EX-99 2 syk071905ex991.htm EX 99 TO STRYKER CORP FORM 8K 071905 Stryker 2nd Qtr 2005 Earnings Release

Exhibit 99.1

 

STRYKER OPERATING RESULTS FOR
QUARTER ENDED JUNE 30, 2005

 

Kalamazoo, Michigan -- July 19, 2005 -- Stryker Corporation (NYSE:SYK) reported operating results for the quarter ended June 30, 2005 as follows:

 

Second Quarter Highlights

 

·

 Net sales increased 16.8% (15.1% constant currency) to $1,219 million

·

 Net earnings increased 20.7% to $184 million

·

 Diluted net earnings per share were $.45, an increase of 21.6%

·

 Orthopaedic Implant sales increased 14.9% (12.7% constant currency)

·

 MedSurg Equipment sales increased 22.3% (21.0% constant currency)

 

 

Net sales were $1,218.6 million for the second quarter of 2005, representing a 16.8% increase over net sales of $1,043.0 million in the second quarter of 2004 and $2,421.1 million for the first half of 2005, representing a 16.5% increase over net sales of $2,078.1 million for the first half of 2004.  Excluding the impact of foreign currency, net sales increased 15.1% for the second quarter and 14.8% for the first half.

 

Net earnings for the second quarter of 2005 were $184.3 million, representing a 20.7% increase over net earnings of $152.7 million in the second quarter of 2004.  Diluted net earnings per share for the second quarter increased 21.6% to $.45 compared to $.37 in the second quarter of 2004.  Net earnings for the first half of 2005 were $357.4 million, representing a 23.8% increase over net earnings of $288.6 million in 2004.  Diluted net earnings per share for the first half increased 24.3% to $.87 compared to $.70 in the first half of 2004.

 

Sales Analysis

 

Domestic sales were $784.1 million for the second quarter and $1,558.8 million for the first half of 2005, representing increases of 15.8% and 16.8%, respectively, as a result of strong shipments of Orthopaedic Implants and MedSurg Equipment and higher revenue from Physical Therapy Services.

 

International sales were $434.5 million for the second quarter and $862.3 million for the first half of 2005, representing increases of 18.8% and 16.1%, respectively, as a result of higher shipments of Orthopaedic Implants and MedSurg Equipment.  The impact of foreign currency comparisons to the dollar value of international sales was favorable by $18.2 million in the second quarter and by $34.7 million in the first half.  Excluding the impact of foreign currency, international sales increased 13.8% in the second quarter and 11.4% in the first half.

 

Worldwide sales of Orthopaedic Implants were $724.8 million for the second quarter and $1,439.2 million for the first half of 2005, representing increases of 14.9% and 13.9%, respectively, based on higher shipments of reconstructive (hip, knee and shoulder), trauma, spine and micro implant systems, osteogenic protein-1 and bone cement.  Excluding the impact of foreign currency, sales of Orthopaedic Implants increased 12.7% in the second quarter and 11.8% in the first half.

 

Worldwide sales of MedSurg Equipment were $427.4 million for the second quarter and $850.4 million for the first half of 2005, representing increases of 22.3% and 23.1%, respectively, based on higher shipments of powered surgical instruments and operating room equipment, endoscopic products and patient handling and emergency medical equipment.  Excluding the impact of foreign currency, sales of MedSurg Equipment increased 21.0% in the second quarter and 21.8% in the first half.

 

Physical Therapy Services revenues were $66.4 million for the second quarter and $131.5 million for the first half of 2005, representing increases of 6.1% and 6.9%, respectively, as a result of added revenue from new physical therapy centers.

 

Income Tax Rate

 

The Company's effective income tax rate for the second quarter and first half of 2005 was reduced to 29.5% as compared to a 30.0% effective income tax rate for the second quarter and first half of 2004 and an effective annual income tax rate of 35.0% for the year ended December 31, 2004.  The effective income tax rate for the year ended December 31, 2004 reflected the non-deductibility for income tax purposes of substantially all of the $120 million upfront payment in the third quarter of 2004 to acquire SpineCore, Inc.  The income tax rate reduction in the first half of 2005 compared to the first half of 2004 results primarily from increased manufacturing in lower tax jurisdictions.

 

Conference Call

 

As previously announced, the Company will conduct a conference call for financial analysts at 5:00 p.m., Eastern Time, today.  To hear the conference call, dial 800/728-2053.  A simultaneous webcast of the call may be accessed via the Company's website at www.stryker.com.  The call will be archived on this site for 90 days. A recording of the call will also be available from 7:30 p.m., Eastern Time, today until 7:30 p.m. on Thursday, July 21, 2005.  To hear this recording dial 800/633-8284 (domestic) or 402/977-9140 (international) and enter the registration number 21248650.

 

Stryker Corporation is one of the world's leading medical device companies with the most broadly-based range of products in orthopaedics and a significant presence in other medical specialties.  The Company's products include implants that are used in joint replacement, trauma, spine and micro surgeries; orthobiologics; operating room and interventional pain products; surgical navigation, endoscopic, communications and digital imaging systems; as well as patient handling and emergency medical equipment.  In addition, Stryker provides outpatient physical therapy services in the United States.

 

 

 

STRYKER CORPORATION

For the Three Month and Six Month Periods Ended June 30, 2005

(Unaudited - In Millions Except Per Share Amounts)

 

 

    Second Quarter

           Six Months

CONDENSED STATEMENTS OF EARNINGS

2005 

2004 

% Change 

2005 

2004

% Change 

 

 

 

 

 

 

 

Net sales

 $1,218.6

$1,043.0

16.8  $2,421.1

 $2,078.1

16.5 

Cost of sales

 422.2

364.7

15.8  851.3

732.9

16.2 

   GROSS PROFIT

 796.4

678.3

17.4  1,569.8

1,345.2

16.7 

      % of Sales

 65.4

65.0

  64.8

64.7

 

 

  

 

    

 

  

Research, development and engineering expenses

 65.9

50.5

30.5  126.5

100.1

26.4 

Selling, general and administrative expenses

 457.5

396.5

15.4  907.7

807.8

12.4 

Intangibles amortization

 11.4

11.2

1.8  27.8

24.0

15.8 

 

 534.8

458.2

16.7  1,062.0

931.9

14.0 

 

  

 

    

 

  

   OPERATING INCOME

 261.6

220.1

18.9  507.8

413.3

22.9 

      % of Sales

 21.5

21.1

  21.0

19.9

 

 

  

 

    

 

  

Other expense

 0.2

1.9

 (89.5) 0.8

1.0

 (20.0)

 

  

 

    

 

  

   EARNINGS BEFORE INCOME TAXES

 261.4

218.2

19.8  507.0

412.3

23.0 

Income taxes

 77.1

65.5

17.7  149.6

123.7

20.9 

   NET EARNINGS

 $184.3

 $152.7

20.7  $357.4

 $288.6

23.8 

 

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Net Earnings Per Share

  

 

    

 

  

   Basic

 $0.46

 $0.38

21.1  $0.89

 $0.72

23.6 

   Diluted

 $0.45

 $0.37

21.6  $0.87

 $0.70

24.3 

 

  

 

    

 

  

Average Shares Outstanding

  

 

    

 

  

   Basic

 403.3

400.8

  403.1

400.3

 

   Diluted

 411.3

410.8

  411.3

410.0

 

 

 

STRYKER CORPORATION

For the Three Month and Six Month Periods Ended June 30, 2005

(Unaudited - In Millions)

 

 

     Second Quarter

          Six Months

CONDENSED SALES ANALYSIS

2005

2004

% Change

2005

 2004

% Change
             

Domestic

 $784.1

$677.2

 15.8 $1,558.8

$1,335.1

 16.8

International

 434.5

365.8

 18.8 862.3

743.0

 16.1

   NET SALES

 $1,218.6

$1,043.0

 16.8 $2,421.1

$2,078.1

 16.5

 

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Orthopaedic Implants

 $724.8

$630.9

 14.9 $1,439.2

$1,264.0

 13.9

MedSurg Equipment

 427.4

349.5

 22.3 850.4

691.1

 23.1

Physical Therapy Services

 66.4

62.6

 6.1 131.5

123.0

 6.9

   NET SALES

 $1,218.6

$1,043.0

 16.8 $2,421.1

$2,078.1

 16.5

 

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STRYKER CORPORATION

(Unaudited - In Millions)

 

 

 

 

 

 

June 30

December 31

CONDENSED BALANCE SHEETS

2005

2004

 

 

 

 

 

ASSETS

 

 

 

Cash and cash equivalents

 $118.4

 $349.4

Marketable securities 212.0

-- 

 

Accounts receivable (net)

 749.6

               751.1

 

Inventories

576.3

               552.5

 

Other current assets

 515.1

489.6

 

TOTAL CURRENT ASSETS

 2,171.4

            2,142.6

 

 

 

 

Property, Plant and Equipment (net)

 738.5

               700.5

 

Goodwill and Other Intangibles (net)

 954.2

               963.2

 

Other Assets

 303.7

               277.5

 

TOTAL ASSETS

 $4,167.8

 $4,083.8

 

 

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 =====

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Current Liabilities

 $951.7

 $1,113.5

 

Long-Term Debt

 0.7

                0.7

 

Other Liabilities

 226.6

               217.6

 

Stockholders' Equity

 2,988.8

            2,752.0

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 $4,167.8

 $4,083.8

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STRYKER CORPORATION

For the Three Month and Six Month Periods Ended June 30, 2005

(Unaudited - In Millions)

 

 

Second Quarter   

 

Six Months       

CONDENSED STATEMENTS OF CASH FLOWS

2005 

2004 

  

2005 

2004 
           

OPERATING ACTIVITIES

 

 

 

 

 

Net earnings

 $184.3 

$152.7 

 

 $357.4 

$288.6 

Depreciation

 26.4 

25.1 

 

 53.5 

50.8 

Amortization

 43.0 

35.9 

 

 89.8 

71.2 

Reductions of accounts receivable securitization

 -- 

(155.0)

 

 -- 

(150.0)

Changes in working capital and other

 (66.5)

(14.0)

 

 (281.5)

(158.0)

   NET CASH PROVIDED BY OPERATING ACTIVITIES

 187.2 

44.7 

 

 219.2 

102.6 

 

  

 

 

  

 

INVESTING ACTIVITIES

  

 

 

  

 

Acquisitions, net of cash acquired

 (3.0)

(5.1)

 

 (53.1)

(14.9)
Purchases of marketable securities (212.9)

-- 

   (212.9)

-- 

Purchases of property, plant and equipment

 (71.1)

(43.1)

 

 (116.4)

(74.2)

Proceeds from sales of property, plant and equipment

   0.2 

    -- 

 

   0.4 

  7.8 

   NET CASH USED IN INVESTING ACTIVITIES

 (286.8)

(48.2)

 

 (382.0)

(81.3)

 

  

 

 

  

 

FINANCING ACTIVITIES

  

 

 

  

 

Borrowings (repayments) of debt, net

 0.2 

(0.2)

 

 0.2 

(10.1)

Dividends paid

 -- 

-- 

 

 (36.2)

(28.0)

Other

 (11.4)

14.4 

 

 (15.5)

20.4 

   NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES

 (11.2)

14.2 

 

 (51.5)

(17.7)

     

          

Effect of exchange rate changes on cash and cash equivalents

 (15.5)

  3.0 

 

 (16.7)

(6.9)

   CHANGE IN CASH AND CASH EQUIVALENTS

 $(126.3)

$13.7 

 

 $(231.0)

$(3.3)

 

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Contact information:
Dean H. Bergy, Vice President and Chief Financial Officer  269/385-2600