史賽克 (SYK) 2010 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth-quarter 2010 Stryker earnings conference call. My name is Melanie, and I'll be your coordinator today. At this time, all participants are in a listen-only mode. We will accept your questions at the end of this conference.(Operator Instructions). As a reminder, today's call is being recorded.

Before we proceed, the Company would like to remind you that certain statements made in today's conference call may contain 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, weakening of economic conditions that could adversely affect the level of demand for the Company's products; pricing pressures generally, including cost containment measures that could adversely affect the price of, or demand for the Company's products; changes in foreign exchange markets; legislative and regulatory action; unanticipated issues arising in connection with clinical studies and otherwise that affect US Food and Drug Administration approval of new products; changes in reimbursement levels from third-party payers; a significant increase in product liability claims; unfavorable resolution of tax audits; changes in financial markets; changes in the competitive environment; and the Company's ability to integrate acquisitions.

Additional information concerning these and other factors are contained in the Company's filings with the US Securities and Exchange Commission, including the Company's annual report on Form 10-K and quarterly reports on Form 10-Q.

And now I would like to turn the call over to Mr. Stephen McMillan, Chairman, President and CEO. Please proceed, sir.

Thank you, Melanie. Good afternoon, everyone, and welcome to Stryker's fourth-quarter 2010 earnings report. With me today are Curt Hartman, our Vice President and Chief Financial Officer, and Katherine Owen, Vice President of Strategy and Investor Relations. Before delving into the quarterly specifics, we'd like to highlight the major strategic milestones achieved in 2010 that have helped transform our Company in ways that we think will be critical not only in navigating through the current environment, but also positioning ourselves well for the future. I'll then pass the call over to Katherine and Curt, to go into the specifics regarding our Q4 results, before we open the call up to your questions.

2010 was a pivotal year for our Company, with a number of key accomplishments that in total underscore our unique competitive strengths, and that we believe will allow us to deliver top tier results, in both the short- and long-term. First, we continued to make major investments in our quality and compliance systems, entering year three of the initial program that is driving myriad benefits to our Company and our customers.

In 2010, investors were able to see the tangible results of these considerable investments with resolution of the remaining three FDA warning letters. This achievement represented an important milestone for our organization, and signaled to us that the path we've been on, is focused and resourced appropriately; recognizing there remains room for improvement, and we'll continue to have quality as a top priority within our organization. Simply put, we've used the challenges we faced to ensure that quality and compliance become embedded in our cultural DNA, and that the focus we've put in place over the last few years does not waver.

We also continued to optimize our capital allocation. With us now generating over $1.5 billion in cash flow from operations annually, we are not limited to a single option, but rather are able to execute on our multi-pronged cash deployment goals. This includes the ability to both invest for long-term sales growth via acquisitions, while also maximizing shareholder return through dividends and buybacks.

Following the acquisition of the neurovascular division from Boston Scientific, we have invested $2.3 billion since the start of 2008 in a series of M&A targets that have both strengthened our core franchises, while also further diversifying our Company into some of the fastest growth segments of med tech. During that same time, we have also returned nearly $600 million to our shareholders through dividends, plus executed over $1.5 billion in share repurchases.

Building on the capital allocation achievements, we closed a number of meaningful acquisitions over the past 12 months, culminating with a neurovascular deal that now positions us as the global leader in the roughly $1 billion neurovascular market. With new product launches already underway and a history of delivering innovation, we are excited to have this team as part of the Stryker family.

Beyond acquisitions, we also made the strategic decision to sell OP-1 for use in orthopaedic bone applications; a move that allows us to redirect R&D to other internal projects which we believe offer the potential for greater shareholder returns, including clinical efforts already underway with BMP-7 for potential use in osteoarthritis, and research into other non-orthopaedic applications. Combined, our acquisitions and divestitures have further strengthened our sales footprint, while simultaneously sharpening our R&D efforts.

Turning to our decentralized business model, it remains a critical aspect of our competitive advantage, and ability to drive consistently strong results. However, as we have grown the top line to over $7 billion in sales, more than doubling our revenue since 2003, aspects of our structure have resulted in inefficiencies in certain areas, and we have opportunities to better leverage our scale.

We have taken a number of steps over the past 18 months to put the infrastructure in place, and to prioritize areas of opportunity. Although this initiative will have negligible earnings impact over the next year or two, longer term we believe it will provide us with additional P&L leverage that can be redeployed into sales, marketing, R&D, or to offset the potential for greater pricing pressure.

And finally, our financial results. At the start of the year, we targeted to deliver constant currency sales growth of 5% to 8%, and per share earnings of $3.20 to $3.30, representing an 8% to 12% increase. Clearly, the slow pace of the economic recovery, and its greater than anticipated dampening effect on elective surgeries, was challenging during the year. Nonetheless, the diversity of our sales footprint that spans a number of key segments in medical technology allowed us to navigate through those challenges, and achieve sales growth at the high end of the targeted range, coming in at a solid 8% excluding foreign exchange. We parlayed the high single-digit sales growth into a robust 13% increase in adjusted diluted per share earnings to $3.33, surpassing the top end of the EPS range we set out at the start of 2010.

Additionally, to further underscore our belief in our future growth prospects, we significantly boosted our R&D spending by 17% in 2010, including a more than 20% increase in the fourth quarter, as we continue to see numerous and exciting opportunities for growth in all of our franchises.

With 2011 now underway, we are highly focused on continuing to execute on our financial commitments. Given the underlying strength of our core franchises, coupled with the benefits from a number of strategic acquisitions, and the flexibility afforded by our balance sheet, we believe we are well-positioned to achieve 11% to 13% constant currency sales growth in 2011.

Excluding both FX and the impact of acquisitions and divestitures, we look to deliver 5% to 7% sales growth. We remain committed to translating our revenue gains into double-digit earnings growth, targeted at 10% to 12%. Although 2011 will undoubtedly present its own challenges, there will also continue to be opportunities that can be maximized by our focus on innovation, execution, and investing. Our Company has a long history of realizing superior financial results, and we expect this year will be no different.

With that, I'll turn the call over to Katherine.

Thanks, Steve. My comments today will focus on several areas, including acquisitions, elective procedure trends and implant pricing, and finally, MedSurg trends.

On the acquisition front, we completed four deals in 2010, including three core deals, with the instruments acquisition of the Sonopet aspirator, our CMS group acquiring Porex Surgical, and the medical acquisition of Gaymar Industries. All three deals further broadened the relevant franchise product offering, and allow us to leverage our existing sales forces. As we have discussed previously, our M&A strategy is focused on both leveraging our core businesses, while also moving into key adjacent markets.

The early January closing of the Boston neurovascular division is clearly an example of the latter. And we are excited about the long-term growth prospects that this market-leading franchise offers. Just prior to our announcement of the definitive agreement to acquire the business, Boston Neurovascular received the long-awaited FDA 510(k) clearance of its next generation Target coil, a key milestone, given coils represent roughly 50% of the $1 billion worldwide neurovascular market.

This was followed in late December with 510(k) clearance of the next generation coil detachment system that allows for coil detachment in less than 10 seconds, representing a demonstrable improvement over the prior system that required upwards of one minute to detach each coil.

Throughout our due diligence, we consistently heard from customers that the length of time required for coil detachment was a key competitive disadvantage to the neurovascular system, and as such, we are extremely excited about this launch. Although still early, we are highly encouraged by the customer feedback, and believe these product introductions will help drive accelerating sales growth over time.

Turning to elective procedure trends and implant pricing, at this point it's fairly well understood that the combination of the global economic contraction, continued rise in healthcare plan deductibles, the expiration of COBRA and unemployment benefits, and the high unemployment rate resulted in a slowdown in elective procedures in 2010. Yet despite this perfect storm of adverse events, the joint replacement market still achieved year-over-year revenue and unit growth in every quarter of 2010, underscoring the strength of the market and the myriad of benefits realized to patients who undergo hip and knee replacement.

And although a subset of patients have clearly deferred the procedure, we continue to expect those patients will eventually return to the surgery pool, given the high success rates of both hip and knee replacement, and the lack of options for the treatment of osteoarthritis.

When combined with the increasingly debilitating pain associated with OA, and its pronounced impact on quality of life, the ability to permanently defer a hip or knee replacement is simply not a viable option for the vast majority of patients. Admittedly, it's not possible to predict in what quarter or even year patients who deferred surgery will re-present, and so our financial forecast assumes a joint replacement market that's similar with respect to growth rates in 2011 as we saw in 2010. As it relates to pricing for our US hip and knee implants, in Q4 we continue to see ongoing recon pricing pressure, partly offset by mix.

We also continue to see an ability to garner both price and mix with innovative new products, as evidenced by the price premiums we are realizing for ADM and Rejuvenate hip systems that were launched in early 2010, and have contributed to a strengthening of the mix contribution in Q4. Although US hip and knee pricing trends remain challenging, at less than 20% of our total sales, combined with the partial offset afforded by mix, we view this as a very manageable headwind as we move into 2011.

Finally, I want to make a few comments on MedSurg market trends, particularly as it relates to hospital CapEx. Recall that approximately 52% of MedSurg sales, including Ascent, are from capital expenditures. In 2010, we experienced a modest and steady improvement in the MedSurg environment, aided by our breadth of offering across the various MedSurg franchises, as well as the need for hospitals to resume certain capital purchases. We also continue to see solid growth from our MedSurg service businesses, which includes Ascent as well as other services offerings.

With respect to 2010 representing a catch-up year for hospital capital purchases, we do not believe this was a material factor behind our growth, which may also reflect the nature of our capital product offerings that tend to be relatively lower-dollar investments. For 2011, we assume continued steady growth in our MedSurg businesses, reflecting underlying organic growth, market share gains, and the benefit from acquisitions.

With that, I'll turn the call over to Curt.

Thanks, Katherine. We're obviously pleased with our fourth-quarter results and the full-year performance, as they are indicative of both the growth potential and underlying earnings strength of our Company. We exceeded our original expectations, while still addressing the challenge of a slowdown in elective procedures and price pressure in hips, knees and spine, while simultaneously making concentrated investments in R&D and M&A, to position our Company for continued top and bottom line growth.

Moving to the fourth-quarter results, sales increased 8.8% on a reported basis, and 8.6% excluding currency. Acquisitions added 3.1%, with the Ascent acquisition contributing 2% to our reported growth rate. For the full year, Ascent has contributed 2.2% to our 8.9% reported growth.

On the earnings side, our revenue growth and solid gross margin allowed us to generate adjusted diluted net earnings per share of $0.93, an increase of 13.4% over Q4 of 2009. On a GAAP basis, diluted net earnings per share were $0.74, a decrease of 2.6% versus Q4 of 2009. Our reported GAAP earnings included $123.5 million impairment charge associated with our decision to divest the BioTech bone business, while 2009 included the credit associated with the favorable patent litigation outcome, and costs associated with a repatriation of foreign earnings.

Turning to some specifics in the quarter, I will begin with currency, which was effectively immaterial to top-line sales. For the year, currency increased reported sales by approximately $70 million, or 1%. As noted in our January 10th press release, currency in the first quarter of 2011 moves to a modest tailwind; and if rates hold near quarter-end levels, we would expect the first-quarter sales impact to be approximately flat to up 1% when compared to 2010. Using quarter-end rates, the full-year currency impact on top-line sales would be an increase in a range of a 0.5% to 1.5% when compared to 2010.

Next, I'll discuss the impact of price and volume mix on the top line. In the quarter, Company-wide selling prices declined 2.1% on a worldwide basis. For the full-year, total Company price was down 1.7%. The number of selling days in the fourth quarter was equal with 2009.

Looking at the product segments, I'll start with Orthopaedic Implants, which represented 58% of our sales in the quarter, and is comprised of our hip, knee, trauma, spine, CMF, and other implant products. In the quarter, total Orthopaedic Implants delivered a 5% increase on a reported basis, and were up 4% in constant currency.

On a worldwide basis, hips reported solid growth of 6% in dollars, and 6% in constant currency. In the US market, hip sales were up 7%, indicative of the traction we're starting to gain with our ADM and Rejuvenate offering. And encouragingly, international hip sales returned to positive territory, increasing 4% on a constant currency basis. Worldwide knee sales increased 3% on both a reported and constant currency basis. US knees reported 4% growth, while international market knees increased 2% on a constant currency basis. We continue to look for FDA clearance of the OtisMed customized cutting blocks during 2011.

Global trauma segment recorded nice quarterly gains, increasing 8% in both dollars and on a constant currency basis. Our US trauma segment posted a strong 12% increase, delivering double-digit growth in three out of four quarters in 2010, while our international trauma sales were up 6% on a constant currency basis. Our global spine segment continued to face challenges in the quarter, consistent with the broader market, as evident by the 3% decline on both a reported and constant currency basis. US spine sales were down 4% versus prior year, while in the international markets spine sales were flat.

In summary, total Orthopaedic Implants registered a nice quarter. Domestic results were largely driven by share gains associated with new products, while international gains were paced by strong growth in Japan, and the emerging market countries of Korea, China and India. Encouragingly, our Europe business also continued to move towards recovery in total Orthopaedic Implants, supported by strong trauma segment growth, and the anniversary of our Q3 2009 distribution and product obsolescence actions.

Finally, we are encouraged by the steady stream of new products that are launching in the international markets, including ADM, Rejuvenate, and OtisMed, which are expected to positively impact 2011 results.

Next, I'll turn to the MedSurg group, which represented 42% of our sales in the quarter. MedSurg today is comprised of our instruments, endoscopy, medical and Ascent healthcare businesses. MedSurg reported another solid growth quarter, with sales increasing 15% both as reported and on a constant currency basis. In total, acquisitions added approximately 8% to MedSurg, while the core MedSurg business reported growth of 8%. Of note in the quarter, domestic MedSurg sales excluding acquisition impact increased 9%, reflecting the strength of our underlying capital and disposable MedSurg product offering.

Sales for the global Instrument segment, again posted strong results, growing 10% in the fourth quarter on both a reported and constant currency basis. In the US market, Instruments reported an impressive 11% gain, while internationally Instrument sales also advanced nicely, recording a 9% gain in constant currency.

Our endoscopy offering reported a global sales increase of 5% on both a reported and constant currency basis. In the US market, endoscopy sales recorded a modest 2% increase. While the domestic growth results were below recent quarterly trends, overall we feel good about the underlying performance and prospects for our domestic endoscopy business, given order trends. Internationally, endoscopy sales continued to strengthen, delivering an 11% constant currency gain.

Finally, our medical segment saw global sales improve a strong 21% in the quarter, on both a reported and constant currency basis. Excluding the acquisitions, global medical sales advanced 10%. US medical sales increased 31%, and 17% excluding the Gaymar acquisition, while our international medical sales declined 12% in constant currency. Overall, our MedSurg businesses continued to achieve steadily improving growth in the underlying businesses, further aided by acquisitions that are broadening our product offering and importance to our customers.

I'll now turn to the remainder of the income statement, providing comments on both the fourth quarter and our expectations for 2011. I will begin with our gross margin performance. Gross margin was again strong in the quarter at 68.7%, representing a 100 basis point increase over fourth-quarter 2009 levels. For the year, gross margin of 68.8% finished slightly above our expectations, and was up 130 basis points over 2009, recognizing the comparison benefited from the depressed 2009 base, and currency variations. Going forward, we do anticipate year-over-year gross margin improvement, partly resulting from our focus on our manufacturing operating model.

Research and development investments represented 5.6% of sales in the quarter, while increasing 24% over 2009 levels. For the year, R&D finished at 5.4% of sales, and increased 17% over prior year. Our heightened level of R&D investment throughout 2010 reflects both our commitment to innovation, as well as the flexibility we retain in our business model to make investments that will drive long-term growth, while delivering leveraged earnings gains.

Our commitment to increased R&D spending will remain in place as we enter 2011, as we expect R&D investments to increase well above our sales growth rates, and approach 6% of revenues. Clearly, the addition of the neurovascular business is influencing total spend, but even absent this addition we see R&D in our core business increasing at double-digit rates.

Selling, general and administrative costs increased 17% over 2009 levels in the fourth quarter. Recall 2009 SG&A was favorably impacted by a $62.5 million patent litigation gain recorded last year. Overall, excluding the prior year impact of the gain on SG&A, expense growth in the quarter was 6%, and SG&A decreased 90 basis points to 36.8% of sales versus 2009. For the year, adjusted SG&A decreased 90 basis points as a percentage of sales versus 2009 levels. For 2011, we expect to continue the trend of decreasing SG&A as a percentage of sales, as we focus on operational efficiency, while reserving the flexibility to make strategic investments across our businesses.

Operating income increased 13% on an adjusted basis. The operating margin finished the quarter at 25.6%, and for the year increased a robust 150 basis points versus prior year to 25.3% of sales.

Other income and expense reduced pre-tax income by $7 million in the quarter. Components of this included investment income of $12 million, and FX transactional gains of $8 million, offset by interest expense of $27 million.

The Company's effective income tax rate was 22.2% for the fourth quarter of 2010. The fourth-quarter tax rate reflects the tax benefit associated with the impairment of the OP-1 Bone assets, and the legislative action to approve the R&D tax credit, and related corporations look-through rule. Absent these items, the Company's effective income tax rate was 27.7% in Q4.

For the full-year 2010, the Company's adjusted effective tax rate was 27.3%, which does include the impact of the R&D tax credit and related look-through rule on our full-year results. From a comparative, this allows alignment with both 2009 actual, and 2011 expectations. For 2011, we see our tax rate moving lower, as a result of increased production coming from lower tax jurisdictions, and expect a rate between 26.5% and 27.3%.

In terms of the balance sheet, we ended the year with $4.38 billion of cash and marketable securities, up $1.43 billion from year-end 2009. Obviously, this balance has been reduced, given the January 3rd closing of the NB transaction, and the associated $1.4 billion payment. That said, we think the remaining cash balance gives us tremendous flexibility. And as a reminder, we have $1 billion of debt on the balance sheet associated with our January 2010 debt offering.

Asset management remains under solid control, as accounts receivable days ended the year at 56, comparable with the prior year. Days in inventory finished the quarter at an improved 154, which was down 20 days sequentially versus third quarter, but up 9 days against the prior year level.

Cash flow from operations was again strong in the quarter, generating $518 million, and free cash flow of $573 million. For the year, cash flow from operations increased to $1.55 billion, from $1.46 billion in 2009.

On the share repurchase program, as announced in our pre-release, we repurchased 6.1 million shares at a cost of $314 million in the fourth quarter. This brings total 2010 share repurchases to 8.3 million shares, at a cost of $426 million. We currently have approximately $325 million remaining on our 2009 authorization, and $500 million from our 2010 authorization. For reference, diluted shares outstanding in December finished at 394.8 million. As we have stated previously, you should assume that the goal of the authorization is to prevent dilution, as well as position the Company to opportunistically acquire shares.

In summary, 2010 was a solid year in which we demonstrated the ability of our diverse business to absorb market challenges, while still delivering on total Company performance expectations. Further, we continue to deploy the resources of our balance sheet to enhance our core franchises, expand into meaningful adjacencies, and increase total shareholder return. Heading into 2011, we feel good about the strength of the Company, and our ability to continue to grow our revenue and earnings, as reflected in our 2011 outlook.

Turning to our outlook, the financial forecast for 2011 includes a constant currency net sales increase of 11% to 13%, as a result of growth in shipments of Orthopaedic Implants, and MedSurg Equipment, as well as revenue from the recently acquired neurovascular business. If foreign currency exchange rates hold near current levels, we anticipate net sales will be favorably impacted by approximately 0.5% to 1.5% for the full year of 2011. Excluding the expected impact from foreign currency as well as acquisitions, sales growth from our core business is projected to be in the 5% to 7% range.

Turning to the P&L, I mentioned in my earlier comments our expectations for each of the key areas to include gross margin, R&D, and tax. Additionally, we continue to invest in our quality and compliance initiatives, as we complete the initial three-year investment. We see ongoing opportunities for leverage in SG&A as a percentage of sales, as we look to remain disciplined with respect to discretionary spending, while retaining the ability to make the necessary investments.

Finally, we expect adjusted diluted net earnings per share for 2011 will be in the range of $3.65 to $3.73, an increase of 10% to 12% over adjusted diluted net earnings per share of $3.33 in 2010. We also anticipate acquisition- and integration-related charges associated with the recently completed neurovascular business to reduce reported diluted net earnings per share by approximately $0.21 to $0.25, including transaction costs, additional costs associated with inventory step-up, and other integration costs as outlined in our press release. In closing, we are comfortable with First Call estimates for both the quarter and full year.

With that, I'll turn the call back over to Steve.

Thanks, Curt. In closing, we're pleased that we reestablished strong growth in 2010, while also making significant progress on our quality and compliance initiatives. We believe we are well-poised entering 2011 to both face the challenges that will invariably exist, while also continuing to capitalize on emerging opportunities. We look forward to executing on our financial goals, and delivering strong results that will continue to define Stryker as a leading player in the medical technology market.

With that, we will now open it up for Q&A.

Thank you.

(Operator Instructions).

And our first question comes from the line of David Lewis with Morgan Stanley. Go ahead.

Good afternoon.

Good afternoon, David.

Steve, I wonder if you could talk a little about metal-on-metal implants and the impact you are seeing on the marketplace, and specifically your business. And clearly, with some of your competitors reporting, it's having an impact, certainly on their hip franchises, mostly internationally, but somewhat in the US as well. I wonder if you see this as a share opportunity for Stryker in your business, or sort of the elimination of a historical headwind? And if you are gaining share, based on metal-on-metal, do you find opportunities to both gain hip share? And then obviously leverage that over to the knee business as well?

Thanks, David. It's certainly at a minimum eliminates the head wind. As many of you know, we've lagged the hip growth, hip market for five years running, largely because of our decision to stay out of metal-on-metal. We feel good about that decision now. We would certainly hope that it will create, not just the loss of a head wind, but also the opportunity to start to gain some hip market share. And where possible, certainly we will always seek to leverage that over to our very strong knee franchise. So we'll certainly see how it plays out. But I think we really do like our position right now, with some new product launches in the hip space, and given the market dynamics.

And then, Curt, thinking about the comments you made about Neurovascular upon making the acquisition, I think you guided, or assuming in year one during the integration period, you would see rather flattish growth for this year. But kind of considering early traction with some of the new products, and the fact that the prior asset had not generated new product pipeline growth in quite sometime, is that flat expectation for growth reflect some conservatism? Or is there some contra sales synergies we should be thinking about to how -- with significant new products, we still could see kind of flattish outlook here for 2011?

David, I think there's a couple items in there that we would point to. One is the integration of an acquisition of this scale, especially on a global basis. And two, would be the timing and the ability to ramp up production, as well as the training and rollout of the new product.

So we're very excited about the Target coil approval. We're very excited about the detachment system approval. There is certainly a long, long pathway to product rollout on a global basis, as well as screening and education of both the selling organization, as well as the customer base. And keeping in mind that roughly two-thirds of this business is O-US, you're going through many country registrations with the new products as well. So we're trying to factor in all of those various factors into our expectations for this year. And so, I think that's where we get to the neutral to slightly accretive on EPS, as well as very muted expectations for top-line growth this year.

Our next question comes from the line of Rick Wise with Leerink Swann. Go ahead.

Good afternoon, Steve. We've got some mixed signals early on here, on the economy, pricing utilization. I would be curious to get your perspective. We heard from J&J today. It seemed like a pretty somber message on utilization, push back, pricing pressure, et cetera. But your numbers, again, seem to suggest at least a little more optimistic. But your perspective generally?

I mean, clearly there's more pressures, but ultimately we still love the businesses we're in. I think as Katherine pointed out, for all the perfect storm against reconstructive implants last year, they still grew every quarter. Fundamentally, the demographics are on our side. We continue to believe that if you're offering good products, and these procedures are not indefinitely deferrable, I think we still feel pretty good about the market dynamics. Most importantly, I would say we feel really good about our position within the marketplace right now.

Okay. And maybe turning to the international part of hips and knees, which did grow a little slower, particularly on the knee side. Could you give us a little perspective on -- just maybe your feelings about the economic, EU economic outlook, and is that a concern for this year? And maybe extend that to -- I know you've been through some product transition, and some distributor transitions. Are we through all that, and how do we think about that for 2011? Thank you.

Sure, thanks, Rick. I think internationally, certainly our knee business had suffered, particularly in Europe, from the distributor changes we've made, and also a lot of the products that we had obsoleted during the year. As well as frankly some slowness in rolling out Instrumentation for our Scorpio knee line, which was really a hangover from a lot of our quality and compliance initiatives.

I think we feel better exiting the year and coming into 2011, than we did in 2010, and would probably hope for a modest pickup there. And having said that, I think Europe, with the overall market dynamics, may still be soft here for the first -- first half of the year, and maybe for the full-year. But again, I think we feel great about how we're positioned, and globally, probably to be a little bit better next year than in 2011, rather than 2010. Thanks, Rick.

Our next question comes from the line of Matt Miksic with Piper Jaffray. Go ahead.

Thanks, good evening. Wanted to follow up on a question on acquisitions. First, just in terms of the trends of Gaymar and Ascent, you've had Ascent here for coming up on a year, and Gaymar for a quarter or so. And just, as you think about trends in 2011, similar to your point on Neurovascular, what kind of consideration do we need to give to integration, sort of new product registration, are those sort of sideways, growing with their market? Or is there a transition period, where we might be kind of flat or down for a couple of quarters? Any color you could provide? Then I have a follow-up.

Sure, Matt. I think we feel pretty good about our ability to integrate those and keep those growing, and particularly given product flow and everything else. And Gaymar comes right into our medical business. That integration looks to be going fine. And Ascent is still in a very nice space, obviously a little bit of growing pains here and there, but overall, we continue to really like the outlook and trajectory for that business.

Okay. And then just to your comments on pricing, Steve, following up on Rick's question, specifically on spine, not that -- there's plenty of things to be concerned about in the spine space, but one of the things that came out of the meeting this morning at J&J was kind of like sequential easing of pricing pressure.

And I'm just -- pretty consistent pricing in orthopaedics, as you've talked about, but fine, maybe it's comps, maybe the low-hanging fruit has been picked, but curious to get your outlook on whether you think that's able -- that negative mid single digits, which is what the industry seems to be talking about for a while? Or if we're actually may see an easing of that pressure over the next several quarters?

Matt, maybe I'll jump in and take that. We don't break out price specifically by franchise, although we've alluded to in Q4 was similar, in that we've been seeing ongoing pricing pressure in the spine business, similar to what the market is seeing.

I think it's too early to say that we've turned a corner. We think there's a stabilization trend. How much pricing does or doesn't improve as we go into 2011, I think it's just probably too early to say. And a lot of that's going to be driven by new product introductions and innovations that come into the market. But overall, it's still a challenging market, but one that doesn't feel like it's worsening.

Our next question comes from the line of Mike Weinstein with JPMorgan. Go ahead.

Thanks, guys. This is Chris Pasquale here for Mike. Just a follow-up on the question about pricing. We've seen the impact on your business overall increase pretty steadily for the past six quarters or so. What does your initial 2011 revenue guidance assume for a pricing head wind for the year?

It's an interesting question, because it is basically an assumption, and it's probably consistent with what we saw this year. We don't right now see any things that would point us to worsening pricing trends in hips and knees. Katherine's already commented on spine. And overall, on a global basis, we feel pretty good about what we're seeing in the rest of our business. Again, keeping in mind that most of the focus on pricing in these discussions has been around hips, knees, and spine, and Stryker's portfolio of business allows us to absorb a lot of that through other opportunities for innovation and the other products we offer. So I would say our assumptions should be modeled similar to what you saw through the course of this year.

Okay. And then you signaled coming into 2010 that you expected to be active on the M&A front. And it did end up being a pretty busy year for the Company. As you look at 2011, you talked about some of the integration efforts you have to do with the deals you have already done. Are you still in a position to be aggressive looking at opportunities, or do you have your hands full with the deals you did over the past few months? And if deals aren't the first call on cash, does that change how you think about the speed of share buybacks?

We'd really continue to reiterate a very consistent strategy, as it relates to our utilization of cash, and it being three-pronged. We think given our pretty significant ability to generate cash, it really does give us the flexibility to employ a three-pronged strategy. It's going to include M&A, it's going to include buybacks, and dividends, which you saw another healthy year-over-year increase in dividends.

There's no change to that strategy. We're fairly large, in terms of the number of franchises, so, for example, the integration of Gaymar into medical really has no impact on anything outside of that division. So the nature of BD, it is impossible to predict how much volume comes through, but there's been no change to the overall strategy. We still think there's a lot of opportunities to leverage our core with Gaymar, Porex, Sonopet being examples of that, as well as opportunistically look at adjacent acquisition strategies, like Neurovascular. And there's no change to that overall guiding principle.

And, Chris, I would pile on here and remind you, I think we feel really good about the underlying strength of our business, which allows us to be disciplined acquirers. And we want to continue to pride ourselves on being very disciplined acquirers, and I think the ability to have a strong base business puts us in that position. And we expect to continue to do the same.

Our next question comes from the line of Vivian Cervantes with Maxim Group. Go ahead.

Hi, good afternoon. Thank you for taking my question. I just wanted to follow up a little bit on the new hip products that are being rolled out, given the performance in the US, can you just give us a sense for where we are with the launch? I think at one point, we thought this could be a two-year process. Is it still a two-year process, or did we accelerate given the weak macro?

I think it's still -- we've always described ourselves with recon launches as being a little bit of a freight train, Vivian. It takes us a little while to get going, and I think that's exactly what we're seeing. I do think we were starting to accelerate our trend in the final quarter of the year, and feel pretty good about where it should go this year. But I don't think -- we're not fully ramped up yet, but certainly on track.

Okay, great. Thanks. And just another follow-up also on the Neurovascular business, and the new coil and detachable that was recently approved. Can we sort of say that maybe these two approvals will sort of protect current market share primarily? And how does it compare with competing products out there from a market share gain standpoint?

Well, I think there's a couple answers to that question. Number one, the organization has been waiting for these new products, so it's a, it's a great confidence builder in the organization. The customer base, who's been using the Neurovascular products for many years, is thrilled to see this organization bringing them new solutions on the innovative front. So it will -- our expectation is, it will both stabilize any market share erosion that may have occurred over the last couple years.

I think when we went back and did the math, in the last five years, there were approximately 20 new products launched into that space, while this business had none. So the competitive attack in the last five years has been significant. So the ability to give this organization a new product, address customer issues, stabilize their customer base, and then ideally as we continue to roll out a pipeline of other items throughout the year and into the following years, get the organization back on offense would be the expectation.

Our next question comes from the line of Bob Hopkins with Bank of America. Go ahead.

Hi. Thanks. Can you hear me okay?

Yes, Bob.

Great. So the -- the negative 2.1% price mix that you talked about this quarter, that, I think is a little bit worse than what you were talking about in the third quarter. And I know you're saying for 2011, that you think that it will be about the same as what you saw in 2010. So I'm just wondering if you can help us try to give some confidence in your statements that things won't get worse in 2011, from a price mix perspective. I'm just curious, what are the kinds of things you're seeing out in the marketplace that give you that confidence at this point?

I think first of all, that negative 2% price, that's pure price. So there is going to be an offset, as we have been seeing throughout the year, an offset to that, that comes from mix. But when we're reporting price, we're talking about just the pure price impact. And overall, in terms of the outlook for 2011, a lot of it comes from the cadence of new products that we expect to be launching, the mix benefit that we are seeing to help offset that.

And just overall trends, we're seeing with respect to the market that don't indicate a significant worsening in the overall pricing trends. It's going to bounce around from quarter-to-quarter as we saw in 2011. But overall, we don't think you're going to see a demonstrable step down.

So just to be clear, within that 5% to 7% top-line growth, there's an assumption that -- that price mix combined is down 1% to 2%? I just wanted to make sure we've got the guidance.

Price, Bob, just price.

Just price with -- so that's not net of mix, okay. All right. That's helpful. And then I wanted to ask you a question about gross margin. Are you guys assuming some gross margin benefit in 2011? And then, you've talked previously about how you had undergone, obviously this quality journey over the last two and a half years. And now you've put the head of that quality initiative also in charge of manufacturing. And you've implied that -- on this call, that you see some longer term gross margin benefits to come from that.

I'm wondering why those are so long-term, if you've kind of been on the quality mission for two and a half years, shouldn't we see more of that in 2011? So, just if you wouldn't mind talking about gross margin, that would be helpful.

Sure, Bob. My comments in the scripted section on gross margin were that we did see opportunities for improvement in 2011. I want to be measured in that comment, because some of the pickup you saw this past year in 2010 was directly attributable to some pretty wild swings in currency, especially when you look at our distribution model, and where our manufacturing occurs. To the point of, shouldn't the results be sooner rather than later, I think one of your statements hit the nail right on the head. The last two years, two-plus years have been 100% focused on the quality initiatives.

That journey continues on the plan that it's on through at least the first half of this year, and we'll constantly be working on enhancing quality systems. The same individual who is responsible for that, as you noted, is also responsible for our global manufacturing network. And as somebody who's watched Stryker for a long time, you know we have a pretty diverse geographic manufacturing footprint. So corralling all of those processes, and focusing on the biggest priorities takes a bit of time. And those are the things that we're working through right now.

I would tell you over the long-term, I couldn't be more excited about the opportunity, but it does take time. And in a highly compliant environment, we cannot afford to rush and make mistakes, because any mistake would simply move us back well, well back into a quality journey that we feel like we're making forward progress on. So we're going to be very measured in our approach here, and be very disciplined in our approach here.

Our next question comes from the line of Joanne Wuensch with BMO Capital Markets. Go ahead.

Thank you for taking my question. In order to make these numbers work by my calculations, you're looking at sort of gross margins flattish, and a step-up in SG&A. I would assume some of that is acquisition integration, waiting for you guys to do your own quality control, and put your management magic on your acquisitions. Having said all of that, how much can you get back to sort of the wonderful leverage we saw in 2010, as we look into 2012? Sorry if I lost you there.

We just put out 2011 guidance.

I'm probably not going to jump into 2012 just yet.

Thank you.

But obviously when you do an acquisition, especially an acquisition that has a scale of the Neurovascular one, you're going to see the top line benefit, and you're actually going to see the deleveraging in the P&L. Clearly one of the goals is to work through the integration, and get back into leveraging that additional revenue. And you should assume that our goal is to do that as quickly as reasonably possible, while still sticking with the overall design of where we're going with the Neurovascular business, along with our other core franchises.

So not going to get into any specifics in 2012, but obviously that is, that is one of the benefits, frankly, of doing acquisitions, is you get the top line acceleration. And then you have to organize around the P&L leverage in the future periods.

All right. And just as a follow-up then, should we assume as we go throughout the year, that leverage is going to become more and more obvious? It's a simple question, but I'm also asking on the gaining for the quarters.

It's a simple question, but if we know anything about the business, they don't tend to run very linear quarter-over-quarter. They tend to move around quarter-over-quarter. So I would hope that a year from now, that you could look back and see our progress. I'm not going to point that each successive quarter is going to materially get better.

Certainly on the integration side, you would expect a lot of those charges to be earlier in the year, as we work through some of the big items. But they all take time. And there's, there's always other investments that seem to somehow materialize.

Our next question comes from the line of Adam Feinstein with Barclays Capital. Go ahead.

Hi, this is Matt for Adam. Can you hear me?

Sure, Matt.

Hi, thanks. Two questions. One is, where everybody's been focused. I just want to make sure I'm hearing your message correctly. So in the hips and knees this quarter, there was some improvement, but I guess what you're saying is, really the market's not improving much. But Stryker's doing a little better, and it's a combination of product launches, lapping some issues, and maybe some competitive disruption, is that sort of a fair characterization?

Yes, I think that's a fair comment, recognizing we haven't seen everybody report yet, but that's probably the way it looks right now.

Okay, good. And then on one area where people haven't really focused on this call is trauma, where you had pretty good results, and have strung together a few good quarters there. I'm just wondering what your expectations are for your business, and for the market going forward? That's something that we haven't talked about in a while.

Yes, we don't give guidance by individual franchise. We are pleased with how our trauma business is doing. Part of that is our move that we did, going back a number of years, where we do have a hybrid sales model. And we think that allows us to execute, adding products into the bag, into the bag. So we've got great sales force focus, expanding product offering.

Overall, those markets continue to do well. They do move around. If you look at the overall, over the years quarterly trends, they can be impacted by economic fluctuations or weather, et cetera. But overall, feel good about our -- that business, that it's an upper single-digit growth market we believe, and we feel well positioned to continue to deliver good results in 2011.

Our next question comes from the line of Glenn Novarro with RBC Capital Markets. Go ahead.

Thank you, good evening. A question on spine. It looks like this was a quarter where you've lost market share in spine. And I recall a year ago at this time, we were highlighting the new cervical plate as a way for Stryker to kind of recapture share, and start growing the business aggressively again. So as we look out to 2011, understanding the market is under pressure, what is the strategy for Stryker to recapture share, and get back to market growth or better than market growth? That's question one. And then, I also remember last year, being at AAOS and you highlighting your kyphoplasty balloon. Any update on that product as well? Thank you.

Sure. On the spine market, I would tell you I think we, for a number of years, have been very good at rolling out innovations and sales force expansion. The dynamics of the spine market last year, we probably slowed down our sales expansion. And while we have the cervical plate, we didn't have enough other things to really kind of keep the franchise going. And I think we've been retooling some of the R&D efforts there, to get back to a little bit better cadence of product flow.

In terms of the, the iVAS balloon that we launched, it's off to a nice start, a steady start. And, again, we point that out as one of those things -- we launch a lot of singles every year, not doubles and triples and home runs, that two, three, four, five years out, becoming full businesses. This one is another one of those where nothing meaningful right now, but we like the trajectory.

So just one follow-up, Steve, on spine. So can you give us a sense of what are the products that may help you reenergize this business, or should we just be assuming that your spine franchise grows below market growth in 2011?

We haven't gone into details on new products. As you know, we don't do it; we'll highlight some of the key products that we're introducing at the upcoming Academy meeting across the major businesses, as well as [following that] at our Analyst meeting. I think right now, we're pretty tempered regarding growth prospect expectations, both for the market, and candidly for our spine business, and as we look to improve the trends we saw in 2010.

Our next question comes from the line of Doug Schenkel with Cowen and Company. Go ahead.

Hi, good afternoon. And thanks for taking my questions. My first question relates to, I guess really the diversity of your business. As you noted recently in public presentations, you've been diversifying for the better part of -- I think three decades at this point. But clearly, your M&A activities picked up over the last year or so. So I guess what I'm wondering is, what opportunity exists for you to drive growth, by picking up share specific to a broader product offering in the aggregate? And would you expect this to pick up momentum, given recent activity, as well as I guess the need for the global healthcare system to control costs?

Doug, I think we feel really good about our position in every market we're in, in terms of being of sufficient scale to compete very well, and it's where we just look for the little tuck-in acquisitions here and there. But we feel very well poised. And we always said, during the 2008, 2009 time period, we thought there would be buying opportunities from the economic downturn, and that we had positioned ourselves to capitalize on them. Right now, we've got a great set of businesses, all of which are of meaningful scale to compete, and don't, certainly don't need anything in terms of getting bigger.

But I guess the crux of the question is really, is there a concerted effort to maybe get broader to go after this -- I know bundling is not the right word or the word that we want to use, but is there the ability to actually broaden the portfolio, and actually gain share that way, by being a sole source supplier?

We still believe more deeply, and just going deeply within each product line, and then looking for the leverage opportunities across. So we're not going to diversify for diversification's sake. We're diversifying, as we've done for three decades, as we see new business opportunities that are close in to our core to keep expanding out.

Our next question comes from the line of David Roman with Goldman Sachs. Go ahead.

Good evening, everybody. Wanted to ask one question on patient mix, and then a follow-up on strategic direction. In at least our conversations with orthopaedic surgeons, what we've heard is generally speaking, they have not seen a tremendous slowdown in operating activity, but over the course of the year, saw the Medicare patient population make up a greater percentage of their patient volumes, which to some extent may explain some of the negative mix, or dollar slowdown we've seen across the industry. I was hoping to get your perspective on that, and where we sort of are from the Medicare/non-Medicare, in the hip and knee market? And whether you think that at all has had an impact on reported dollar growth in 2011, 2010, excuse me. Then I had just one follow-up.

Yes, I think there's been some element of that, David. Certainly with people unemployed and younger people not having as much insurance, again, given the breadth of our portfolio not making a huge difference probably.

Okay. And then just in terms of M&A, one thing that you've talked about in the past is given the quality issues you've undertaken, that part of the evaluation of a target will be -- sort of either to what extent they are at the same level of quality systems that you are, or the costs associated with bringing them up to par. Can you just sort of maybe highlight your -- how that impacts the due diligence process and potentially the pacing at which you do transactions?

I think it just is reflective of another one of the key focus areas in the due diligence process. We've obviously learned a tremendous amount through our own quality efforts, and applying those learnings to acquisitions. It just adds to the list of areas that we focus on.

I will throw our hats off that -- I will tell you the Boston Scientific business, they have made tremendous progress. I would bet that we valued where their new quality systems are perhaps more than other people, because they have done a great job, and we feel great about that one.

Our next question comes from the line of Matthew O'Brien with William Blair. Go ahead.

Good afternoon. Thanks for taking the question. Just curious on the hip side of the market, given your good performance in the quarter compared to some of your competitors, any sense for how much of that was more share shift within a specific surgeon base, be it that they shifted from their metal-on-metal product over to your metal-on-metal product, versus new share that you're taking, in terms of new accounts?

I think it's too early to really have that level of granularity. It's just one quarter. I -- and it's one quarter where everybody hasn't reported yet. So I think we're clearly seeing a little bit of movement on metal-on-metal, but I don't think we can get that granular at this point.

Okay, so you didn't see it kind of from AAOS last year through this point?

Not beyond what we've seen in the market, where there's clearly been some contraction, but how significant it's been, it's still relatively early. Surgeons tends to move pretty slowly one way or the other.

Okay. And then just a quick follow-up, on R&D, pretty significant increase in spending 2010, and expected in 2011. Is that really focused on more clinical studies, or post market studies in support of your current products, or upcoming products versus new product development?

I would tell you it's mostly new product development. The range of products we offer cover all classes of approval. And to the extent that there are heavier clinicals required, we have experience with that across our product offering. This is really an initiative to ramp up more effort on pure new product innovation. And particularly as it relates to coming out of the remediation efforts, where a lot of remediation has started with R&D, and getting our R&D organizations around the world focused on pure new product initiatives.

Our next question comes from the line of Kristen Stewart with Deutsche Bank. Go ahead.

Hi, thanks for taking the question. First, just a clarification, Katherine. I wanted to make sure I heard you right. You said with US recon prices down, but it was almost offset by mix, so net-net, price mix was still negative in the quarter, if any?

Partly offset by mix. Net-net, still negative, very close to the trend we saw throughout the year, with a little bit of a strengthening in mix in the fourth-quarter.

Okay. Got you. And then, one question is, going back to the pricing, as we see the decline from about 1% in first quarter to 2.1 now, would you guys say that trend in price getting more negative is more a reflection of the overall orthopaedic trends? Or are there any worsening of price within MedSurg? And then my second question is, can you give a little bit more granularity on the $0.21 to $0.25 related to the Boston Scientific spend? What -- is there amortization included within there, or is that included within your adjusted guidance? Just kind of what is that $0.21 to $0.25 make up?

So the first question there was pricing, and just as a reminder, Q1 pricing was negative 1 point (inaudible). And then we went to negative 1.5, then 1.8, then 2.1. So we had 80-basis point movement over the course of the year, not anything that's going to require to us radically change our offense, especially when you look at the scale of new product rollouts, both in the US and the international markets. So nothing, nothing dramatically different outside of what we would refer to as normal pricing pressure, especially if you look back over the Company's reported price change over a five-year period, where we traditionally bounce between plus 2 to minus 2.

So I don't think we see anything in the pricing that's dramatically challenging outside of a few key segments, which we've highlighted as spine being, what we felt was the biggest pricing pressure area. And that goes back to Q4 of 2009 when we made that comment. On the NV acquisition, those charges that we've called out in our press release are specific integration-related costs. There's a big inventory step-up charge that materializes over time. And there are other integration-related costs that could be in the form of outside services provided to the deal, or just other one-time costs associated with transition of that business from one parent to the other.

Our next question comes from the line of [Rashen Hoy] with Jefferies. Go ahead.

Just a couple of questions actually. You mentioned OtisMed is still kind of a work in progress. I'm curious if there's been any updates you can provide with what's happening with the FDA? And if nothing there, perhaps any updates on your expectation for what that product could do to the knee business.

No change in expectations. Clearly it's -- we have been hoping for 2010, as many of you know -- predicting FDA time lines, it has become more challenging. So we're hopeful for 2011. We still believe this is going to be a nice product for our knee, knee growth. We were seeing the benefit of that prior to the acquisition and so sometime in 2011, but nothing more specific than that is the current goal.

Okay, so you can't even -- you're not even narrowing it down to first half, second half, anything at this point?

No, not at this point.

Okay. Just then the Ascent deal, a lot of moving parts on the MedSurg side in the fourth-quarter. But if we -- our numbers, and I'm not saying they are correct, but looks like Ascent may have been flat to slightly down in the third quarter on a dollar basis. Is that correct?

I don't think you would assume that we're going to break out a business the size of Ascent on a dollar basis. I think you have to recognize that across MedSurg, things as I mentioned earlier, don't always flow evenly one quarter over the next. I would point you back to Steve's comments that overall we feel pretty good about where Ascent stands after the first year and as we head into 2011, we still have growth expectations for that franchise.

Our next question comes from the line of Dave Turkaly with SIG. Go ahead.

Thanks. I seem to remember some litigation that went on between Target and [Microsys] part of J&J. I was just curious on that detachment system and the new coil, are you comfortable with the intellectual property as it stands today?

We're very comfortable with the intellectual property, and obviously the amount of due diligence around intellectual property was substantial. So I would say we feel very good. I can't predict the future as it relates to legal, so I never say never, as it comes to legal events in today's society. But our due diligence, we feel, was very comprehensive.

That's it for me. Thanks.

Our next question comes from the line of Derrick Sung with Sanford Bernstein. Go ahead.

Hi. Thanks for taking my question. Maybe if you could give us a little bit more detail and color on what you're seeing in MedSurg. You know, you've been sort of a full-year now, in terms of a recovery from the major impact from the economic downturn. And I'm just wondering, as you look at sort of hospital CapEx spending trends, and habits sort of now versus pre-recession, are you seeing any major changes, in terms of the way that the hospitals are approaching their CapEx spending, that would lead you to believe there would be sort of moving forward, kind of a fundamental shift in the way that you view the business?

Derrick, I don't think there's any fundamental shift in how we view the business. I think if there is a change in MedSurg capital spend behavior, it's at the approval levels that used to probably be a little more close to the action, have probably moved up higher in the organization, perhaps to the C suite. And in some cases, that has been relinquished back down to high level materials management or purchasing folks. And in other cases, it continues to reside at the C suite. And if there is a change in behavior, it's probably our selling organizations have had to learn how to sell on a broader basis, as it relates to capital equipment in the hospitals.

Okay, great. That's helpful. And specifically this quarter in endoscopy, I know you kind of talked about lumpy quarters, but what specifically drove kind of the weakness there? Was it share loss in your view, or just some big accounts for sales didn't go through, or can you kind of give any color there?

It's timing.

Timing.

Don't worry about it.

Yes, it's just timing.

It will be fine. We're not losing share.

Similar to what we saw in medical earlier in one of the quarters. I feel very good about those businesses.

Ladies and gentlemen, we have time for two more questions. Our next question comes from the line of Michael Matson with Mizuho Securities. Go ahead.

Hi. Given your decision to sell the OP-1 business, I was just wondering if you could provide us with an update on kind of your overall strategy and the biologics area, and whether or not you had ruled out developing or acquiring any other higher end biologic products in the future?

Yes, I think, Mike, we're not going to get into strategic direction on this call. We'll probably lay a little bit more of that out at our Analyst meeting later in the year. Suffice to say, we're looking in the biologic area, and we'll talk about kind of where we're headed.

As we commented in the press release, we are still investing in OP-1 outside of the orthopaedic bone applications.

Okay, and then just on MedSurg, can you give us an update on where you're at driving that business into the international markets, and how big of a driver that could really be for MedSurg overall?

It continues to be good. Previous to the last question, I think our international Endo business was up 11% in the quarter. As Curt said, our international Instruments business was up 9, continue to feel very good about the trends and the opportunities there.

And our final question comes from the line of Stephen Lichtman with Oppenheimer. Go ahead.

Thanks. Hi, guys. I was just wondering, just given the uncertainty around OtisMed and the strong product lineup on the hip side, how you're keeping the sales force focused on the knee side of the business in 2011, where are we with Triathlon, and what should we be focused on relative to product flow in knees outside of OtisMed in 2011?

I tell you, Steve, we still feel great about Triathlon. Recent registry data out of the UK that shows Triathlon has by far the lowest revision rate. And for everything, people talk about evidence-based medicine and registries and everything else, we feel great about the data that's being generated there, that I think will give it a shot in the arm, even to our organization. So, we'll obviously be continuing to look at little line extensions here and there, and other things to keep that business fresh.

Okay. And then just on the Neurovascular business, obviously you pointed to the two new products. Is there anything from a sales force perspective that needs to get invested in, as well in terms of getting that, in order to get that growth up toward market level over the next 12 to 24 months?

I think just like any of our other businesses, there are opportunities for sales force expansion in various markets. Not going to get real granular there, but as we get into the process of moving the business into Stryker in all geographies, we'll be obviously, looking very deeply at what they have or what they don't have, where their presence is adequate, and where there may be opportunities to enhance the presence. And we'll get into that as we further engrain the business and get through some of the basic, what I would call month one operational issues.

And ladies and gentlemen --

Go ahead, Melanie.

Ladies and gentlemen, that does conclude our Q&A session. I'll turn it over to you, sir, for closing remarks.

Great, thank you, Melanie, and thank you for your time. I know it's gone a little long here, with a lot of questions. We continue to feel really good about our team and the results we're generating. And our conference call for our first quarter 2011 results will be held on April 19th of 2011. Thank you, everyone.

Ladies and gentlemen, thank you for your participation in today's conference. That does conclude the presentation. You may disconnect. Have a wonderful day.