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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C.  20549

__________________________

FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2003

Commission file number: 0-9165

_________________________
                                                        
STRYKER CORPORATION
(Exact name of registrant as specified in its charter)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES [X]          NO [  ]

    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

198,531,542 shares of Common Stock, $.10 par value, as of April 30, 2003.

PART I. - FINANCIAL INFORMATION 

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
Stryker Corporation and Subsidiaries
(in millions, except per share amounts)

 See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)
Stryker Corporation and Subsidiaries
(in millions, except per share amounts)

See accompanying notes to condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Unaudited)
Stryker Corporation and Subsidiaries
(in millions, except per share amounts)

See accompanying notes to condensed consolidated financial statements.

    In 2002, the Company declared a cash dividend of twelve cents per share to shareholders of record on December 31, 2002, payable on January 31, 2003.  No cash dividends have been declared during 2003.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Stryker Corporation and Subsidiaries
(in millions)

See accompanying notes to condensed consolidated financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Stryker Corporation and Subsidiaries
March 31, 2003
(in millions, except per share amounts)

NOTE 1
BASIS OF PRESENTATION

    The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  The results of operations for the three-month period ended March 31, 2003 are not necessarily indicative of the results that may be expected for the year ended December 31, 2003.

    The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

    For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2002 (the "2002 Form 10-K").

NOTE 2
COMPREHENSIVE GAIN

    The Company follows Financial Accounting Standards Board (FASB) Statement No. 130, Reporting Comprehensive Income, in accounting for comprehensive income and its components.  The comprehensive gain for the three months ended March 31, 2003 and 2002 was $135.5 and $66.9, respectively. 

NOTE 3
ACCOUNTS RECEIVABLE SECURITIZATION

    The Company's accounts receivable securitization facility is described in detail in Note 1 to the consolidated financial statements included in the Company's 2002 Form 10-K.  The amounts of accounts receivable interests sold by Stryker Funding Corporation (SFC) under the facility, net of SFC's retained interest, totaled $130.0 at both March 31, 2003 and December 31, 2002 and are reflected in the condensed consolidated balance sheets as reductions of accounts receivable.

    On April 24, 2003, the Company entered into an amended and restated accounts receivable securitization facility pursuant to which it increased the aggregate undivided percentage ownership interest in receivables that SFC may sell to bank administered commercial paper conduits from $130.0 to $200.0.  Subsequent to the amendment of the facility, SFC sold an additional $51.8 of undivided percentage ownership interests in accounts receivable bringing the total sold, net of SFC's retained interest, to $181.8 as of April 30, 2003.  The proceeds from the sale of additional accounts receivable interests were used to reduce outstanding borrowings under the Company's Unsecured Credit Facilities.

NOTE 4
INVENTORIES

    Inventories are as follows:

NOTE 5
RESTRUCTURING AND ACQUISITION-RELATED LIABILITIES

    Note 6 in the Company's 2002 Form 10-K describes restructuring and acquisition-related pretax charges (credits) recorded by the Company in 2002, 2001 and 2000.

    The following table provides a rollforward from December 31, 2002 to March 31, 2003 of the remaining liabilities associated with business acquisition purchase liabilities and restructuring and acquisition-related charges recorded by the Company:

NOTE 6
STOCK OPTIONS

    The Company has key employee and director stock option plans which are described more fully in Note 8 of the Company's 2002 Form 10-K.  The Company follows Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for its stock option plans.  Under APB Opinion No. 25, no compensation expense is recognized because the exercise price of the Company's stock options equals the market price of the underlying stock on the measurement date (date of grant).  Had compensation expense for the Company's stock-based compensation plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of FASB Statement No. 123, Accounting for Stock-Based Compensation, the Company's net earnings and net earnings per share would have been as follows:

NOTE 7
SEGMENT INFORMATION

    The Company segregates its operations into two reportable business segments:  Orthopaedic Implants and MedSurg Equipment.  The Orthopaedic Implants segment sells orthopaedic reconstructive (hip, knee, and shoulder), trauma and spinal implants, bone cement and the bone growth factor osteogenic protein-1 (OP-1).  The MedSurg Equipment segment sells powered surgical instruments, endoscopic systems, medical video imaging equipment, hospital beds and stretchers, craniomaxillofacial implants and image-guided surgical systems.  Other includes Physical Therapy Services and corporate administration, interest expense and interest income.

    The Company's reportable segments are business units that offer different products and services and are managed separately because each business requires different manufacturing, technology and marketing strategies.

    Sales and net earnings (loss) by business segment follow:

Results of Operations

    The table below outlines the components of the condensed consolidated statements of earnings as a percentage of net sales and the period-to-period percentage change in dollar amounts:

    The table below sets forth domestic/international and product line sales information (in millions):

    Stryker Corporation's net sales increased 20% in the first three months of 2003 to $846.9 million from $702.9 million in 2002.  Net sales grew by 11% as a result of increased unit volume and changes in product mix; 5% due to changes in foreign currency exchange rates; 2% as a result of higher selling prices; and 2% due to acquired businesses and product lines. 

    The Company's domestic sales were $546.2 million for the first quarter of 2003, representing an increase of 17% as a result of strong shipments of Orthopaedic Implants and MedSurg Equipment and higher revenue from Physical Therapy Services.

    International sales were $300.7 million for the first quarter, representing an increase of 27% as a result of higher shipments of Orthopaedic Implants and MedSurg Equipment.  The impact of foreign currency comparisons to the dollar value of international sales was favorable by $36.7 million in the quarter.  Excluding the impact of foreign currency, international sales increased 11% in the quarter.

    Worldwide sales of Orthopaedic Implants were $490.8 million for the first quarter of 2003, representing an increase of 24% based on higher shipments of reconstructive (hip, knee, and shoulder), trauma and spinal implants.  Excluding the impact of foreign currency, sales of Orthopaedic Implants increased 17% in the quarter.  Worldwide sales of MedSurg Equipment were $304.1 million for the first quarter of 2003, representing an increase of 18% based on higher shipments of powered surgical instruments, endoscopic systems, hospital beds and stretchers and craniomaxillofacial implants.  Excluding the impact of foreign currency, sales of MedSurg Equipment increased 14% in the quarter.  Physical Therapy Services revenues were $52.0 million for the first quarter of 2003, representing an increase of 5% as a result of new physical therapy centers.

    Cost of sales in the first quarter of 2003 represented 35.5% of sales compared to 36.3% in the same period of 2002.  The decrease in the cost of sales percentage in the quarter is due to the faster sales growth in the higher margin Orthopaedic Implant business and increased sales of non-royalty based products.

    Research, development and engineering expenses represented 5.1% of sales in the first quarter of 2003 compared to 4.8% in the same period of 2002 and increased 29% to $43.2 million.  The higher spending level is the result of the Company's continued focus on new product development for anticipated product launches throughout the remainder of the year.

    Selling, general and administrative expenses increased 22% in the first quarter of 2003 and represented 39.9% of sales compared to 39.4% in the same period of 2002.  The increase in selling, general and administrative expenses is partially due to an increase in sales commission expense as a result of the 20% increase in net sales in the first quarter of 2003.  In addition, the Company incurred a $3.8 million increase in insurance costs, resulting from increased premiums charged by third-party insurers and the establishment of a wholly-owned captive insurance company as more fully described in Other Matters.  The increase in selling, general and administrative expenses as a percentage of sales is primarily due to higher distribution costs associated with the increased sales mix of Orthopaedic Implants products. 

    Interest expense declined to $7.0 million in the first quarter of 2003 from $10.6 million in 2002 as a result of lower outstanding debt balances and lower interest rates.  The increase in intangibles amortization in the first quarter of 2003 to $9.0 million from $6.0 million in the same period of 2002 is primarily the result of the increased intangible assets recorded as a result of the July 1, 2002, acquisition of the Surgical Dynamics Inc. spinal implant business (SDI) from Tyco International Ltd. as more fully described in Other Matters.  Other income was $1.5 million in the first quarter of 2003 compared to $0.4 million in 2002 due to higher foreign currency transaction gains in the current year compared to 2002.

    The Company's effective income tax rate was 31.0% for the first quarter of 2003 compared to a 33.0% effective income tax rate for the first quarter 2002 and an effective annual income tax rate of 31.8% for the year ended December 31, 2002.  The income tax rate reduction results primarily from increased manufacturing in lower tax jurisdictions.

    Net earnings for the first quarter of 2003 were $104.1 million, an increase of 28% when compared to net earnings of $81.1 million in the first quarter of 2002.  Basic net earnings per share increased 27% in 2003 to $.52 from $.41 in 2002, and diluted net earnings per share increased 28% to $.51 in 2003 from $.40 in 2002.

Liquidity and Capital Resources

    The Company's working capital at March 31, 2003, increased $72.2 million to $516.0 million from $443.8 million at December 31, 2002.  The increase in working capital resulted from growth in the Company's overall business and the use of strong cash earnings to fund increases in accounts receivable, inventory and prepaid expenses and to pay current liabilities due in the first quarter of 2003, primarily for accrued bonuses and dividends.  Accounts receivable days sales outstanding, excluding the effect of the Company's $130.0 million accounts receivable securitization program, increased one day to 59 days at March 31, 2003 from 58 days at December 31, 2002.  Days sales in inventory increased twelve days to 138 days at March 31, 2003 from 126 days at December 31, 2002.  The higher days sales outstanding and days sales in inventory at March 31, 2003 are due in part to higher international balances attributable to the weakening of the U.S. dollar relative to the local foreign currency balances during the first quarter.

    The Company generated cash of $104.2 million from operations in the first three months of 2003 compared to $62.7 million in 2002.  The increase in cash provided by operating activities in the first three months of 2003 compared to 2002 is primarily due to strong cash earnings and the timing of income tax payments in 2003 compared to the prior year.

    In the first quarter of 2003, the Company used cash of $29.2 million for capital expenditures, $4.3 million for business and product line acquisitions, and $23.8 million for the payment of dividends.  The Company also borrowed an additional $168.9 million under its existing credit facilities to fund cash flow needs during the first three months of 2003 and made repayments of $221.9 million against the credit facilities.  Total borrowings declined by $52.8 million during the first quarter of 2003.

    The Company had $39.6 million in cash and cash equivalents at March 31, 2003.  The Company had outstanding borrowings totaling $448.9 million at the end of the first quarter of 2003.  Current maturities of long-term debt at March 31, 2003 were $7.5 million and will decrease to $0.2 million for the twelve months ending March 31, 2004 and 2005.  The Company's $250.0 million 364-day revolving credit agreement expires in December 2003 and is renewable at the Company's and the lenders' discretion.  The Company's $750.0 million five-year, non-amortizing, revolving credit agreement expires in December 2006.  The Company believes its cash on hand as well as anticipated cash flows from operations will be sufficient to fund future operating and investing activities and required debt repayments.  Should additional funds be required, the Company had $638.5 million of additional borrowing capacity available under its existing credit facilities at March 31, 2003.

    On April 24, 2003, the Company entered into an amended and restated accounts receivable securitization facility pursuant to which it increased the aggregate undivided percentage ownership interest in receivables that Stryker Funding Corporation (SFC) may sell to bank administered commercial paper conduits from $130.0 million to $200.0 million.  Subsequent to the amendment of the facility, SFC sold an additional $51.8 million of undivided percentage ownership interests in accounts receivable bringing the total sold, net of SFC's retained interest, to $181.8 million as of April 30, 2003.  The proceeds from the sale of additional accounts receivable interests were used to reduce outstanding borrowings under the Company's Unsecured Credit Facilities.

Other Matters

    On July 1, 2002, the Company acquired SDI from Tyco International Ltd. for $135.0 million in cash.  The acquisition expands the Company's spinal product line by adding interbody spinal cages for the United States market as well as other thoracolumbar and cervical spinal fixation devices.  The acquisition was funded using existing credit facilities.

    The acquisition of SDI was accounted for using the purchase method of accounting.  The results of operations for the acquired business are included in the Company's Consolidated Financial Statements beginning July 1, 2002.  The purchase price of $135.0 million in cash and liabilities assumed have been preliminarily allocated to the assets acquired based on their estimated fair value at the date of acquisition.  Based on the preliminary purchase price allocation, $91.1 million of the purchase price was allocated to patent licensing agreements to be amortized over their remaining life of 8 years, $9.4 million to inventory, $36.9 million to deferred tax assets related to future tax deductions, $5.2 million to other tangible assets and $7.6 million to liabilities assumed.  Immediately after the acquisition was consummated, management of the Company began to implement an integration plan to combine Stryker and SDI.  In conjunction with the integration plan, the Company has recorded additional purchase liabilities of $3.6 million, which were included in the preliminary purchase price allocation.  The additional purchase liabilities include $3.1 million for severance and related costs and $0.5 million for contractual obligations.  The severance and related costs are provided for workforce reductions covering 37 SDI employees.  The workforce reductions were completed during the fourth quarter of 2002 with severance payments to be made through the third quarter of 2003.  The Company's pro forma consolidated financial results did not differ significantly as a result of the SDI acquisition.

    The Company is partially self-insured for product liability claims.  In January 2003, the Company established a wholly-owned captive insurance company to manage its self-insured retention limits.  The captive insurance company provides insurance reserves for estimated liabilities for product claims incurred but not reported based on actuarially determined liabilities.  The actuarial valuations are based on historical information along with certain assumptions about future events. 

    The Company has certain investments in net assets in international locations that are not hedged that are subject to translation gains and losses due to changes in foreign currencies.  In the first quarter of 2003, the strengthening of foreign currencies relative to the U.S. dollar increased the value of these investments in net assets by $29.4 million.  This gain reduced the previously-recorded cumulative loss from weakening of foreign currencies that had been recorded as a separate component of stockholders' equity.

Forward-Looking Statements

    The information contained in this report may contain information that includes or is based on forward-looking statements within the meaning of the federal securities laws that are subject to risks and uncertainties.  These statements may be identified by the use of words such as "anticipates," "expects," "estimates," "projects," "intends" and "believes" and variations thereof and other terms of similar meaning.  Factors that could cause the Company's actual results and financial condition to differ from the Company's expectations include, but are not limited to: regulatory actions, including cost-containment measures, that could adversely affect the price of or demand for the Company's products; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; changes in economic conditions that adversely affect the level of demand for the Company's products; changes in foreign exchange markets; changes in financial markets; and changes in the competitive environment.

    While the Company believes that the assumptions underlying such forward-looking statements are reasonable, there can be no assurance that future events or developments will not cause such statements to be inaccurate.  All forward-looking statements contained in this report are qualified in their entirety by this cautionary statement.

    There have been no material changes from the information provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2002.

    Within the 90-day period preceding the date of this report, an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures was carried out under the supervision and with the participation of the Company's management, including the Chairman of the Board, Chief Executive Officer and President and the Vice President and Chief Financial Officer ("the Certifying Officers").  Based on that evaluation, the Certifying Officers concluded that the Company's disclosure controls and procedures are effective to bring to the attention of the Company's management the relevant information necessary to permit an assessment of the need to disclose material developments and risks pertaining to the Company's business in its periodic filings with the Securities and Exchange Commission.  There have been no significant changes to the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation.

PART II. - OTHER INFORMATION

SIGNATURES

            Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CERTIFICATIONS

 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, John W. Brown, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Stryker Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.  The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  May 5, 2003

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, Dean H. Bergy, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Stryker Corporation;

2.  Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.  Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.  The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.  The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date:  May 5, 2003

EXHIBIT INDEX