This document provides an analysis and recommendation to buy shares of Stryker Corporation (SYK). Key points: - SYK is recommended as a buy with a 12-month target price of $106, offering 12.9% upside from the current $93.91 price. - SYK has shown consistent 5.8% annual revenue growth through organic growth and acquisitions. Future growth drivers include aging demographics and expanding into international markets. - Valuation methods including discounted cash flow and PE multiples analysis estimate SYK's intrinsic value at $106 per share. - Risks include operating liabilities, effects of currency exchange rates on international sales, and regulatory/litigation costs.

1. CFA Institute Research Challenge
Hosted by
Local Challenge CFA Society West Michigan

2. Grand Valley State University – Student Research
Healthcare Sector, Healthcare Equipment Industry
New York Stock Exchange
Stryker Corporation
Date: 1/21/2016 Current Price: $93.91 (1/22/16 Close) Recommendation: Buy
Ticker: NYSE – SYK Headquarters: Kalamazoo, MI Target Price: $106.00
Highlights
We initiate coverage on Stryker Corporation (SYK) with a Buy
recommendation based one-year target price of $106.00. This offers
a 12.9% upside from its current price of $93.91. (appendix 17)
Growth Drivers
SYK has shown consistent top line revenue growth averaging 5.8%
since 2010. Growth is driven organically and through the use of
acquisitions. Future growth will be realized through rising
demographic ages, additionally by enhancement of current
acquisitions, while leveraging its Trans-Atlantic operating model to
expand in international markets.
Valuation
Valuation methods calculated by the team show a current intrinsic
value of $106.00 per share. SYK provides a strong long-term
upside potential through its experience and strong market
penetration in the United States. We estimate SYK’s intrinsic value
using a weighted average of the discounted cash flow analysis and
PE multiples valuation.
Risk Factors
The risks associated with SYK stem from their operating liabilities
resonating from their sales force. International risks of the
appreciating dollar and the global economic slowing lessen the
sales of the company for their international markets. Regulatory
risks including the ACA implementations to the healthcare
insurance company payback period increase SYK’s cash
conversion cycle and the litigation of product recalls cost SYK
liquidity and billions of dollars, respectively.
Business Description
Stryker Corporation (SYK) is a Fortune 500 medical technology
firm. It is located in Kalamazoo, Michigan where it was founded in
1946 by Dr. Homer Stryker. It has three divisions, neurotechnology
and spine, medical and surgical (MedSurg), as well as
orthopaedics. SYK products are sold in over 100 countries through
company-owned sales subsidiaries and branches as well as third-
party dealers and distributors. The company’s products are
marketed directly to doctors, hospitals, and other healthcare
facilities.
In 2014 approximately 68.0% of SYK’s revenues were generated
from customers in the United States. With the establishment of

3. their European regional headquarters in the Netherlands, they hope
to increase their European market share and lower their effective
tax rate.
Neurotechnology and Spine
Their neurotechnology and spine products include both
neurosurgical and neurovascular devices. SYK’s neurotechnology
offering includes products used for minimally invasive
endovascular techniques; a comprehensive line of products for
traditional brain and open skull base surgical procedures,
orthobiologic and biosurgery products, and minimally invasive
products for the treatment of acute ischemic and hemorrhagic
stroke.
MedSurg
SYK’s MedSurg products include surgical equipment and surgical
navigation systems; endoscopic and communications systems;
patient handling and emergency medical equipment; and
reprocessed and remanufactured medical devices as well as other
medical device products used in a variety of medical specialties.
Orthopaedics (Reconstructive)
SYK’s products within their orthopaedics line consist primarily of
implants used in hip and knee joint replacements as well as trauma
and extremities surgeries. They produce advanced implant designs
and specialized instrumentation that make orthopaedic surgery and
recovery simpler, faster and more effective. SYK’s orthopaedic
products also aid surgeons with technology and support to develop
new surgical techniques.
Management and Governance
Corporate Governance
SYK has a set list of values that they adhere to; integrity,
accountability, people, and performance. Together these values are
at the core of everything SYK does.
Board- SYK’s business and affairs are managed under the board
of directors. Directors are expected to spend the time and effort to
meet their responsibilities. (Appendix 1)
Shareholder Rights- (Appendices 3 and 18)
Audit and Oversight- Management sets a system of internal
control in order to provide reasonable assurance in regards to
preparation and fair presentation of published financial statements.
This is audited by the public accounting firm Ernst & Young LLP.
Compensation-The Board of Directors at SYK believe that
stock-based awards are an important component of their overall
compensation plan. Stock-based awards are set for a predetermined
date and are one of the following; Annual grants, off-cycle grants,
acquisition-related grants.
Management
SYK devotes separate dedicated sales forces to each of its product
lines who work with the doctors in the operating rooms. This is
done to maintain a high level of focus and expertise. Management
is focused on continuous development and innovation. They
dedicate resources to internal development and innovation. This
would not be possible if they did not collaborate with their

4. customers. They maintain their capital allocation strategy that
prioritizes acquisitions, dividends, and share repurchases. They
acquire new companies in order to grow their product lines. SYK
has consistently grown their dividend each year since 2010. They
made share repurchases of $946 million from 2012 through quarter
three 2015.
Industry Overview and Competitive Positioning
Industry Growth Drivers
Market Adoption of Robotic Assisted Surgery
Surgical assisted surgeries are the way future surgeries are going to
be completed. According to the Mayo clinic, robotic assisted
procedures make minimally invasive surgeries possible. They have
less complications, less pain, quicker recovery time and smaller
and less noticeable scars compared to a traditional operation.
Rising World Demographics
Global population trends are an important considerations. Looking
at the ages of populations around the world that are 45 or older, the
United States has 41.4%, China 38.2%, Europe 45.7% and Japan
has 52.8%. The population pyramids also show the common trend
of aging population across the countries. This trend of increasing
age demographics increases SYK’s demand for their products and
will create a margin of safety in the event of an economic downturn
in the coming years. (Appendix 4)
Growth of Emerging Markets
Emerging markets such as China, Brazil and India offer huge areas
of growth in the healthcare industry. As income and education rise
and their economies become more advanced, medical spending
increases. China’s medical device industry has surpassed $50
billion, India could reach $6 billion by the end of 2016 and Brazil
almost $5 billion in 2016. Even with struggling growth as a country
in whole, Brazil still sees positive CAGR in the medical device
industry.
Mergers and Acquisitions
The medical device industry has had large technological gains in
recent years to spur their large market growth. This has led to many
companies entering the market and expanding their business
operation. Large-size companies are now looking to diversify their
portfolio of products and expand globally through mergers and
acquisitions, as see with Zimmer and Biomet merging. This has
produced four main players in the medical device industry, with
Zimmer Biomet (ZBH), Depuy Synthes, a subsidiary of Johnson
and Johnson (JNJ), Medtronic (MDT), and SYK.
Competitive Positioning
There is a high amount of rivalry between medical device
companies competing for new products in all areas of surgical care,
including post-surgery. SYK has low pressure from sellers as the
materials needed are of high quality but are common and available
from many producers. Buyers have low power as well due to the
regulations that are imposed on doctors and the products that they
use to ensure safety during the surgery, and few companies can
provide them. The threats of new entrants into the medical device

5. market is low, however companies already operating in the market
are moving towards the areas that SYK is operating in, increasing
competition in these segments. Threat of substitutes is medium due
to the socio-cultural shift of consumers opting for alternative
medicine and diet to minimize the risk of needing selective
surgeries in the future. (Appendix 12)
SWOT Analysis
SYK has high strengths due to the current profits of the company
and the quality products the company produces. Weak international
sales growth and litigation costs affect the EPS of the company,
however the international market does pose opportunities to expand
the sales of the company in the future. Threats to the company
come from existing competitors in the medical device market
creating products to directly compete with SYK. (Appendix 5)
Investment Summary
We issue a Buy recommendation on Stryker Corporation (SYK)
with a target price of $106.00 using the Discounted Cash Flow
Method, Dividend Discount Model, and P/E Multiples Analysis.
This offers approximately 12.9% upside from its closing price of
on January 22, 2016. This valuation is supported by numerous
merits, as outlined below.
Merits
Defensive
SYK falls into the Healthcare Sector, which makes them a
defensive stock. They are a defensive stock because; healthcare is a
basic necessity and SYK has the third largest market share behind
Medtronic and DePuy.
Strong Financials
SYK is highly liquid with a liquidity ratio of 1.81. This allows
them to make acquisitions and pay liabilities. Its total debt to equity
ratio is 1.06. This is right in line with their top competitors. It has a
growing Free Cash Flow that allows it to make acquisitions, pay
dividends, and reinvest. (Appendices 9 and 10)
Leveraging of Trans-Atlantic Operating Model
The creation of a regional headquarters in the Netherlands in July
of 2014 allowed for a substantial future tax savings while allowing
for a base of operations for growth in European and emerging
markets. Approximately 70.8% of consolidated cash and cash
equivalents are held overseas. This cash is intended to be used by
reinvesting organically or through acquisitions outside of the
United States. China, the world's largest emerging market, and
becoming one of the largest markets for medical devices surpassing
$50 billion in 2015. Reforms by the Chinese government allowed
easier access for foreign companies to enter and SYK acquired
Trauson Holding Company in March of 2013 for $675 million.
Trauson was China’s number one supplier of trauma products and
pelvic reconstruction plates and the third largest spine distributor.
This acquisition creates a presence in China with a network of 633
distributors covering 3,880 hospitals. While taking advantage of

6. the lower production costs in China, this strategic move also gives
SYK a “value” product which will be scaled to provide emerging
markets with products that still have gross margins in the upper
60% range.
Continued Growth of Mako Surgical
Mako Surgical Corp. was acquired in December 2013 for $1.65
billion. This amplified SYK’s operating room integration and
surgical navigation while providing means for robotic assisted
surgeries. Economics of scope increased, locking hospitals into
using SYK replacement joints, bones and supplies while using
Mako. Mako, while providing “consistent, reproducible, precision”
assists in total knee and recently approved total hip replacement
surgeries with reasonable expectations to expand into shoulder
surgeries. Although the sales have been slower than anticipated,
they have set records every quarter with sales, most recently selling
17 robots in Q3 of 2015. Q4 sales are projected to increase even
more due the fact that year-end sales are seasonally strong in Q4
and Mako was approved for total hip replacement with expansion
on the types of implants allowed for use.
Expansion into Extremities
With the global extremity industry expected to increase in value to
$1.66 billion by 2016, SYK acquired Small Bone Innovations
(SBi) in 2014 for $375 million, SYK now has the ability to provide
small bones for fingers, wrists, and elbows to treat trauma and
disease. The Scandinavian Total Ankle Replacement System or
STAR, included in the acquisition, is the only complete three piece
cement less mobile bearing ankle on the market.
SYK was first rumored to be targeting Smith & Nephew in
December 2014. The London based company is one of the only
mid-sized medical device companies left. In December 2015 it was
rumored again that SYK had extended an 18 billion dollar deal for
the merger. Smith & Nephew, which is a European orthopaedic
leader, operates in a value business strategy compared to SYK’s
high services model. This would allow SYK to introduce products
into emerging markets quicker and be leveraged through their
Trans-Atlantic operating model. SYK would gain significant
market share and would help SYK become the leading orthopaedic
provider in the European market. This would further the expansion
of robotic assisted surgeries through Blue Belt Technologies which
was recently acquired by Smith & Nephew. This merger would
also have significant tax savings and could act as a corporate
inversion.
In comparison to two of its closest competitors, ZBH and MDT,
SYK has been efficient at capitalizing its new acquisitions onto its
balance sheet. Over the last five years, all three companies have
made multiple acquisitions. However, out of the three companies,
SYK has recorded the least amount of intangible assets. This shows
that SYK executives can effectively target and acquire companies
while paying fair value for the firms.

7. Financial Analysis
Capital Allocation
SYK has three primary objectives for capital allocation. The
primary use is intended for mergers and acquisition costs. In the
time period from 2012 up to Q3 2015, acquisition costs totaled
approximately $3.5 billion on 11 different acquisitions. The
secondary goal is to distribute a constant and rising dividend each
year. Since 2010, SYK has increased its dividend payout every
year by an average of 14.20% per year. The third use of capital
SYK employs are share repurchases. From 2012 through Q3 2015
SYK repurchased $946 million worth of shares. They currently
have $136 million authorized to buy back under their 2012
repurchase plan, and $2 billion under their 2015 repurchase plan
which was approved in March.
Profitability
By examining Greenblatt’s return on capital formula and earnings
yields we have determined that SYK has a favorable financial
position in comparison to its two closest competitors. In addition to
MDT and ZBH, four other competitors were originally scrutinized.
However, ZBH and MDT will only be included due to their closely
related operations and size.
Starting with the return on capital formula, SYK recently (2015
LTM) surpassed both ZBH and MDT with a ROC of 31.7%, far
above the 18.2% and 17.7% reported by MDT and ZBH
respectively. Looking at the three companies’ earnings yields, SYK
has remained a favorable position, maintaining yields 200 basis
points over its next closest competitor for the last five years. SYK
reported 5.54% in 2010, and has grown to 6.65% in the LTM of
2015. ZBH and MDT had respective yields of 5.09% and 4.34% in
the LTM 2015. (Appendix 13)
Earnings Management
To better understand management’s representation of financial data
and search for balance sheet bloat, we first calculated scaled net
operating assets. For the three firms we have discussed, SYK has
maintained low SNOA. ZBH had a lower percentage than SYK in
the LTM of 2015, but SYK was lower than both competitors from
2010 to 2014. Looking at scaled total accruals, our calculation has
shown consistently negative accruals for all three companies. The
2015 LTM data point is an outlier at .017. This metric is a measure
of accounting practices and our last data point does not include one
fiscal year of data, our team recommends recalculation when
earnings are available. Excluding that data point, SYK has
downward trending accruals that appear far more attractive than the
upward trending accruals of its competitors. (Appendix 14)

8. ROE
SYK is expected to boost ROE to ~17.00% as it improves net profit
margins, the results of recent operations reconstructuring efforts.
Recovering healthy sales growth in the near future will also help
the ROE to improve.
Valuation
Discounted Cash Flow model (DCF)
We used the discounted cash flow model to estimate the intrinsic
value of SYK’s share prices by projecting forward five years of
operations, profitability, and free cash flows. We believe five years
is a reasonable time horizon to forecast SYK’s operations due to its
consistent operations; we can also see the effects of recent
acquisition activities on operations. In this model, we calculated
free cash flow from projected sale revenue (Appendix 6). We
derive with our price target of $106.00 from the DCF model. The
foundation of this result is based on the historical performances of
operations, our forecasted growth rate of profitability and sales,
forward-looking effects of the recent reconstructing operations
activities, the predicted market conditions, industry outlooks, and
recent M&A activities. The estimate price is subjected to changes
and sensitivity, according to these calculated factors below:
Weighted Average Cost of Capital (WACC)
The Risk-free rate of 2.79% was calculated using the projected 10
year treasury rates of return which take into account three possible
rate hikes in 2016. Taking the unstable and pessimistic world
economic environment into accounts, the team projected the FED
will be reluctant to raise the interest further. The expected market
risk is calculated based on the last 5 years average returns. To
derive with the above Beta value of SYK stock, we run the
regression of SYK’s daily-adjusted close stock price against the
S&P 500 daily composite values from 1/1/2011 to 12/31/2015. We
calculate the cost of equity using the Capital Asset Pricing model.
The cost of debt, on the other hand, is the sum of the projected risk-
free rate and the AAA’s average bonds spread. We calculate the
after-tax cost of debt with the assumption that SYK has a 30% tax
bracket. SYK’s historical capital structure comprise of 30%
interest-bearing debt and 70% equity.

9. Revenue growth
We forecast revenue growth for SYK for the next five years
coming from various operations across the world. With the adverse
effect of the current world economic conditions and the instability
of the currency exchange rates, we anticipate most of the revenue
growth in the next five years will come from U.S. market. Growth
in emerging market will remain low as currency exchange rates
remain speculative and the overall world economy struggles with
weak indicators such as the Brazil and China market. Strong
growth in orthopedic segment will continue contribute as the main
source the revenue for SYK. We see the company’s aim to
diversify its products portfolio to reduce its reliance on
orthopaedics segment is beneficial in the long run. Lessening the
dependence on orthopaedics will reduce the company’s operation
exposure with the business cycle; orthopedic products are mostly
elective and the sales can negatively affected when the economy is
going through a downturn. The introduction of MAKO products,
together with Patient Safety Technologies, SBi, and Surpass
provide SYK with more opportunities and technologies for internal
innovations and growth in its product portfolio. With the
company’s commitments on further growing in Neurotechnology
and spine segments, we are confident that sales growth rate will
improve after 2016 as its divergence strategy becomes more
stabilized and the world economic condition improve.
Terminal growth rate
We project sustainable growth rate of 3.5% for SYK, much higher
than the 2.0% growth rate of GDP to perpetuity in developed
countries. The difference between the GDP growth rates will
reflect the higher projected health care costs. As the world
economic environment becomes stable, we see spending for
healthcare in emerging market countries will contribute greatly to
the increase in spending on healthcare services and equipment. We
see great potential of growth for the healthcare-related industries in
emerging market countries as the population becomes more health
conscious and their disposable incomes increase at a much faster
rates than those of developed countries.
Dividend Discount Model
Our team calculated a price target using the dividend discount
model (DDM). However, the DDM model is best for value firms
that do not have many growth opportunities. Therefore, it was not
included in our final weighting of the security price. The DDM
resulted in a target price of $44.33 which is reflective of the
acquisitive nature of SYK and the quantity of growth opportunities
available. (Appendix 7)
The 2016 estimated dividend is the product of the $.38 dividend
announced by SYK for next quarter multiplied by four to reflect the
entire year. This is a close estimate because SYK for the last five
years has raised dividends once a year and proceeded to pay out a
consistent dividend for the next three quarters. Our 2017-2018 and
2019-2020 growth rates were found by averaging EBIT, EPS,
dividend, sales, and analyst’s estimates of growth. The weighted

10. average of these numbers resulted in growth rates of 11.98% and
9.29% respectively. To discount the dividends we used our
calculated WACC of 7.7% and our terminal growth rate we
calculated to be 3.5%. Please refer to the corresponding sections
above for how these rates were derived.
Although the DDM model creates a major price discrepancy
between our other two valuation techniques, the model is still
relevant. The difference between the $44.33 calculated by the
DDM, and the weighted estimated price of $106.00 calculated from
the multiple and DCF valuation is the present value of SYK’s
growth opportunities and reflective of our bullish rating on the
company.
Multiple Analysis
Based off of our conservative forward looking earnings multiple
valuation, our team is issuing a target price of $103.98. This price
is a function of our forecasted earnings and our industry extracted
cap rate. We forecasted revenue in constant currency at 6%,
however, due to the strong dollar we revised this growth to 3.5% to
reflect the negative impact of currency exchanges and slow growth
of the global economic environment. Our COGS was determined to
be 32% of revenue, which was an average of the COGS over the
last five years. Our SG&A, R&D, and amortization expenses we
trended forward linearly. Although SYK’s corporate strategy
includes increased centralization of administrative practices, these
percentages were not adjusted in order to keep a conservative
approach. Our team maintained that practice for future merger and
restructuring charges, considering it is likely that SYK will
continue to acquire smaller firms. Finally, we chose a 25% tax rate,
this conservative number is much higher than the 18.3% reported
tax rate of the last twelve months of 2015, and is in line with our
conservative methodology. (Appendices 8 and 15)
To determine the multiple for our valuation our team extracted
historic multiples from SYK’s competitors and the healthcare
medical equipment and supplies sector. Over the last two years the
average P/E for SYK’s closest competitors has been 31.9, and the
sector as a whole which included 238 companies has had an
average PE of 31.7. Again to stay in line with our conservative
approach we have decided to use a forward looking PE of 25. This
multiplied by our earnings yields a target price of $103.98 for
2016.
Investment Risks
International Risks (IR):
IR1.) Slow economic growth in overseas countries that SYK
operates is bringing down the overall growth rate of the company.
This is most notably affecting the countries of China and Brazil,
SYK’s two biggest overseas markets, and could drag down further
sales.
IR2.) As foreign currencies continue to lag or even depreciate
against the dollar, Stryker will see less growth in their overseas
operations. This will bring down the overall growth rate of the

11. company, as SYK hopes to push their overseas efforts into more
foreign markets, such as Great Britain and Europe.
Regulatory Risks (RR):
RR1.) In 2014, Stryker had a litigation that is still pending and
resulting in a company estimate of $1.43 Billion USD. This is due
to the negative health aspects of their Hip replacement product, the
Rejuvenate and ABG II modular neck hip system. This represents a
$3.81 per share loss for the company when place within one
accounting period (2014). These types of losses can happen in the
future bringing SYK future sales down.
RR2.) The Affordable Care Act pushes doctors and patients to
practice more “Preventative Medicine”. This litigation push could
move customers away from SYK’s strategic position in the market,
and cut away from their profits. SYK is preparing for this shift with
their recent acquisitions. Also the ACA has also allowed medical
insurance companies to allow the payments for surgeries to happen
over an extended period of time, increasing SYK’s A/R and greatly
increasing their Cash Conversion Cycle. This makes SYK less
liquid and makes the company less able to make strategic moves
into the future. In addition, the excise tax on medical devices
increases the cost of SYK’s products, and this may make SYK
products less competitive.
Operational Risks (OR):
OR1.) In 2013, the company was accused by the SEC for bribery
in the amount of 2 Million USD. Direct selling to doctors and
hospitals is the main sales tactic of SYK, and the revenue streams
depend heavily on this selling tactic. Failure in this aspect of the
company will result in massive losses in the profitability of the
company.
OR2.) An Increase in MedSurg division of the company due to the
increase in the practice of preventative medicine in line with the
ACA regulations, along with the shifts in socio-cultural tendencies
to favor healthier diets and exercise. As these shifts in demands
happen, SYK along with its competition will be fighting against
each other for these new revenue streams within the
hospital/patient care realm. The intensity of rivalry between
competitors in this field have now intensified with the forecasted
needs of the consumers in the short term.

12. Disclosures:
Ownership and material conflicts ofinterest:
The author(s), or a member of their household, of this report does not hold a financial interest in the securities of this company.
The author(s), or a member of their household, of this report does not know of the existence of any conflicts of interest that might
bias the content or publication of this report.
Receipt of compensation:
Compensation of the author(s) of this report is not based on investment bankingrevenue.
Position as a officer or director:
The author(s), or a member of their household, does not serve as an officer, director or advisory board member of the subject
company.
Market making:
The author(s) does not act as a market maker in the subject company’ssecurities.
Disclaimer:
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the
author(s) to be reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or
completeness. The information is not intended to be used as the basis of any investment decisions by any person or entity. This
information does not constituteinvestment advice, nor is it an offer or a solicitation of an offer to buy or sell any security. This
report should not be considered to be a recommendation by any individual affiliated with CFA Society West Michigan, CFA
Institute or the CFA Institute Research Challenge with regard to this company’s stock.
CFA Institute Research Challenge

13. Appendices
Appendix 1: Board of Directors
Board
Member
Title Background Description
Kevin A. Lobo Chairman of the Board
and Chief Executive
Officer Since 2012
● Joined in April 2011
● Group President of
Orthopaedics
Mr. Lobo has many years of experience with companies such as Johnson
and Johnson, along with Ethicon Endo Surgery. He has also held financial
positions with Unilever and Kraft. He has a Great understanding of SYK’s
values and brings in expertise in the field of medical technology to the
company.
Howard E. Cox, Jr. Board Director since
1974
● Partner of Greylock
venture capitalist firm
Mr. Cox has extensive experience by being a Director of many institutions,
such as the Harvard Medical School Board of Fellows and the Secretary
of Defense Business Board. His continued commitment to SYK gives the
company a historical reference and venture capitalism expertise is
beneficial when referencing to acquisitions.
Srikant M. Datar,
Ph.D.
Board Director since
2009
● Works with Novartis AG
and T-Mobile
● Professor at Harvard and
Stanford
Doctor Datar has extensive accounting and finance expertise that shows
during his tenue as professor of Graduate School of Business
Administration at Harvard and Accounting and Management professor at
Stanford. He also serves on the board of Novartis AG and T-Mobile, giving
him many insights into the international markets
Dr. Roch Doliveux Board Director since
2010
● CEO of UCB S.A from
2005 until 2014
Dr. Doliveux is a doctor of veterinary medicine from Maisons-Alfort and
brings his extensive expertise in global markets to SYK’s board in order
for the company to expand their international presence. His action on
many regional boards of UCB S.A will help SYK expand into new regions
and imprint their global presence in the medical device market
Loiuse L. Francesconi Board Director since
2006
● Chairman of the Tucson
Medical Center Healthcare
Board of Trustees
● Former Vice PResident of
Raytheon Company
Her presence in the board brings experience in the hospital setting, one of
the major sources of revenue for SYK and a great customer base for the
company’s products. Her various leadership roles in other companies also
brings knowledge to the areas of finance, operational, and governance
aspects of the company
Allan C. Golston Board Director since
2011
● President of the Bill and
Melinda Gates Foundation
since 2006
● Director of Malt-O-Meal
Mr. Golston provides SYK with experience in the healthcare sector and
with his CPA certification, provides SYK with advice during the auditing
process. His experience in providing healthcare to underprivileged people
provides SYK with insight into the needs of the ultimate consumer and
design products to meet those needs.
William U. Parfet Independent Board
Director Since 1993
● CEO of MPI, a drug safety
and pharmaceutical
company
● Director of Monsanto
● Director of Taubman
Center
● 30 year career of Upjohn
company (now Pfizer) as
an executive
Mr. Parfet has extensive experience in leadership roles in many public
companies, giving his experience to the SYK board and to the executives.
His experience with various pharmaceutical companies gives him
extensive knowledge in regards to research and development of new
products, leading SYK into the future. He also is very active in the
accounting field, working on the Financial Accounting Foundation that sets
the rules for accounting standards across the U.S.
Andrew K. Silvernail Board Director since
2013
● CEO of IDEX company
since 2011
● Group president for
Rexnord Industries
● senior leader at Newell
Rubbermaid
Mr. Silvernail has extensive leadership roles in companies that provide
materials for products in the healthcare field. This experience helps SYK
develop products with the highest quality materials, ensuring the quality is
brought to the consumers of SYK products. His experience in the
healthcare field as well provide SYK with insights into giving a better
healthcare service to clients.
Ronda E. SYK Board Member since
1984
● Granddaughter of the
founder of the company
● Vice chair of Greenleaf
Trust
● Harvard Medical School
Board of Fellows
Ms. SYK brings various matters regarding social responsibility to the
company. She also brings the SYK values instilled in her through her
upbringing to make sure that the SYK board and executives stay on
mission. In addition, she brings a strong shareholder presence into the
boardroom.

14. Appendix 2: Key Executives
Executive Title Description
Kevin A. Lobo Chairman and Chief
Executive Officer Kevin A. Lobo was appointed Chairman of the Board on July 22, 2014 in addition to his responsibilities as Chief Executive Officer of
SYK Corporation, which he assumed on October 1, 2012. Mr. Lobo joined SYK in April 2011, and had previously been Group President
of Orthopaedics. Mr. Lobo serves on the Board of Directors for Parker Hannifin Corporation, the global leader in motion and control
technologies. He is also a board member of the Advanced Medical Technology Association (AdvaMed), the Business Leaders for
Michigan and United Way for Kalamazoo/Battle Creek regions, and is a member of the Business Roundtable. Mr. Lobo has a broad
business career that includes executive positions in general management and finance. After holding finance positions with KPMG,
Unilever and Kraft Canada he spent eight years with Rhone-Poulenc, including roles based in Europe as Worldwide Corporate
Controller of the chemical spin-out, Rhodia, and General Manager of Specialty Phosphates EMEA. He then spent eight years at
Johnson & Johnson, including CFO of McNeil Consumer Healthcare and Ortho Women’s Health & Urology, President of J&J Medical
Products Canada and President of Ethicon Endo Surgery.
Yin C. Becker Vice President,
Communications,
Public Affairs and
Strategic Marketing
Yin C. Becker was named Vice President, Communications, Public Affairs and Strategic Marketing in January of 2012. Ms. Becker
leads the development and management of the company’s global communications, public affairs and corporate marketing strategies that
enhance SYK’s position as an industry leader. With 27 years of experience in the medical technology industry, Ms. Becker’s career
spans several senior leadership positions at SYK. She served as Vice President, Healthcare Innovations, Executive Director of the
Homer SYK Learning Center and Vice President, Global Communications for SYK’s Orthopaedics business. Prior to joining SYK, Ms.
Becker also served for ten years at Pfizer Inc. in various leadership roles in marketing and sales. Ms. Becker holds a B.A. in Psychology
from Rider University and she is the Vice Chair for HINJ and a member of the Ramapo College Board of Governors.
Dean H. Bergy Vice President,
Corporate Secretary Dean H. Bergy was named Vice President, Corporate Secretary in October 2012.
Mr. Bergy joined the Company in 1994 as the Corporate Controller. In 1996, he was promoted to Vice President, Finance of our Medical
division and then to Vice President, Finance of the corporation in 1998. In January 2003, he was appointed Vice President and Chief
Financial Officer. He also held the role of Secretary from January 2003 to February 2005, and resigned as Vice President, CFO in March
2009. Mr. Bergy continued to be employed by the Company as an Advisor to the CFO and was elected Secretary of the Company in
September 2011, and also served as Interim Chief Financial Officer and Vice President, Corporate Secretary from October 2012 until
April 22, 2013. Prior to joining SYK, Mr. Bergy was an Audit Senior Manager for Ernst & Young LLP. Mr. Bergy holds a B.B.A. in
Accounting from the University of Michigan and is a Certified Public Accountant. He completed the Program for Management
Development at the Harvard Business School in 2001.
William E. Berry Jr. Vice President,
Corporate Controller
William E. Berry Jr. was named Vice President, Corporate Controller and Principal Accounting Officer in February 2014. Mr. Berry has
oversight responsibility for the global accounting and financial functions and is responsible for internal reporting and consolidations, SEC
and external reporting, financial accounting research, policies and procedures and the company’s finance training and development
programs. Mr. Berry joined SYK in August 2011 as Corporate Controller. Prior to that, he served as the Assistant Corporate Controller
for Whirlpool Corporation the world’s leading global manufacturer and marketer of major home appliances leading the accounting and
reporting functions for the multi-national company. From 2007 to 2009 Mr. Berry served as the Controller of the Electronics and Safety
Division of Delphi Automotive LLP, a leading global vehicle components manufacturer. From 1995 to 2007 Mr. Berry served Federal-
Mogul Corporation, a leading global supplier of vehicle and industrial products, and during his 12-year tenure he held various positions
of increasing responsibility most recently as the Director of Finance for Global Powertrain and prior to that while based in Germany as
the Director of Corporate Finance for Europe and South Africa. Mr. Berry began his career in public accounting at Deloitte & Touche
LLP. He earned a Bachelor’s of Business Administration degree in accounting from Eastern Michigan University, is a Certified Public
Accountant and a member of the American Institute of Certified Public Accountants
Jeanne M. Blondia
Vice President,
Finance and
Treasurer
Jeanne M. Blondia joined SYK as Vice President and Treasurer in May 2008. In January of 2014 she was named Vice President,
Finance and Treasurer. Ms. Blondia is responsible for the Treasury department including all treasury, risk, insurance, real estate and
travel functions and works closely with the global finance team. Prior to joining SYK, Ms. Blondia served as the Vice President and
Treasurer of Constellation Energy Group, Inc. At Constellation she had full treasury responsibilities including funding plans for business
growth and was also highly involved in merger and acquisition activities. She previously worked at the General Motors Treasurer’s office
in New York and held various roles of increasing responsibility, including Director of Business Development for GMAC, GM’s finance
subsidiary. She began her career as an Analyst at DRI, an economic consulting firm. Ms. Blondia holds a B.A. in Economics from
Kalamazoo College and an M.B.A. in Finance from the University of Michigan.
Lonny J. Carpenter Group President,
Global Quality and
Business Operations
Lonny J. Carpenter was named Group President, Global Quality and Operations, in January 2016 and further expanded his role. Mr.
Carpenter is responsible for setting company-wide direction for our quality, manufacturing, procurement and logistics strategies, and
ensuring the successful execution of that direction, as well as oversight of our European Business Operations, Transatlantic Operating
Model, Canada and our global Enterprise Resource Planning (ERP) platform. Mr. Carpenter began his career with SYK in 1989 at the
Instruments division where he excelled in various manufacturing and operations roles, the last being Vice President, Global Operations.
In 2006 he was promoted to Vice President/General Manager of the Medical division and then to President in 2008. That same year, he
was promoted to Group President, Instruments and Medical. Mr. Carpenter holds a Bachelor of Science degree from the United States
Military Academy at West Point.

15. Irene B. Corbe Vice President,
Internal Audit Irene B. Corbe joined SYK in April 2014 as Vice President, Internal Audit. Ms. Corbe reports to the Audit Committee of SYK's Board of
Directors. In this role, Irene oversees SYK’s financial audit activity which is a critical component of the corporate governance structure.
Irene joined SYK with 25 years of experience in internal audit, finance and accounting in various roles of increasing responsibilities.
Most recently, Ms. Corbe was the Vice President, Internal Audit at Whirlpool Corporation. Ms. Corbe received her Masters of Business
Administration from Oakland University and her undergraduate degree in business administration from the University of Michigan. She is
also a Certified Public Accountant.
M. Kathryn (Katy)
Fink
Vice President,
Global Human
Resources
M. Kathryn (Katy) Fink was named Vice President, Global Human Resources, in January 2016. Ms. Fink is responsible for all human
resources policies, practices, planning, direction and activities, including Talent Acquisition, Talent Development, Total Rewards and HR
Shared Services. Ms. Fink began her career with SYK in 2013 as Vice President, Talent Management and was promoted in 2015 to
Vice President, Human Resources, MedSurg and Neurotechnology Group. Prior to joining SYK, she held a number of HR roles of
increasing scope and complexity at Cintas Corporation, Ethicon Endo-Surgery, a division of Johnson & Johnson. Ms. Fink holds a
Bachelor of Science degree from Kenyon College and Master's degree in human resource management (HRM) at Rutgers' School of
Management and Labor Relations.
David K. Floyd Group President,
Orthopaedics David K. Floyd was named Group President, Orthopaedics on November 15, 2012. The leaders of SYK’s Reconstructive, Trauma and
Extremities, Spine, Performance Solutions, Asia and South Pacific businesses report to David. Mr. Floyd joined SYK after 25 years in
the medical technology and orthopaedics industry, where he held a number of senior level leadership roles at DePuy, a division of
Johnson and Johnson, Abbott Spine, AxioMed Spine, Centerpulse Orthopaedics and most recently, Chief Executive Officer for
OrthoWorx. Mr. Floyd received his bachelor’s of science degree from Grace College in Winona Lake, Indiana.
David G. Furgason Vice President, Tax
David G. Furgason was named Vice President, Tax, in August 2012 and is responsible for all aspects of tax for SYK’s global business,
including global tax policy and strategy, compliance, audits and accounting for income taxes. Mr. Furgason began his career with SYK in
2004 as Senior Manager, Tax Planning, Audits and Accounting at our Corporate headquarters in Kalamazoo, Michigan. He was
promoted to Director of Tax, U.S. in August of 2006 and appointed Director, Global Tax Operations in 2010. Prior to SYK, David had an
18 year career in public accounting as a principal with Jansen Furgason & Valk, PC, and a manager with Ernst & Young. Mr. Furgason
is a Certified Public Accountant and holds a Bachelor of Business Administration degree from Western Michigan University.
Michael D.
Hutchinson
General Counsel
Michael D. Hutchinson joined SYK as its Assistant Counsel in June 2008, was promoted to Chief Legal Counsel for the Orthopaedics
Group in December 2008, then Deputy General Counsel in 2012, and General Counsel in 2013. Mr. Hutchinson is responsible for the
leadership and strategic direction of SYK’s legal, compliance, and corporate secretary functions. Prior to joining SYK, Mr. Hutchinson
worked for several law firms and as an in-house attorney in the Washington, D.C. area. Mr. Hutchinson received his law degree from
the George Washington University Law School and his undergraduate degree from Clark University.
William R. Jellison
Vice President,
Chief Financial
Officer
William R. Jellison joined SYK as Vice President, Chief Financial Officer in April 2013. Mr. Jellison has global responsibilities for
Finance activities, including Corporate Accounting, Reporting, Tax, Treasury and Internal Audit functions for the Company. Mr. Jellison
began his career with the Donnelly Corporation, a publicly traded international automotive parts supplier, where he served in several
senior leadership roles advancing to Vice President of Finance. Prior to joining SYK, Mr. Jellison spent 15 years at Dentsply
International, the world’s largest manufacturer of professional dental products, most recently as the company’s Senior Vice President
and Chief Financial Officer. To broaden his operational experience, he also spent 2 years as a Senior Vice President with full P&L
responsibilites for some of Dentsply's operating divisions located in the U.S., Europe & Asia. Mr. Jellison holds a Bachelor’s degree in
business administration from Hope College, and became a Certified Management Accountant. Mr. Jellison is a member of the Institute
of Management Accountants and is also affiliated with Financial Executives International.
Katherine A. Owen
Vice President,
Strategy and
Investor Relations
Katherine A. Owen joined SYK as Vice President, Strategy and Investor Relations, in February 2007. Ms. Owen is responsible for
overseeing the strategic planning and business development processes at SYK, as well as investor relations. Prior to joining SYK, Ms.
Owen served as a Medical Technology Analyst at Merrill Lynch. She previously served as a Medical Technology Analyst at Cowen &
Co./SG Cowen. She also was a Corporate Lending Analyst at State Street Bank and an Underwriter at Chubb Insurance Corporation.
Ms. Owen holds a B.A. in Economics from the University of Massachusetts at Amherst and a M.B.A. from Boston College.
Bijoy Sagar Vice President,
Chief Information
Officer
Bijoy Sagar was named Vice President, Chief Information Officer, in May 2014. Mr. Sagar is responsible for the development and
execution of our global information technology strategy.Prior to joining SYK, Mr. Sagar spent 20 years in the information technology
field, most recently serving as Chief Information Officer for Merck Millipore, and before that as Global Head of Information Systems and
a Member of the Divisional Board for the $15 Billion Chemicals Division of Merck KGaA. Prior to joining Merck in 2006, Bijoy held
various roles of increasing responsibility with Millennium Pharmaceuticals, Amgen, and Eli Lilly & Company. Mr. Sagar holds a
Bachelor’s and Master’s in science from the University of Bombay.
Timothy J. Scannell Group President,
MedSurg and
Neurotechnology
Timothy J. Scannell was named Group President, MedSurg & Neurotechnology on January 1, 2013. The leaders of the
Craniomaxillofacial (CMF), Endoscopy, Healthcare Systems, Instruments, Medical, Neurovascular, Sustainability Solutions, Japan and
Latin America divisions report to Tim. Mr. Scannell began his career with SYK in 1990. During eleven years with SYK's Endoscopy

16. division, he served in various sales and marketing leadership roles and progressed to the position of Executive Vice President
overseeing sales, marketing and operations. He was then named as Vice President and General Manager of SYK's Biotech division in
2001. In 2003 he was promoted to Vice President and General Manager of SYK's Spine division and later to President of Spine. He
became the Group President of Spine and Endoscopy in 2008 and was named Group President, MedSurg & Spine in August of 2009.
Mr. Scannell serves on the Board of Directors for Insulet Corporation, the leader in tubeless insulin pump technology with its OmniPod®
Insulin Management System. Mr. Scannell holds bachelor’s and master’s degrees in business administration from the University of
Notre Dame.
Elizabeth A. Staub Vice President,
Regulatory Affairs
and Quality
Assurance
Elizabeth A. Staub was named Vice President, Regulatory Affairs and Quality Assurance, in April 2006. Ms. Staub is responsible for
overseeing SYK’s compliance with worldwide product quality and regulatory requirements, including FDA and other regulatory bodies.
Ms. Staub began her career with SYK in April 1989 and held a number of quality, regulatory and operational positions within the
Company’s Orthopaedics division, including Manager, Quality Assurance; Team Leader for the packaging cell; Manufacturing Team
Leader for the external support cell; Director of the Knee Steering Team; Vice President, Quality Assurance, Regulatory Compliance and
Clinical Research; and Director of the Business Process Excellence Project. She then served as Director, Regulatory Affairs and Quality
Assurance, for the Company from 2005 to 2006. Prior to joining SYK, Ms. Staub spent six years with Baxter Healthcare in a variety of
quality assurance positions. Ms. Staub holds a B.S. in Medical Technology from York College of Pennsylvania.
Appendix 3: Shareholder Rights
All shareholders are invited to the annual shareholder meeting held on the third Monday in April. At any
meeting of shareholders each outstanding share of stock having voting power shall be entitled to one vote on
each matter. All shareholders are entitled to vote for the board of directors. Shareholders running for a board
seat must receive a majority of the vote to be elected.
Appendix 4: Population Pyramids

17. Appendix 5: SWOT Analysis

18. Strengths:
● Leader in market share for the
segments of the surgical equipment
that operating in
● Excellent relations with customers
● Positions in future technologies and
cutting edge techniques
● Diverse portfolio of products
Weaknesses:
● Exposed to high amounts of litigation risks
● Failure to connect with customers could lead
to lower sales
● Slowing international growth can greatly affect
revenue growth
Opportunities:
● High amounts of new customers due
to ACA
● Smaller companies with technology in
new, developing areas are good
acquisition targets
● Healthcare represents a majority of
discretionary spending for Americans
Threats:
● Exposed to litigation that takes away majority
of earnings
● Competition intensifying from the expected
increase from ACA
● Shifts in needs for ultimate consumers away
from product line
Appendix 6: Historical and Projected Cash Flow from 2014 to 2020

19. 2016 2017 2018 2019 2020
PV in 2015 $1,125.83 $1,582.09 $1,737.79 $1,455.78 $38,026.44
Enterprise Value $43,927.92
Number of shares outstanding (m) 376.55821
Debt $ 3,469.00
Equity value $40,458.92
Value per share $107.44
Appendix 7: Valuations

20. Appendix 8: Historical Income Statement
t

21. Appendix 9: SYK’s Long-term Debt Structure
Name Maturity
Date
Amount
$(Mil)
Price Coupon
%
Coupon
Type
Yield to
maturity (%)*
Weight Weighted
factors
SYK 2% 9/30/2016 750 100.8 2.00 Fixed 0.9 0.19 0.18%
SYK 3.375% 11/1/2025 750 100.1 3.38 Fixed 3.4 0.19 0.63%
SYK 1.3% 4/1/2018 600 99.5 1.30 Fixed 1.6 0.15 0.23%
SYK 3.375% 5/15/2024 600 99.0 3.38 Fixed 3.5 0.15 0.53%
SYK 4.375% 1/15/2020 500 108.7 4.38 Fixed 2.1 0.13 0.26%
SYK 5/15/2044 400 97.5 4.38 Fixed 4.5 0.10 0.45%
SYK 4.1% 4/1/2043 400 98.0 4.10 Fixed 4.2 0.10 0.42%
After-tax cost of debt 2.70%
* Yield to maturity have been adjusted, assuming 25% tax bracket.

22. Appendix 10: Historical and Projected Key Financial Ratios
Financial Condition 2014 2015 2016E 2017E 2018E 2019E 2020E
Profitability
NOI / EBITDA Margin 85.5% 85.4% 84.7% 84.0% 83.3% 82.7% 82.0%
Operating Profit Margin 23.0% 22.9% 22.5% 22.3% 22.0% 21.8% 21.6%
Net Profit Margin 5.3% 12.0% 15.2% 15.2% 14.9% 14.8% 14.8%
Return on Assets 2.9% 7.4% 9.4% 9.4% 9.2% 9.2% 9.1%
Return on Equity 6.0% 13.9% 17.6% 17.6% 17.3% 17.2% 17.2%
Liquidity
Current Ratio 1.06x 1.08x 135.4% 130.2% 120.8% 120.1% 122.9%
Cash Ratio .55x .45x .66x .64x .58x .58x .58x
Activity
Accounts Receivable
Turnover
6.15x 6.58x 6.58x 6.94x 7.65x 8.8x 7.9x
Total Asset Turnover .55x .62x .68x .57x .63x .6x .7x
Fixed Asset Turnover 8.81x 8.73x 8.4x 8.26x 8.22x 8.2x 8.4x
Financial Leverage
Long-term Debt to Assets 18% 16% 18% 20% 20% 23% 25%
Long-term Debt to Equity .73x .71x .66x .47x .12x -.34x -1.51x
Debt to Equity 1.06x .88x .89x .93x .97x .91x 1.03x
Interest Coverage 19.7x 19.99x 20.28x 20.57x 20.35x 20.75x 21.x
Shareholder Ratios
Dividend Payout Ratio .9x .43x .45x .46x .48x .51x .48x

23. Appendix 11: Corporate Subsidiaries

24. Appendix 12: Market Share Graphs
Market Share of Medical Device Companies by Segment:
Appendix 13: Profitability Graphs

26. Appendix 14: Earnings Management Graph

27. Appendix 15: Multiple Graphs

28. Appendix 16: Market Cap to GDP with SMA

29. Appendix 17: Stryker vs. S&P500 5 Years

30. Appendix 18: Ownership