Welcome to Stryker's First Quarter 2014 Earnings Conference Call. My name is Eric and I'll be your operator for today's call. (Operator Instructions) This conference call is being recorded for replay purposes. Before we begin, I would like to remind you that the discussions during this conference call will include forward-looking statements. Factors that could cause actual results to differ materially are discussed in the company's most recent filings with the SEC. Also, discussions will include certain non-GAAP financial measures. Reconciliation to the most directly comparable GAAP financial measures can be found in today's press release that is an exhibit to Stryker's current report on Form 8-K filed today with the SEC. I will now turn the call over to Mr. Kevin Lobo, President and Chief Executive Officer. You may begin sir.

Good afternoon, everyone, and welcome to Stryker's first quarter 2014 earnings call. Joining me today are Bill Jellison, our CFO; and Katherine Owen, Vice President of Strategy & Investor Relations. Following my opening comments, Katherine will provide an update as it relates to our recent M&A activity and Bill will then offer details on our quarterly results before opening the call up to Q&A. Our first quarter results reinforce the strength of our diversified mix of businesses which include implants, disposables, capital equipment and services that address a broad spectrum of the medical technology industry. With this comprehensive offering, we achieved another quarter of solid organic sales growth, up 5% excluding acquisitions and foreign exchange. While we benefited from one extra selling day in the quarter, this was offset by the negative impact from the unusually severe weather, which resulted in a high number of cancelled surgeries. As these surgeries are being rescheduled over the course of the year, we do not anticipate any discernable impact on our full year growth rates. All three of our key business segments, Reconstructive, MedSurg and Neurotechnology and Spine delivered year-over-year revenue gains in Q1 and growth was well balanced between the U.S. and international. In the U.S., trauma and extremities posted an impressive growth of 12% off of a tough 26% comparable which was aided by competitor recall last year. This growth was fueled by continued strength in Foot & Ankle, up 34%. Hip growth of 6% and knee growth of 4% reflected seasonality and some disruption associated with the MAKO acquisition. As publicly traded competitors, we were only able to start our integration discussions after the deal closed late last year. With that planning taking place over the course of the first quarter. During this period, we experienced hesitancy by our sales…

My comments on today's call will focus on providing an update on our recent M&A activity. During Q1 we acquired Pivot Medical which was founded in 2007 with a focus on hip arthroscopy procedures treating FAI syndrome. Pivot provides us with a platform of innovative instrumental implants to efficiently access and restore the mobility of the hip with minimal incision. Hip arthroscopy is the fastest growing procedure in sports medicine resulting from improved procedural solution and growing demand for solution. This acquisition complements our existing sports medicine portfolio and provides our customers with a comprehensive offering to address a broader range of procedures. More recently, we completed the acquisition of Berchtold Holding, which achieved sales in 2013 of approximately $125 million to its product portfolio of surgical infrastructure equipment. Berchtold offering includes surgical table, equipment films and surgical lighting systems geared towards maximizing efficiency and safety in operating rooms and IT use. Combining these complementary solutions with our endoscopy division’s existing operating room portfolio creates a comprehensive quality focused offering equipped to satisfy a wide range of customers’ needs around the globe. Also during the quarter we closed on the acquisition of Patient Safety Technologies which we discussed in detail on our prior call. Our Instruments division is excited about this innovative technology which helps prevent the objects in the operating room thereby improving patient safety and reducing healthcare costs. Finally, as it relates to MAKO, during Q1 we initiated enrollment in a clinical study of a total knee application using MAKO’s Total Knee System. We are excited about this opportunity to further broaden the clinical application for this technology and anticipate having the Total Knee on the market in 2015. We are excited about these recent transactions and the opportunity for our division to leverage the considerable sales and marketing infrastructure to help drive accelerating revenue growth. With that, I will now turn the call over to Bill.

Thanks, Katherine. Sales growth was positive by 5.3% in the first quarter, including a negative 1.1% impact from FX translation. Constant currency sales growth was a positive 6.4%, which includes organic growth of 5%. Earnings per share on a GAAP basis for the first quarter were $0.18 per share versus $0.79 per share last year in the first quarter, while adjusted earnings per share were $1.06 per share for the quarter versus $1.09 in the first quarter last year. This quarter's EPS includes a negative impact of approximately $0.05 per share from FX this quarter compares into the last year’s first quarter is also negatively impacted by approximately $0.05 per share both from tax extenders not being renewed and also from an additional full year benefit for the 2012 tax extenders booked in the first quarter of last year. The most significant non-GAAP adjustments in the quarter are related to a $340 million increase in the charges associated with the voluntary recalls of Rejuvenate and ABG II and Neptune. These charges may increase or decrease over time as additional facts become available and assumptions become more refined. No insurance proceeds that may potentially be available to cover some of these costs have been included. Looking at sales in the first quarter. Our organic growth of 5% was comprised of a positive 6.9% from volume and mix, with price negatively impacting sales by 1.8%. Acquisitions added 1.4%, while FX had a negative 1.1% impact due to significant weakness in both the Japanese yen and the Australian dollar compared to the same period last year. This impact should lessen considerably as we move through the year if rates fall near current levels. Looking at our segments, Reconstructive represented 43% of our sales in the quarter. Sales of Reconstructive products were up 4.5%…

David, what I say around seasonality, that’s something that we expected. It’s obviously a trend that we’ve seen over the last couple of years and that played out again this quarter. The weather clearly was not expected and it was obviously an unusual period. We expect that those procedures will get done over the course of the year. They will be rescheduled. So for the full year we don’t expect that to have a meaningful impact on our volumes. Now obviously, MAKO was a different issue and separate from weather and seasonality where we had the first quarter of integration and obviously we had sales forces on both sides at MAKO and Stryker trying to feel each other out and understand how we they are going to work together. We’ve spent the first quarter working through those plans and obviously that did affect the first quarter for MAKO but we are very excited we have our plans in place. We have a unified sales force ready to hit the ground. But to actually parse seasonality versus weather is not something not I could really do either. David Lewis – Morgan Stanley: Okay and then maybe kind of a follow-up on the MAKO commentary you just gave. Can you give us a sense of now that the integration has been done, what does the MAKO distribution force look like in terms of dedicated reps, the capital sales force, and we'd love to get obviously some information about how MAKO grew this quarter. If you're not willing to do that, can you give us any sense of when you can get the MAKO business back to the type of growth rates we were seeing in the earlier part of last year? Thank you.

So, as we’ve already indicated, we are going to report in these MAKO knee numbers with knees, the MAKO hip numbers with hips and the capital will be part of our other reconstructive segment. We have our full scales force now will be selling the implants combining the MAKO implant sales force as well as the Stryker Orthopedic sales force and that’s new starting in April. We also have separate reps that will be selling capital.

Your next call comes from the line of Kristen Stewart with Deutsche Bank. You may proceed. Kristen Stewart – Deutsche Bank: Hi, (inaudible) if you could just quantify the impact of just reclassifying some of the Sports Medicine business into endoscopy, and just maybe talk a little bit more broadly about your strategy going forward in that line?

Sure, Kristen. The sales of Sports Medicine implants was roughly $15 million for the quarter. It was a small but very fast-growing business which we had separate from our endoscopy division. Our endoscopy division does sell many products into the Sports Medicine specialty. We have now emerged those two together and have one combined offense from Sports Medicine and we renamed the business unit Sports Medicine which is not part of the endoscopy franchise. We are really excited about being able to be built now a strong fast-growing sports medicine implant business and now combining with our existing arthroscopy business. Kristen Stewart – Deutsche Bank: Okay and then I guess, just looking ahead is the plan I guess to just grow that business more organically or grow it through supplementing through M&A?

Kristen we did the Pivot acquisition and that is going to be within the Endoscopy division. So that really rounded out a key gap. In Sports Medicine we are pretty well positioned in knees and in shoulders, but having a product to treat hip arthroscopy with the gap and we were obviously very impressed by the Pivot offering. So, I would say right now the focus on that acquisition which just recently closed. Clearly, endoscopy has a much larger sales marketing and depth and breadth that will be able to hopefully leverage as part of the Sports Medicine strategy going forward.

And your next call comes from the line of Bob Hopkins with Bank of America. You may proceed. Bob Hopkins – BofA Merrill Lynch: Thanks, can you hear me okay.

Hi, Bob.

Hi, Bob. Bob Hopkins – BofA Merrill Lynch: Great, good afternoon. First question for Bill, are you still comfortable suggesting that about 45% of the total year's earnings will come in the first half? And I was curious in Q1 if earnings came in where you thought because obviously it was a little lower than what the street was predicting.

Sure, I’d say that, I mean, roughly we are still comfortable with that. But keep in mind that there was a couple of caveats that I talked about which FX is impacting at the little bit more upfront than we expected moving into the year. And also the tax extenders that we talked about as well too. We are originally in pretty much for the full year on a more of an equal basis. It’s still uncertain obviously when those will be renewed at this time, but that’s also an impact that’s affecting the first half of the year. Bob Hopkins – BofA Merrill Lynch: Okay. So, couple incremental things to consider around that 45% it sound like. And then the second question I wanted to ask which was back on hips and knees and your comment you think things will accelerate over the year. I was wondering if you're already starting to see evidence of those surgeries rescheduled and things back to normal. And Kevin, maybe what your assumption is for the hip and knee market growth rate for 2014?

Bob, I’ll jump in with couple of things, going back to your prior question, keep in mind we clearly did not have any visibility when we thought about the first quarter as to how should be the weather would be and obviously it had an impact and still talked about FX that also worst. So there were some incremental negatives. In terms of the surgeries I think what we would say is not really going to comment where we are right now early on in the second quarter, surgeries get rescheduled but they tend not to get rescheduled all in the same quarter that they were canceled, particularly if a division has a backlog in place. So, that’s why we said we feel comfortable that those surgeries will get replaced or rescheduled over the course of the year for all the obvious reasons for these diseases. We generated these patients are going to suddenly feel better. So it will work itself out over the course of the year. We still continue to assume the reconstructive market growth somewhere in the mid single-digits and whether that’s three to four, three to five, something in that vicinity. So there has been no discernable change in the underlying trends with the note of exception that seasonality continues to get more pronounced each year and based on the fourth quarter. First quarter, we anticipate the same trend will take place as we look ahead to the fourth quarter of this year and the first quarter of 2015. Bob Hopkins – BofA Merrill Lynch: Just to (Inaudible)

You broke up a little bit there.

Bob are you still there? Bob Hopkins – BofA Merrill Lynch: Should be willing to say whether or not that's a new number for that 45%, I mean, you give us that previously, are you willing to say what the best estimate is for the first half of the year in terms of percentage of earnings giving all these considerations that you just suggested?

As we said previously, we still assume approximately 45% of earnings during the first half of the year based on the range of estimates we have for the full year and then, I think Bill outlined in his comments, some incremental headwinds that are specific to the first half and Q2 that are worth looking at when you think about modeling. Bob Hopkins – BofA Merrill Lynch: Okay. Thank you.

And your next call comes from Mike Weinstein with JPMorgan. Please go ahead. Mike Weinstein – JPMorgan: Thanks. Bill, how big is the SG&A line? I think about the acquisitions you've made and MAKO was $20 million of the quarter on SG&A itself. So I am trying to reconcile with the addition of MAKO and recognizing that the efforts you're taking there, they don't happen day one. How does SG&A come in as well as it did?

Yes, so I think that there are couple comments there. So, keep in mind on the R&D increase that we had a piece of that is obviously from some of the acquisitions that we’ve been bringing on board, especially as it relates to a percent of sales of R&D to our total sales and then as it relates to the broader based SG&A side, I think that, you should assume that there were some reductions actually in each of those areas. So selling costs were down slightly as well as a couple of the key categories within the G&A area. Mike Weinstein – JPMorgan: And is that sustainable? This is you know that’s one-time?

And I think that is probably reasonable to assume that the R&D side should expect to run probably higher than it did last year, pretty much throughout this year and I think the reverse is probably also true with the SG&A broader category. Mike Weinstein – JPMorgan: And there is nothing that's been re-categorized that's been added SG&A in some other category?

No reclassifications in place. Mike Weinstein – JPMorgan: Okay, and then lastly on the disclosure that you're backing out from costs pertaining to the Neptune recall, can you be clear what those are?

Are you talking for this quarter? There were no additional Neptune recall costs in this quarter. You broke up a little bit on your question. Is that what you are referring to? Mike Weinstein – JPMorgan: Yes, are you guys still there?

Yes.

Yes, hi, Mike there is a little trouble hearing you and specific to the last question, was it around the Neptune recall charges in the quarter? Mike Weinstein – JPMorgan: Yes, I am just trying to make sure that we've got the reconciliation because in your move from GAAP to adjusted, it says that you are adjusting for costs relative to both Rejuvenate, which we understand obviously and it lists as well the Neptune recall and I wasn't clear why you'd have expenses related to that recall that you are backing out, but it sounds like Bill is saying there were no expenses.

That’s correct. There were no recall expenses for Neptune in this quarter. The recall cost that you are seeing there were related to just the Rejuvenate matter. Mike Weinstein – JPMorgan: Perfect, okay. Thank you, guys.

That kind of market as well as and we would expect that business to continue to ramp as we move through this year. Mike Weinstein – JPMorgan: Okay. Thank you.

You bet,

And your next call comes from Richard Newitter with Leerink Partners. Please go ahead. Richard Newitter – Leerink Partners: Hi, thanks for taking the questions. Kevin, can I just ask you to elaborate a bit on your comments on the dynamics playing out in the EU Recon division and what gives you confidence? I think you said acceleration throughout the year in 2014?

So, as you know, Europe was a sour spot to go back about a year-and-a-half for Stryker and it has been over a number of quarters trailing the market and we launched our turnaround and we’ve now had four straight quarters of low single-digit growth. So it’s sustained. We started off with Northern Europe being the area of primary focus and now I would include Southern Europe in that. So, Spain sort of performing well at the end of last year and in this first quarter, even Italy registered positive results and Italy have been a country where we were suffering the most. So I would say our recovery has been broad based across all the countries back to basics. We really have our management team performing very well. So it’s sustainable four quarters in a row in a market that’s still challenging market overall. We are performing well and obviously for Stryker, Reconstructive is the biggest segments in Europe and so, the implant business is starting to get healthy again. Richard Newitter – Leerink Partners: Great, and then just – with respect to the comment you were making about rescheduling surgeries in 2Q and beyond, you said that a surgeon's backlog might actually be prohibitive in terms of the surgeon being able to get that patient in. That would almost seem to suggest that backlogs seem very healthy at least in your customer base. Can you describe either anecdotally or quantify what you're hearing from your customers about expanding backlogs, if any and does that leave you feeling better than perhaps a few months ago looking forward into the year?

Rich, I’ll take it. I think it’s safe to say obviously reading a little bit too much into my comment it was more around to give perspective that you can’t make up all the surgeries in a given quarter and that maybe one factor. It was intended to imply that there has been a significant change in backlog that’s specific to us. It’s really just the factors to why we said and think those procedure volumes will be rescheduled over the course of the year and that I would go back, we are continuing to assume the Reconstructive market is essentially unchanged in terms of its growth with the noted commentary around seasonality.

Your next call comes from Derrick Sung with Sanford Bernstein. Please go ahead. Derrick Sung – Sanford Bernstein: Hi, thanks for taking my questions. So, going to your organic knee growth, I guess, our calculations suggest that in the US at least, excluding MAKO, your organic knee growth was flat to even perhaps down a little bit negative? Was this a surprise to you? Is that calculation in the ballpark? And if so then that would imply a pretty substantial reacceleration through the back half of the year. Is that fair?

Derrick, I’ll take that question and for consistency sake we have said we are not going to breakout MAKO revenue and I know it cause us some challenges but I have to note you guys have your models and we’ll get some approximation in there. We very clearly saw some impact as we talked about on weather and seasonality in the quarter and clearly Q1 versus Q4 growth is there is a big change and we assume that trend will continue this quarter. So those are some of the factors that you should assume. This isn’t a linear trend as it relates to our businesses both in recon as well as some of our capital businesses. Derrick Sung – Sanford Bernstein: Okay.

Yes, specifically related to knees, what I’d say is all of last year we grew at market rates in knees and so I wouldn’t expect anything really different going into this year in terms of outside of MAKO if you just look at our core knee implants that we perform around market rates and we don’t see a different dynamic necessarily playing. Derrick Sung – Sanford Bernstein: Okay, thanks and can you spend a couple minutes on pricing, both what sort of the level of price cuts that were seen from Japan versus your expectations? And also it does look like on Recon pricing has gotten sort of sequentially worse over the last three quarters. What's going on there, if anything? Thanks.

I’ll take the recon comment and we don’t break out pricing by specific product lines or hips and knees in our financials you can get the pricing impacts. We continue – for the three main businesses, we continue to see pricing pressure partly offset by mix and the total company price continues to be down at the 1.5% to 2% range.

And Japan price cuts, obviously we expected those price cuts and they came in line with our expectations. And specifically for reconstructive, we do break out pricing by segment, the first quarter price reduction was not very different, if you look at our full year price reduction, it’s in line with our full year price reduction.

Your next call comes from Matthew Dodds with Citigroup. Please go ahead. Matthew Dodds – Citigroup: Hi, good afternoon, just a couple of quick ones. First, Katherine, just, on the acquisitions, is the right math two months of Trauson in the quarter and then a full quarter of MAKO, there is the only two that have an impact?

Matthew Dodds – Citigroup: Okay and then – and Kevin for you on trauma in the US, not everybody's reported but the big companies have. It looks like the market doubled. So almost 10% this quarter. Is your sense that that was weather-related or do you see a strengthening in the market overall?

Yes, so first of all, not everybody has reported yet. And I’d say, you do have the impact of the recall, the competitor recall from last year which inflated that competitor’s first quarter and frankly damped down our growth rates, so our real underlying growth rate was even higher than the 12% we reported. Weather did does have a factor. It’s not nearly as – it’s not a one-for-one with sort of the slow down you see in hips and knees, there is not a one-for-one replacement trauma, but, yes, the weather does have an impact and was a tailwind for us for the market in the first quarter. Matthew Dodds – Citigroup: Thanks, Kevin. Thanks, Katherine.

Your next call comes from Matt Miksic with Piper Jaffray. Please go ahead. Matt Miksic – Piper Jaffray: Hey, thanks. Just one – a couple points to clarify, just I'd love to understand you mentioned some of the factors impacting the MAKO business as you got further along in the integration or really began your first quarter of integration. Could you – I wasn't sure if I understood whether this was hesitation among the sales force as they the typical sort of who gets what territory kind of questions. Whether there was some loss of sales force in that process or whether there was hesitation or sort of on the customer utilization side, if you could maybe add a little color there? And then I have one follow-up.

So to the points you made, I would say yes, hesitancy on the sales force around who is going to get paid, who is going to get credit, what territory am I going to cover and yes on the hesitancies around customers saying well not the Stryker ones evolve should I buy this or should I wait, can I get financing, or are they going to sell this differently. So the hesitancies is yes, on both two parts. The one area where we did not have an issue was on sales force loss. We did not lose any sales force, our sales forces has all been retained, but there was this limbo where you are trying to figure out and sort out who is going to be credit for what. Especially, if you look at Stryker Reconstructive implant people who are not getting credits in the first quarter, they obviously were engaged fully until they understood what it meant for them. We were able to clarify that over the course of the first quarter, so they are now fully engaged. Matt Miksic – Piper Jaffray: Great and then this reacceleration, if you could, Katherine, maybe would be the best person to walk through what the points and drivers are as you see through the rest of the year putting aside what we just talked about what Kevin just mentioned, what are some of the other factors you think that get the growth going again to hit your full-year numbers?

So, if you are talking about – I assume you talk about top-line? Matt Miksic – Piper Jaffray & Co: Yes.

So, keep in mind, our organic growth in the quarter was 5% and so I think we are in very good shape recognizing Q1 the biggest factors that’s a negative for revenue is the seasonality both for capital which obviously has stronger fourth quarter trends and then the Reconstructive, which I think is, of course that was pretty well beaten in terms of that seasonality trend. As the year unfolds, the benefit we’ll see is the acceleration in MAKO as we talk through. Neptune is ramping up as it just got back on the market. We had to do some customer upgrades in the first quarter. We did several acquisitions that we closed in the first quarter. We’ll start to see those attraction with those as the division start to take advantage of the expanded product offering there and…

And I’d say, we are going to continue to sustain the kind of double-digit growth in Neurotechnology. Those businesses are all really well positioned with strong momentum, strong pipelines. So we expect that business to continue to perform very well. So we have a number of businesses, Trauma, Instruments division, Neurotechnology, we were very bullish on our performance over the course of the year.

But, I just think as you go back and adjust models, the biggest change that we’ve seen as we talked about it’s gotten greater each quarter or each year, is the seasonality. So obviously that’s going to impact how the fourth quarter of this year looks like just it did impacted the first quarter. And then sort of the headwinds that we talked about around FX in particular that will impact the second quarter. So there is just more variability on the overall quarterly trends, but when we step back and look at the full year, it’s very consistent with our expectations. Matt Miksic – Piper Jaffray: Great. Thank you.

Your next call comes from Jason Wittes with Brean Capital. Please go ahead. Jason Wittes – Brean Capital: Hi, thanks for taking the question. I wonder if you could help us out with timelines on product flow for MAKO, now that it's fully integrated with Stryker, and that is specifically the Total Knee I think you're starting that trial, I think that's still going to be the MAKO knee. I guess how long will that take to get on the market from your expectation, and when would we see integration with other Stryker products within MAKO?

I would refer back to the comments we made in the formal part of the call. We start movement in the first quarter with the Total Knees with MAKO’s Total Knee system and we do anticipate launching the Total Knee on the MAKO robot in 2015. In terms of product iterations and next generations, we are not going to go into any additional color on that. Obviously, we do have plans to introduce Stryker implants in both the hip and knee side. The timing of that and the prioritization – I think that we are working through internally. We will likely be able to share some additional color at our Analyst Meeting in September where the product there is going to focus on the Reconstructive business in MAKO. But beyond that, we are not prepared to go into any more detail around the pipeline. Jason Wittes – Brean Capital: Okay. Fair enough. Thank you.

Your next call comes from Glenn Novarro with RBC Capital Markets. Please go ahead. Glenn Novarro – RBC Capital Markets: Hi, good afternoon. First question is on foot and ankle. Again, another quarter of 30% plus growth. But that's 3X the market, so Kevin, maybe talk about what continues to drive that growth and how sustainable it is? And I had a follow-up on Spine.

Yes, it’s the beauty of the Foot & Ankle business unit. We created this dedicated focused business unit only a couple of years ago. We obviously combine the Memo Metal acquisitions with our existing products and we’ve just been driving market expansion and we are addressing surgeons that weren’t using implants before. And so it has been difficult to predict, I would say, at some point the comparables what you think would catch up to you, but we are in a market expansion mode. We are just continuing to drive and gain new procedures with new clinicians. So, it’s a fabulous market. We’re very, very well positioned and we continue to outperform the market by a healthy margin. So, there isn’t anything new we are doing, so the playbook that we put in place from the beginning is the playbook that we are following and because it’s a new market, versus having to take share from existing players, the run rate for growth in still very healthy. Glenn Novarro – RBC Capital Markets: And then my follow-up on Spine, I think you said in your prepared comments that implants were down low-single digits. Can you break that out between US and OUS? And was that down low-single digits in line with the market?

Yes, I would say that we – our performance if you look over last year we performed kind of inline with the market, at least with some large players. I would say that held true again in the first quarter or you have the U.S. down low single-digits, OUS, up low single-digits, that’s kind of what’s been playing out over the course of last year and the first quarter was no different.

Your next call comes from Matthew Taylor with Barclays. Please go ahead. Matthew Taylor – Barclays Capital: Hi, thanks for taking the question. I wanted to understand how you are thinking about the combined business now that you've linked the sales forces and are aligned there. Is that, I guess, like flipping a light switch do you think or does it takes some time now for them to regain momentum?

Well, it’s just like any other integration. So it’s going to depend. I can’t give you a straight answer, but what I can tell you is the teams are very engaged and they are very excited, but it’s new and you have people that are collaborating together, you have that certain relationships are well established, but it’s not something that I can – it’s not going to be linear and it’s something that will build and grow and accelerate throughout the course of the year. Matthew Taylor – Barclays Capital: Okay and then just on the weather, were your comments on surgeries more related to any one segment, or is it more Recon focused or did you see it more broadly across your business is?

No, certainly they are recon focused. If you look at our MedSurg business posted very, very good results, our Neurotechnology division posted very, very solid results. So it really was localized to the Recon business. And Spine to degree, but it’s not that different than last year.

: David Roman – Goldman Sachs: Hi, good evening. I wanted to ask just one follow-up question on the insurance business, I had thought that as part of the Neptune upgrade that you were going to place those systems with customers, so I'm just wondering about the 13% growth in the quarter whether you are in fact selling that again and how we should think about the actual revenue trajectory to the balance of the year?

So what we talked about, that’s probably going to take until the third quarter in this year so we are really at a fully run rate because we did have to go back to existing customers and do a software upgrade for them. But we are also now selling, and we are selling disposables associated with that. So the comment still hold, I would say the teams are very excited obviously to have the product back on the market, given the features and benefits and we would expect that momentum to accelerate again into the third quarter where it should be truly reflective of them hitting on all cylinders. David Roman – Goldman Sachs: That's helpful. And then, maybe just a broader question for Kevin and Bill. As you think about the long-term earnings growth of the business, how should we think about the rubric to the P&L? Just looking at the performance the past couple quarters, it seems to me as though if I look at the drivers you have the top-line growing at a pretty consistent solid rate, gross margins are coming down. There might be some discrete factors there but it sounds like you're going to run really hard to try to keep them flattish at best. You can manage discretionary spending and then you can try to get some financial leverage to grow earnings. Is that the right way to think about how you grow earnings in this business now in an environment where pricing looks like a persistent headwind?

Sure, I think that – I mean, those are generally reasonable comments, but maybe the one exception on the gross margin related rate. Keep in mind that both in the first quarter of this year and also throughout all months all the quarters last year, we took a pretty heavy headwind from FX in each of those periods and a large part of that has impacted at the gross margin level. So, if FX was even neutral, I think that headwind on the gross margin rate would be much reduced and despite the fact that we’ve got some significant pricing headwinds in general, I think that we’ve got some good initiatives to our broader based GQO team itself reduce those operating related costs in the gross margin area to help offset that.

Your next call comes from Larry Biegelsen – Wells Fargo. Please go ahead. Larry Biegelsen – Wells Fargo: Good afternoon. Thanks for taking the question. Kevin, could you talk a little bit about the outlook for the medical division in the US, and the US capital equipment market in general now that the ACA has been in place for four months this year? Thanks.

So, you saw our Medical division in the U.S. grew in low single-digits and it has had pretty steady performance. We are not seeing any discernable change in the capital equipment market. The same challenging market that we had all of last year, the ACA impact is negligible capital is still challenging, but our division is continuing to perform well in a challenging market. Larry Biegelsen – Wells Fargo Securities: And then on emerging markets, could you just talk about what percent of your sales now are emerging markets, the growth in the quarter, and how much the knee issue in Asia impacted your growth? Thanks.

So, yes, as we mentioned in previous calls, the smaller market Asian companies, the distributor change that we’ve gone through has lingered and that primarily in knee business. So that did impact us. Our emerging market as a total percent of sales is around 7% and we are having very strong growth as we mentioned in China as well as India. We still have a lot of work to do in some countries like Russia and Turkey where we are really starting from a small foundation. I am excited about the potential for emerging markets specifically with Trauson which performed very well in China and which we will start to launch in countries outside of China over the course of this year.

And your next call comes from Matthew O'Brien with William Blair. Please go ahead. Matthew O'Brien – William Blair & Company: Good afternoon. Thanks for taking the questions. Just quickly on MAKO with the clinical trial that you're enrolling right now, I'm looking at the website right now and it seems reasonable that it will probably take a couple quarters to enroll. And then I think it says here about a one-year follow-up. So we shouldn't expect that rollout to come before that trial is complete. Is that a fair way to characterize it?

So we are going to complete the trial. We haven’t given a timing on submission but clearly it’s going to have to happen to be consistent with our goal of launching our Total Knee system in 2015. So we are enrolling, we have not gone into detail probably for competitive reasons regarding the trial design and some of the specifics. But it’s all consistent with our goal of launching in 2015. Matthew O'Brien – William Blair & Company: Okay, but it seems reasonable that it would probably be later next year rather than earlier?

2015. So I would say…

I would say just hold for now and over the course of this year we will be able to provide more color. It’s just too early for us to comment at this point in time. Matthew O'Brien – William Blair & Company: Okay, thank you. And just real – one more real quick one for Kevin, since you've got there, you got into that position, you've done a real nice job of building out your presence in some of the faster growth areas of orthopedics and you've done the Pivot acquisition now and your commentary there was interesting to me given how large that market is, and the growth opportunity that you have there. Should we think of Sports Med as the next focus area in ortho for Stryker? A big ramp up in sales and marketing presence there as a bigger chunk of R&D spend heading into that market?

So, we have a number of fast-growing segments within Stryker and I would say Sports Medicine is one of those fast-growing segments, trauma is a fast-growing segment. We have fast-growing segments in Neurotech, we mentioned Interventional Spine is a fast-growing. So many business units that are fast-growing. I wouldn’t want to isolate it to one or two or three and we believe that the combination of the fast-growing sports medicine implants where we had strong knee, strong shoulder and now very strong best-in-class hip arthroscopy products which that we acquired through Pivot combined with the endo arthroscopy business will give that a shot in arm. So, yes, I would say Sports Medicine is a focus area, but it’s not different than it has been in the past. We are just going to bring a bit more muscle to it by combining the two organizations together. We think we are very well positioned. We have a number of new launches coming out of the arthroscopy unit that will combine with the Sports Medicine business. So we think the timing is perfect to bring these businesses together. But I wouldn’t say that it’s something different than we were doing before in terms of focusing, we were focused on Sports Medicine. We just didn’t have still in the implant side, so we carved out a separate group, did a lot of internal development, have now combined that with Pivot, so we now have really a great offering on the implant side that we can combine. So, three or four years, we weren’t ready to really compete vigorously in Sports Medicine, because we didn’t have a complete offering, but we are now ready.

Your next call comes from Joanne Wuensch with BMO Capital Markets. Please go ahead. Joanne Wuensch – BMO Capital Markets: Thank you so much for taking the questions. A big picture one and a detailed one, big picture, one of the things that you focused on when you first joined, Kevin is, what was happening in Europe. Can you give us an update on what that looks like? And then my more specific question is, is there any update on the timing for the reintroduction of OtisMed in the United States? Thank you.

So on the first question, I take the first part of the question on Europe, I would say, we just had sustained strong performance. I had mentioned before four straight quarters of positive growth in constant currency in the low single-digit area. It’s taken a number of quarters to get that in all countries. I mentioned last year that we were lagging in Italy. We have been lagging in Spain that story in Spain has changed over the last six months and this quarter was the first positive we saw in Italy which had been the country where we were suffering the most over the last two years. So, the business model that we put in place for the turnaround is working and working well and we are now sustaining that performance in Europe, as we mentioned before in detail how we have changed our commercial model, we are very pleased with how that commercial model is working. And so, beyond that I could just say that that the team is stable and performing at a high level.

And Joanne, on the OtisMed, unfortunately we’ve proven that we have done a great job of predicting when we are going to get that back to the FDA. So I don’t think we’ve gotten good visibility right now in terms of a re-launch. I wouldn’t be assuming necessarily anything in the next few quarters. Joanne Wuensch – BMO Capital Markets: Thank you.

Your next call comes from Dave Turkaly with JMP Securities. Please go ahead. Dave Turkaly – JMP Securities: Thanks. Did you say you're going to launch another Total Knee in 2015 in addition to the MAKO one?

Not an addition.

The trial is being done with the MAKO robot and they had obviously releasing their MAKO Knee when they were putting this together. So that's what’s the news that it’s in the trial right now and we anticipate launching in 2015. The Total Knee and the MAKO robot assisted system with the MAKO Knee in the trial. Dave Turkaly – JMP Securities: Okay. Thanks. And then in terms of the follow-up in the fast-growing segment, it seems like there are some smaller players out there in the world of spine just like some unique assets there that are growing at a pretty good clip and given your performance there, I was wondering if you have any thoughts of incremental R&D to mimic some of that maybe minimally invasive technology or M&A spend there in the future? Thanks.

Yes, clearly minimal invasive is the fastest growing segment in Spine. It is a focus area for us certainly with our internal R&D organization and we’d certainly be open for looking at acquisitions within Spine. We did a very small acquisition. We did CoAlign in the first quarter and that’s an acquisition that our Spine team is very excited about. So you should continue to expect that we will launch products internally as well as pursue acquisitions in that space.

Your next call comes from Bill Plovanic with Canaccord Genuity. Please go ahead. Bill Plovanic – Canaccord Genuity: Hey, thanks. Good evening and thanks for taking my question, Just this is for Bill. On FX, when did you start to hedge? Does this start to turning positive, It’s been a headwind, does it start turning to a tailwind for you at any point in time?

Right now, if you take a look at kind of the roughly the $0.10 per share impact that I referred to. In the first quarter we referenced it was about $0.05 that was probably the biggest related impact for the year, I think the second quarter will also be – maybe not quite that level but still at fairly significant level. As you move into the third quarter, there may be little bit of an impact yet in the fourth quarter, should be more at least balanced off based on where rates are today. If rates move, obviously that’s an impact that needs to separately be taken into account. From a hedging perspective, we did begin to – we see some benefits from the hedging program already in the first quarter here. As we move through this year, it takes us I think we stated, kind of in the early part of next year until the hedging program is more fully in place but based on current FX rates that we see the impact should be pretty much more neutralized by the time we get into the fourth quarter. Bill Plovanic – Canaccord Genuity: And then once it's fully in place, does it become that there is – we shouldn't see any EPS impact from the hedging?

No, I mean, absolutely not. The hedging program is meant to really mitigate what that risk is, so it just buffers it in comparison. At some point unless rates reverse from a different level, right, you still have the positive or negative impact of that. The hedging only just spreads out what the rate is that you are actually paying within a specific quarter. And if you think about it, just think about kind of over, kind of a six quarter basis, that’s kind of where we are purchasing the different components of our FX exposure. So, it’s the average that go into that six quarter basis as we move out into kind of the beginning part of the next year that we should be looking at.

Your next call comes from Bill Kristen Stewart with Deutsche Bank. Please go ahead. Kristen Stewart – Deutsche Bank: Hi, I just want to take a follow-up, just on the other expense line item, can you break it out between interest and other and whether or not that was materially off from your expectations?

So, I’d say that, most of that was kind of inline, a little bit of that was actually from part of our FX exposure that we just talked about the $0.05 that hit us in the quarter. Probably a good penny of that ran through that category. So, that was probably the one area that was not expected because the transaction impact in that category generally, if rates don’t move from the beginning of the quarter to the end of the quarter, there is typically no FX impact in that expense line. But as far as the increase in the interest expense side, keep in mind, we place some debt at the beginning part of last year and so the first quarter on a comparable basis now reflects that interest expense in the first quarter as well through and obviously that was planned. Kristen Stewart – Deutsche Bank: Right and then just relative to the share repurchase you mentioned there was $700 million outstanding. How should we think about your guys' approach to whether that will be completed during the year or is it still kind of subject to some acquisition activity?

It’s always going to be subject to acquisition activity because as we stated, we’ve got three primary uses, but first and foremost is the acquisition, dividends are second and obviously fairly consistent in terms of how those play out and interest that we purchased it is going to be the most variable, I would say that in those years we have finished the year with still shares available under the authorization. But that you should anticipate in any given year that there will be some level of buyback activity. Clearly in the first quarter, we had a lot of acquisition activity that was the primary use of cash.

There are no further questions at this time. I will now turn the conference over to Mr. Kevin Lobo for any closing remarks.

So, thank you all for joining our call. Our conference call for the second quarter of 2014 results will be held on July 17, 2014. Thank you.