Annual Report (Form 10-K), fiscal year 1993




ITEM 2. PROPERTIES
The Company's principal facilities are located in Kalamazoo and Portage, Michigan. A 190,000 square foot Portage facility completed in 1992 houses manufacturing (80,000 square feet) and warehousing and distribution (25,000 square feet) for surgical instrument products, with the remaining portion of the facility used for Division offices. The Medical Division is located in two facilities, one in Portage which was completed in 1985 and contains manufacturing and warehousing (122,000 square feet) and Division offices (23,000 square feet), and another in Kalamazoo which contains manufacturing and warehousing (64,000 square feet) and offices (22,000 square feet).
The Company leases 185,000 square feet in an industrial park in Allendale, New Jersey for its orthopaedic implant business; 56,000 square feet in San Jose, California for its endoscopic systems business; 28,000 square feet in Clackamas, Oregon for production of maternity beds and furniture; and 40,000 square feet in Arroyo, Puerto Rico for the assembly of disposable tubing sets and other manufacturing. The Company's 72 physical therapy clinics are all located in leased offices.
ITEM 2. PROPERTIES -- continued
The Company's principal European facilities are located in two buildings (one of which is leased) in Uden, The Netherlands. Of the total 70,000 square feet (22,000 of which is leased) 41,000 square feet are devoted to production (principally hospital beds and related equipment) and 11,300 square feet to warehousing, with the balance used for administrative offices. In addition, the Company leases 16,000 square feet in Bordeaux, France for its spinal implant manufacturing operation. Manufacturing and warehousing account for 11,000 square feet of the total and the remainder is used for administrative offices. The Company also leases other foreign sales and administration offices.
In addition, the Company leases 12,000 square feet in Kalamazoo, Michigan for its administrative offices.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
The Company is a defendant and plaintiff in various legal actions arising in the normal course of business. The Company does not anticipate material losses as a result of these actions.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
EXECUTIVE OFFICERS
Certain information with respect to the executive officers of the Company is set forth in Item 10 of this report.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock is traded in the over-the-counter market on the NASDAQ National Market System under the symbol STRY. Quarterly stock prices and dividend information appearing under the caption "Summary of Quarterly Data" on page 44 (page 47 of the 1993 Annual Report) are incorporated herein by reference. The Company's Board of Directors intends to consider a year-end cash dividend annually at its December meeting.
On December 31, 1993 there were 3,951 stockholders of record of the Company's common stock.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The financial information for each of the five years in the period ended December 31, 1993 under the caption "Ten Year Review" on page 29 (pages 32 and 33 of the 1993 Annual Report) is incorporated herein by reference.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 30 through 32 (pages 34 through 36 of the 1993 Annual Report) is incorporated herein by reference.
ITEM 8.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company and its subsidiaries and report of independent auditors, included on pages 33 through 45 (pages 37 through 48 of the 1993 Annual Report) are incorporated herein by reference.
Quarterly results of operations appearing under the caption "Summary of Quarterly Data" on page 44 (page 47 of the 1993 Annual Report) are incorporated herein by reference.
ITEM 9.

ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
PART III
ITEM 10.



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
Information regarding the directors of the Company appearing under the caption "Election of Directors" in the 1994 proxy statement is incorporated herein by reference.
Information regarding the executive officers of the Company appears below. All officers are elected annually. Reported ages are as of January 31, 1994.
John W. Brown, age 59, has been Chairman of the Board since January 1981, and President and Chief Executive Officer of the Company since February 1977. He is also a director of Lunar Corporation, a medical products company, First of America, a bank, and the Health Industry Manufacturers Association and a Trustee of Kalamazoo College.
Ronald A. Elenbaas, age 40, was appointed President of the Surgical Group in 1985 and has been a Vice President of the Company since August 1983. Previously he was the Director of Surgical Sales since May 1982. Since joining the Company in September 1975 he has held various other positions, including Sales Representative, Marketing Product Manager, Plant Manager, Canadian Sales Director, Assistant to the President and Director of Customer Relations.
William T. Laube, III, age 54, was appointed President of Stryker Pacific Limited in 1985 and has been a Vice President of the Company since March 1979. Since joining the Company in July 1975 he has held various international sales management positions.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS -- continued
Robert D. Monk, age 42, was appointed Treasurer-Controller upon joining the Company in March 1984. He was also appointed Assistant Secretary in February 1991.
David J. Simpson, age 47, was appointed Vice President, Chief Financial Officer and Secretary upon joining the Company in June 1987. He had previously been Vice President and Treasurer of Rexnord Inc., a manufacturer of industrial and aerospace products, since July 1985.
Thomas R. Winkel, age 41, was appointed President of Stryker Americas/Middle East in March 1992 and has been a Vice President of the Company since December 1984. He had previously been Vice President, Administration since June 1987. Since joining the Company in October 1978 he has held various other positions, including Assistant Controller, Secretary and Corporate Controller.
An amended Form 5 was filed with the Securities and Exchange Commission in June 1993 by John W. Brown, Chairman of the Board, President and Chief Executive Officer of the Company, when it was realized that a charitable gift of 2,625 Shares of Common Stock of the Company made by him had been omitted from the original filing.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
Information regarding the compensation of the management of the Company appearing under the captions "Director Compensation" and "Executive Compensation" in the 1994 proxy statement is incorporated herein by reference.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the captions "Beneficial Ownership of More than 5% of the Outstanding Common Stock" and "Beneficial Ownership of Management" in the 1994 proxy statement is incorporated herein by reference.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Not applicable.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (Executive compensation plans and arrangements are referenced as exhibits 10(i) and (ii).)
(a)(1) and (2) - The response to this portion of Item 14 is submitted as a separate section of this report following the signature page.
(a)(3) - Exhibits
Exhibit 3 - Articles of incorporation and by-laws
(i) Restated Articles of Incorporation and amendment thereto dated December 28, 1993.
(ii) By-Laws--Incorporated by reference to Exhibit 3(ii) to the Company's Form 10-Q for the quarter ended June 30, 1988 (Commission File No. 0-9165).
Exhibit 4 - Instruments defining the rights of security holders, including indentures--The Company agrees to furnish to the Commission upon request a copy of each instrument pursuant to which long-term debt of the Company and its subsidiaries not exceeding 10% of the total assets of the Company and its consolidated subsidiaries is authorized.
Exhibit 10-Material contracts
(i)* 1988 Stock Option Plan as amended--Incorporated by reference to Exhibit 10(i) to the Company's Form 10-K for the year ended December 31, 1992 (Commission File No. 0-9165).
(ii)* Description of bonus arrangements between the Company and certain officers, including Messrs. Brown, Elenbaas, Laube, Simpson and Winkel.
Exhibit 11-Statement re computation of per share earnings
(i) Statement Re: Computation of net earnings per share
Exhibit 13-Annual report to security holders
(i) Portions of the 1993 Annual Report that are incorporated herein by reference
Exhibit 21-Subsidiaries of the registrant
(i) List of Subsidiaries
*compensation arrangement
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K--continued
Exhibit 23-Consents of experts and counsel
(i) Consent of Independent Auditors
(b) Reports on Form 8-K - No reports on Form 8-K were required to be filed in the fourth quarter of 1993.
(c) Exhibits - The response to this portion of Item 14 is submitted as a separate section of this report following the signature page.
(d) Financial statement schedules - The response to this portion of Item 14 is submitted as a separate section of this report following the signature page.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
STRYKER CORPORATION
Date: March 18, 1994 DAVID J. SIMPSON David J. Simpson, Vice President, Chief Financial Officer and Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
JOHN W. BROWN 3/18/94 DAVID J. SIMPSON 3/18/94 John W. Brown, Chairman, President David J. Simpson, Vice President, Chief and Chief Executive Officer Financial Officer and Secretary (Principal Executive Officer) (Principal Financial Officer)
HOWARD E. COX, JR. 3/18/94 ROBERT D. MONK 3/18/94 Howard E. Cox, Jr. - Director Robert D. Monk, Treasurer/Controller (Principal Accounting Officer)
DONALD M. ENGELMAN 3/18/94 RONDA E. STRYKER 3/18/94 Donald M. Engelman, Ph.D. - Director Ronda E. Stryker - Director
JEROME H. GROSSMAN 3/18/94 GERARD THOMAS 3/18/94 Jerome H. Grossman, M.D. - Director Gerard Thomas - Director
JOHN S. LILLARD 3/18/94 WILLIAM U. PARFET 3/18/94 John S. Lillard - Director William U. Parfet - Director
ANNUAL REPORT ON FORM 10-K
ITEM 14(a)(1) and (2), (c) and (d)
LIST OF FINANCIAL STATEMENTS, FINANCIAL STATEMENT SCHEDULES
CERTAIN EXHIBITS
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED DECEMBER 31, 1993
STRYKER CORPORATION
KALAMAZOO, MICHIGAN
FORM 10-K--ITEM 14(a)(1), (2) AND (d)
STRYKER CORPORATION AND SUBSIDIARIES
Index to Financial Statements and Financial Statement Schedules
The following consolidated financial statements of Stryker Corporation and subsidiaries and report of independent auditors, included in the annual stockholders report of the registrant for the year ended December 31, 1993, are incorporated by reference in Item 8:
Report of independent auditors
Consolidated balance sheet--December 31, 1993 and 1992.
Consolidated statement of earnings--years ended December 31, 1993, 1992 and 1991.
Consolidated statement of stockholders' equity--years ended December 31, 1993, 1992 and 1991.
Consolidated statement of cash flows--years ended December 31, 1993, 1992 and 1991.
Notes to consolidated financial statements--December 31, 1993.
The following consolidated financial statement schedules of Stryker Corporation and subsidiaries are included in Item 14(d):
Schedule I--Marketable securities-other investments
Schedule VIII--Valuation and qualifying accounts
Schedule IX--Short-term borrowings
Schedule X--Supplementary income statement information
Schedule XIII--Other investments
All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
SCHEDULE X --SUPPLEMENTARY INCOME STATEMENT INFORMATION
STRYKER CORPORATION AND SUBSIDIARIES
Col. A Col. B
ITEM Charged to Costs and Expenses
Year Ended December 31 _________________________________________
1993 1992 1991 _________________________________________
Advertising costs $8,097,000 $7,345,000 $6,038,000 ========== ========== ==========
Amounts for maintenance and repairs; amortization of tangible assets, pre-operating costs and similar deferrals; taxes, other than payroll and income taxes; and royalties are not presented as such amounts are less than 1% of net sales.
FORM 10-K--ITEM 14(c)
STRYKER CORPORATION AND SUBSIDIARIES
Exhibit Index
Exhibit Page*
(3) Articles of incorporation and by-laws
(i) Restated Articles of Incorporation. . . . . . . . . . . . . . . 22
(ii) By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11**
(10) Material contracts
(i) 1988 Stock Option Plan as amended . . . . . . . . . . . . . . . 11**
(ii) Description of bonus arrangements between the Company and certain officers including, Messrs. Brown, Elenbaas, Laube, Simpson and Winkel . . . . . . . . . . . . . . . . . . 27
(11) Statement re computation of per share earnings
(i) Statement Re: Computation of net earnings per share. . . . . . 28
(13) Annual report to security holders
(i) Portions of the 1993 Annual Report are incorporated here by reference. . . . . . . . . . . . . . . . 29
(21) Subsidiaries of the registrant
(i) List of Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 48
(23) Consents of experts and counsel
(i) Consent of Independent Auditors . . . . . . . . . . . . . . . . . 49
* Page number in sequential numbering system where such exhibit can be found, or it is stated that such exhibit is incorporated by reference.
** Incorporated by reference in this Annual Report on Form 10-K.
CERTIFICATE OF AMENDMENT OF RESTATED ARTICLES OF INCORPORATION OF STRYKER CORPORATION _______________________
1. The present name of the corporation is Stryker Corporation. The registered office of the corporation is 2725 Fairfield Road, Kalamazoo, Michigan 49002.
2. The former name of the corporation was Orthopedic Frame Company.
3. The date of filing of the original Articles of Incorporation was February 20, 1946.
4. Section A of Article III of the Articles of Incorporation, as amended and restated to date, is hereby amended to increase the authorized Common Stock to 150,000,000 shares, and as so amended shall read in its entirety as follows:
A. The aggregate number of shares of all classes of stock which the corporation shall have authority to issue is 150,500,000 to be divided into two classes consisting of 500,000 shares of a class designated "Preferred Stock", of the par value of One Dollar ($1) per share, and 150,000,000 shares of a class designated "Common Stock", of the par value of Ten Cents ($.10) per share.
5. This amendment was duly adopted by the shareholders of the corporation on the 27th day of April, 1993 in accordance with the provisions of subsection (2) of Section 611 of the Business Corporation Act of Michigan.
Dated this 28th day of December, 1993.
STRYKER CORPORATION
By JOHN W. BROWN John W. Brown, Chairman, President and Chief Executive Officer
RESTATED ARTICLES OF INCORPORATION OF STRYKER CORPORATION
1. These Restated Articles of Incorporation are executed pursuant to the provisions of Section 641-643 of the Business Corporation Act of Michigan (Act 284, Public Acts of 1972, as amended).
2. The present name of the corporation is Stryker Corporation.
3. The former name of the corporation was Orthopedic Frame Company.
4. The date of filing the original Articles of Incorporation was February 20, 1946.
5. The following Restated Articles of Incorporation supersedes the original Articles of Incorporation, as amended and restated to date, and shall be the Articles of Incorporation of the corporation.
ARTICLE I
The name of the corporation is Stryker Corporation.
ARTICLE II
The purpose of the corporation is to engage in any activity within the purposes for which corporations may be organized under the Business Corporation Act of Michigan. Without limiting in any manner the scope and generality of the foregoing, the corporation may manufacture and/or sell or lease hospital equipment, medical and surgical supplies and instruments and allied products and may buy, sell, lease or rent real estate and erect buildings in connection with the foregoing, or otherwise.
ARTICLE III
A. The aggregate number of shares of all classes of stock which the corporation shall have authority to issue is 50,500,000 to be divided into two classes consisting of 500,000 shares of a class designated "Preferred Stock", of the par value of One Dollar ($1) per share, and 50,000,000 shares of a class designated "Common Stock," of the par value of Ten Cents ($.10) per share.
B. The relative rights, preferences and limitations of the shares of each class are as follows:
1. Preferred Stock. The Preferred Stock may be issued from time to time in one or more series, with such distinctive designation or title and in such number of shares as may be fixed by resolution of the Board of Directors without further action by shareholders. The Board of Directors is expressly granted authority to prescribe, by resolution or resolutions adopted before the issuance of any shares of a particular series of Preferred Stock, the relative rights and preferences of each series, and the limitations applicable thereto, including but not limited to the following:
(a) The voting powers full, special or limited, or no voting powers of each such series;
(b) The rate, terms and conditions on which dividends shall be paid, whether such dividends will be cumulative, and what preference such dividends shall have in relation to the dividends on other series or classes of stock;
(c) The rights, terms and conditions, if any, for conversion of such series of Preferred Stock into shares of other series or classes of stock;
(d) Any right of the corporation to redeem the shares of such series of Preferred Stock, and the price, time, and conditions of such redemption, including the provisions for any sinking fund; and
(e) The rights of holders of such series of Preferred Stock in relation to the rights of other series and classes of stock upon the liquidation, dissolution or distribution of the assets of the corporation.
Unless the Board of Directors otherwise provides in the resolution establishing a series of Preferred Stock, upon repurchase by the corporation, redemption or conversion, the shares of Preferred Stock shall revert to authorized but unissued shares and may be reissued as shares of any series of Preferred Stock.
2. Common Stock.
(a) Subject to the prior payment or provision therefor of dividends on the Preferred Stock, the holders of the Common Stock shall be entitled to receive out of the funds of the corporation legally legally available for such purpose dividends as and when declared by the Board of Directors.
(b) In the event of any liquidation, dissolution or distribution of the assets of the corporation and after satisfaction of the preferential requirements of the Preferred Stock, the holders of Common Stock shall be entitled to share ratably in the distribution of all remaining assets of the corporation available for distribution.
(c) The holders of the Common Stock shall be entitled to one vote for each share held by them of record on the books of the corporation.
ARTICLE IV
The shareholders of the corporation shall have no preemptive right to acquire additional or treasury shares of the corporation. All preemptive rights existing prior to the date hereof, whether created by statute or common law, are abolished.
ARTICLE V
The address of the current registered office is: 420 Alcott Street, Kalamazoo, Michigan 49001. The name of the current resident agent is David J. Simpson.
ARTICLE VI
The duration of the corporation is perpetual.
ARTICLE VII
The liability to the corporation and its shareholders of each and every person who is at any time a director of the corporation for acts or omissions in such person's capacity as a director is and shall be limited and eliminated to the full extent authorized or permitted by the Michigan Business Corporation Act, as it now exists or may hereafter be amended. Any amendment, alteration or repeal of this Article VII by the shareholders of the corporation shall not adversely affect any right or protection of a director of the corporation for or with respect to any act or omission of such director occurring prior to, or at the time of, such amendment, alteration or repeal.
6. The Restated Articles of Incorporation were duly adopted by the Board of Directors on the 29th day of July, 1988, without a vote of the shareholders, in accordance with the provisions of Section 642 of the Business Corporation Act of Michigan. The Restated Articles of Incorporation only restate and integrate and do not further amend the Articles of Incorporation as heretofore amended, and there is no material discrepancy between the provisions of the Articles of Incorporation as heretofore amended and the provisions of these Restated Articles of Incorporation.
Dated this 29th day of July, 1988.
STRYKER CORPORATION
By JOHN W. BROWN John W. Brown, Chairman, President and Chief Executive Officer
EXHIBIT (10)(ii)
DESCRIPTION OF BONUS ARRANGEMENTS
The Company has entered into bonus arrangements with certain executive officers for 1994, including Mr. Brown, Mr. Elenbaas, Mr. Laube, Mr. Simpson and Mr. Winkel, based on specific performance criteria including sales, profits and asset management. The aggregate amount of such bonuses is not expected to exceed $1,200,000.
EXHIBIT (11)
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE OF COMMON STOCK
Year Ended December 31 1993 1992 1991
Average number of shares outstanding 48,356,000 47,716,000 47,526,000 __________ __________ __________ Net earnings $60,205,000 $47,700,000 $33,075,000 =========== =========== =========== Earnings per share of common stock: Net earnings $1.25 $1.00 $.70
Primary: Average shares outstanding 48,356,000 47,716,000 47,526,000
Net effect of dilutive stock options, based on the treasury stock method using average market price 536,000 1,173,000 1,228,000 __________ __________ __________ Total Primary Shares 48,892,000 48,889,000 48,754,000 ========== ========== ========== Fully Diluted: Average shares outstanding 48,356,000 47,716,000 47,526,000
Net effect of dilutive stock options, using the year-end market price, if higher then average market price 586,000 1,199,000 1,447,000 __________ __________ __________ Total Fully Diluted Shares 48,942,000 48,915,000 48,973,000 ========== ========== ==========
Note: Shares subject to stock options are not included in the earnings per share computation because the present effect thereof is not materially dilutive.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The table below outlines the components of the consolidated statement of earnings as a percentage of net sales:
Percentage of Net Percentage Sales Increase ______________________ __________________ 1993 1992 1991 1993/92 1992/91
Net Sales 100.0% 100.0% 100.0% 17% 31% Cost of sales 46.1 46.5 47.3 16 29 Research, development and engineering expense 6.5 6.8 6.5 12 36 Selling, general and administrative expense 30.9 31.3 32.1 15 28
Operating Income 16.5 15.4 14.1 25 43 Other income .7 .7 .5
Earnings Before Income Taxes 17.2 16.1 14.6 25 44 Income taxes 6.4 6.1 5.5 23 44
Net Earnings 10.8% 10.0% 9.1% 26 44
1993 COMPARED TO 1992
Stryker Corporation's net sales increased 17% in 1993 to $557.3 million as demand for the Company's products, which are sold to hospitals throughout the world, continued to grow. Increased unit volume accounted for the entire increase as higher selling prices in 1993 provided only 1% growth and were essentially offset by the effect of changes in foreign currency exchange rates.
Uncertainty over the impact of U.S. health care reform programs has generally slowed domestic sales of medical devices. In addition, in an effort to reduce their costs, purchasers of the Company's orthopaedic implants domestically have shifted their purchasing mix toward the Company's lower-cost implants. Despite these factors, the Company's total domestic sales grew 14% in 1993. International sales increased 22% in 1993 led by Osteonics orthopaedic implant and Dimso spinal implant sales. International sales expanded to 32% of total sales in 1993 compared to 31% in 1992.
Surgical product sales (principally orthopaedic products) increased 13% for the year. The domestic sales growth in Surgical products was led by Stryker Instruments' High Vacuum Cement Injection System and new Surgilav Plus pulsed irrigation system, Osteonics' knee implants and Stryker Endoscopy's newly introduced third generation Model 782 3-Chip Camera. The international sales growth of Surgical products was led by Osteonics orthopaedic implant sales by the Company's Pacific Division and Dimso spinal implant system sales by all the Company's international divisions. Sales of Medical products (principally specialty stretchers/beds and physical therapy services) increased 33%, led by the introduction of the MPS Primary Acute Care Bed in the third quarter, increased revenues from physical therapy services and increased sales of patient handling equipment.
Cost reduction programs at several of the Company's divisions and the higher mix of international sales lowered the cost of sales percentage in 1993 compared to 1992. Research, development and engineering expense increased 12% as the Company spent $36.2 million on product development in 1993 compared to $32.3 million in 1992. This commitment to product development resulted in several new products in 1993 including the MPS Primary Acute Care Bed, the Quadracut ACL/Shaver System for arthroscopy, the SurgiLav Plus pulsed irrigation system, and the Series 7000 Primary Posterially Stabilized Knee and Modular
Tibia System. Selling, general and administrative expense increased 15% in 1993, principally as a result of larger sales forces in the Company's Instruments and Medical Divisions.
However, this cost increase was contained below the percentage growth in sales and these costs dropped to 30.9% of sales in 1993 compared to 31.3% in 1992.
The effective tax rate decreased to 37.3% in 1993 compared to 38.0% in 1992 due to lower effective foreign tax rates. Effective January 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes". The cumulative effect of the change in the method of accounting on net earnings was not material. Net earnings in 1993 were $60.2 million, a 26% increase over the Company's earnings in 1992 of $47.7 million.
In the fourth quarter of 1993, net sales reached a record level of $145.2 million and net earnings were $17.8 million or 12.2% of sales. Fourth quarter net earnings as a percent of sales was higher than the previous three quarters of the year because manufacturing costs and operating expenses increased at a slower rate than sales.
1992 COMPARED TO 1991
Stryker Corporation's net sales increased 31% in 1992 to $477.1 million compared to $364.8 million in 1992. Increased unit volume generated a 28% sales increase, increased selling prices added 2% and a 1% increase was due to changes in foreign currency exchange rates. Sales of the Company's Surgical products increased 30% for the year led domestically by Stryker Endoscopy's 3-Chip Camera system, the newly introduced Osteonics Series 7000 Total Knee System and the System 2000 heavy-duty battery-powered instrument line. The international sales growth in Surgical products was led by the introduction of the Osteonics knee line in Japan. Sales of Medical products increased 34%, led by gains in physical therapy revenues and nearly the entire line of patient-handling equipment.
Cost of sales increased 29% in 1992 and represented 46.5% of sales compared to 47.3% in 1991. The lower cost of sales percentage in 1992 resulted from cost reduction programs implemented at several of the Company's divisions and from increased unit volume. Research, development and engineering expense increased 36% as the Company spent $32.3 million on product development in 1992 compared to $23.7 million in 1991. This commitment to product development resulted in several new products in 1992 including the Series 7000 Total Knee System, the Company's third generation 3-Chip and 1-Chip Camera systems, the High Vacuum Cement Injection System for applying bone cement, and a warming stretcher for the recovery room. Selling, general and administrative expense increased 28% in 1992, principally as a result of the increased cost of larger sales forces in the Endoscopy, Instruments, Medical and Europe Divisions. These costs dropped to 31.3% of sales in 1992 compared to 32.1% in 1991.
The increase in other income is a result of modest foreign currency gains in 1992 of $188,000 compared to $898,000 of foreign currency losses in 1991. In addition, interest income, which is included in other income, increased in 1992 as a result of increased levels of cash and marketable securities.
The effective tax rate remained constant at 38.0% in 1992. Net earnings in 1992 were $47.7 million, a 44% increase over the Company's net earnings in 1991 of $33.1 million.
In the fourth quarter of 1992, net sales were $130.0 million and net earnings were $14.6 million or 11.2% of sales. Fourth quarter net earnings as a percent of sales was higher than the previous three quarters of the year because manufacturing costs and selling, general and administrative expenses increased at a slower rate than sales.
LIQUIDITY AND CAPITAL RESOURCES
Stryker's financial position continued to strengthen in 1993, with operating activities providing $86.1 million in cash. Working capital increased to $214.0 million from $168.2 million in the prior year. Accounts receivable increased 14% compared with the Company's 17% increase in sales and days sales outstanding in accounts receivable at the end of 1993 decreased to 47 days from 52 days at the end of 1992. Inventories actually decreased 4% in 1993 and days sales in inventory reflected even greater improvement, finishing 1993 at 114 days compared to 130 days at the end of 1992.
In August 1993, the Company purchased 20% of the outstanding shares of Matsumoto Medical Instruments, Inc., Osaka, Japan. The cost of the investment, which was based on net book value, was approximately $33 million and was financed by a five-year Japanese yen denominated fixed-rate bank borrowing. The investment is accounted for under the equity method. The Company's share of Matsumoto's net earnings in 1993 were immaterial to consolidated net earnings.
The Company's cash and marketable securities of $152.6 million at December 31, 1993, as well as anticipated cash flows from operations, are expected to be sufficient to fund planned future operating capital requirements. Should additional funds be required, the Company has unsecured lines of credit with banks totaling $39.0 million. At December 31, 1993, only $.8 million of these lines has been utilized to fund operating activities overseas.
CONSOLIDATED BALANCE SHEET STRYKER CORPORATION AND SUBSIDIARIES
December 31 (in thousands, except per share amounts) 1993 1992
Assets
CURRENT ASSETS Cash and cash equivalents $49,712 $43,091 Marketable securities 102,925 48,661 Accounts receivable, less allowance of $3,800 ($2,900 in 1992) 87,896 76,899 Inventories 76,582 79,391 Deferred income taxes 15,829 12,772 Prepaid expenses and other current assets 10,907 8,791 ------- ------- Total Current Assets 343,851 269,605
PROPERTY, PLANT AND EQUIPMENT Land, buildings and improvements 30,790 25,220 Machinery and equipment 94,551 82,317 _______ _______ 125,341 107,537 Less allowance for depreciation 57,634 47,888 _______ _______ 67,707 59,649
OTHER ASSETS Intangibles, less accumulated amortization of $9,925 ($6,790 in 1992) 7,795 9,370 Investment in affiliate 32,569 Miscellaneous 2,282 1,648 _______ _______ 42,646 11,018 _______ _______ $454,204 $340,272 ======== ========
Liabilities and Stockholders' Equity
CURRENT LIABILITIES Notes payable $777 Accounts payable 43,172 $38,269 Accrued compensation 28,270 25,067 Income taxes 21,107 9,979 Accrued expenses and other liabilities 35,678 26,901 Current maturities of long-term debt 882 1,192 _______ _______ Total Current Liabilities 129,886 101,408
LONG-TERM DEBT, EXCLUDING CURRENT MATURITIES 31,282 1,433
OTHER LIABILITIES 4,602 5,170
STOCKHOLDERS' EQUITY Common stock, $.10 par value: Authorized--150,000 shares (50,000 in 1992) Outstanding--48,395 shares (48,303 in 1992) 4,840 4,830 Additional paid-in capital 17,111 15,732 Retained earnings 268,367 211,550 Foreign translation adjustments (1,884) 149 _______ _______ Total Stockholders' Equity 288,434 232,261 _______ _______ $454,204 $340,272 ======== ========
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF EARNINGS STRYKER CORPORATION AND SUBSIDIARIES
Years Ended December 31 (in thousands, except per share amounts) 1993 1992 1991
Net Sales $557,335 $477,054 $364,825
Costs and expenses: Cost of sales 256,748 221,650 172,477 Research, development and engineering 36,199 32,313 23,703 Selling, general and administrative 172,446 149,390 117,089 _______ _______ _______ 465,393 403,353 313,269 _______ _______ _______ Operating Income 91,942 73,701 51,556 Other income - net 4,123 3,239 1,789 _______ _______ _______ Earnings Before Income Taxes 96,065 76,940 53,345 Income taxes 35,860 29,240 20,270 _______ _______ _______ Net Earnings $60,205 $47,700 $33,075 ======= ======= ======= Net Earnings Per Share of Common Stock $1.25 $1.00 $.70 ======= ======= ======= Average Number of Shares Outstanding 48,356 47,716 47,526
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY STRYKER CORPORATION AND SUBSIDIARIES
Years Ended December 31 Additional Foreign (in thousands, except per Common Paid-In Retained Translation share amounts) Stock Capital Earnings Adjustments
Balance at January 1, 1991 $4,746 $4,757 $136,053 $2,319
Net earnings for 1991 33,075 Sales of 134 shares of common stock under option, including $799 income tax benefit 14 1,256 Cash dividend declared of $.05 per share of common stock (2,380) Translation adjustment 35 ______ ______ ________ ______ Balance at December 31, 1991 4,760 6,013 166,748 2,354
Net earnings for 1992 47,700 Sales of 706 shares of common stock under stock option and benefit plans, including $7,469 income tax benefit 70 9,719 Cash dividend declared of $.06 per share of common stock (2,898) Translation adjustment (2,205) ______ ______ _______ ______ Balance at December 31, 1992 4,830 15,732 211,550 149
Net earnings for 1993 60,205 Sales of 92 shares of common stock under stock option and benefit plans, including $393 income tax benefit 10 1,379 Cash dividend declared of $.07 per share of common stock (3,388) Translation adjustment (2,033) ______ ______ _______ ______ Balance at December 31, 1993 $4,840 $17,111 $268,367 ($1,884)
See accompanying notes to consolidated financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS STRYKER CORPORATION AND SUBSIDIARIES
Years Ended December 31 (in thousands) 1993 1992 1991
OPERATING ACTIVITIES Net Earnings $60,205 $47,700 $33,075 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 13,048 10,214 9,890 Amortization 3,135 1,168 1,906 Provision for losses on accounts receivable 900 400 1,200 Deferred income taxes (credit) (2,917) (4,171) (5,872) Changes in operating assets and liabilities: Increase in accounts receivable (11,305) (20,563) (3,682) Decrease (increase) in inventories 2,271 726 (18,103) Increase in accounts payable 4,982 7,723 8,340 Increase in income taxes 11,092 632 2,766 Other 4,691 6,899 8,124 _______ _______ _______ Net Cash Provided by Operating Activities 86,102 50,728 37,644
INVESTING ACTIVITIES Purchases of property, plant and equipment (20,160) (31,618) (16,570) Purchases of marketable securities (54,264) (21,553) (11,728) Business acquisitions (34,654) (8,736) _______ _______ _______ Net Cash Used in Investing Activities (109,078) (61,907) (28,298)
FINANCING ACTIVITIES Proceeds from borrowings 33,563 4,401 Payments on borrowings (2,016) (7,418) (400) Dividends paid (2,898) (2,380) Proceeds from exercise of stock options 1,389 9,789 1,270 Other (126) (376) (198) _______ _______ _______ Net Cash Provided by (Used in) Financing Activities 29,912 (385) 5,073
Effect of exchange rate changes on cash and cash equivalents (315) 1,734 (170) _______ _______ _______ Increase (Decrease) in Cash and Cash Equivalents 6,621 (9,830) 14,249 Cash and cash equivalents at beginning of year 43,091 52,921 38,672 _______ _______ _______ Cash and Cash Equivalents at End of Year $49,712 $43,091 $52,921 ======= ======= =======
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS STRYKER CORPORATION AND SUBSIDIARIES December 31, 1993
1. Significant Accounting Policies
BUSINESS: Stryker Corporation develops, manufactures and markets specialty surgical and medical products which are sold primarily to hospitals throughout the world.
PRINCIPLES OF CONSOLIDATION: The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries after elimination of all significant intercompany accounts and transactions. The Company's investment in affiliate represents a 20% investment and is accounted for by the equity method.
REVENUE RECOGNITION: Revenue is recognized on the sale of products when the related goods have been shipped or services have been rendered.
CASH EQUIVALENTS AND MARKETABLE SECURITIES: Cash equivalents are highly liquid investments with a maturity of three months or less when purchased. Marketable securities are valued at cost which approximates market value.
INVENTORIES: Inventories are stated at the lower of cost or market. Cost for approximately 63% (68% in 1992) of inventories is determined using the lower of first-in, first-out (FIFO) cost or market. Cost for certain domestic inventories is determined using the last-in, first-out (LIFO) cost method. The FIFO cost for all inventories approximates replacement cost.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment is stated at cost. Depreciation is computed by the straight-line method over the estimated useful lives of the assets.
INTANGIBLE ASSETS: Intangible assets represent the excess of purchase price over fair value of tangible net assets of acquired businesses. Intangible assets, which include patents and intangibles not specifically identifiable, are being amortized using the straight-line method over periods of up to sixteen years.
INCOME TAXES: Effective January 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes", which requires the use of the liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates in effect for the years in which the differences are expected to reverse. Prior to the adoption of Statement 109, income tax expense was determined using the deferred method. Deferred tax expense was based on items of income and expense that were reported indifferent years in the financial statements and tax returns and were measured at the tax rate in effect in the year the difference originated.
EARNINGS PER SHARE: Earnings per share is based upon the average number of shares of common stock outstanding during each year. Shares subject to option are not included in earnings per share computations because the present effect thereof is not materially dilutive.
2. Inventories
Inventories are as follows (in thousands): December 31 1993 1992
Finished goods $45,338 $47,068 Work-in-process 10,586 14,968 Raw material 28,455 24,783 _______ _______ FIFO cost 84,379 86,819 Less LIFO reserve 7,797 7,428 _______ _______ $76,582 $79,391 ======= =======
3. Business Acquisitions
In August 1993, the Company purchased 20% of the outstanding shares of Matsumoto Medical Instruments, Inc., Osaka, Japan. Matsumoto began distributing Stryker products in Japan in 1969 and is the exclusive distributor of most Stryker products in that country. The cost of the investment, which was based on net book value, was approximately 3.4 billion yen ($32.8 million). This investment is accounted for under the equity method. The Company's share of Matsumoto's net earnings did not have a material impact on the Company's net earnings in 1993.
During 1993 and 1992, the Company's subsidiary, Physiotherapy Associates, Inc., purchased several physical therapy clinic operations. The aggregate purchase price of these clinics in 1993 and 1992 was approximately $1,900,000 and $2,900,000, respectively, and generally approximated the carrying amounts of the assets acquired. Proforma consolidated results including the purchased businesses would not differ significantly from reported results.
In October 1992, the Company's subsidiary, Stryker France S.A., acquired Dimso S.A. and its subsidiary companies in France and Spain. Dimso designs and manufactures the Diapason and Stryker 2S Spinal Implant Systems and other orthopaedic products. The acquisition was accounted for by the purchase method at a total cost of $13,000,000 of which approximately $7,000,000 will be paid over the next three years. Intangible assets acquired, principally patents, are being amortized over a ten year period. Proforma consolidated results including the purchased business would not differ significantly from reported results.
4. Borrowings
The Company and its subsidiaries have unsecured short-term line of credit arrangements with banks aggregating $20,000,000 domestically and $19,000,000 equivalent in foreign currencies. Borrowings under these lines at December 31, 1993 were $777,000 in foreign funds at an average interest rate of 12.5%. These lines generally expire July 31, 1994.
Long-term debt is as follows (in thousands):
December 31 1993 1992 Bank loan $30,736 Other 1,428 $2,625 _______ ______ 32,164 2,625 Less current maturities 882 1,192 _______ ______ $31,282 $1,433 ======= ======
The unsecured bank loan, which matures on August 4, 1998, is Japanese yen denominated and bears interest at a fixed rate of 4.9% per annum.
Maturities of debt for the four years succeeding 1994 are: 1995 - $44,000; 1996 - $48,000; 1997 - $52,000 and 1998 - $30,793,000.
The carrying amount of the Company's long-term debt approximates the fair value based on the Company's current borrowing rates for similar types of borrowing agreements.
Total interest expense, which is included in other income and approximates interest paid, was $1,067,000 in 1993, $411,000 in 1992 and $655,000 in 1991.
5. Capital Stock
The Company has key employee and director Stock Option Plans under which options are granted at a price not less than fair market value at date of grant. The options are granted for periods of up to ten years and become exercisable in varying installments. A summary of stock option activity follows:
Option Shares Price Per Share
Options outstanding at January 1, 1992 1,709,750 $3.20 - $30.75 Granted 397,000 34.25 - 38.75 Canceled (69,800) 4.34 - 34.25 Exercised (761,025) 3.20 - 14.63 ________________________________________________________________________________ Options outstanding at December 31, 1992 1,275,925 3.20 - 38.75 Granted 867,500 22.38 - 25.50 Canceled (411,300) 6.75 - 38.75 Exercised (75,600) 3.20 - 14.63 ________________________________________________________________________________ Options outstanding at December 31, 1993 1,656,525 $3.20 - $34.25
At December 31, 1993, options for 576,225 shares were exercisable and 1,113,100 shares were reserved for future grants.
On May 13, 1991, the Company effected a two-for-one stock split. All share and per share data and affected amounts have been adjusted to reflect the stock split as though it had occurred at the beginning of the periods presented.
The Company has 500,000 authorized shares of $1 par value preferred stock, none of which are outstanding.
6. Retirement Plans
Substantially all Company employees are covered by profit sharing or defined contribution retirement plans. Retirement plan expense under the Company's profit sharing and defined contribution retirement plans totaled $5,302,000 in 1993, $4,715,000 in 1992 and $3,631,000 in 1991.
7. Income Taxes
Effective January 1, 1993, the Company adopted FASB Statement No. 109, "Accounting for Income Taxes", which requires the use of the liability method of accounting for income taxes (see Note 1). As permitted by Statement 109, the Company has elected not to restate the financial statements of any prior years. The cumulative effect of the change in the method of accounting on net earnings was not material.
Earnings before income taxes consist of the following (in thousands):
1993 1992 1991
United States operations $88,181 $66,552 $45,480 Foreign operations 7,884 10,388 7,865 _______ _______ _______ $96,065 $76,940 $53,345 ======= ======= =======
The components of the provision for income taxes follow (in thousands):
1993 1992 1991 Current: Federal $26,114 $20,827 $17,985 State, including Puerto Rico 10,372 7,973 4,467 Foreign 2,291 4,611 3,690 _______ _______ _______ 38,777 33,411 26,142 Deferred tax expense (credit) (2,917) (4,171) (5,872) ------- ------ ------ $35,860 $29,240 $20,270 ======= ======= =======
A reconciliation of the statutory federal income tax rate to the Company's effective tax rate follows:
1993 1992 1991 U.S. statutory income tax rate 35.0% 34.0% 34.0% Add (deduct): State taxes, less effect of federal reduction 6.3 5.9 4.3 Foreign income taxes at rates different from the U.S. statutory rate (.8) 1.0 1.3 Tax benefit relating to operations in Puerto Rico (1.8) (1.9) (2.4) Research and development tax credit (1.4) (.9) (1.7) Earnings of Foreign Sales Corporation (1.4) (.8) (1.3) Other 1.4 .7 3.8 ---- ---- ---- 37.3% 38.0% 38.0%
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The tax effect of significant temporary differences which comprise the Company's deferred tax assets and liabilities at December 31, 1993 are as follows (in thousands):
Deferred tax assets: Inventories $4,712 Accounts receivable and other assets 2,874 Other accrued expenses 6,662 State taxes 1,297 Other 920 ------ Total deferred tax assets 16,465 Deferred tax liabilities: Depreciation (792) Other (895) ------ Total deferred tax liabilities (1,687) ------ Total net deferred tax assets $14,778 =======
Deferred tax assets and liabilities are included in the consolidated balance sheet at December 31, 1993 as follows (in thousands):
Current -- Deferred income taxes $15,829 Non-current -- Other liabilities (1,051) ------- Net deferred tax assets $14,778 =======
No provision has been made for U.S. federal and state income taxes or foreign taxes that may result from future remittances of the undistributed earnings ($40,128,000 at December 31, 1993) of foreign subsidiaries because it is expected that such earnings will be reinvested overseas indefinitely. Determination of the amount of any unrecognized deferred income tax liability on these unremitted earnings is not practicable.
Total income taxes paid were $27,641,000 in 1993, $25,133,000 in 1992 and $22,550,000 in 1991.
8. Geographic Data
Geographic area information follows (in thousands):
1993 1992 1991 NET SALES United States operations: Domestic $378,255 $330,782 $253,479 Export 115,977 81,513 72,256 Foreign operations: Europe 63,366 58,010 47,685 Other 45,638 43,182 24,401 Eliminations (45,901) (36,433) (32,996) -------- -------- -------- Net Sales $557,335 $477,054 $364,825 ======== ======== ========
OPERATING INCOME (LOSS) United States operations $90,726 $68,759 $49,492 Foreign operations: Europe 6,571 6,998 7,497 Other 3,125 4,477 717 -------- -------- -------- Total Foreign Operations 9,696 11,475 8,214
Corporate expenses (8,480) (6,533) (6,150) -------- -------- -------- Total Operating Income $91,942 $73,701 $51,556 ======== ======== ========
ASSETS United States operations $225,587 $199,188 $156,155 Foreign operations: Europe 39,313 42,580 24,607 Other 16,120 15,125 15,834 Corporate 173,184 83,379 73,720 -------- -------- -------- Total Assets $454,204 $340,272 $270,316
Intercompany sales between geographic areas are included in export and foreign operations sales at agreed upon prices which include a profit element.
For the year ended December 31, 1993, sales to Matsumoto Medical Instruments, Inc. were $64,300,000 or 12% of total net sales. No customer accounted for 10% or more of the Company's sales in 1992 and 1991.
Gains (losses) on foreign currency transactions, which are included in other income, totaled $(256,000), $188,000 and $(898,000) in 1993, 1992 and 1991, respectively.
Corporate assets consist primarily of domestic cash and cash equivalents, marketable securities and investment in affiliate.
9. Leases
The Company leases various manufacturing and office facilities and equipment under operating leases. Future minimum lease commitments under these leases are as follows (in thousands):
1994 $7,507 1995 5,591 1996 4,316 1997 3,001 1998 2,115 Thereafter 2,152 ------ $24,682 =======
Rent expense totaled $10,950,000 in 1993, $8,792,000 in 1992 and $6,686,000 in 1991.
10. Contingencies
The Company is involved in various claims and legal actions arising in the normal course of business. The Company does not anticipate material losses as a result of these actions.
REPORT OF INDEPENDENT AUDITORS
Board of Directors Stryker Corporation
We have audited the accompanying consolidated balance sheet of Stryker Corporation and subsidiaries as of December 31, 1993 and 1992, and the related consolidated statements of earnings, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1993. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stryker Corporation and subsidiaries at December 31, 1993 and 1992, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1993, in conformity with generally accepted accounting principles.
Ernst & Young
Kalamazoo, Michigan January 31, 1994
BOARD OF DIRECTORS AND OFFICERS
BOARD OF DIRECTORS
John W. Brown Chairman, President and Chief Executive Officer, Stryker Corporation. Howard E. Cox, Jr. General Partner, Greylock Partners & Co. *Donald M. Engelman, Ph.D. Professor of Molecular Biophysics and Biochemistry, Yale University. Jerome H. Grossman, M.D. Chairman and Chief Executive Officer, New England Medical Center, Inc. *John S. Lillard Chairman-Founder, JMB Institutional Realty Corp. William U. Parfet President and Chief Executive Officer, Richard-Allan Medical Industries, Inc. Ronda E. Stryker Granddaughter of the founder of the Company and daughter of the former President of the Company. A director of Comerica Bank, the L. Lee Stryker Center and Trustee of Kalamazoo College. *Gerard Thomas Attorney, Miller, Canfield, Paddock & Stone.
*Audit and Compensation Committees
CORPORATE OFFICERS
John W. Brown Chairman, President and Chief Executive Officer Ronald A. Elenbaas Vice President, President, Stryker Surgical Group William T. Laube, III Vice President, President, Stryker Pacific Robert D. Monk Treasurer/Controller and Assistant Secretary Julia M. Paradine-Rice Assistant Treasurer David J. Simpson Vice President, Chief Financial Officer and Secretary Thomas R. Winkel Vice President, President, Stryker Americas/Middle East
OPERATING DIVISIONS
OSTEONICS CORP. Edward B. Lipes - President Gary L. Grenter - Vice President, Operations Brian K. Hutchison - Vice President, Finance Michael T. Manley, Ph.D. - Vice President, Advanced Research Anthony M. Moutinho - Vice President, Sales
PHYSIOTHERAPY ASSOCIATES, INC. Jason T. Blackwood - President Jeffrey S. Chitwood - Vice President, Finance G. William Cole, Jr. - Vice President, Marketing and Development
STRYKER AMERICAS/MIDDLE EAST Thomas R. Winkel - President Bradford J. Williams - Vice President, Canada
STRYKER BIOTECH Samuel Yin, Ph.D. - Director
STRYKER ENDOSCOPY Ronald A. Elenbaas - President Pedro A. Martinez - Vice President, General Manager William E. Chang - Vice President, Research and Development
STRYKER EUROPE Jean-Pierre Boucher - President Alain Guez - Vice President, France Maurizio Zaccarelli - Vice President, Stryker Europe
STRYKER INSTRUMENTS Ronald A. Elenbaas - President Stephen Si Johnson - Executive Vice President, General Manager Matthew S. Alves - Vice President, Marketing Bradley D. Black - Vice President, Human Resources James A. Evans - Vice President, Research and Development Thomas R. Gillentine - Vice President, Controller John T. Saunders - Vice President, Operations
STRYKER MEDICAL Harry E. Carmitchel - President Joseph S. Messer - Vice President, Marketing, Patient Care Division Michael R. Stringer - Vice President, Sales, Patient Care Division Mark J. Fletcher - Vice President, Sales and Marketing, Patient Handling Division Gary T. Morton - Vice President, Engineering, Patient Handling Division Kenneth A. Palmer - Vice President, General Manager, Patient Handling Division Joseph P. Briggs - Vice President, Service Division
STRYKER PACIFIC William T. Laube, III - President Alexander S. Kennedy - Vice President, General Manager, Australia Hyung-Yun Lee - Vice President, General Manager, Korea John D. Pierson - President, Japan Hugo K.W. Hui - Vice President, Finance and Administration
EXHIBIT (21)
List of Subsidiaries
State or Country of Name of Subsidiary Incorporation - ------------------ -------------------
Nippon Stryker Service K.K. Japan
Osteonics Corp. New Jersey
Physiotherapy Associates, Inc. Michigan
Stryker Australia Pty. Ltd. Australia
Stryker B.V. The Netherlands
Stryker Barbados Foreign Sales Corporation Barbados
Stryker Canada Inc. Canada
Stryker Corporation (Malaysia) SDN BHD Malaysia
Stryker Deutschland GmbH Germany
Stryker Far East, Inc. Delaware
Stryker Foreign Sales Corporation U.S. Virgin Islands
Stryker France SA France
Stryker India Medical Equipment Private Limited India
Stryker Italia SRL Italy
Stryker Japan K.K. Japan
Stryker Korea Ltd. Korea
Stryker Malaysia, SDN. BHD. Malaysia
Stryker Pacific Limited Hong Kong
Stryker Puerto Rico, Inc. Delaware
Stryker SA Switzerland
Stryker Sales Corporation Michigan
Stryker Singapore Private Limited Singapore
Stryker Corporation is the immediate parent and owns 100% of the outstanding voting securities of each of the above-named subsidiaries.
EXHIBIT 23--CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Annual Report (Form 10-K) of Stryker Corporation and subsidiaries of our report dated January 31, 1994, included in the 1993 Annual Report to Stockholders of Stryker Corporation and subsidiaries.
Our audits also included the financial statement schedules of Stryker Corporation and subsidiaries listed in Item 14(a). These schedules are the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, the financial statement schedules referred to above, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.
We also consent to the incorporation by reference in the Registration Statement Number 33-55662 on Form S-8 dated December 11, 1992, Registration Statement Number 2-96467 on form S-8 dated April 4, 1985, Registration Statement Number 33-16642 on Form S-3 dated August 20, 1987, and Registration Statement Number 33-32240 on Form S-8 dated November 20, 1989 and to the related prospectus for each of the registration statements, of our report dated January 31, 1994, with respect to the consolidated financial statements incorporated herein by reference, and our report included in the preceding paragraph with respect to the financial statement schedules included in this Annual Report (Form 10-K) of Stryker Corporation.
ERNST & YOUNG
Kalamazoo, Michigan March 17, 1994