2016 Form 10-K Dollar amounts in millions except per share amounts or as otherwise specified. 30 pension plans will be reclassified from AOCI into net periodic benefit cost in 2017. Change in Benefit Obligations 2016 2015 Beginning projected benefit obligations $ 529 $ 570 Service cost 33 36 Interest cost 11 10 Foreign exchange impact (18) (43) Employee contributions 6 6 Actuarial losses (gains) 40 (21) Acquisition 7 — Benefits paid (20) (29) Ending projected benefit obligations $ 588 $ 529 Ending accumulated benefit obligations $ 560 $ 505 Change in Plan Assets 2016 2015 Beginning fair value of plan assets $ 289 $ 310 Actual return 20 2 Employer contributions 18 16 Employee contributions 6 6 Foreign exchange impact (9) (18) Acquisition 2 — Benefits paid (18) (27) Ending fair value of plan assets $ 308 $ 289 Allocation of Plan Assets 2016 Target 2016 Actual 2015 Actual Equity securities 28% 28% 31% Debt securities 50 50 48 Other 22 22 21 Total 100% 100% 100% Valuation of Plan Assets 2016 Level 1 Level 2 Level 3 Total Cash and cash equivalents $ 7 $ — $ — $ 7 Equity securities 83 17 — 100 Corporate debt securities 127 — — 127 Other 23 13 38 74 Total $ 240 $ 30 $ 38 $ 308 2015 Cash and cash equivalents $ 6 $ — $ — $ 6 Equity securities 67 22 — 89 Corporate debt securities 135 — — 135 Other 19 9 31 59 Total $ 227 $ 31 $ 31 $ 289 Our Level 3 pension plan assets (Refer to Note 2 for an explanation of our fair value hierarchy) consist primarily of guaranteed investment contracts with insurance companies. The insurance contracts guarantee us principal repayment and a fixed rate of return. The $7 increase in Level 3 pension plan assets is primarily related to actual returns and acquired assets. We expect to contribute $20 to our defined benefit pension plans in 2017. Estimated Future Benefit Payments 2017 2018 2019 2020 2021 2022-2026 $ 16 $ 14 $ 14 $ 14 $ 14 $ 80 NOTE 12 - SUMMARY OF QUARTERLY DATA (UNAUDITED) 2016 Quarter Mar 31 Jun 30 Sep 30 Dec 31 Net sales $ 2,495 $ 2,840 $ 2,833 $ 3,157 Gross profit 1,694 1,842 1,873 2,086 Earnings before income taxes 481 433 419 588 Net earnings 402 380 355 510 Net earnings per share of common stock: Basic $ 1.08 $ 1.02 $ 0.95 $ 1.36 Diluted $ 1.07 $ 1.00 $ 0.94 $ 1.34 Market price of common stock: High $ 107.95 $ 119.83 $ 123.55 $ 121.84 Low $ 86.68 $ 106.26 $ 109.75 $ 106.48 Dividends declared per share of common stock $ 0.38 $ 0.38 $ 0.38 $ 0.425 2015 Quarter Net sales $ 2,379 $ 2,432 $ 2,420 $ 2,715 Gross profit 1,553 1,605 1,624 1,820 Earnings before income taxes 377 401 345 612 Net earnings 224 392 301 522 Net earnings per share of common stock: Basic $ 0.59 $ 1.04 $ 0.80 $ 1.39 Diluted $ 0.58 $ 1.03 $ 0.79 $ 1.38 Market price of common stock: High $ 96.18 $ 97.94 $ 105.34 $ 100.51 Low $ 89.81 $ 90.19 $ 91.73 $ 90.30 Dividends declared per share of common stock $ 0.345 $ 0.345 $ 0.345 $ 0.380 Price quotations were supplied by the New York Stock Exchange. NOTE 13 - SEGMENT AND GEOGRAPHIC DATA We segregate our operations into three reportable business segments: Orthopaedics, MedSurg, and Neurotechnology and Spine. The Orthopaedics segment includes reconstructive (hip and knee) and trauma implant systems and other related products. The MedSurg segment includes surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling, emergency medical equipment, intensive care disposable products and reprocessed and remanufactured medical devices and other related products. The Neurotechnology and Spine segment includes neurovascular products, spinal implant systems and other related products. The Corporate and Other category shown in the table below includes corporate and administration, central initiatives and share- based compensation, which includes compensation related to both employee and director stock option, restricted stock unit and performance stock unit grants.

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