Welcome to the major leagues of debt. Collateralized debt obligations, almost always referred to as a CDOs, are horrendously complicated deals that often leave anyone without a MBA wondering what was put into these CDOs.

The first thing to understand about bonds, (aka debt) is that bonds are often backed by something else. Think about your home mortgage. If you don't pay your mortgage, the bank can take the house. You end up homeless, and the bank sells the house to pay off the rest of that mortgage. There is something "backing" that mortgage; something lender can fall back on, if you don't pay your bills like a good human being. That's called collateral.

CDOs are one flavor of an entire sector of investing called structured finance, and they are also backed. CDOs, in the simplest concept, are just bonds backed by something else. In most cases, a CDO is backed by a collection of various types of debt. CDOs can be home mortgages, or other types of debt like credit cards, auto loans, and personal loans. Most of these types of debt are usually considered a bit more risky and they don't have the backing that a home loan does. So, if you think it through, you can imagine that CDOs are usually considered a risky investment.

To take a step further, understand that CDOs have multiple flavors within each CDO. These flavors are called tranches. If you've taken French, you might recognize the word, it means "slice" or "portion." Each slice of that CDO you invest in is a little different and carries different amounts of risk.

You could invest in the lowest risk tranche of the CDO, which would provide you lower risk. But, you don't get a good return on that investment. Or, you can be the heroic adventurer of bonds and invest in the lowest-grade tranche of the CDO. You'll make an amazing return, but if the economy even looks at you wrong, you might lose the entire investment.

CDOs aren¿t easy, and are almost always invested in by mutual funds, insurance companies and hedge funds. As an individual investor, you will probably not come across a CDO you can participate in.

Home / Markets / Industries / Health Care

Thursday, July 17, 2008

Stryker Operating Results for Quarter Ended June 30, 2008

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Comtex

KALAMAZOO, Mich., July 17, 2008 /PRNewswire-FirstCall via COMTEX/ ----Stryker Corporation (NYSE: SYK) reported operating results for the quarter ended June 30, 2008 as follows:

 Second
   Quarter Highlights -- Net sales increased 17.0% (12.6% constant currency) to $1,713 million -- Orthopaedic Implant sales increased
   14.5% (9.2% constant currency) -- MedSurg Equipment sales increased 20.8% (17.8% constant currency) -- Net earnings from continuing
   operations increased 27.4% to $306 million from $240 million and increased 21.0% when compared to adjusted net earnings from
   continuing operations of $253 million in 2007 -- Diluted net earnings per share from continuing operations increased 25.9%
   to $.73 from $.58 and increased 19.7% when compared to adjusted diluted net earnings per share from continuing operations
   of $.61 in 2007

"Balanced geographic growth helped us deliver another strong quarter, our 30th consecutive with double-digit sales growth," commented Stephen P. MacMillan, President and Chief Executive Officer. "Seven of our eight product franchises grew at least 15% and our collective MedSurg businesses were particularly strong, posting domestic and international growth of 16% and 37%, respectively."

Net sales were $1,712.6 million for the second quarter of 2008, representing a 17.0% increase over net sales of $1,463.7 million for the second quarter of 2007, and were $3,347.0 million for the first half of 2008, representing a 15.8% increase over net sales of $2,889.2 million for the first half of 2007. On a constant currency basis, net sales increased 12.6% for the second quarter and 11.4% for the first half.

Net earnings from continuing operations for the second quarter of 2008 were $305.8 million, representing a 27.4% increase over net earnings from continuing operations of $240.1 million for the second quarter of 2007. Diluted net earnings per share from continuing operations for the second quarter of 2008 increased 25.9% to $.73 compared to $.58 for the second quarter of 2007. Net earnings from continuing operations for the first half of 2008 were $596.3 million, representing a 23.7% increase over net earnings from continuing operations of $481.9 million for the first half of 2007. Diluted net earnings per share from continuing operations for the first half of 2008 increased 23.3% to $1.43 compared to $1.16 for the first half of 2007.

Net earnings from continuing operations for the second quarter of 2007 were reduced by a $12.7 million intangible asset impairment charge (net of $7.1 million income tax benefit) to write off patents associated with intervertebral body fusion cage products.

Excluding the impact of the 2007 intangible asset impairment charge, net earnings from continuing operations for the second quarter of 2008 of $305.8 million increased 21.0% over adjusted net earnings from continuing operations of $252.8 million for the second quarter of 2007 and diluted net earnings per share from continuing operations for the second quarter of 2008 of $.73 increased by 19.7% over adjusted diluted net earnings per share from continuing operations of $.61 for the second quarter of 2007.

Excluding the impact of the 2007 intangible asset impairment charge, net earnings from continuing operations for the first half of 2008 of $596.3 million increased 20.6% over adjusted net earnings from continuing operations of $494.6 million for the first half of 2007 and diluted net earnings per share from continuing operations for the first half of 2008 of $1.43 increased by 20.2% over adjusted diluted net earnings per share from continuing operations of $1.19 for the first half of 2007.

Net earnings for the second quarter of 2007 included a gain of $25.7 million (net of income taxes), or $.06 per diluted share, to reflect the divestiture of the Company's outpatient physical therapy business, Physiotherapy Associates.

Net earnings for the second quarter of 2008 were $305.8 million, representing a 13.6% increase over net earnings of $269.1 million for the second quarter of 2007. Diluted net earnings per share for the second quarter of 2008 increased 12.3% to $.73 compared to $.65 for the second quarter of 2007. Net earnings for the first half of 2008 were $596.3 million, representing a 16.3% increase over net earnings of $512.6 million for the first half of 2007. Diluted net earnings per share for the first half of 2008 increased 16.3% to $1.43 compared to $1.23 for the first half of 2007.

Sales Analysis

Domestic sales were $1,052.8 million for the second quarter and $2,085.7 million for the first half of 2008, representing increases of 12.4% and 12.8%, respectively, as a result of higher shipments of Orthopaedic Implants and MedSurg Equipment.

International sales were $659.8 million for the second quarter and $1,261.3 million for the first half of 2008, representing increases of 25.2% and 21.3%, respectively. The impact of foreign currency comparisons to the dollar value of international sales was favorable by $65.0 million in the second quarter and by $127.0 million in the first half of 2008. On a constant currency basis, international sales increased 12.8% in the second quarter and 9.1% in the first half of 2008, as a result of higher shipments of Orthopaedic Implants and MedSurg Equipment.

Worldwide sales of Orthopaedic Implants were $1,016.2 million for the second quarter and $1,987.3 million for the first half of 2008, representing increases of 14.5% and 13.5%, respectively. On a constant currency basis, sales of Orthopaedic Implants increased 9.2% in the second quarter and 8.3% in the first half of 2008, based on higher shipments of reconstructive (hip, knee and shoulder), trauma, spinal and craniomaxillofacial implant systems.

Worldwide sales of MedSurg Equipment were $696.4 million for the second quarter and $1,359.7 million for the first half of 2008, representing increases of 20.8% and 19.5%, respectively. On a constant currency basis, sales of MedSurg Equipment increased 17.8% in the second quarter and 16.4% in the first half of 2008, based on higher shipments of surgical equipment; endoscopic, communications and digital imaging systems; as well as patient handling and emergency medical equipment.

Income Taxes

The Company's effective income tax rates on earnings from continuing operations for the second quarter and first half of 2008 were 27.2% and 27.6%, respectively, as compared to effective income tax rates on such earnings for the second quarter, first half and year ended December 31, 2007 of 27.6%, 27.9% and 28.0%, respectively. The effective income tax rates for the second quarter, first half and year ended December 31, 2007 reflect the impact of the intangible asset impairment charge of $12.7 million (net of $7.1 million income tax benefit).

 Outlook for 2008

The Company's outlook for 2008 continues to be optimistic regarding underlying growth rates in orthopaedic procedures and sales growth rates in the Company's broadly based range of products in orthopaedics and other medical specialties, despite the potential for continued pricing pressure in certain markets. The Company projects that diluted net earnings per share for 2008 will approximate $2.88, an increase of 20% over adjusted diluted net earnings per share from continuing operations of $2.40 in 2007. The financial forecast for 2008 remains unchanged, with a constant currency net sales increase in the range of 11% to 13% as a result of growth in shipments of Orthopaedic Implants and MedSurg Equipment. If foreign currency exchange rates hold near June 30, 2008 levels, the Company anticipates a favorable impact on net sales of approximately 2.5% to 3% in the third quarter of 2008 and a favorable impact on net sales of approximately 3% to 3.5% for the full year of 2008.

Conference Call

As previously announced, the Company will conduct a conference call for financial analysts at 4:30 p.m., Eastern Time, today. To participate in the conference call dial 866-700-0161 (domestic) or 617-213-8832 (international) and enter the participant passcode 83648540. A simultaneous webcast of the call will be accessible via the Company's website at www.stryker.com. The call will be archived on this site for 90 days.

A recording of the call will also be available from 6:30 p.m., Eastern Time today until 6:30 p.m. on Thursday, July 24, 2008. To hear this recording dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter the passcode 63234745.

 Forward-Looking Statements

This press release contains information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause the Company's actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for the Company's products; regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; changes in economic conditions that adversely affect the level of demand for the Company's products; changes in foreign exchange markets; changes in financial markets; and changes in the competitive environment. Additional information concerning these and other factors is contained in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Stryker Corporation is one of the world's leading medical technology companies with the most broadly based range of products in orthopaedics and a significant presence in other medical specialties. Stryker works with respected medical professionals to help people lead more active and more satisfying lives. The Company's products include implants used in joint replacement, trauma, craniomaxillofacial and spinal surgeries; biologics; surgical, neurologic, ear, nose & throat and interventional pain equipment; and endoscopic, surgical navigation, communications and digital imaging systems; as well as patient handling and emergency medical equipment. For more information about Stryker, please visit the company web site at www.stryker.com.

 STRYKER CORPORATION For the Three Month and Six Month Periods
   Ended June 30, 2008 (Unaudited - In Millions Except Per Share Amounts) Second Quarter CONDENSED STATEMENTS OF EARNINGS 2008
   2007 % Change Net sales $1,712.6 $1,463.7 17.0 Cost of sales 533.2 444.3 20.0 GROSS PROFIT 1,179.4 1,019.4 15.7 % of Sales
   68.9 69.6 Research, development and engineering expenses 90.3 92.1 (2.0) Selling, general and administrative expenses 678.2
   581.6 16.6 Intangibles amortization 10.0 11.0 (9.1) Intangible asset impairment - 19.8 (100.0) 778.5 704.5 10.5 OPERATING
   INCOME 400.9 314.9 27.3 % of Sales 23.4 21.5 Other income (expense) 19.2 16.9 13.6 EARNINGS FROM CONTINUING OPERATIONS BEFORE
   INCOME TAXES 420.1 331.8 26.6 Income taxes 114.3 91.7 24.6 NET EARNINGS FROM CONTINUING OPERATIONS 305.8 240.1 27.4 Net earnings
   from discontinued operations - 3.3 (100.0) Net gain on sale of discontinued operations - 25.7 (100.0) NET EARNINGS $305.8
   $269.1 13.6 Basic net earnings per share Net earnings from continuing operations $0.74 $0.59 25.4 Net earnings from discontinued
   operations $- $0.01 (100.0) Net gain on sale of discontinued operations $- $0.06 (100.0) Basic net earnings per share $0.74
   $0.66 12.1 Diluted net earnings per share Net earnings from continuing operations $0.73 $0.58 25.9 Net earnings from discontinued
   operations $- $0.01 (100.0) Net gain on sale of discontinued operations $- $0.06 (100.0) Diluted net earnings per share $0.73
   $0.65 12.3 Average Shares Outstanding Basic 412.0 409.4 Diluted 417.9 416.9 Six Months CONDENSED STATEMENTS OF EARNINGS 2008
   2007 % Change Net sales $3,347.0 $2,889.2 15.8 Cost of sales 1,033.7 883.7 17.0 GROSS PROFIT 2,313.3 2,005.5 15.3 % of Sales
   69.1 69.4 Research, development and engineering expenses 175.4 176.7 (0.7) Selling, general and administrative expenses 1,332.7
   1,149.7 15.9 Intangibles amortization 20.6 22.2 (7.2) Intangible asset impairment - 19.8 (100.0) 1,528.7 1,368.4 11.7 OPERATING
   INCOME 784.6 637.1 23.2 % of Sales 23.4 22.1 Other income (expense) 39.5 31.1 27.0 EARNINGS FROM CONTINUING OPERATIONS BEFORE
   INCOME TAXES 824.1 668.2 23.3 Income taxes 227.8 186.3 22.3 NET EARNINGS FROM CONTINUING OPERATIONS 596.3 481.9 23.7 Net earnings
   from discontinued operations - 5.0 (100.0) Net gain on sale of discontinued operations - 25.7 (100.0) NET EARNINGS $596.3
   $512.6 16.3 Basic net earnings per share Net earnings from continuing operations $1.45 $1.18 22.9 Net earnings from discontinued
   operations $- $0.01 (100.0) Net gain on sale of discontinued operations $- $0.06 (100.0) Basic net earnings per share $1.45
   $1.25 16.0 Diluted net earnings per share Net earnings from continuing operations $1.43 $1.16 23.3 Net earnings from discontinued
   operations $- $0.01 (100.0) Net gain on sale of discontinued operations $- $0.06 (100.0) Diluted net earnings per share $1.43
   $1.23 16.3 Average Shares Outstanding Basic 411.7 409.0 Diluted 417.9 416.5 RECONCILIATION OF REPORTED NET EARNINGS FROM CONTINUING
   OPERATIONS TO ADJUSTED NET EARNINGS FROM CONTINUING OPERATIONS Second Quarter 2008 2007 % Change NET EARNINGS FROM CONTINUING
   OPERATIONS Reported net earnings from continuing operations $305.8 $240.1 27.4 Intangible asset impairment - 12.7 (100.0)
   Adjusted net earnings from continuing operations $305.8 $252.8 21.0 DILUTED NET EARNINGS PER SHARE FROM CONTINUING OPERATIONS
   Reported diluted net earnings per share from continuing operations $0.73 $0.58 25.9 Intangible asset impairment $- $0.03 (100.0)
   Adjusted diluted net earnings per share from continuing operations $0.73 $0.61 19.7 Six Months 2008 2007 % Change NET EARNINGS
   FROM CONTINUING OPERATIONS Reported net earnings from continuing operations $596.3 $481.9 23.7 Intangible asset impairment
   - 12.7 (100.0) Adjusted net earnings from continuing operations $596.3 $494.6 20.6 DILUTED NET EARNINGS PER SHARE FROM CONTINUING
   OPERATIONS Reported diluted net earnings per share from continuing operations $1.43 $1.16 23.3 Intangible asset impairment
   $- $0.03 (100.0) Adjusted diluted net earnings per share from continuing operations $1.43 $1.19 20.2 STRYKER CORPORATION For
   the Three Month and Six Month Periods Ended June 30, 2008 (Unaudited - In Millions) Second Quarter % Change Constant CONDENSED
   SALES ANALYSIS 2008 2007 Reported Currency Domestic $1,052.8 $936.5 12.4 12.4 International 659.8 527.2 25.2 12.8 NET SALES
   $1,712.6 $1,463.7 17.0 12.6 Orthopaedic Implants $1,016.2 $887.4 14.5 9.2 MedSurg Equipment 696.4 576.3 20.8 17.8 NET SALES
   $1,712.6 $1,463.7 17.0 12.6 Six Months % Change Constant CONDENSED SALES ANALYSIS 2008 2007 Reported Currency Domestic $2,085.7
   $1,849.7 12.8 12.8 International 1,261.3 1,039.5 21.3 9.1 NET SALES $3,347.0 $2,889.2 15.8 11.4 Orthopaedic Implants $1,987.3
   $1,751.4 13.5 8.3 MedSurg Equipment 1,359.7 1,137.8 19.5 16.4 NET SALES $3,347.0 $2,889.2 15.8 11.4 Second Quarter % Change
   Domestic International Total Constant Constant Reported Reported Currency Reported Currency SUPPLEMENTAL SALES GROWTH ANALYSIS
   Orthopaedic Implants sales: Hips 3 12 2 7 2 Knees 13 25 13 18 13 Trauma 13 28 13 22 13 Spine 22 19 7 21 17 Craniomaxillofacial
   23 22 11 22 18 Total Orthopaedic Implants 10 21 8 15 9 MedSurg Equipment sales: Surgical equipment and surgical navigation
   systems 21 38 25 26 22 Endoscopic, communications and digital imaging systems 11 33 21 16 13 Patient handling and emergency
   medical equipment 13 43 32 18 16 Total MedSurg Equipment 16 37 25 21 18 Six Months % Change Domestic International Total Constant
   Constant Reported Reported Currency Reported Currency Orthopaedic Implants sales: Hips 2 9 (1) 6 0 Knees 12 21 9 16 11 Trauma
   18 27 12 23 15 Spine 23 17 4 21 17 Craniomaxillofacial 26 19 8 24 20 Total Orthopaedic Implants 10 18 6 13 8 MedSurg Equipment
   sales: Surgical equipment and surgical navigation systems 18 31 18 22 18 Endoscopic, communications and digital imaging systems
   12 33 20 16 13 Patient handling and emergency medical equipment 17 29 17 19 17 Total MedSurg Equipment 16 31 19 20 16 STRYKER
   CORPORATION (Unaudited - In Millions) June 30 December 31 CONDENSED BALANCE SHEETS 2008 2007 ASSETS Cash and cash equivalents
   $421.6 $290.5 Marketable securities 2,141.1 2,120.3 Accounts receivable (net) 1,132.0 1,030.7 Inventories 953.2 796.2 Other
   current assets 707.0 667.2 TOTAL CURRENT ASSETS 5,354.9 4,904.9 Property, Plant and Equipment (net) 1,017.8 991.6 Goodwill
   and Other Intangibles (net) 942.6 925.5 Other Assets 710.0 532.0 TOTAL ASSETS $8,025.3 $7,354.0 LIABILITIES AND SHAREHOLDERS'
   EQUITY Current Liabilities $1,124.0 $1,333.0 Other Liabilities 682.2 642.5 Shareholders' Equity 6,219.1 5,378.5 TOTAL LIABILITIES
   AND SHAREHOLDERS' EQUITY $8,025.3 $7,354.0 STRYKER CORPORATION For the Three Month and Six Month Periods Ended June 30, 2008
   (Unaudited - In Millions) Second Quarter Six Months CONDENSED STATEMENTS OF CASH FLOWS 2008 2007 2008 2007 OPERATING ACTIVITIES
   Net earnings from continuing operations $305.8 $240.1 $596.3 $481.9 Depreciation 39.8 32.8 78.5 64.7 Amortization 58.9 57.5
   118.4 112.7 Intangible asset impairment - 19.8 - 19.8 Gain on sale of discontinued operations - (40.7) - (40.7) Changes in
   working capital and other (164.2) (98.6) (362.1) (274.8) NET CASH PROVIDED BY OPERATING ACTIVITIES 240.3 210.9 431.1 363.6
   INVESTING ACTIVITIES Acquisitions, net of cash acquired (2.4) (31.9) (8.6) (37.6) Proceeds from sale of discontinued operations
   - 144.7 - 144.7 Purchases of marketable securities, net (202.1) (437.7) (110.5) (609.1) Purchases of property, plant and equipment
   (41.2) (39.1) (72.1) (79.9) Proceeds from sales of property, plant and equipment 0.1 0.1 0.2 0.3 Other - (0.4) - (1.6) NET
   CASH USED IN INVESTING ACTIVITIES (245.6) (364.3) (191.0) (583.2) FINANCING ACTIVITIES Borrowings of debt, net 6.3 1.9 7.1
   2.3 Dividends paid - - (135.6) (89.7) Other 0.5 25.8 5.0 56.3 NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 6.8 27.7
   (123.5) (31.1) Effect of exchange rate changes on cash and cash equivalents (3.4) 1.4 14.5 4.1 CHANGE IN CASH AND CASH EQUIVALENTS
   $(1.9) $(124.3) $131.1 $(246.6)

SOURCE Stryker Corporation

http://www.stryker.com/

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