Stryker (SYK) 10-K risk factor changes: FY2019 vs FY2018

[removed: Words that identify] forward-looking statements include words such as "may," "could," "will," "should," "possible," "plan," "predict," "forecast," "potential," "anticipate," "estimate," "expect," "project," "intend," "believe," "may impact," "on track," "goal," "strategy" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, an acquisition or our businesses.

Therefore, actual results could differ materially and [added: adversely from these forward-looking statements.]

[removed: LEGAL] [added: LEGAL] AND REGULATORY [removed: RISKS][added: RISKS]

[removed: Current] [added: Current] economic and political conditions make tax rules in jurisdictions subject to significant [removed: change:] [added: change:] Our future results of operations could be affected by changes in the effective tax rate as a result of changes in tax laws, regulations and judicial rulings.

[removed: The] [added: The] impact of United States healthcare reform legislation on our business remains [removed: uncertain:] [added: uncertain:] In 2010 the Patient Protection and Affordable Care Act (ACA) was enacted.

Congress suspended the excise tax for 2016 and [removed: 2017.][added: 2017 and the suspension was once again upheld in January 2018 for two years.]

We [removed: also] face uncertainties that might result from modification or repeal of any of the provisions of the ACA, including as a result of current and future executive orders and legislative actions.

We cannot predict what other healthcare programs and regulations will ultimately be implemented at the federal or state level or the effect [removed: of any future legislation or regulation in the United States may have on our business.]

[removed: We] [added: We] are subject to extensive governmental regulation relating to the [added: classification,] manufacturing, [removed: labeling and] [added: labeling,] marketing [added: and sale] of our [removed: products:] [added: products:] The [added: classification,] manufacturing, [removed: labeling and] [added: labeling,] marketing [added: and sale] of our products are subject to extensive and evolving regulations and rigorous regulatory enforcement by the FDA, European Union (EU), the [removed: Safe Food and Drug] [added: National Medical Products] Administration [removed: (SFDA)] [added: (NMPA)] in China, and other governmental authorities in the United States and internationally.

The process of obtaining regulatory [added: clearances and/or] approvals to market [removed: a medical device] [added: and sell our products] can be costly and time consuming and [added: the clearances and/or] approvals might not [added: be granted timely.]

| [removed: Dollar] [added: Dollar] amounts in millions except per share amounts or as otherwise [removed: specified.] [added: specified.] | [removed: 3] [added: 3] |

[removed: STRYKER] [added: STRYKER] CORPORATION [removed: 2018] [added: 2019] FORM [removed: 10-K][added: 10-K]

Costs to comply with regulations, including the EU Medical Device Regulation enacted by the EU in May 2017 and effective in May 2020, and the regulatory laws established by the [removed: SFDA] [added: NMPA] in China, and costs associated with remediation can be significant.

[removed: We] [added: We] are subject to federal, state and foreign healthcare regulations, including anti-bribery and anti-corruption laws, and could face substantial penalties if we fail to comply with such regulations and [removed: laws:] [added: laws:] The relationships that [removed: we and our distributors] [added: we,] and [removed: others] [added: third parties] that market [added: and/or sell] our [removed: products] [added: products,] have with healthcare professionals, such as [removed: physicians] [added: physicians, hospitals] and [removed: hospitals,] [added: other healthcare organizations,] are subject to scrutiny under various state and federal laws often referred to collectively as healthcare fraud and abuse laws.

In addition, the United States and foreign government regulators have increased the enforcement of the Foreign Corrupt Practices Act [added: (FCPA)] and other anti-bribery laws.

We also must comply with a variety of other laws that [removed: protect the privacy of individually identifiable healthcare information and] impose extensive tracking and reporting related to all transfers of value provided to certain healthcare professionals.

[removed: We] [added: We] are subject to data privacy and protection regulations and laws globally, and could face substantial penalties if we fail to comply with such regulations and [removed: laws:] [added: laws:] We are subject to a variety of laws and regulations globally regarding privacy, data protection, and data security, including those related to the collection, storage, handling, use, disclosure, transfer, and security of [removed: personal data.][added: personally identifiable healthcare information.]

For example, Europe’s General Data Protection Regulation (GDPR), which became effective in May 2018, applies to all of our activities related [removed: to products and services that we offer to EU customers and employees.]

Other governmental authorities around the world are considering similar types of legislative and regulatory proposals concerning data protection, which could impose significant limitations and increase our cost of providing our products and services where we process [removed: end user] personal data.

[removed: We] [added: We] may be adversely affected by product liability claims, unfavorable court decisions or legal [removed: settlements:] [added: settlements:] We are exposed to potential product liability risks inherent in the design, manufacture and marketing of medical devices, many of which are implanted in the human body for long periods of time or indefinitely.

[added: We are currently defendants in a number of product liability matters,] including those relating to our Rejuvenate and ABGII Modular-Neck hip stems and LFIT Anatomic CoCr V40 Femoral Heads discussed in Note 7 to our Consolidated Financial Statements.

[removed: Intellectual] [added: Intellectual] property litigation and infringement claims could cause us to incur significant expenses or prevent us from selling certain of our [removed: products:] [added: products:] The medical device industry is characterized by extensive intellectual property litigation and, from time to time, we are the subject of claims of infringement or misappropriation.

[removed: Dependence] [added: Dependence] on patent and other proprietary rights and failing to protect such rights or to be successful in litigation related to such rights may impact offerings in our product [removed: portfolios:] [added: portfolios:] Our long-term success largely depends on our ability to market technologically competitive products.

[removed: MARKET RISKS][added: MARKET RISKS]

[removed: We] [added: We] have exposure to exchange rate fluctuations on cross border transactions and translation of local currency results into United States [removed: Dollars:] [added: Dollars:] We report our financial results in United States Dollars and approximately 30% of our net sales are denominated in foreign currencies, including the Australian Dollar, British Pound, Euro and Japanese Yen.

[removed: In addition, the weakening or strengthening of the United States Dollar results in favorable or unfavorable translation] effects when the results of our foreign locations are translated into United States Dollars.

[removed: Additional] [added: Additional] capital that we may require in the future may not be available to us or may only be available to us on unfavorable [removed: terms:] [added: terms:] Our future capital requirements will depend on many factors, including operating requirements, current and future acquisitions and the need to refinance existing debt.

[removed: BUSINESS] [added: BUSINESS] AND OPERATIONAL [removed: RISKS][added: RISKS]

[removed: We] [added: We] are subject to cost containment measures in the United States and other countries resulting in pricing [removed: pressures:] [added: pressures:] Initiatives to limit the growth of general healthcare expenses and [added: hospital costs are ongoing in the markets in which we do business.]

| [removed: Dollar] [added: Dollar] amounts in millions except per share amounts or as otherwise [removed: specified.] [added: specified.] | [removed: 4] [added: 4] |

[removed: We] [added: We] operate in a highly competitive industry in which competition in the development and improvement of new and existing products is [removed: significant:] [added: significant:] The markets in which we compete are highly competitive.

[removed: We] [added: We] may be unable to maintain adequate working relationships with healthcare [removed: professionals:] [added: professionals:] We seek to maintain close working relationships with respected physicians and medical personnel in [added: healthcare organizations such as] hospitals and universities who assist in product research and development.

[removed: We] [added: We] are subject to additional risks associated with our extensive [removed: international operations:] [added: global operations:] We develop, manufacture and distribute our products globally.

[removed: Our international operations are subject to additional risks and potential costs, including] changes in [removed: reimbursement, changes in] regulatory requirements, differing local product preferences and product requirements, diminished protection of intellectual property in some countries, [added: tariffs and other] trade protection [removed: measures] [added: measures, international trade disputes] and import or export [removed: licensing] requirements, difficulty in staffing and managing foreign operations, [added: introduction of new internal business structures] and [added: programs, and] political and economic [removed: instability.][added: instability (such as the United Kingdom's exit from the European Union, commonly referred to as "Brexit").]

Our business could be adversely impacted if we are unable to successfully manage these and other risks of [removed: international] [added: global] operations in an increasingly volatile environment.

[removed: We] [added: We] may be unable to capitalize on previous or future [removed: acquisitions:] [added: acquisitions:] In addition to internally developed products, we invest in new products and technologies through acquisitions.

The risks include the activities required and resources allocated to integrate new businesses, diversion of management time that could adversely affect management's ability to focus on other projects, the inability to realize the expected benefits, savings or synergies from the acquisition, the loss of key [removed: personnel] [added: personnel, litigation resulting from the acquisition] and exposure to unexpected liabilities of acquired companies.

[removed: We] [added: We] may incur goodwill impairment charges related to one or more of our business [removed: units:] [added: units:] We perform our annual impairment test for goodwill in the fourth quarter of each year, or more frequently if indicators are present or changes in circumstances suggest that [removed: impairment may exist.]

[added: A significant] reduction in the estimated fair values could result in impairment charges.

[removed: We] [added: We] could be negatively impacted by future changes in the allocation of income to each of the income tax jurisdictions in which we [removed: operate:] [added: operate:] We operate in multiple income tax jurisdictions both in the United States and internationally.

Words that identify

There have been ongoing judicial and congressional efforts to modify or repeal all or certain provisions of the ACA.

In December 2019, the excise tax was permanently repealed.

of any future legislation or regulation in the United States may have on our business.

In 2013 and 2018 we settled claims brought by the Securities and Exchange Commission (SEC) related to the FCPA.

Pursuant to these settlements, we paid fines and penalties, and we are working with an independent compliance consultant to implement recommendations that resulted from the independent compliance consultant’s review of our commercial practices.

to products and services that we offer to EU customers and employees.

In addition, the weakening or strengthening of the United States Dollar results in favorable or unfavorable translation

STRYKER CORPORATION 2019 FORM 10-K

We rely on indirect distribution channels and major distributors that are independent of Stryker: In many markets, we rely on indirect distribution channels to market, distribute, and sell our products.

These indirect channels often are the main point of contact for the healthcare professional and healthcare organization customers who buy and use our products.

Our ability to continue to market, distribute, and sell our products may be at risk if the indirect channels choose to sell competitive products, choose to stop selling medical technology, or are subject to new or additional government regulation.

Our global operations are subject to risks and potential costs, including changes in reimbursement,

We may be unable to close the Wright Medical acquisition or, if the acquisition does close, to capitalize on it: The completion of the acquisition of Wright Medical Group N.V. (Wright) is subject to a number of conditions.

The failure to satisfy all of the required conditions, including the receipt of required regulatory clearances, could delay the completion of the transaction for a significant period of time or prevent it from occurring at all.

Any delay in completing the transaction could cause us not to realize some or all of the expected benefits of the transaction or to realize them on a different timeline than expected.

In addition, the terms and conditions of the required regulatory clearances for the acquisition may impose requirements, limitations or costs that may materially delay the completion of the transaction or could materially adversely affect the expected benefits of the transaction.

Any breach by us of the acquisition agreement could also subject us to material liabilities related to the transaction.

If completed, the success of the Wright acquisition will depend, in part, on our ability to successfully combine and integrate Wright into our businesses and realize the anticipated benefits, including synergies, from the transaction.

If we are unable to achieve these objectives within the anticipated time frame, or at all, the anticipated benefits may not be realized fully or at all, or may take longer to realize than expected.

The integration of Wright into Stryker may result in material challenges, including: the diversion of management’s attention from ongoing business concerns and performance shortfalls at one or both of the companies; maintaining employee morale and retaining key management, sales and other employees; retaining existing business and operational relationships; the possibility of faulty assumptions underlying expectations regarding the integration process; consolidating corporate and administrative infrastructures and eliminating duplicative operations; unanticipated issues in integrating information technology, communications and other systems; and unforeseen costs, expenses and liabilities (including litigation related liabilities) associated with the acquisition.

STRYKER CORPORATION 2019 FORM 10-K

impairment may exist.

In addition, if we are unable to maintain an inclusive culture that aligns our diverse work force with our mission and values, this could adversely impact our ability to recruit, hire, develop and retain key talent.

| Dollar amounts in millions except per share amounts or as otherwise specified. | 6 |

| | |

| --- | --- |

| | |

adversely from these forward-looking statements.

The suspension was once again upheld in January 2018 for two years.

If the excise tax is not repealed or further suspended, the tax will adversely impact future results of operations after the current suspension expires in December 2019.

be granted timely.

We are currently defendants in a number of product liability matters,

hospital costs are ongoing in the markets in which we do business.

A significant

If we are unable to recruit, hire, develop and retain a talented,

Our goal is to achieve sales growth at the high-end of the medical technology (MedTech) industry and maintain our [added: long-term] capital allocation strategy that prioritizes: (1) Acquisitions, (2) Dividends and (3) Share repurchases.

In [removed: 2018] [added: 2019] we achieved reported net sales growth of [removed: 9.3%.][added: 9.4%.]

We reported net earnings of [removed: $3,553] [added: $2,083] and net earnings per diluted share of [removed: $9.34.][added: $5.48.]

Excluding the impact of certain items, we achieved adjusted net earnings of [removed: $2,779] [added: $3,139] and growth of [removed: 12.6%] [added: 13.0%] in adjusted net earnings per diluted [removed: share(1).][added: share(1).]

We continued our capital allocation strategy by investing [removed: $2,451] [added: $802] in acquisitions, paying [removed: $703] [added: $778] in dividends to our shareholders and using [removed: $300] [added: $307] for share repurchases.

[removed: (1)] [added: (1)] Refer to "Non-GAAP Financial Measures" for a discussion of non-GAAP financial measures used in this report and a reconciliation to the most directly comparable GAAP financial measure.

[removed: CONSOLIDATED] [added: CONSOLIDATED] RESULTS OF [removed: OPERATIONS][added: OPERATIONS]

| | | | | | | | | | | | [removed: Percent] [added: Percent] Net [removed: Sales] [added: Sales] | | | | | | | [removed: Percentage Change] [added: Percentage Change] | | | |

| [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | | [removed: 2018] [added: 2019] | | [removed: 2017] [added: 2018] | | [removed: 2016] [added: 2017] | | | [removed: Current] [added: Current] Year [removed: End] [added: End] | | [removed: Prior] [added: Prior] Year [removed: End] [added: End] | | |

| [removed: Net sales] [added: Net sales] | [removed: $] [added: $] | [removed: 13,601] [added: 14,884] | | [removed: $] [added: $] | [removed: 12,444] [added: 13,601] | | [removed: $] [added: $] | [removed: 11,325] [added: 12,444] | | | [removed: 100.0] [added: 100.0] | [removed: %] [added: %] | [removed: 100.0] [added: 100.0] | [removed: %] [added: %] | [removed: 100.0] [added: 100.0] | [removed: %] [added: %] | | [removed: 9.3] [added: 9.4] | [removed: %] [added: %] | [removed: 9.9] [added: 9.3] | [removed: %] [added: %] |

| Gross profit | [added: 9,696 | | |] 8,938 | | | 8,180 | | | [removed: 7,504] | [removed: |] [added: 65.1] | | 65.7 | | 65.7 | | [removed: 66.3] | [added: 8.5] | | 9.3 | | [removed: 9.0 | |]

| Research, development and engineering expenses | [removed: 862] [added: 971] | | | [removed: 787] [added: 862] | | | [removed: 715] [added: 787] | | | | [removed: 6.3] [added: 6.5] | | 6.3 | | 6.3 | | | [removed: 9.5] [added: 12.6] | | [removed: 10.1] [added: 9.5] | |

| Selling, general and administrative expenses | [added: 5,356 | | |] 5,099 | | | 4,552 | | | [removed: 4,137] | [removed: |] [added: 36.0] | | 37.5 | | 36.6 | | [removed: 36.5] | [added: 5.0] | | 12.0 | | [removed: 10.0 | |]

| Recall charges, net of insurance proceeds | [removed: 23] [added: 192] | | | [removed: 173] [added: 23] | | | [removed: 158] [added: 173] | | | | [removed: 0.2] [added: 1.3] | | [removed: 1.4] [added: 0.2] | | 1.4 | | | [removed: (86.7] [added: nm] | [removed: )] | [removed: 9.5] [added: nm] | |

| Amortization of intangible assets | [added: 464 | | |] 417 | | | 371 | | | [removed: 319] | [removed: |] [added: 3.1] | | 3.1 | | 3.0 | | [removed: 2.8] | [added: 11.3] | | 12.4 | | [removed: 16.3 | |]

| Other income (expense), net | [removed: (181] [added: (151] | | ) | [removed: (234] [added: (181] | | ) | [removed: (254] [added: (234] | | ) | | [removed: (1.3] [added: (1.0] | ) | [removed: (1.9] [added: (1.3] | ) | [removed: (2.2] [added: (1.9] | ) | | [removed: (22.6] [added: (16.6] | ) | [removed: (7.9] [added: (22.6] | ) |

| Income taxes | [removed: (1,197] [added: 479] | | [removed: )] | [removed: 1,043] [added: (1,197] | | [added: )] | [removed: 274] [added: 1,043] | | | | | | | | | | | [removed: (214.8] [added: nm] | [removed: )] | [removed: 280.7] [added: nm] | |

| [removed: Net earnings] [added: Net earnings] | [removed: $] [added: $] | [removed: 3,553] [added: 2,083] | | [removed: $] [added: $] | [removed: 1,020] [added: 3,553] | | [removed: $] [added: $] | [removed: 1,647] [added: 1,020] | | | [removed: 26.1] [added: 14.0] | [removed: %] [added: %] | [removed: 8.2] [added: 26.1] | [removed: %] [added: %] | [removed: 14.5] [added: 8.2] | [removed: %] [added: %] | | [removed: 248.3] [added: (41.4] | [removed: %] [added: )%] | [removed: (38.1] [added: 248.3] | [removed: )%] [added: %] |

| [removed: Net] [added: Net] earnings per diluted [removed: share] [added: share] | [removed: $] [added: $] | [removed: 9.34] [added: 5.48] | | [removed: $] [added: $] | [removed: 2.68] [added: 9.34] | | [removed: $] [added: $] | [removed: 4.35] [added: 2.68] | | | | | | | | | | [removed: 248.5] [added: (41.3] | [removed: %] [added: )%] | [removed: (38.4] [added: 248.5] | [removed: )%] [added: %] |

| [removed: Adjusted] [added: Adjusted] net earnings per diluted [removed: share(1)] [added: share(1)] | [removed: $] [added: $] | [removed: 7.31] [added: 8.26] | | [removed: $] [added: $] | [removed: 6.49] [added: 7.31] | | [removed: $] [added: $] | [removed: 5.80] [added: 6.49] | | | | | | | | | | [removed: 12.6] [added: 13.0] | [removed: %] [added: %] | [removed: 11.9] [added: 12.6] | [removed: %] [added: %] |

| [removed: Geographic] [added: Geographic] and Segment Net [removed: Sales] [added: Sales] | | | | | | | | | | | [removed: Percentage Change] [added: Percentage Change] | | | | | | | | |

| | | | | | | | | | | [removed: Current] [added: Current] Year [removed: End] [added: End] | | | | | [removed: Prior] [added: Prior] Year [removed: End] [added: End] | | | | |

| | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | | [removed: As Reported] [added: As Reported] | | [removed: Constant Currency] [added: Constant Currency] | | | [removed: As Reported] [added: As Reported] | | [removed: Constant Currency] [added: Constant Currency] | |

| [removed: Geographic:] [added: Geographic:] | | | | | | | | | | | | | | | | | | | |

| United States | $ | [removed: 9,848] [added: 10,957] | | $ | [removed: 9,059] [added: 9,848] | | $ | [removed: 8,230] [added: 9,059] | | | [removed: 8.7] [added: 11.3] | % | [removed: 8.7] [added: 11.3] | % | | [removed: 10.1] [added: 8.7] | % | [removed: 10.1] [added: 8.7] | % |

| International | [removed: 3,753] [added: 3,927] | | | [removed: 3,385] [added: 3,753] | | | [removed: 3,095] [added: 3,385] | | | | [removed: 10.9] [added: 4.6] | | [removed: 9.7] [added: 9.3] | | | [removed: 9.4] [added: 10.9] | | [removed: 9.0] [added: 9.7] | |

| [removed: Total] [added: Total] | [removed: $] [added: $] | [removed: 13,601] [added: 14,884] | | [removed: $] [added: $] | [removed: 12,444] [added: 13,601] | | [removed: $] [added: $] | [removed: 11,325] [added: 12,444] | | | [removed: 9.3] [added: 9.4] | [removed: %] [added: %] | [removed: 9.0] [added: 10.7] | [removed: %] [added: %] | | [removed: 9.9] [added: 9.3] | [removed: %] [added: %] | [removed: 9.8] [added: 9.0] | [removed: %] [added: %] |

| [removed: Segment:] [added: Segment:] | | | | | | | | | | | | | | | | | | | |

| Orthopaedics | $ | [removed: 4,991] [added: 5,252] | | $ | [removed: 4,713] [added: 4,991] | | $ | [removed: 4,422] [added: 4,713] | | | [removed: 5.9] [added: 5.2] | % | [removed: 5.4] [added: 6.7] | % | | [removed: 6.6] [added: 5.9] | % | [removed: 6.5] [added: 5.4] | % |

| MedSurg | [removed: 6,045] [added: 6,574] | | | [removed: 5,557] [added: 6,045] | | | [removed: 4,894] [added: 5,557] | | | | 8.8 | | [removed: 8.7] [added: 9.9] | | | [removed: 13.6] [added: 8.8] | | [removed: 13.4] [added: 8.7] | |

| Neurotechnology and Spine | [removed: 2,565] [added: 3,058] | | | [removed: 2,174] [added: 2,565] | | | [removed: 2,009] [added: 2,174] | | | | [removed: 18.0] [added: 19.2] | | [removed: 17.4] [added: 20.5] | | | [removed: 8.2] [added: 18.0] | | [removed: 8.3] [added: 17.4] | |

| [removed: Dollar] [added: Dollar] amounts in millions except per share amounts or as otherwise [removed: specified.] [added: specified.] | [removed: 8] [added: 9] |

[removed: STRYKER] [added: STRYKER] CORPORATION [removed: 2018] [added: 2019] FORM [removed: 10-K][added: 10-K]

| [removed: Supplemental] [added: Supplemental] Net Sales Growth [removed: Information] [added: Information] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | [removed: Percentage Change] [added: Percentage Change] | | | | | | | | | | | | | | | | | [removed: Percentage Change] [added: Percentage Change] | | | | | | | | | |

| | | | | | | | | | | | [removed: United States] [added: United States] | | [removed: International] [added: International] | | | | | | | | | | | | | | | [removed: United States] [added: United States] | | [removed: International] [added: International] | | | |

| | [removed: 2018] [added: 2019] | | | [removed: 2017] [added: 2018] | | | [removed: As Reported] [added: As Reported] | | [removed: Constant Currency] [added: Constant Currency] | | [removed: As Reported] [added: As Reported] | | [removed: As Reported] [added: As Reported] | | [removed: Constant Currency] [added: Constant Currency] | | | [removed: 2017] [added: 2018] | | | [removed: 2016] [added: 2017] | | | [removed: As Reported] [added: As Reported] | | [removed: Constant Currency] [added: Constant Currency] | | [removed: As Reported] [added: As Reported] | | [removed: As Reported] [added: As Reported] | | [removed: Constant Currency] [added: Constant Currency] | |

| [removed: Orthopaedics:] [added: Orthopaedics:] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Knees | $ | [removed: 1,701] [added: 1,815] | | $ | [removed: 1,595] [added: 1,701] | | [removed: 6.6] [added: 6.7] | % | [removed: 6.3] [added: 8.1] | % | [removed: 6.4] [added: 8.2] | % | [removed: 7.3] [added: 2.6] | % | [removed: 5.7] [added: 7.6] | % | | $ | [removed: 1,595] [added: 1,701] | | $ | [removed: 1,490] [added: 1,595] | | [removed: 7.0] [added: 6.6] | % | [removed: 6.9] [added: 6.3] | % | [removed: 7.4] [added: 6.4] | % | [removed: 5.9] [added: 7.3] | % | [removed: 5.5] [added: 5.7] | % |

| Hips | [removed: 1,336] [added: 1,383] | | | [removed: 1,303] [added: 1,336] | | | [removed: 2.5] [added: 3.5] | | [removed: 2.1] [added: 5.2] | | [removed: 2.2] [added: 5.4] | | [removed: 3.1] [added: 0.3] | | [removed: 2.0] [added: 4.8] | | | [removed: 1,303] [added: 1,336] | | | [removed: 1,283] [added: 1,303] | | | [removed: 1.6] [added: 2.5] | | [removed: 1.8] [added: 2.1] | | [removed: 2.0] [added: 2.2] | | [removed: 0.9] [added: 3.1] | | [removed: 1.4] [added: 2.0] | |

Overview of 2019

Excluding the impact of acquisitions, sales grew 8.1% in constant currency.

In January 2019 we repaid $500 of our senior unsecured notes with a coupon of 1.800% that were due on January 15, 2019.

In March 2019 we repaid $750 of our senior unsecured notes with a coupon of 2.000% that were due on March 8, 2019.

In December 2019 we issued €2.4 billion senior unsecured notes comprised of €850 of senior unsecured notes with a coupon of 0.250% due December 3, 2024, €800 of senior unsecured notes with a coupon of 0.750% due March 1, 2029 and €750 of senior unsecured notes with a coupon of 1.000% due December 3, 2031.

In January 2020 we repaid $500 of senior unsecured notes with a coupon of 4.375% that were due on January 15, 2020.

In 2019 we completed acquisitions for total net cash consideration of $802 and $294 in future milestone payments primarily due upon the achievement of certain regulatory and commercial milestones.

In November 2019 we announced a definitive agreement to acquire all of the issued and outstanding ordinary shares of Wright Medical Group N.V. (Wright) for $30.75 per share, or an aggregate purchase price of approximately $5.4 billion (including convertible notes).

We expect the acquisition to close in the second half of 2020, subject to the expiration of the waiting period (and any extension thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the receipt of other required approvals and clearances under applicable antitrust laws, the adoption of certain resolutions by Wright’s shareholders and other customary conditions.

Wright is a global medical device company focused on extremities and biologics.

Following closing, we plan to integrate Wright into our Trauma and Extremities business within Orthopaedics.

In 2019 we repurchased 1.9 million shares of our common stock at a cost of $307 under our authorized repurchase program.

The total dollar value of shares of our common stock that could be acquired under our authorized repurchase program was $1,033 as of December 31, 2019.

When we issued the €2.4 billion of senior unsecured notes we also announced our intention to suspend our share repurchase program in 2020 and 2021.

| Total | $ | 14,884 | | $ | 13,601 | | $ | 12,444 | | | 9.4 | % | 10.7 | % | | 9.3 | % | 9.0 | % |

| Other | 415 | | | 374 | | | 11.2 | | 12.0 | | 11.5 | | 10.0 | | 14.2 | | | 374 | | | 337 | | | 11.0 | | 11.0 | | 8.7 | | 21.3 | | 21.3 | |

| | $ | 5,252 | | $ | 4,991 | | 5.2 | % | 6.7 | % | 6.8 | % | 1.9 | % | 6.4 | % | | $ | 4,991 | | $ | 4,713 | | 5.9 | % | 5.4 | % | 5.2 | % | 7.3 | % | 5.7 | % |

| | $ | 6,574 | | $ | 6,045 | | 8.8 | % | 9.9 | % | 10.8 | % | 1.3 | % | 6.5 | % | | $ | 6,045 | | $ | 5,557 | | 8.8 | % | 8.7 | % | 8.4 | % | 10.2 | % | 10.0 | % |

| | $ | 3,058 | | $ | 2,565 | | 19.2 | % | 20.5 | % | 21.3 | % | 14.9 | % | 18.9 | % | | $ | 2,565 | | $ | 2,174 | | 18.0 | % | 17.4 | % | 17.3 | % | 19.4 | % | 17.6 | % |

nm - not meaningful

Refer to Note 1 and Note 2 to our Consolidated Financial Statements for further information on our revenue recognition policies and disclosures.

STRYKER CORPORATION 2019 FORM 10-K

Excluding the impact of the items noted below, gross profit decreased to 65.9% from 66.1% in 2018 primarily due to the impact of lower selling prices.

| Adjusted | $ | 9,807 | | $ | 8,983 | | $ | 8,259 | | | 65.9 | % | 66.1 | % | 66.4 | % |

Excluding the impact of the items noted below, expenses decreased to 6.1% in 2019 from 6.3% in 2018 and 2017 primarily due to leverage from higher sales volumes.

| | | | | | | | | | | | Percent Net Sales | | | | | |

| Reported | $ | 971 | | $ | 862 | | $ | 787 | | | 6.5 | % | 6.3 | % | 6.3 | % |

| Medical device regulations | (56 | | ) | (10 | | ) | — | | | | (0.4 | ) | — | | — | |

| Adjusted | $ | 915 | | $ | 852 | | $ | 787 | | | 6.1 | % | 6.3 | % | 6.3 | % |

| | | | | | | | | | | | Percent Net Sales | | | | | |

| | 2019 | | | 2018 | | | 2017 | | | | 2019 | | 2018 | | 2017 | |

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | Percent Net Sales | | | | | |

| | 2019 | | | 2018 | | | 2017 | | | | 2019 | | 2018 | | 2017 | |

STRYKER CORPORATION 2019 FORM 10-K

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

Overview of 2018

Excluding the impact of acquisitions and the adoption of Accounting Standards Update 2014-9, Revenue From Contracts with Customers, as well as related amendments, sales grew 7.9% in constant currency.

In November 2018 we completed the acquisition of K2M Group Holdings, Inc. (K2M) for $27.50 per share, or an aggregate purchase price of approximately $1,380.

K2M is a global leader of complex spine and minimally invasive solutions focused on achieving three-dimensional Total Body Balance.

K2M is part of our Spine business within Neurotechnology and Spine.

In February 2018 we completed the acquisition of Entellus Medical, Inc. (Entellus) for $24.00 per share, or an aggregate purchase price

of $697, net of cash acquired.

Entellus is focused on delivering superior patient and physician experiences through products designed for the minimally invasive treatment of various ear, nose and throat (ENT) disease states.

Entellus is part of our Neurotechnology business within Neurotechnology and Spine.

In March 2018 we issued $600 of senior unsecured notes with a coupon of 3.650% due on March 7, 2028.

In April 2018 we repaid $600 of our senior unsecured notes with a coupon of 1.300%.

In November 2018 we issued: €300 of senior unsecured notes with a floating interest rate (Three Month EURIBOR plus 28 bps) due on November 30, 2020, €550 of senior unsecured notes with a fixed interest rate of 1.125% due on November 30, 2023, €750 of senior unsecured notes with a fixed interest rate of 2.125% due on November 30, 2027, and €650 of senior unsecured notes with a fixed interest rate of 2.625% due on November 30, 2030.

In December 2018 the transfer of certain intellectual properties between tax jurisdictions resulted in a $1.5 billion non-cash tax benefit and a corresponding $1.5 billion deferred tax asset.

The benefit of the transaction will be realized as a reduction of cash paid for taxes over a period of nine years and a corresponding charge to tax expense, which consistent with the benefit recognized in 2018 will also be adjusted out of reported net earnings going forward in our non-GAAP financial measure.

| | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Other | 374 | | | 337 | | | 11.0 | | 11.0 | | 8.7 | | 21.3 | | 21.3 | | | 337 | | | 285 | | | 18.0 | | 17.6 | | 17.9 | | 18.6 | | 16.4 | |

| | $ | 4,991 | | $ | 4,713 | | 5.9 | % | 5.4 | % | 5.2 | % | 7.3 | % | 5.7 | % | | $ | 4,713 | | $ | 4,422 | | 6.6 | % | 6.5 | % | 7.8 | % | 4.0 | % | 3.8 | % |

| | $ | 6,045 | | $ | 5,557 | | 8.8 | % | 8.7 | % | 8.4 | % | 10.2 | % | 10.0 | % | | $ | 5,557 | | $ | 4,894 | | 13.5 | % | 13.4 | % | 13.2 | % | 15.1 | % | 14.1 | % |

| | $ | 2,565 | | $ | 2,174 | | 18.0 | % | 17.4 | % | 17.3 | % | 19.4 | % | 17.6 | % | | $ | 2,174 | | $ | 2,009 | | 8.2 | % | 8.3 | % | 6.3 | % | 12.4 | % | 12.4 | % |

Excluding the 1.4% impact of

The unit volume increase was primarily due to higher shipments of medical, instruments, and endoscopy products.

The unit volume increase was primarily due to higher shipments of endoscopy, instruments and medical products.

The unit volume increase was primarily due to higher shipments of neurotechnology products.

The following sales growth data and subsequent analysis have been presented to supplement our discussion and analysis of net sales by quantifying and excluding the impact of the adoption of ASC 606 for our businesses, which related primarily to the reclassification of certain costs previously presented as selling, general and administrative expenses to net sales.

| | Full Year | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | Percentage Change Excluding ASC 606 Impact | | | | | | | |

| | | | | | | | Percentage Change | | | | | | | | | International | | | |

| | 2018 | | | 2017 | | | As Reported | | Excluding ASC 606 Impact | | | Constant Currency | | United States | | Excluding ASC 606 Impact | | Constant Currency | |

| Orthopaedics: | | | | | | | | | | | | | | | | | | | |

| Knees | $ | 1,701 | | $ | 1,595 | | 6.6 | % | 7.0 | % | | 6.7 | % | 6.9 | % | 7.4 | % | 6.1 | % |

| Hips | 1,336 | | | 1,303 | | | 2.5 | | 2.8 | | | 2.3 | | 2.5 | | 3.3 | | 2.2 | |

| Trauma and Extremities | 1,580 | | | 1,478 | | | 6.9 | | 7.8 | | | 7.0 | | 6.5 | | 10.1 | | 7.8 | |

| Other | 374 | | | 337 | | | 11.0 | | 10.8 | | | 11.0 | | 8.6 | | 20.9 | | 21.5 | |

| | $ | 4,991 | | $ | 4,713 | | 5.9 | % | 6.4 | % | | 5.9 | % | 5.8 | % | 7.6 | % | 6.1 | % |

| MedSurg: | | | | | | | | | | | | | | | | | | | |

| Instruments | $ | 1,822 | | $ | 1,678 | | 8.6 | % | 10.2 | % | | 10.0 | % | 11.2 | % | 6.9 | % | 6.2 | % |

| Endoscopy | 1,846 | | | 1,652 | | | 11.7 | | 12.1 | | | 12.3 | | 11.5 | | 14.3 | | 14.9 | |

| Medical | 2,118 | | | 1,969 | | | 7.6 | | 9.1 | | | 9.0 | | 8.8 | | 10.2 | | 9.6 | |

| Sustainability | 259 | | | 258 | | | 0.4 | | 3.1 | | | 3.1 | | 3.0 | | 19.7 | | 19.5 | |

[removed: We develop and manufacture products in the United States, Canada,] China, France, Germany, Ireland, Japan, Mexico, Puerto Rico, Sweden, Switzerland and Turkey and incur costs in the applicable local currencies.

A hypothetical 10% change in foreign currencies relative to the United States Dollar would change the December 31, [removed: 2018] [added: 2019] fair value of these instruments by approximately [removed: $334.][added: $523.]

We develop and manufacture products in the United States, Canada,

| | |

| --- | --- |

| Dollar amounts in millions except per share amounts or as otherwise specified. | 15 |

STRYKER CORPORATION 2018 FORM 10-K

[removed: ][added: ]

Our products are sold in over [removed: 80] [added: 75] countries through company-owned subsidiaries and branches, as well as third-party dealers and distributors, and include implants used in joint replacement and trauma surgeries; surgical equipment and surgical navigation systems; endoscopic and communications systems; patient handling, emergency medical equipment and intensive care disposable products; neurosurgical, neurovascular and spinal devices; as well as other products used in a variety of medical specialties.

[removed: Business] [added: Business] Segments and Geographic [removed: Information][added: Information]

| [removed: Net] [added: Net] Sales by Reportable [removed: Segment] [added: Segment] | | | | | | | | | | | | | | | | | |

| | [removed: 2018] [added: 2019] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2016] [added: 2017] | | | | |

| Orthopaedics | $ | [removed: 4,991] [added: 5,252] | | [removed: 37] [added: 35] | % | | $ | [removed: 4,713] [added: 4,991] | | [removed: 38] [added: 37] | % | | $ | [removed: 4,422] [added: 4,713] | | [removed: 39] [added: 38] | % |

| MedSurg | [removed: 6,045] [added: 6,574] | | | 44 | | | [removed: 5,557] [added: 6,045] | | | [removed: 45] [added: 44] | | | [removed: 4,894] [added: 5,557] | | | [removed: 43] [added: 45] | |

| Neurotechnology and Spine | [removed: 2,565] [added: 3,058] | | | [removed: 19] [added: 21] | | | [removed: 2,174] [added: 2,565] | | | [removed: 17] [added: 19] | | | [removed: 2,009] [added: 2,174] | | | [removed: 18] [added: 17] | |

| [removed: Total] [added: Total] | [removed: $] [added: $] | [removed: 13,601] [added: 14,884] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 12,444] [added: 13,601] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 11,325] [added: 12,444] | | [removed: 100] [added: 100] | [removed: %] [added: %] |

[removed: Orthopaedics][added: Orthopaedics]

| [removed: Composition] [added: Composition] of Orthopaedics Net [removed: Sales] [added: Sales] | | | | | | | | | | | | | | | | | |

| Knees | $ | [removed: 1,701] [added: 1,815] | | [removed: 34] [added: 35] | % | | $ | [removed: 1,595] [added: 1,701] | | 34 | % | | $ | [removed: 1,490] [added: 1,595] | | 34 | % |

| Hips | [removed: 1,336] [added: 1,383] | | | [removed: 27] [added: 26] | | | [removed: 1,303] [added: 1,336] | | | [removed: 28] [added: 27] | | | [removed: 1,283] [added: 1,303] | | | [removed: 29] [added: 28] | |

| Trauma and Extremities | [removed: 1,580] [added: 1,639] | | | [removed: 32] [added: 31] | | | [removed: 1,478] [added: 1,580] | | | [removed: 31] [added: 32] | | | [removed: 1,364] [added: 1,478] | | | 31 | |

| Other | [removed: 374] [added: 415] | | | [removed: 7] [added: 8] | | | [removed: 337] [added: 374] | | | 7 | | | [removed: 285] [added: 337] | | | [removed: 6] [added: 7] | |

| [removed: Total] [added: Total] | [removed: $] [added: $] | [removed: 4,991] [added: 5,252] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 4,713] [added: 4,991] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 4,422] [added: 4,713] | | [removed: 100] [added: 100] | [removed: %] [added: %] |

[removed: MedSurg][added: MedSurg]

In Medical our primary competitors are Hill-Rom Holdings, Inc., Zoll Medical Corporation, Medline Industries and [removed: Koninklijke Philips N.V.][added: Ferno-Washington, Inc.]

| [removed: Composition] [added: Composition] of MedSurg Net [removed: Sales] [added: Sales] | | | | | | | | | | | | | | | | | |

| Instruments | $ | [removed: 1,822] [added: 2,041] | | [removed: 30] [added: 31] | % | | $ | [removed: 1,678] [added: 1,822] | | 30 | % | | $ | [removed: 1,553] [added: 1,678] | | [removed: 32] [added: 30] | % |

| Endoscopy | [removed: 1,846] [added: 1,983] | | | [removed: 31] [added: 30] | | | [removed: 1,652] [added: 1,846] | | | [removed: 30] [added: 31] | | | [removed: 1,470] [added: 1,652] | | | 30 | |

| Medical | [removed: 2,118] [added: 2,264] | | | [removed: 35] [added: 34] | | | [removed: 1,969] [added: 2,118] | | | 35 | | | [removed: 1,633] [added: 1,969] | | | [removed: 33] [added: 35] | |

| Sustainability | [removed: 259] [added: 286] | | | [removed: 4] [added: 5] | | | [removed: 258] [added: 259] | | | [removed: 5] [added: 4] | | | [removed: 238] [added: 258] | | | 5 | |

| [removed: Total] [added: Total] | [removed: $] [added: $] | [removed: 6,045] [added: 6,574] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 5,557] [added: 6,045] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 4,894] [added: 5,557] | | [removed: 100] [added: 100] | [removed: %] [added: %] |

[removed: Neurotechnology] [added: Neurotechnology] and [removed: Spine][added: Spine]

| [removed: Dollar] [added: Dollar] amounts in millions except per share amounts or as otherwise [removed: specified.] [added: specified.] | [removed: 1] [added: 1] |

[removed: STRYKER] [added: STRYKER] CORPORATION [removed: 2018] [added: 2019] FORM [removed: 10-K][added: 10-K]

| [removed: Composition] [added: Composition] of Neurotechnology and Spine Net [removed: Sales] [added: Sales] | | | | | | | | | | | | | | | | | |

| Neurotechnology | $ | [removed: 1,737] [added: 1,973] | | [removed: 68] [added: 65] | % | | $ | [removed: 1,423] [added: 1,737] | | [removed: 65] [added: 68] | % | | $ | [removed: 1,255] [added: 1,423] | | [removed: 62] [added: 65] | % |

| Spine | [removed: 828] [added: 1,085] | | | [removed: 32] [added: 35] | | | [removed: 751] [added: 828] | | | [removed: 35] [added: 32] | | | [removed: 754] [added: 751] | | | [removed: 38] [added: 35] | |

| [removed: Total] [added: Total] | [removed: $] [added: $] | [removed: 2,565] [added: 3,058] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 2,174] [added: 2,565] | | [removed: 100] [added: 100] | [removed: %] [added: %] | | [removed: $] [added: $] | [removed: 2,009] [added: 2,174] | | [removed: 100] [added: 100] | [removed: %] [added: %] |

[removed: Raw] [added: Raw] Materials and [removed: Inventory][added: Inventory]

[removed: Patents] [added: Patents] and [removed: Trademarks][added: Trademarks]

On December 31, [removed: 2018] [added: 2019] we owned approximately [removed: 3,068] [added: 3,392] United States patents and approximately [removed: 4,716] [added: 5,491] international patents.

[removed: Seasonality][added: Seasonality]

[removed: Competition][added: Competition]

[removed: Regulation][added: Regulation]

These regulations require companies that [removed: wish to] manufacture and distribute medical devices in EU member countries to meet certain quality system requirements and obtain CE marking for their products.

[removed: Environment][added: Environment]

[removed: Employees][added: Employees]

Mako is the only robotic-arm assisted technology enabled by 3D CT-based pre-operative planning, and with AccuStop™ haptic technology, Mako provides surgeons intra-operative haptic guidance for bone preparation and implant placement.

| | 2019 | | | | | | 2018 | | | | | | 2017 | | | | |

| | 2019 | | | | | | 2018 | | | | | | 2017 | | | | |

In 2019 Instruments acquired SafeAir AG, a Swiss medical device company dedicated to the design, development and manufacture of innovative surgical smoke evacuation solutions.

The company's smoke evacuation products help reduce staff and patient exposure to hazards associated with surgical smoke.

Instruments also acquired TSO3, a Quebec City developer of sterilization processes, related consumable supplies and accessories utilized in sterile hospital environments that offer an advantageous replacement solution to other low temperature sterilization processes.

In 2019 Endoscopy launched the 1688 Advanced Imaging Modalities platform, the next generation of its flagship visualization technology with 4K image quality and ICG fluorescence overlay.

The 1688, coupled with the SPY-PHI portable handheld imager, delivers a standardized system for a multitude of minimally invasive and open surgical procedures.

| | 2019 | | | | | | 2018 | | | | | | 2017 | | | | |

In 2019 Stryker received Food and Drug Administration (FDA) pre-market approval (PMA) of its Neuroform Atlas™ Stent System for the treatment of wide-neck intracranial aneurysms in conjunction with embolic detachable coils in the anterior circulation of the neurovasculature.

The Neuroform Atlas™ device was previously approved under a humanitarian device exemption, which restricted use to specific hospitals with institutional review board approval.

PMA was granted based on robust clinical trial evidence proving the efficacy of the device.

In 2018 Stryker received FDA PMA for the Surpass Streamline™ Flow Diverter to treat unruptured large and giant wide neck intracranial aneurysms.

The device was the second flow diverting stent to gain FDA approval in the United States, expanding our commercial footprint into the flow diversion market and reinforcing our commitment to complete stroke care for patients suffering from cerebrovascular disease.

Stryker’s next generation flow diverting stent, Surpass Evolve™, received CE mark approval in 2019.

STRYKER CORPORATION 2019 FORM 10-K

| As of January 31, 2020 | | | |

Prior to joining Stryker in April 2019, Mr. Fletcher held various legal leadership roles with Johnson & Johnson for the previous 14 years, most recently as the Worldwide Vice President, Litigation.

In 2017 Instruments launched System 8, the next generation of power tools comprised of a sagittal saw, reciprocating saw, rotary drill and sternum saw.

The new power tools offer improved ergonomics, a quick and efficient keyless chuck system preventing loosening through a secondary locking mechanism and advanced material and coating to prevent sticking and slipping.

In addition, the handpieces are built to be actively washed and temporarily submerged prior to sterilization.

In 2017 the New England Journal of Medicine published the results of the DAWN Trial, the first to provide compelling evidence in treating late window and wake-up stroke patients with mechanical thrombectomy.

The purpose of the study is to demonstrate superior clinical outcomes at 90 days with Trevo™ Retriever plus medical management compared to medical management alone in appropriately selected stroke patients treated six to 24 hours after last seen well (for cases of unknown time of onset).

The Trevo™ Retriever’s indication within the DAWN Trial, for use in patients treated six to 24 hours after last seen well, is currently under an Investigational Device Exemption (IDE), and the submission for expanding the indication for the later time window is pending.

| As of January 31, 2019 | | | |

| Bijoy S.N. Sagar | 50 | Vice President, Chief Digital Technology Officer | 2014 |

Prior to joining Stryker in May 2014, Mr. Sagar served as the Chief Information Officer for Merck Millipore, and before that as Global Head of Information Systems and a member of the divisional board for the chemicals division of Merck KGaA.

Our main corporate website address is www.stryker.com.

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: FORM 10-K][added: FORM 10-K]

| [removed: \[X\]] [added: ☒] | [removed: ANNUAL] [added: ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

For the fiscal year ended December 31, [removed: 2018][added: 2019]

| [removed: \[ \]] [added: ☐] | [removed: TRANSITION] [added: TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934] [added: 1934] |

Commission file number: [removed: 000-09165][added: 001-13149]

[removed: ][added: ]

[removed: STRYKER] [added: STRYKER] CORPORATION [added: 2019 FORM 10-K]

| [removed: Michigan] [added: Michigan] | | [removed: 38-1239739] | [added: | | | 38-1239739 |]

| (State of incorporation) | | [added: | | | |] (I.R.S. Employer Identification No.) |

| [removed: 2825] [added: 2825] Airview [removed: Boulevard Kalamazoo, Michigan] [added: Boulevard,] | | [removed: 49002] [added: Kalamazoo,] | [added: | Michigan | | 49002 |]

| (Address of principal executive offices) | | [added: | | | |] (Zip Code) |

| | [removed: (269) 385-2600] | | [added: (269) | 385-2600 | | |]

| (Registrant’s telephone number, including area code) | | | [added: | | | |]

| [removed: Securities] [added: Securities] registered pursuant to Section 12(b) of the [removed: Act:] [added: Act:] | | |

| Title of each class | [added: Trading Symbol(s)] | Name of each exchange on which registered |

| [removed: Common] [added: Common] Stock, $.10 [removed: par value] [added: Par Value] | [added: SYK] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: Floating] [added: Floating] Rate Notes due [removed: 2020] [added: 2020] | [added: SYK20A] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: 1.125%] [added: 1.125%] Notes due [removed: 2023] [added: 2023] | [added: SYK23] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: 2.125%] [added: 2.125%] Notes due [removed: 2027] [added: 2027] | [added: SYK27] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

| [removed: 2.625%] [added: 2.625%] Notes due [removed: 2030] [added: 2030] | [added: SYK30] | [removed: New] [added: New] York Stock [removed: Exchange] [added: Exchange] |

[removed: Securities] [added: Securities] registered pursuant to Section 12(g) of the [removed: Act: None][added: Act: None]

[removed: YES \[X\] NO \[ \]][added: Yes ☒ No ☐]

[removed: YES \[ \] NO \[X\]][added: Yes ☐ No ☒]

| Large accelerated filer | [removed: \[X\]] [added: ☒] | Accelerated filer | [removed: \[ \]] [added: ☐] | Emerging growth company | [removed: \[ \]] [added: ☐] |

| Non-accelerated filer | [removed: \[ \]] [added: ☐] | Small reporting company | [removed: \[ \]] [added: ☐] | | |

The aggregate market value of the voting stock held by non-affiliates of the registrant was approximately [removed: $58,918,371,156] [added: $71,863,352,935] at June 30, [removed: 2018.][added: 2019.]

There were [removed: 372,664,636] [added: 374,575,145] shares outstanding of the registrant’s common stock, [removed: $.10] [added: $0.10] par value, on January 31, [removed: 2019.][added: 2020.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the proxy statement to be filed with the U.S. Securities and Exchange Commission relating to the [removed: 2019] [added: 2020] Annual Meeting of Shareholders (the [removed: 2019] [added: 2020] proxy statement) are incorporated by reference into Part III.

[removed: STRYKER] [added: STRYKER] CORPORATION [removed: 2018] [added: 2019] FORM [removed: 10-K][added: 10-K]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| [removed: PART I |] [added: PART I] | | |

[removed: Item] [added: | Item] 1A. [added: | Risk Factors | [3](#s516C8EEF05EF5C2E95ADDB30A3D500E6) |]

[added: | Item 1B. |] Unresolved Staff Comments [removed: 6][added: | [7](#sB3AE441BF476588F8F7465813DE5DB0C) |]

[added: | Item 3. |] Legal Proceedings [removed: 6][added: | [7](#s61070DF9F146596186499D2C9D07370A) |]

[added: | Item 4. |] Mine Safety Disclosures [removed: 6][added: | [7](#s3843F44543575F67BD9C8130779C47D2) |]

| [removed: PART II |] [added: PART II] | | |

[added: | Item 5. |] Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities [removed: 6][added: | [7](#sE2F0D83D4D205276A84005379119CF8C) |]

OR

STRYKER CORPORATION

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | | |

| | | | | | | |

| | | | | | | |

| 0.250% Notes due 2024 | SYK24A | New York Stock Exchange |

| 0.750% Notes due 2029 | SYK29 | New York Stock Exchange |

| 1.000% Notes due 2031 | SYK31 | New York Stock Exchange |

Yes ☒ No ☐

Yes ☒ No ☐

Yes ☐ No ☒

| --- | --- | --- |

| Item 1. | Business | [1](#s45B97D78CE515CD383088D872CB2716F) |

| Item 2. | Properties | [7](#s1278D06FE8AF54388B364FB18F84E2A3) |

| | | |

| | | |

10-K 1 syk10k123118.htm 10-K

OR

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

\[ \]

| | | | |

| --- | --- | --- | --- |

Item 1.

Business 1

Risk Factors 3

Item 1B.

Item 2.

Properties 6

Item 3.

Item 4.

Item 5.

Item 6.

Item 7.

Item 7A.

Item 8.

Item 9.

Item 9A.

Other Information 34

Item 10.

Executive Compensation 35

Item 12.

Item 13.

Item 14.

Item 15.

Form 10-K Summary 39

We have approximately [removed: 23] [added: 24] company-owned and [removed: 273] [added: 295] leased locations worldwide including [removed: 43] [added: 50] manufacturing locations.

| [removed: PART II] [added: PART II] |

On January 31, [removed: 2019] [added: 2020] there were [removed: 2,729] [added: 2,617] shareholders of record of our common stock.

We did not repurchase any shares in the three months ended December 31, [removed: 2018] [added: 2019] and the total dollar value of shares that could be acquired under our authorized repurchase program at December 31, [removed: 2018] [added: 2019] was [removed: $1,340.][added: $1,033.]

We issued [removed: 150] [added: 213] shares of our common stock in the fourth quarter of [removed: 2018] [added: 2019] as performance incentive awards.

The graph assumes $100 (not in millions) invested on December 31, [removed: 2013] [added: 2014] in our common stock and each of the indices.

[removed: ][added: ]

| [removed: Company] [added: Company] / [removed: Index] [added: Index] | [removed: 2013] [added: 2014] | | | [removed: 2014] [added: 2015] | | | [removed: 2015] [added: 2016] | | | [removed: 2016] [added: 2017] | | | [removed: 2017] [added: 2018] | | | [removed: 2018] [added: 2019] | | |

| [removed: Dollar] [added: Dollar] amounts in millions except per share amounts or as otherwise [removed: specified.] [added: specified.] | [removed: 6] [added: 7] |

[removed: STRYKER] [added: STRYKER] CORPORATION [removed: 2018] [added: 2019] FORM [removed: 10-K][added: 10-K]

| Stryker Corporation | $ | 100.00 | | $ | 100.01 | | $ | 130.71 | | $ | 171.01 | | $ | 175.18 | | $ | 237.06 | |

| S&P 500 Index | $ | 100.00 | | $ | 101.38 | | $ | 113.51 | | $ | 138.29 | | $ | 132.23 | | $ | 173.86 | |

| S&P 500 Health Care Index | $ | 100.00 | | $ | 106.89 | | $ | 104.01 | | $ | 126.98 | | $ | 135.19 | | $ | 163.34 | |

| Stryker Corporation | $ | 100.00 | | $ | 127.41 | | $ | 127.44 | | $ | 166.51 | | $ | 217.86 | | $ | 223.13 | |

| S&P 500 Index | $ | 100.00 | | $ | 113.69 | | $ | 115.26 | | $ | 129.05 | | $ | 157.22 | | $ | 150.33 | |

| S&P 500 Health Care Index | $ | 100.00 | | $ | 125.34 | | $ | 133.97 | | $ | 130.37 | | $ | 159.15 | | $ | 169.44 | |

| [removed: Statement] [added: Statement] of Earnings [removed: Data] [added: Data] | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| [removed: Net sales] [added: Net sales] | | [removed: $] [added: $] | [removed: 13,601] [added: 14,884] | | | [removed: $] [added: $] | [removed: 12,444] [added: 13,601] | | | [removed: $] [added: $] | [removed: 11,325] [added: 12,444] | | | [removed: $] [added: $] | [removed: 9,946] [added: 11,325] | | | [removed: $] [added: $] | [removed: 9,675] [added: 9,946] | |

| Cost of sales | | [removed: 4,663] [added: 5,188] | | | | [removed: 4,264] [added: 4,663] | | | | [removed: 3,821] [added: 4,264] | | | | [removed: 3,333] [added: 3,821] | | | | [removed: 3,310] [added: 3,333] | | |

| [removed: Gross profit] [added: Gross profit] | | [removed: $] [added: $] | [removed: 8,938] [added: 9,696] | | | [removed: $] [added: $] | [removed: 8,180] [added: 8,938] | | | [removed: $] [added: $] | [removed: 7,504] [added: 8,180] | | | [removed: $] [added: $] | [removed: 6,613] [added: 7,504] | | | [removed: $] [added: $] | [removed: 6,365] [added: 6,613] | |

| Research, development and engineering expenses | | [removed: 862] [added: 971] | | | | [removed: 787] [added: 862] | | | | [removed: 715] [added: 787] | | | | [removed: 625] [added: 715] | | | | [removed: 614] [added: 625] | | |

| Selling, general and administrative expenses | | [removed: 5,099] [added: 5,356] | | | | [removed: 4,552] [added: 5,099] | | | | [removed: 4,137] [added: 4,552] | | | | [removed: 3,610] [added: 4,137] | | | | [removed: 3,547] [added: 3,610] | | |

| Recall [removed: charges, net of insurance proceeds] [added: charges] | | [removed: 23] [added: 192] | | | | [removed: 173] [added: 23] | | | | [removed: 158] [added: 173] | | | | [removed: 296] [added: 158] | | | | [removed: 761] [added: 296] | | |

| Amortization of intangible assets | | [removed: 417] [added: 464] | | | | [removed: 371] [added: 417] | | | | [removed: 319] [added: 371] | | | | [removed: 210] [added: 319] | | | | [removed: 188] [added: 210] | | |

| Total operating expenses | | $ | [removed: 6,401] [added: 6,983] | | | $ | [removed: 5,883] [added: 6,401] | | | $ | [removed: 5,329] [added: 5,883] | | | $ | [removed: 4,741] [added: 5,329] | | | $ | [removed: 5,110] [added: 4,741] | |

| [removed: Operating income] [added: Operating income] | | [removed: $] [added: $] | [removed: 2,537] [added: 2,713] | | | [removed: $] [added: $] | [removed: 2,297] [added: 2,537] | | | [removed: $] [added: $] | [removed: 2,175] [added: 2,297] | | | [removed: $] [added: $] | [removed: 1,872] [added: 2,175] | | | [removed: $] [added: $] | [removed: 1,255] [added: 1,872] | |

| Other income (expense), net | | [removed: (181] [added: (151] | | ) | | [removed: (234] [added: (181] | | ) | | [removed: (254] [added: (234] | | ) | | [removed: (137] [added: (254] | | ) | | [removed: (95] [added: (137] | | ) |

| [removed: Earnings] [added: Earnings] before income [removed: taxes] [added: taxes] | | [removed: $] [added: $] | [removed: 2,356] [added: 2,562] | | | [removed: $] [added: $] | [removed: 2,063] [added: 2,356] | | | [removed: $] [added: $] | [removed: 1,921] [added: 2,063] | | | [removed: $] [added: $] | [removed: 1,735] [added: 1,921] | | | [removed: $] [added: $] | [removed: 1,160] [added: 1,735] | |

| Income taxes | | [added: 479 | | | |] (1,197 | | ) | | 1,043 | | | | 274 | | | | 296 | | | [removed: | 645 | | |]

| [removed: Net earnings] [added: Net earnings] | | [removed: $] [added: $] | [removed: 3,553] [added: 2,083] | | | [removed: $] [added: $] | [removed: 1,020] [added: 3,553] | | | [removed: $] [added: $] | [removed: 1,647] [added: 1,020] | | | [removed: $] [added: $] | [removed: 1,439] [added: 1,647] | | | [removed: $] [added: $] | [removed: 515] [added: 1,439] | |

| [removed: Net] [added: Net] earnings per share of common [removed: stock:] [added: stock:] | | | | | | | | | | | | | | | | | | | | |

| Basic net earnings per share of common stock | | $ | [removed: 9.50] [added: 5.57] | | | $ | [removed: 2.73] [added: 9.50] | | | $ | [removed: 4.40] [added: 2.73] | | | $ | [removed: 3.82] [added: 4.40] | | | $ | [removed: 1.36] [added: 3.82] | |

| Diluted net earnings per share of common stock | | $ | [removed: 9.34] [added: 5.48] | | | $ | [removed: 2.68] [added: 9.34] | | | $ | [removed: 4.35] [added: 2.68] | | | $ | [removed: 3.78] [added: 4.35] | | | $ | [removed: 1.34] [added: 3.78] | |

| [removed: Dividends] [added: Dividends] declared per share of common [removed: stock] [added: stock] | | [removed: $] [added: $] | [removed: 1.93] [added: 2.135] | | | [removed: $] [added: $] | [removed: 1.745] [added: 1.93] | | | [removed: $] [added: $] | [removed: 1.565] [added: 1.745] | | | [removed: $] [added: $] | [removed: 1.415] [added: 1.565] | | | [removed: $] [added: $] | [removed: 1.26] [added: 1.415] | |