STRYKER

2017 FORM 10-K

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STRYKER CORPORATION 2017 FORM 10-K Dollar amounts in millions except per share amounts or as otherwise specified. 31 NOTE 12 - SUMMARY OF QUARTERLY DATA (UNAUDITED) 2017 Quarter Mar 31 Jun 30 Sep 30 Dec 31 Net sales $ 2,955 $ 3,012 $ 3,006 $ 3,471 Gross profit 1,962 1,990 1,982 2,239 Earnings before income taxes 499 444 471 649 Net earnings 444 391 434 (249) Net earnings per share of common stock: Basic $ 1.19 $ 1.04 $ 1.16 $ (0.66) Diluted $ 1.17 $ 1.03 $ 1.14 $ (0.66) Market price of common stock: High $ 133.59 $ 145.62 $ 148.84 $ 160.62 Low $ 116.50 $ 129.82 $ 137.70 $ 141.68 Dividends declared per share of common stock $ 0.425 $ 0.425 $ 0.425 $ 0.47 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 NOTE 13 - SEGMENT AND GEOGRAPHIC DATA We segregate our operations into three reportable business segments: Orthopaedics, MedSurg, and Neurotechnology and Spine. The Corporate and Other category shown in the table below includes corporate and administration, corporate initiatives and share-based compensation, which includes compensation related to employee stock options, restricted stock units and performance stock unit grants and director stock options and restricted stock unit grants. Segment Results 2017 2016 2015 Orthopaedics $ 4,713 $ 4,422 $ 4,223 MedSurg 5,557 4,894 3,895 Neurotechnology & Spine 2,174 2,009 1,828 Net sales $ 12,444 $ 11,325 $ 9,946 Orthopaedics $ 337 $ 317 $ 290 MedSurg 315 249 117 Neurotechnology & Spine 142 140 132 Segment depreciation and amortization $ 794 $ 706 $ 539 Corporate and Other 65 46 51 Total depreciation and amortization $ 859 $ 752 $ 590 Orthopaedics $ 1,669 $ 1,597 $ 1,487 MedSurg 1,225 1,085 822 Neurotechnology & Spine 639 557 474 Segment operating income $ 3,533 $ 3,239 $ 2,783 Items not allocated to segments: Corporate and Other $ (402) $ (352) $ (302) Acquisition & integration-related charges (64) (131) (35) Amortization of intangible assets (371) (319) (210) Restructuring related-charges (194) (125) (132) Rejuvenate and related-charges (173) (158) (296) Regulatory and legal matters (39) 12 53 Consolidated operating income $ 2,290 $ 2,166 $ 1,861 Segment Assets and Capital Spending Assets: 2017 2016 2015 Orthopaedics $ 7,486 $ 7,048 $ 6,149 MedSurg 9,759 8,553 5,341 Neurotechnology & Spine 4,105 4,129 3,904 Total segment assets $ 21,350 $ 19,730 $ 15,394 Corporate and Other 847 705 829 Total assets $ 22,197 $ 20,435 $ 16,223 Capital spending: Orthopaedics $ 138 $ 153 $ 95 MedSurg 194 129 89 Neurotechnology & Spine 50 25 28 Total segment capital spending $ 382 $ 307 $ 212 Corporate and Other 216 183 58 Total capital spending $ 598 $ 490 $ 270 We measure the financial results of our reportable segments using an internal performance measure that excludes acquisition and integration-related charges, restructuring-related charges, reserves for certain product recall matters, reserves for certain legal and regulatory matters and a donation to an educational institution. Identifiable assets are those assets used exclusively in the operations of each business segment or allocated when used jointly. Corporate assets are principally cash and cash equivalents, marketable securities and property, plant and equipment. The countries in which we have local revenue generating operations have been combined into the following geographic areas: the United States (including Puerto Rico); Europe, Middle East, Africa; Asia Pacific; and other foreign countries, which include Canada and countries in the Latin American region. Net sales are reported based off the geographic area of the Stryker location where the sales to the customer originated. Geographic Information Net Sales Net Property, Plant and Equipment 2017 2016 2015 2017 2016 United States $ 9,059 $ 8,230 $ 7,116 $ 1,102 $ 941 Europe, Middle East, Africa 1,567 1,437 1,267 718 493 Asia Pacific 1,413 1,325 1,251 107 105 Other countries 405 333 312 48 30 Total $ 12,444 $ 11,325 $ 9,946 $ 1,975 $ 1,569 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Disclosure Controls and Procedures The Company's management, with the participation of the Chief Executive Officer and Chief Financial Officer (the Certifying Officers), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended) (Exchange Act) at December 31, 2017. Based on that evaluation, the Certifying Officers concluded that the Company's disclosure controls and procedures were effective as of December 31, 2017. Changes in Internal Control over Financial Reporting There was no change to our internal control over financial reporting during the fourth quarter of 2017 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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