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 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 by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~October 25, 2013, 170,980,862~~April 28, 2014, 167,819,367 shares of the registrant’s $.01 par value common stock were outstanding.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
Net Sales	$	1,074.3		$	1,025.5		$	3,382.7		$	3,291.2		$	1,161.5		$	1,138.9
Cost of products sold		328.8			255.7			945.3			826.3			305.4			292.9

Gross Profit		745.5			769.8			2,437.4			2,464.9			856.1			846.0

Research and development		49.4			53.5			157.8			170.3			47.5			53.5
Selling, general and administrative		438.0			430.0			1,356.8			1,346.6			464.3			460.8
Certain claims		—			—			47.0			—
Special items (Note 2)		46.4			36.9			155.5			101.1			45.9			33.5

Operating expenses		533.8			520.4			1,717.1			1,618.0			557.7			547.8

Operating Profit		211.7			249.4			720.3			846.9			298.4			298.2
Interest income		3.8			3.8			11.4			10.7			2.5			3.7
Interest expense		(17.1	)		(18.3	)		(53.6	)		(54.0	)		(15.0	)		(18.2	)

Earnings before income taxes		198.4			234.9			678.1			803.6			285.9			283.7
Provision for income taxes		44.3			57.2			154.3			203.0			64.8			65.7

Net earnings		154.1			177.7			523.8			600.6			221.1			218.0
Less: Net loss attributable to noncontrolling interest		(0.3	)		(0.4	)		(1.3	)		(1.6	)		(0.4	)		(0.6	)

Net Earnings of Zimmer Holdings, Inc.	$	154.4		$	178.1		$	525.1		$	602.2		$	221.5		$	218.6

Earnings Per Common Share
Basic	$	0.91		$	1.02		$	3.10		$	3.43		$	1.31		$	1.30
Diluted	$	0.90		$	1.02		$	3.07		$	3.41		$	1.29		$	1.28
Weighted Average Common Shares Outstanding
Basic		170.0			174.1			169.2			175.6			169.1			168.7
Diluted		172.2			175.3			171.2			176.7			171.8			170.7
Cash Dividends Declared Per Common Share	$	0.20		$	0.18		$	0.60		$	0.36		$	0.22		$	0.20

The accompanying notes are an integral part of these consolidated financial statements.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
Net earnings	$	154.1		$	177.7		$	523.8		$	600.6		$	221.1		$	218.0
Other Comprehensive Income:
Foreign currency cumulative translation adjustments		45.4			67.2			(51.4	)		20.1			15.9			(65.0	)
Unrealized cash flow hedge gains/(losses), net of tax		(18.3	)		(35.9	)		24.5			(11.7	)		(3.1	)		29.2
Reclassification adjustments on foreign currency hedges, net of tax		(3.5	)		0.1			(2.0	)		2.3			(2.0	)		3.9
Unrealized gains/(losses) on securities, net of tax		0.9			0.3			(0.1	)		0.6			0.1			(0.1	)
Reclassification adjustments on securities, net of tax														(0.4	)		—
Adjustments to prior service cost and unrecognized actuarial assumptions, net of tax		3.4			4.0			9.9			28.5			(1.9	)		4.2

Total Other Comprehensive Gain/(Loss)		27.9			35.7			(19.1	)		39.8			8.6			(27.8	)

Comprehensive Income		182.0			213.4			504.7			640.4			229.7			190.2
Comprehensive loss attributable to the noncontrolling interest		(0.4	)		(0.3	)		(1.4	)		(1.7	)		(0.4	)		(0.6	)

Comprehensive Income attributable to Zimmer Holdings, Inc.	$	182.4		$	213.7		$	506.1		$	642.1		$	230.1		$	190.8

The accompanying notes are an integral part of these consolidated financial statements.


		September 30, 2013			December 31, 2012				March 31, 2014			December 31, 2013
ASSETS	ASSETS							ASSETS
Current Assets:
Cash and cash equivalents		$	917.4		$	884.3			$	882.7		$	1,080.6
Short-term investments			588.4			671.6				705.4			727.0
Accounts receivable, less allowance for doubtful accounts			898.9			884.6				939.1			936.6
Inventories			1,081.9			995.3				1,125.9			1,074.5
Prepaid expenses and other current assets			98.0			76.3				96.3			107.1
Deferred income taxes			252.6			196.6				297.3			271.9

Total Current Assets			3,837.2			3,708.7				4,046.7			4,197.7
Property, plant and equipment, net			1,234.1			1,210.7				1,235.6			1,224.7
Goodwill			2,602.8			2,571.8				2,623.3			2,611.2
Intangible assets, net			712.2			740.7				671.0			707.7
Other assets			971.1			780.5				803.5			839.3

Total Assets		$	9,357.4		$	9,012.4			$	9,380.1		$	9,580.6


LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY							LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	146.6		$	184.1			$	155.3		$	146.3
Income taxes			41.7			22.8				155.1			221.2
Short-term debt			—			100.1
Other current liabilities			615.9			559.0				608.3			664.1

Total Current Liabilities			804.2			866.0				918.7			1,031.6
Other long-term liabilities			728.2			559.3				543.6			576.6
Long-term debt			1,686.0			1,720.8				1,680.1			1,672.3

Total Liabilities			3,218.4			3,146.1				3,142.4			3,280.5

Commitments and Contingencies (Note 14)
Commitments and Contingencies (Note 15)
Stockholders’ Equity:
Zimmer Holdings, Inc. Stockholders’ Equity:
Common stock, $0.01 par value, one billion shares authorized, 262.3 million shares issued in 2013 (257.1 million in 2012)			2.6			2.6
Common stock, $0.01 par value, one billion shares authorized, 266.4 million shares issued in 2014 (264.3 million in 2013)										2.6			2.6
Paid-in capital			3,844.2			3,500.6				4,146.0			4,000.6
Retained earnings			7,510.6			7,085.9				7,897.3			7,712.7
Accumulated other comprehensive income			324.8			343.9				375.7			367.1
Treasury stock, 91.8 million shares in 2013 (85.5 million shares in 2012)			(5,546.5	)		(5,072.1	)
Treasury stock, 98.7 million shares in 2014 (94.5 million shares in 2013)										(6,186.3	)		(5,785.7	)

Total Zimmer Holdings, Inc. stockholders’ equity			6,135.7			5,860.9				6,235.3			6,297.3
Noncontrolling interest			3.3			5.4				2.4			2.8

Total Stockholders’ Equity			6,139.0			5,866.3				6,237.7			6,300.1

Total Liabilities and Stockholders’ Equity		$	9,357.4		$	9,012.4			$	9,380.1		$	9,580.6

The accompanying notes are an integral part of these consolidated financial statements.


	For the Nine Months Ended September 30,						For the Three Months Ended March 31,
	2013			2012			2014			2013
Cash flows provided by (used in) operating activities:
Net earnings	$	523.8		$	600.6		$	221.1		$	218.0
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization		268.4			272.9			101.0			85.1
Share-based compensation		37.1			41.7			11.2			14.0
Income tax benefit from stock option exercises		29.1			10.0			20.2			13.6
Excess income tax benefit from stock option exercises		(7.3	)		(2.3	)		(5.4	)		(3.5	)
Inventory step-up		5.1			2.5			2.5			0.8
Changes in operating assets and liabilities, net of effect of acquisitions:
Income taxes		(50.2	)		29.7			(75.6	)		17.6
Receivables		(33.0	)		(34.2	)		5.3			(44.2	)
Inventories		(115.1	)		(53.3	)		(56.6	)		(59.7	)
Accounts payable and accrued expenses		(3.7	)		4.0			(56.0	)		(31.3	)
Other assets and liabilities		8.7			(87.7	)		21.1			(29.9	)

Net cash provided by operating activities		662.9			783.9			188.8			180.5

Cash flows provided by (used in) investing activities:
Additions to instruments		(166.1	)		(104.7	)		(49.4	)		(57.5	)
Additions to other property, plant and equipment		(77.2	)		(71.4	)		(31.4	)		(17.9	)
Purchases of investments		(580.3	)		(801.7	)		(600.7	)		(94.8	)
Sales of investments		631.2			667.1			583.1			232.0
Investments in other assets		(79.9	)		(56.8	)		—			(8.8	)

Net cash used in investing activities		(272.3	)		(367.5	)
Net cash provided by (used in) investing activities								(98.4	)		53.0

Cash flows provided by (used in) financing activities:
Net payments under revolving credit facilities		(99.3	)		(149.9	)		0.2			(100.1	)
Proceeds from term loans		—			147.3
Dividends paid to stockholders		(98.4	)		(63.2	)		(34.0	)		(30.9	)
Proceeds from employee stock compensation plans		325.4			34.1			138.2			67.0
Excess income tax benefit from stock option exercises		7.3			2.3			5.4			3.5
Debt issuance costs		—			(3.3	)
Purchase of additional shares from noncontrolling interest		(1.8	)		—
Repurchase of common stock		(478.3	)		(345.7	)		(400.5	)		(392.0	)

Net cash used in financing activities		(345.1	)		(378.4	)		(290.7	)		(452.5	)

Effect of exchange rates on cash and cash equivalents		(12.4	)		(4.8	)		2.4			(8.3	)

Increase in cash and cash equivalents		33.1			33.2

Decrease in cash and cash equivalents								(197.9	)		(227.3	)
Cash and cash equivalents, beginning of year		884.3			768.3			1,080.6			884.3

Cash and cash equivalents, end of period	$	917.4		$	801.5		$	882.7		$	657.0

The accompanying notes are an integral part of these consolidated financial statements.

The financial data presented herein is unaudited and should be read in conjunction with the consolidated financial statements and accompanying notes included in the ~~2012~~2013 Annual Report on Form 10-K filed by Zimmer Holdings, Inc. The condensed consolidated financial statements for the majority of our international subsidiaries are for periods that ended on ~~September~~March 25, ~~2013~~2014 and ~~2012.~~2013. For these international subsidiaries, the three month results included in these condensed consolidated financial statements are for the period of ~~June 26 through September 25 and the nine month results included in these condensed consolidated financial statements are for the period of~~ December 26 through ~~September~~March 25 or the period of January 1 to ~~September~~March 25.

In our opinion, the accompanying unaudited condensed consolidated financial statements include all adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The December 31, ~~2012~~2013 condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America (GAAP). Results for interim periods should not be considered indicative of results for the full year. Certain amounts in the ~~2012~~2013 condensed consolidated financial statements have been reclassified to conform to the ~~2013~~2014 presentation.

The words “we,” “us,” “our” and similar words refer to Zimmer Holdings, Inc. and its subsidiaries. Zimmer Holdings refers to the parent company only.

Special Items — We recognize expenses resulting directly from our business combinations, employee termination benefits, certain R&D agreements, certain contract terminations, consulting and professional fees and asset impairment or loss on disposal charges connected with global ~~restructurings,~~restructuring, quality and operational ~~and quality~~ excellence initiatives, and other items as “Special items” in our condensed consolidated statement of earnings. “Special items” included (in millions):


	Three Months Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
	2013		2012			2013		2012			2014		2013
Impairment/loss on disposal of assets	$	3.9	$	0.3		$	4.2	$	0.7		$	9.7	$	0.3
Consulting and professional fees		16.7		25.6			67.0		63.1			15.0		26.9
Employee severance and retention		3.6		1.8			9.8		6.2			0.9		(0.3	)
Dedicated project personnel		8.3		3.9			24.8		10.5			10.9		5.4
Certain R&D agreements		—		—			0.8		—			4.5		—
Relocated facilities		0.8		—			3.4		—			0.7		1.3
Distributor acquisitions		—		—			0.3		0.4
Certain litigation matters		9.0		3.3			26.9		13.2			—		(3.8	)
Contract terminations		0.6		2.0			2.0		4.6			1.0		0.5
Contingent consideration adjustments		0.1		(2.0	)		6.0		(2.8	)		0.5		0.3
Accelerated software amortization		1.5		1.5			4.5		3.0			1.5		1.5
Other		1.9		0.5			5.8		2.2			1.2		1.4

Special items	$	46.4	$	36.9		$	155.5	$	101.1		$	45.9	$	33.5

~~In the nine months ended September 30, 2013, we eliminated approximately 150 positions as part of our ongoing operational excellence initiatives.~~

In the nine months ended September 30, 2012, we announced our plans to outsource our Warsaw, Indiana distribution center to a third party service provider at a national transportation hub, among other organizational changes. Approximately 300 positions were affected by these actions.

As a result of these actions, we incurred expenses related to severance benefits, share-based compensation acceleration and other employee termination-related costs. The vast majority of these termination benefits were provided in accordance with our existing policies or local government regulations and are considered ongoing benefits. These costs were accrued when they became probable and estimable and were recorded as part of other current liabilities. The majority of these costs have been paid or will be paid in the year they were accrued.

~~Medical Device Excise Tax~~ — As part of The Patient Protection and Affordable Care Act, in January 2013 we began paying a 2.3 percent medical device excise tax on a majority of our U.S sales. The excise tax is imposed on the first sale in the U.S. by the manufacturer, producer or importer of a medical device to either a third party or an affiliated distribution entity. We distribute a majority of our musculoskeletal products through an affiliated distribution entity. Under GAAP, excise taxes incurred to get inventory to its current location can be included in the cost of the inventory. Accordingly, we capitalize this excise tax as a part of inventory and recognize it as a cost of products sold when the inventory upon which the excise tax was assessed is sold to a third party on a first-in first-out basis. In the three ~~and nine month periods~~months ended ~~September 30, 2013,~~March 31, 2014, we reduced the ~~amount~~estimated useful lives of ~~medical device excise tax recognized~~certain intangible assets to zero because we determined we would no longer utilize those assets. This was accounted for as a change in ~~our condensed consolidated statement~~accounting estimate, which resulted in their remaining net book values of ~~earnings was not material.~~$7.2 million being amortized immediately. We have included this amortization expense in the caption “Impairment/loss on disposal of assets.”

Recent Accounting Pronouncements — Effective January 1, 2013, we adopted the Financial Accounting Standard Board’s Accounting Standard Updates (ASUs) requiring reporting of amounts reclassified out of accumulated other comprehensive income (OCI) and balance sheet offsetting between derivative assets and liabilities. These ASUs only change financial statement disclosure requirements and therefore do not impact our financial position, results of operations or cash flows. See Note 7 for disclosures relating to OCI. See Note 9 for disclosures relating to balance sheet offsetting.

There are no ~~other~~ recently issued accounting pronouncements that we have not yet adopted that are expected to have a material effect on our financial position, results of operations or cash flows.

In the three and nine month periods ended September 30, 2013, we have recorded charges in cost of products sold of $52.5 million and $92.9 million, respectively, for excess and obsolete inventory. In the three month period ended September 30, 2013, the majority of those charges came from our decision to discontinue certain products. This resulted in charges of $39.1 million for the affected inventory and instruments. Of the $39.1 million, $36.2 million was related to inventory and reflected in cost of products sold and $2.9 million was related to instruments and reflected in “Special items”.


	September 30, 2013			December 31, 2012			March 31, 2014			December 31, 2013
	(in millions)						(in millions)
Land	$	21.8		$	22.1		$	21.7		$	21.7
Buildings and equipment		1,301.9			1,232.8			1,356.1			1,353.1
Capitalized software costs		268.3			241.8			278.2			272.6
Instruments		1,656.5			1,579.8			1,646.9			1,610.6
Construction in progress		89.6			117.8			75.1			58.2

		3,338.1			3,194.3			3,378.0			3,316.2
Accumulated depreciation		(2,104.0	)		(1,983.6	)		(2,142.4	)		(2,091.5	)

Property, plant and equipment, net	$	1,234.1		$	1,210.7		$	1,235.6		$	1,224.7

We invest in short and long-term investments classified as available-for-sale securities. Information regarding our investments is as follows (in millions):

~~Unrealized gains and losses on these investments are recorded in OCI in our condensed consolidated balance sheet.~~

~~The following table shows the fair value and gross unrealized losses for the securities in an unrealized loss position deemed to be temporary (in millions):~~

~~All securities in the table above have been in an unrealized loss position for less than twelve months. A total of 98 securities were in an unrealized loss position as of September 30, 2013.~~

The unrealized losses on our investments in corporate debt securities were caused by increases in interest yields in the global credit markets. We believe the unrealized losses associated with these securities as of ~~September 30, 2013~~March 31, 2014 are temporary because we do not intend to sell these investments, and we do not believe we will be required to sell them before recovery of their amortized cost basis.

The amortized cost and fair value of our available-for-sale fixed-maturity securities by contractual maturity are as follows (in millions):


	September 30, 2013				March 31, 2014
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	588.1	$	588.4	$	705.4	$	705.4
Due after one year through two years		267.7		267.6		118.4		118.5

Total	$	855.8	$	856.0	$	823.8	$	823.9


	September 30, 2013			December 31, 2012
Short-term debt
Senior Credit Facility	$	—		$	100.0
Other short-term debt		—			0.1

Total short-term debt	$	—		$	100.1
							March 31, 2014			December 31, 2013
Long-term debt
Senior Notes due 2014	$	250.0		$	250.0		$	250.0		$	250.0
Senior Notes due 2019		500.0			500.0			500.0			500.0
Senior Notes due 2021		300.0			300.0			300.0			300.0
Senior Notes due 2039		500.0			500.0			500.0			500.0
Term Loan		118.6			138.6			114.5			112.4
Other long-term credit facilities		0.8			—
Other long-term debt								2.7			2.1
Debt discount		(1.6	)		(1.7	)		(1.5	)		(1.5	)
Adjustment related to interest rate swaps		18.2			33.9			14.4			9.3

Total long-term debt	$	1,686.0		$	1,720.8		$	1,680.1		$	1,672.3

The estimated fair value of our ~~Senior Notes~~senior notes as of ~~September 30, 2013,~~March 31, 2014, based on quoted prices for the specific securities from transactions in over-the-counter markets (Level 2), was ~~$1,647.7~~$1,700.7 million. The estimated fair value of the ~~Term Loan~~term loan as of ~~September 30, 2013,~~March 31, 2014, based upon publicly available market yield curves and the terms of the debt (Level 2), was ~~$118.4~~$114.2 million.

Before our senior notes due November 30, 2014 become payable, we intend to borrow against our senior credit facility or issue new senior notes to pay the $250 million owed. Since we have the ability and intent to refinance these senior notes on a long-term basis with new notes or through our senior credit facility, we have classified these senior notes as long-term debt as of March 31, 2014.

~~OCI~~Other comprehensive income (OCI) refers to certain gains and losses that under GAAP are included in comprehensive income but are excluded from net earnings as these amounts are initially recorded as an adjustment to stockholders’ equity. Amounts in OCI may be reclassified to net earnings upon the occurrence of certain events.

Our OCI is comprised of foreign currency translation adjustments, unrealized gains and losses on cash flow hedges, unrealized gains and losses on available-for-sale securities, and amortization of prior service costs and unrecognized gains and losses in actuarial assumptions on our defined benefit plans. Foreign currency translation adjustments are reclassified to net earnings upon sale or upon a complete or substantially complete liquidation of an investment in a foreign entity. Unrealized gains and losses on cash flow hedges are reclassified to net earnings when the hedged item affects net earnings. Unrealized gains and losses on available-for-sale securities are reclassified to net earnings if we sell the security before maturity or if the unrealized loss is considered to be other-than-temporary. We typically hold our available-for-sale securities until maturity and are able to realize their amortized cost and therefore we do not have reclassification adjustments to net earnings on these securities. Amounts related to defined benefit plans that are in OCI are reclassified over the service periods of employees in the plan. The reclassification amounts are allocated to all employees in the plans and therefore the reclassified amounts may become part of inventory to the extent they are considered direct labor costs. See Note 1112 for more information on our defined benefit plans.

The following table shows the changes in the components of OCI, net of tax (in millions):


	Foreign Currency Translation		Cash Flow Hedges			Unrealized Gains on Securities			Defined Benefit Plan Items
Balance December 31, 2013	$	401.1	$	33.1		$	0.5		$	(67.6	)
OCI before reclassifications		15.9		(3.1	)		0.1			—
Reclassifications		—		(2.0	)		(0.4	)		(1.9	)

Balance March 31, 2014	$	417.0	$	28.0		$	0.2		$	(69.5	)

The following table shows the reclassification adjustments from OCI (in millions):


	Amount of Gain / (Loss) Reclassified from OCI													Amount of Gain / (Loss) Reclassified from OCI
	Three Months Ended September 30,						Nine Months Ended September 30,						Location on Statement of Earnings	Three Months Ended March 31,						Location on Statement of Earnings
Component of OCI	2013			2012			2013			2012			Location on Statement of Earnings	2014			2013			Location on Statement of Earnings
Cash flow hedges
Foreign exchange forward contracts	$	5.2		$	(1.6	)	$	3.5		$	(9.4	)	Cost of products sold	$	5.0		$	(5.4	)	Cost of products sold
Foreign exchange options		—			(0.3	)		(0.2	)		(0.4	)	Cost of products sold		(0.1	)		(0.1	)	Cost of products sold
Cross-currency interest rate swaps		—			—			—			0.2		Interest expense

		5.2			(1.9	)		3.3			(9.6	)	Total before tax		4.9			(5.5	)	Total before tax
															2.9			(1.6	)	Provision for income taxes

														$	2.0		$	(3.9	)	Net of tax

Investments
Realized gains on securities															0.4			—		Interest income
		1.7			(1.8	)		1.3			(7.3	)	Provision for income taxes		—			—		Provision for income taxes

	$	3.5		$	(0.1	)	$	2.0		$	(2.3	)	Net of tax	$	0.4		$	—		Net of tax

Defined benefit plans
Prior service cost	$	1.0		$	1.3		$	2.9		$	2.7		*	$	1.0		$	1.0		*
Unrecognized actuarial (loss)		(4.7	)		(3.2	)		(14.0	)		(9.9	)	*		(2.9	)		(4.7	)	*

		(3.7	)		(1.9	)		(11.1	)		(7.2	)	Total before tax		(1.9	)		(3.7	)	Total before tax
		(0.3	)		2.1			(1.2	)		0.4		Provision for income taxes		—			0.5		Provision for income taxes

	$	(3.4	)	$	(4.0	)	$	(9.9	)	$	(7.6	)	Net of tax	$	(1.9	)	$	(4.2	)	Net of tax

Total reclassifications	$	0.1		$	(4.1	)	$	(7.9	)	$	(9.9	)	Net of tax	$	0.5		$	(8.1	)	Net of tax

The following table shows the tax effects on each component of OCI recognized in our condensed consolidated statements of comprehensive income (in millions):


	Three Months Ended September 30, 2012									Nine Months Ended September 30, 2012									Three Months Ended March 31, 2014									Three Months Ended March 31, 2013
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	67.2		$	—		$	67.2		$	20.1		$	—		$	20.1		$	15.9		$	—		$	15.9		$	(65.0	)	$	—		$	(65.0	)
Unrealized cash flow hedge gains		(46.4	)		(10.5	)		(35.9	)		(15.7	)		(4.0	)		(11.7	)
Unrealized cash flow hedge gains/(losses)																				(3.9	)		(0.8	)		(3.1	)		44.8			15.6			29.2
Reclassification adjustments on foreign currency hedges		1.9			1.8			0.1			9.6			7.3			2.3			(4.9	)		(2.9	)		(2.0	)		5.5			1.6			3.9
Unrealized gains on securities		0.3			—			0.3			0.6			—			0.6
Unrealized gains/(losses) on securities																				0.1			—			0.1			(0.1	)		—			(0.1	)
Reclassification adjustments on securities																				(0.4	)		—			(0.4	)		—			—			—
Adjustments to prior service cost and unrecognized actuarial assumptions		1.9			(2.1	)		4.0			44.9			16.4			28.5			(1.9	)		—			(1.9	)		3.7			(0.5	)		4.2

Total Other Comprehensive Gain/(Loss)	$	24.9		$	(10.8	)	$	35.7		$	59.5		$	19.7		$	39.8		$	4.9		$	(3.7	)	$	8.6		$	(11.1	)	$	16.7		$	(27.8	)

The following assets and liabilities are recorded at fair value on a recurring basis (in millions):


	As of September 30, 2013								As of March 31, 2014
			Fair Value Measurements at Reporting Date Using:								Fair Value Measurements at Reporting Date Using:
Description	Recorded Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Recorded Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available-for-sale securities
Corporate debt securities	$	443.5	$	—	$	443.5	$	—	$	288.9	$	—	$	288.9	$	—
U.S. government and agency debt securities		253.1		—		253.1		—		199.2		—		199.2		—
Foreign government debt securities		3.1		—		3.1		—		8.1		—		8.1		—
Commercial paper		89.0		—		89.0		—		267.2		—		267.2		—
Certificates of deposit		67.3		—		67.3		—		60.5		—		60.5		—

Total available-for-sale securities		856.0		—		856.0		—		823.9		—		823.9		—
Derivatives, current and long-term
Foreign currency forward contracts and options		53.8		—		53.8		—		49.2		—		49.2		—
Interest rate swaps		19.9		—		19.9		—		17.1		—		17.1		—

	$	929.7	$	—	$	929.7	$	—	$	890.2	$	—	$	890.2	$	—

Liabilities
Derivatives, current and long-term
Foreign currency forward contracts and options		14.4		—		14.4		—		18.3		—		18.3		—
Interest rate swaps		1.7		—		1.7		—		2.7		—		2.7		—

	$	16.1	$	—	$	16.1	$	—	$	21.0	$	—	$	21.0	$	—


	As of December 31, 2012								As of December 31, 2013
			Fair Value Measurements at Reporting Date Using:								Fair Value Measurements at Reporting Date Using:
Description	Recorded Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Recorded Balance		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Available-for-sale securities
Corporate debt securities	$	383.8	$	—	$	383.8	$	—	$	457.9	$	—	$	457.9	$	—
U.S. government and agency debt securities		295.9		—		295.9		—		211.2		—		211.2		—
Foreign government debt securities		5.0		—		5.0		—		3.1		—		3.1		—
Commercial paper		138.7		—		138.7		—		68.3		—		68.3		—
Certificates of deposit		92.3		—		92.3		—		67.2		—		67.2		—

Total available-for-sale securities		915.7		—		915.7		—		807.7		—		807.7		—
Derivatives, current and long-term
Foreign currency forward contracts and options		28.4		—		28.4		—		68.7		—		68.7		—
Interest rate swaps		33.9		—		33.9		—		16.3		—		16.3		—

	$	978.0	$	—	$	978.0	$	—	$	892.7	$	—	$	892.7	$	—

Liabilities
Derivatives, current and long-term
Foreign currency forward contracts and options	$	10.8	$	—	$	10.8	$	—		20.6		—		20.6		—
Interest rate swaps										7.0		—		7.0		—

									$	27.6	$	—	$	27.6	$	—

We value our available-for-sale securities using a market approach based on broker prices for identical assets in over-the-counter markets and we perform ongoing assessments of counterparty credit risk.

We value our foreign currency forward contracts and foreign currency options using a market approach based on foreign currency exchange rates obtained from active markets and we perform ongoing assessments of counterparty credit risk.

We value our interest rate swaps using a market approach based on publicly available market yield curves and the terms of our swaps and we perform ongoing assessments of counterparty credit risk.

We are exposed to certain market risks relating to our ongoing business operations, including foreign currency exchange rate risk, commodity price risk, interest rate risk and credit risk. We manage our exposure to these and other market risks through regular operating and financing activities. Currently, the only risks that we manage through the use of derivative instruments are interest rate risk and foreign currency exchange rate risk.

We use interest rate derivative instruments to manage our exposure to interest rate movements by converting fixed-rate debt into variable-rate debt. Under these agreements, we agree to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. The objective of the instruments is to more closely align interest expense with interest income received on cash and cash equivalents. These derivative instruments are designated as fair value hedges under GAAP. Changes in the fair value of the derivative instrument are recorded in current earnings and are offset by gains or losses on the underlying debt instrument.

We have multiple fixed-to-variable interest rate swap agreements that we have designated as fair value hedges of the fixed interest rate obligations on our ~~Senior Notes~~senior notes due 2019 and 2021. The total notional amounts are $250 million and $300 million for the ~~Senior Notes~~senior notes due 2019 and 2021, respectively. On the interest rate swap agreements for the ~~Senior Notes~~senior notes due 2019, we receive a fixed interest rate of 4.625 percent and pay variable interest equal to the three-month LIBOR plus an average of 133 basis points. On the interest rate swap agreements for the ~~Senior Notes~~senior notes due 2021, we receive a fixed interest rate of 3.375 percent and pay variable interest equal to the three-month LIBOR plus an average of 99 basis points.

We operate on a global basis and are exposed to the risk that our financial condition, results of operations and cash flows could be adversely affected by changes in foreign currency exchange rates. To reduce the potential effects of foreign currency exchange rate movements on net earnings, we enter into derivative financial instruments in the form of foreign currency exchange forward contracts and options with major financial institutions. We are primarily exposed to foreign currency exchange rate risk with respect to transactions and net assets denominated in Euros, Swiss Francs, Japanese Yen, British Pounds, Canadian Dollars, Australian Dollars, Korean Won, Swedish Krona, Czech Koruna, Thai Baht, Taiwan Dollars, South African Rand, Russian Rubles and Indian Rupees. We do not use derivative financial instruments for trading or speculative purposes.

Our revenues are generated in various currencies throughout the world. However, a significant amount of our inventory is produced in U.S. Dollars. Therefore, movements in foreign currency exchange rates may have different proportional effects on our revenues compared to our cost of products sold. To minimize the effects of foreign currency exchange rate movements on cash flows, we hedge intercompany sales of inventory expected to occur within the next 30 months with foreign currency exchange forward contracts and options. We designate these derivative instruments as cash flow hedges.

We perform quarterly assessments of hedge effectiveness by verifying and documenting the critical terms of the hedge instrument and that forecasted transactions have not changed significantly. We also assess on a quarterly basis whether there have been adverse developments regarding the risk of a counterparty default. For derivatives which qualify as hedges of future cash flows, the effective portion of changes in fair value is temporarily recorded in other comprehensive income and then recognized in cost of products sold when the hedged item affects net earnings. The ineffective portion of a derivative’s change in fair value, if any, is immediately reported in cost of products sold.

For foreign currency exchange forward contracts and options outstanding at ~~September 30, 2013,~~March 31, 2014, we had obligations to purchase U.S. Dollars and sell Euros, Japanese Yen, British Pounds, Canadian Dollars, Australian Dollars, Korean Won, Swedish Krona, Czech Koruna, Thai Baht, Taiwan Dollars, South African Rand, Russian Rubles and Indian Rupees and obligations to purchase Swiss Francs and sell U.S. Dollars. These derivatives mature at dates ranging from ~~October 2013~~April 2014 through ~~March 2015.~~September 2016. As of ~~September 30, 2013,~~March 31, 2014, the notional amounts of outstanding forward contracts and options entered into with third parties to purchase U.S. Dollars were ~~$1,514.0~~$1,564.9 million. As of ~~September 30, 2013,~~March 31, 2014, the notional amounts of outstanding forward contracts and options entered into with third parties to purchase Swiss Francs were ~~$333.1~~$344.5 million.

We enter into foreign currency forward exchange ~~forward~~ contracts with terms of one month to manage currency exposures for monetary assets and liabilities denominated in a currency other than an ~~entity��s~~entity’s functional currency. As a result, any foreign currency remeasurement gains/losses recognized in earnings are generally offset with gains/losses on the foreign currency forward exchange ~~forward~~ contracts in the same reporting period. These offsetting gains/losses are recorded in cost of products sold as the underlying assets and liabilities exposed to remeasurement include inventory-related transactions. These contracts are settled on the last day of each reporting period. Therefore, there is no outstanding balance related to these contracts recorded on the balance

sheet as of the end of the reporting period. The notional amounts of these contracts are typically in a range of $1.2 billion to $1.7 billion per quarter.

In previous years, we entered into cross-currency interest rate swap agreements that matured in the first quarter of 2012. We designated these swaps as cash flow hedges of the foreign currency exchange and interest rate risks. We have not entered into any other similar swap agreements since the first quarter of 2012.

Derivative instruments designated as fair value hedges had the following effects on our condensed consolidated statements of earnings (in millions):


				Gain / (Loss) on Instrument														Gain / (Loss) on Hedged Item																	Gain / (Loss) on Instrument							Gain / (Loss) on Hedged Item
	Location on Statement of Earnings			Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended September 30,							Nine Months Ended September 30,							Location on Statement of Earnings			Three Months Ended March 31,							Three Months Ended March 31,
Derivative Instrument			2013				2012			2013				2012			2013				2012			2013				2012				Location on Statement of Earnings		2014				2013			2014				2013
Interest rate swaps	Location on Statement of Earnings	Interest expense			$	(1.6	)	$	2.7			$	(15.7	)	$	7.8			$	1.6		$	(2.7	)		$	15.7		$	(7.8	)		Interest expense			$	5.1		$	(3.3	)		$	(5.1	)	$	3.3

We had no ineffective fair value hedging instruments during the three ~~and nine~~ month periods ended ~~September 30, 2013~~March 31, 2014 and ~~2012.~~2013.

Derivative instruments designated as cash flow hedges had the following effects, before taxes, on OCI and net earnings on our condensed consolidated statements of earnings, condensed consolidated statements of comprehensive income and condensed consolidated balance sheets (in millions):


	Amount of Gain / (Loss) Recognized in OCI														Amount of Gain / (Loss) Reclassified from OCI																Amount of Gain / (Loss) Recognized in OCI											Amount of Gain / (Loss) Reclassified from OCI
	Three Months Ended September 30,						Nine Months Ended September 30,						Location on Statement of Earnings		Three Months Ended September 30,								Nine Months Ended September 30,								Three Months Ended March 31,							Location on Statement of Earnings				Three Months Ended March 31,
Derivative Instrument	2013			2012			2013			2012				2013				2012				2013				2012				2014				2013				Location on Statement of Earnings			2014				2013
Foreign exchange forward contracts	$	(21.4	)	$	(46.1	)	$	46.6		$	(14.3	)	Location on Statement of Earnings	Cost of products sold		$	5.2			$	(1.6	)		$	3.5			$	(9.4	)		$	(3.9	)		$	45.3			Cost of products sold			$	5.0			$	(5.4	)
Foreign exchange options		—			(0.3	)		(0.3	)		(1.4	)	Cost of products sold			—				(0.3	)			(0.2	)			(0.4	)			—				(0.5	)		Cost of products sold				(0.1	)			(0.1	)
Cross-currency interest rate swaps		—			—			—			—		Interest expense			—				—				—				0.2

	$	(21.4	)	$	(46.4	)	$	46.3		$	(15.7	)			$	5.2			$	(1.9	)		$	3.3			$	(9.6	)		$	(3.9	)		$	44.8						$	4.9			$	(5.5	)

The net amount recognized in earnings during the three ~~and nine~~ month periods ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~ due to ineffectiveness and amounts excluded from the assessment of hedge effectiveness was not significant.

The fair value of outstanding derivative instruments designated as cash flow hedges and recorded on the balance sheet at ~~September 30, 2013,~~March 31, 2014, together with settled derivatives where the hedged item has not yet affected earnings, was a net unrealized gain of ~~$48.0~~$51.9 million, or ~~$26.6~~$28.0 million after taxes, which is deferred in OCI. Of the net unrealized gain, ~~$23.3~~$29.1 million, or ~~$12.2~~$14.8 million after taxes, is expected to be reclassified to earnings over the next twelve months.

The following ~~gains/~~gains / (losses) from these derivative instruments were recognized on our condensed consolidated statements of earnings (in millions):


	Location on Statement of Earnings		Three Months Ended September 30,						Nine Months Ended September 30,					Location on Statement of Earnings			Three Months Ended March 31,
Derivative Instrument	Location on Statement of Earnings		2013			2012			2013		2012					2014				2013
Foreign exchange forward contracts		Cost of products sold	$	(7.5	)	$	(9.8	)	$	0.1	$	(1.2	)	Location on Statement of Earnings	Cost of products sold			$	(2.4	)	$	7.9

This impact does not include any offsetting gains/losses recognized in earnings as a result of foreign currency remeasurement of monetary assets and liabilities denominated in a currency other than an entity’s functional currency.

As of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012,~~2013, all derivative instruments designated as fair value hedges and cash flow hedges ~~are~~were recorded at fair value on the balance sheet. On our condensed consolidated balance sheets, we recognize individual forward contracts and options with the same counterparty on a net asset/liability basis if we have a master netting agreement with the counterparty. Under these master netting agreements, we are able to settle derivative instrument assets and liabilities with the same counterparty in a single transaction, instead of settling each derivative instrument separately. We have master netting agreements with all of our counterparties. The fair value of derivative instruments on a gross basis is as follows (in millions):


	September 30, 2013			December 31, 2012			March 31, 2014			December 31, 2013
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
*Asset Derivatives*
Foreign exchange forward contracts	Other current assets	$	46.6	Other current assets	$	29.7	Other current assets	$	50.9	Other current assets	$	60.2
Foreign exchange options	Other current assets		—	Other current assets		0.6
Foreign exchange forward contracts	Other assets		21.8	Other assets		19.8	Other assets		18.8	Other assets		30.2
Interest rate swaps	Other assets		19.9	Other assets		33.9	Other assets		17.1	Other assets		16.3

Total asset derivatives		$	88.3		$	84.0		$	86.8		$	106.7

*Liability Derivatives*
Foreign exchange forward contracts	Other current liabilities	$	16.2	Other current liabilities	$	20.2	Other current liabilities	$	25.4	Other current liabilities	$	26.4
Foreign exchange forward contracts	Other long-term liabilities		12.8	Other long-term liabilities		12.3	Other long-term liabilities		13.4	Other long-term liabilities		15.9
Interest rate swaps	Other long-term liabilities		1.7	Other long-term liabilities		—	Other long-term liabilities		2.7	Other long-term liabilities		7.0

Total liability derivatives		$	30.7		$	32.5		$	41.5		$	49.3

The table below presents the effects of our master netting agreements on our condensed consolidated balance sheets (in millions):


		As of September 30, 2013						As of December 31, 2012							As of March 31, 2014						As of December 31, 2013
Description	Location	Gross Amount		Offset		Net Amount in Balance Sheet		Gross Amount		Offset		Net Amount in Balance Sheet		Location	Gross Amount		Offset		Net Amount in Balance Sheet		Gross Amount		Offset		Net Amount in Balance Sheet
*Asset Derivatives*
Cash flow hedges	Other current assets	$	46.6	$	8.3	$	38.3	$	30.3	$	15.2	$	15.1	Other current assets	$	50.9	$	13.6	$	37.3	$	60.2	$	13.5	$	46.7
Cash flow hedges	Other assets		21.8		6.3		15.5		19.8		6.5		13.3	Other assets		18.8		6.9		11.9		30.2		8.2		22.0
*Liability Derivatives*
Cash flow hedges	Other current liabilities		16.2		8.3		7.9		20.2		15.2		5.0	Other current liabilities		25.4		13.6		11.8		26.4		13.5		12.9
Cash flow hedges	Other long-term liabilities		12.8		6.3		6.5		12.3		6.5		5.8	Other long-term liabilities		13.4		6.9		6.5		15.9		8.2		7.7

We operate on a global basis and are subject to numerous and complex tax laws and regulations. Our income tax filings are regularly under audit in multiple federal, state and foreign jurisdictions. Income tax audits may require an extended period of time to reach resolution and may result in significant income tax adjustments when interpretation of tax laws or allocation of company profits is disputed. ~~The net~~We estimate that the amount of ~~tax liability for~~ unrecognized tax benefits may change within the next twelve months between $0 and $60 million due to changes in audit status, expiration of statutes of limitations, settlements of tax assessments and other events which could impact our determination of unrecognized tax benefits. ~~Currently, we cannot reasonably estimate the amount by which our unrecognized tax benefits may change.~~

During the second quarter of 2011, the Internal Revenue Service (IRS) concluded ~~their~~its examination of our U.S. federal returns for years 2005 through 2007 and ~~issued income tax assessments~~during the fourth quarter of 2013, the IRS concluded its examination of our U.S. federal returns for years 2008 through 2009. For years 2006 through 2009, the IRS has proposed adjustments reallocating profits between certain of our U.S. and foreign subsidiaries. ~~During the third quarter of 2013, the IRS examination division issued Notices of Proposed Adjustment (NOPAs) for tax years 2008~~We have disputed these proposed adjustments and ~~2009. These NOPAs also relate to intercompany pricing between certain of our U.S. and foreign subsidiaries. We~~ continue to pursue resolution with the IRS. Although the ultimate timing for resolution of the disputed tax issues is uncertain, we may resolve certain tax matters ~~for years 2005 through 2009~~ with the ~~IRS. The ultimate~~IRS within the next twelve months, and pay amounts for other unresolved tax matters in order to limit the potential impact of IRS

interest charges. Final resolution of ~~this matter is uncertain and~~these matters could have a material impact on our income tax expense, results of operations and cash flows for future periods.

In the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013,~~March 31, 2014, our effective tax rate was ~~22.3 percent and 22.8 percent, respectively.~~22.7 percent. Our effective tax rate was lower than the U.S. statutory income tax rate of 35 percent primarily due to income earned in foreign locations with lower tax ~~rates.~~rates as well as an international reorganization resulting in the release of a valuation allowance on foreign net operating loss carryforwards.

We have defined benefit pension plans covering certain U.S. and Puerto Rico employees. The employees who are not participating in the defined benefit plans receive additional benefits under our defined contribution plans. Plan benefits are primarily based on years of credited service and the participant’s compensation. In addition to the U.S. and Puerto Rico defined benefit pension plans, we sponsor various foreign pension arrangements, including retirement and termination benefit plans required by local law or coordinated with government sponsored plans.

The components of net periodic pension expense for our U.S. and foreign defined benefit retirement plans are as follows (in millions):


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2013			2012			2013			2012			2014			2013
Service cost	$	7.0		$	6.2		$	21.1		$	19.1		$	6.7		$	7.1
Interest cost		4.7			4.6			14.1			14.2			6.4			4.7
Expected return on plan assets		(8.9	)		(8.2	)		(26.7	)		(24.7	)		(10.4	)		(8.9	)
Settlement		—			—			—			0.7
Amortization of prior service cost		(1.0	)		(1.3	)		(2.9	)		(2.7	)		(1.0	)		(1.0	)
Amortization of unrecognized actuarial loss		4.7			3.2			14.0			9.9			2.9			4.7

Net periodic pension expense	$	6.5		$	4.5		$	19.6		$	16.5		$	4.6		$	6.6

We contributed ~~$20.0~~$2.0 million during the ~~nine~~three month period ended ~~September 30, 2013~~March 31, 2014 to our U.S. and Puerto Rico defined benefit plans and do not expect to contribute additional funds to these plans during the remainder of ~~2013.~~2014. We contributed ~~$11.3~~$3.6 million to our foreign-based defined benefit plans in the ~~nine~~three month period ended ~~September 30, 2013~~March 31, 2014 and expect to contribute ~~$3.4~~$11.0 million to these foreign-based plans during the remainder of ~~2013.~~2014.

In March 2012, we amended our U.S. defined benefit pension plan which led us to remeasure our plan assets and obligations. Accordingly, the resulting remeasurement was reflected in our condensed consolidated statements of earnings and condensed consolidated statements of comprehensive income.

The following is a reconciliation of weighted average shares for the basic and diluted shares computations (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2013		2012		2013		2012		2014		2013
Weighted average shares outstanding for basic net earnings per share		170.0		174.1		169.2		175.6		169.1		168.7
Effect of dilutive stock options and other equity awards		2.2		1.2		2.0		1.1		2.7		2.0

Weighted average shares outstanding for diluted net earnings per share		172.2		175.3		171.2		176.7		171.8		170.7

During the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013, an average of 1.4 million~~March 31, 2014, all outstanding options ~~and 4.2 million options, respectively,~~ to purchase shares of common stock were ~~not~~ included in the computation of diluted earnings per share because the exercise prices of ~~these~~all options were less than the average market price of our common stock. During the three month period ended March 31, 2013, an average of 6.3 million options had exercise prices that were greater than the average market price of ~~the~~our common ~~stock. During the three~~stock and ~~nine month periods ended September 30, 2012, an average of 11.9 million options and 12.3 million options, respectively,~~ were not included in the computation.

In the three month period ended ~~September 30, 2013,~~March 31, 2014, we repurchased ~~0.2~~4.2 million shares of our common stock at an average price of ~~$83.92~~$94.57 per share for a total cash outlay of ~~$17.5~~$400.5 million, including commissions. In the nine month period ended September 30, 2013, we repurchased 6.4 million shares of our common stock at an average price of $74.20 per share for a total cash outlay of $478.3 million, including commissions. As of September 30, 2013, $536.4 million remained authorized under a $1.5 billion repurchase program, which will expire on December 31, 2014.

We design, develop, manufacture and market orthopaedic reconstructive implants, biologics, dental implants, spinal implants, trauma products and related surgical products which include surgical supplies and instruments designed to aid in surgical procedures and post-operation rehabilitation. We also provide other healthcare-related services. We manage operations through three major geographic segments – the Americas, which is comprised principally of the U.S. and includes other North, Central and South American markets; Europe, which is comprised principally of Europe and includes the Middle East and African markets; and Asia Pacific, which is comprised primarily of Japan and includes other Asian and Pacific markets. This structure is the basis for our reportable segment information discussed below. Management evaluates reportable segment performance based upon segment operating profit exclusive of operating expenses pertaining to share-based payment expense, inventory step-up and certain other inventory and manufacturing related charges, “Certain claims,” goodwill impairment, “Special items,” and global operations and corporate functions. Global operations and corporate functions include research, development engineering, medical education, brand management, corporate legal, finance, and human resource functions, U.S., Puerto Rico and Ireland-based manufacturing operations and logistics and intangible asset amortization resulting from business combination accounting. Intercompany transactions have been eliminated from segment operating profit.


	Net Sales				Operating Profit							Net Sales				Operating Profit
	Three Months Ended September 30,				Three Months Ended September 30,							Three Months Ended March 31,				Three Months Ended March 31,
	2013		2012		2013			2012				2014		2013		2014			2013
Americas	$	632.9	$	583.5	$	312.6		$	291.0			$	638.7	$	634.7	$	309.9		$	320.6
Europe		255.0		245.6		63.3			65.5				326.9		307.5		101.7			88.3
Asia Pacific		186.4		196.4		76.8			75.3				195.9		196.7		94.5			80.4
											��
Total	$	1,074.3	$	1,025.5								$	1,161.5	$	1,138.9

Share-based compensation						(10.9	)		(13.9	)							(11.2	)		(14.0	)
Inventory step-up and other inventory and manufacturing related charges						(43.8	)		(0.5	)
Inventory step-up																	(2.5	)		(2.2	)
Special items						(46.4	)		(36.9	)							(45.9	)		(33.5	)
Global operations and corporate functions						(139.9	)		(131.1	)							(148.1	)		(141.4	)

Operating profit					$	211.7		$	249.4							$	298.4		$	298.2

Beginning in 2013, our Knees product category net sales include certain early intervention products that are primarily used in knee procedures. In 2012, these products were included in the Surgical and other product category. Net sales in the three and nine month periods ended September 30, 2012 related to these products have been reclassified to conform to the 2013 presentation. Net sales by product category are as follows (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2013		2012		2013		2012		2014		2013
Reconstructive
Knees	$	434.5	$	411.6	$	1,386.5	$	1,350.8	$	487.9	$	471.0
Hips		308.3		308.5		977.5		993.0		331.7		330.8
Extremities		45.5		39.7		141.9		127.0		52.1		47.8

		788.3		759.8		2,505.9		2,470.8		871.7		849.6
Dental		55.1		54.7		176.2		176.4		61.0		59.7
Trauma		78.5		74.5		234.6		223.9		79.7		82.0
Spine		48.0		49.8		149.9		155.4		48.3		47.7
Surgical and other		104.4		86.7		316.1		264.7		100.8		99.9

Total	$	1,074.3	$	1,025.5	$	3,382.7	$	3,291.2	$	1,161.5	$	1,138.9

On a quarterly and annual basis, we review relevant information with respect to loss contingencies and update our accruals, disclosures and estimates of reasonably possible losses or ranges of loss based on such

reviews. We establish liabilities for loss contingencies when it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. For matters where a loss is believed to be reasonably possible, but not probable, no accrual has been made.

Durom^® Cup-related claims: On July 22, 2008, we temporarily suspended marketing and distribution of theDurom Acetabular Component (Durom Cup) in the U.S. Subsequently, a number of product liability lawsuits and other claims have been asserted against us. We have settled some of these claims and the others are still pending. Additional claims may be asserted in the future.

Since 2008, we have recognized expense of $450.2 million forDurom Cup-related ~~claims, including, as previously reported, $47.0 million during~~claims. With respect to the ~~three month~~ period ~~ended June 30, 2013. We increased~~covered by this report, our estimate of our total liability for these claims as of March 31, 2014 remains consistent with our prior estimate, and, accordingly, we did not record any additional expense during the three month period ended ~~June 30, 2013 based on our review of~~March 31, 2014. With respect to the ~~most recent claims information then available. We~~same prior year period, we also did not record any additional expense forDurom Cup-related ~~claims during the three month period ended September 30, 2013 or during the three and nine month periods ended September 30, 2012.~~claims.

We maintain insurance for product liability claims, subject to self-insurance retention requirements. In 2008, we notified our insurance carriers of potential claims related to theDurom Cup. Based upon our most recent estimates for liabilities associated with theDurom Cup, we believe we may exhaust our self-insured retention under our insurance program. In this event, we would have a claim for insurance proceeds for ultimate losses which exceed the self-insured retention amount, subject to a 20 percent co-payment requirement and a cap. We believe our contracts with the insurance carriers are enforceable for these claims and, therefore, we believe it is probable that we would recover some amount from our insurance carriers if our ultimate losses exceed our self-insured retention. We have recognized a $218.0 million receivable in “Other assets” on our condensed consolidated balance sheet as of ~~September 30, 2013~~March 31, 2014 for estimated insurance recoveries, which reduced “Certain claims” expense. As is customary in this process, our insurance carriers have reserved all rights under their respective policies and could still ultimately deny coverage for some or all of our insurance claims.

Our estimate as of ~~September 30, 2013~~March 31, 2014 of the remaining liability for allDurom Cup-related claims is ~~$391.6~~$372.3 million, of which $50.0 million is classified as short-term in “Other current liabilities” and ~~$341.6~~$322.3 million is classified as long-term in “Other long-term liabilities” on our condensed consolidated balance sheet. We expect to pay the majority of theDurom Cup-related claims within the next five years.

Our understanding of clinical outcomes with theDurom Cup and other large diameter hip cups continues to evolve. We rely on significant estimates in determining the provisions forDurom Cup-related claims, including the number of claims that we will receive and the average amount we will pay per claim. The actual number of claims that we receive and the amount we pay per claim may differ from our estimates. Among other factors, since our understanding of the clinical outcomes is still evolving, we cannot reasonably estimate the possible loss or range of loss that may result fromDurom Cup-related claims in excess of the losses we have accrued.

Margo and Daniel Polett v. Zimmer, Inc. et al.: On August 20, 2008, ~~the Poletts~~Margo and Daniel Polett filed an action against us and an unrelated third party, Public Communications, Inc. (PCI), in the Court of Common Pleas, Philadelphia, Pennsylvania seeking an unspecified amount of damages for injuries and loss of consortium allegedly suffered by Mrs. Polett and her spouse, respectively. The complaint alleged that defendants were negligent in connection with Mrs. Polett’s participation in a promotional video featuring one of our knee products. The case was tried in November 2010 and the jury returned a verdict in favor of plaintiffs. The jury awarded $27.6 million in compensatory damages and apportioned fault 30 percent to plaintiffs, 34 percent to us and 36 percent to PCI. Under applicable law, we may be liable for any portion of the damages apportioned to PCI that it does not pay. On December 2, 2010, we and PCI filed a Motion for Post-Trial Relief seeking a judgment notwithstanding the verdict, a new trial or a remittitur. On June 10, 2011, the trial court entered an order denying our Motion for Post-Trial Relief and affirming the jury verdict in full and entered judgment for $20.3 million against us and PCI. On June 29, 2011, we filed a Notice of Appeal to the Superior Court of Pennsylvania and posted a bond for the verdict amount plus interest. Oral argument before the appellate court in Philadelphia, Pennsylvania was held as scheduled on March 13, 2012. On March 1, 2013, the Superior Court of Pennsylvania vacated the $27.6 million judgment and remanded the case for a new trial. On March 15, 2013, plaintiffs filed a

motion for re-argumenten banc,, and on March 28, 2013, we filed our response in ~~opposition~~.opposition. On May 9, 2013, the Superior Court of Pennsylvania granted plaintiffs’ motion for re-argumenten ~~banc~~.banc. Oral argument ~~(re-argument~~(re-argumenten ~~banc~~)banc) before the Superior Court of Pennsylvania was held on October 16, 2013. ~~A ruling has not yet been issued.~~On December 20, 2013, the Court issued its opinion again vacating the trial court judgment and remanding the case for a new trial. On January 21, 2014, plaintiffs filed a petition for allowance of appeal in the Supreme Court of Pennsylvania, and on February 4, 2014, we filed our response in opposition. Although we are defending this lawsuit vigorously, its ultimate resolution is uncertain.

NexGen^® Knee System claims: Following a wide-spread advertising campaign conducted by certain law firms beginning in 2010, a number of product liability lawsuits have been filed against us in various jurisdictions. The plaintiffs seek damages for personal injury, alleging that certain products within theNexGen Knee System suffer from defects that cause them to loosen prematurely. The majority of the cases are currently pending in a federal Multidistrict Litigation in the Northern District of Illinois. Other cases are pending in other state and federal courts, and additional lawsuits may be filed. As of ~~September 30, 2013,~~March 31, 2014, discovery in these lawsuits was underway and no trial dates had been set. We have not accrued an estimated loss relating to these lawsuits because we believe the plaintiffs’ allegations are not consistent with the record of clinical success for these products. As a result, we do not believe that it is probable that we have incurred a liability, and we cannot reasonably estimate any loss that might eventually be incurred. Although we are vigorously defending these lawsuits, their ultimate resolution is uncertain.

Patent infringement lawsuit: On December 10, 2010, Stryker Corporation and related entities (Stryker) filed suit against us in the U.S. District Court for the Western District of Michigan, alleging that certain of ourPulsavac^® Plus Wound Debridement Products infringe three U.S. patents assigned to Stryker. The case was tried beginning on January 15, 2013, and on February 5, 2013, the jury found that we infringed certain claims of the subject patents. The jury awarded $70.0 million in monetary damages for lost profits. The jury also found that we willfully infringed the subject patents. We filed multiple post-trial motions, including a motion seeking a new trial. On August 7, 2013, the trial court issued a ruling denying all of our motions and awarded treble damages and attorneys’ fees to Stryker. We filed a notice of appeal to the Court of Appeals for the Federal Circuit to seek reversal of both the jury’s verdict and the trial court’s rulings on our post-trial motions. That appeal is pending. We have not accrued an estimated loss related to this matter in our condensed consolidated statement of earnings for the quarter ended ~~September 30, 2013~~March 31, 2014 or any prior period because we do not believe that it is probable that we have

incurred a liability. Although we believe we have strong grounds to reverse the trial court’s judgment, the ultimate resolution of this matter is uncertain. In the future we could be required to record a charge of up to $210.0 million plus interest and attorneys’ fees that could have a material adverse effect on our results of operations.

In September 2012, we received a warning letter from the U.S. Food and Drug Administration (FDA) citing concerns relating to certain manufacturing and validation processes pertaining toTrilogy^®Acetabular System products manufactured at our Ponce, Puerto Rico manufacturing facility. We have provided detailed responses to the FDA as to our corrective actions and will continue to work expeditiously to address the issues identified by the FDA during inspections in Ponce. As of ~~September 30, 2013,~~March 31, 2014, the warning letter remains pending. Until the violations are corrected, we may be subject to additional regulatory action by the FDA, including seizure, injunction and/or civil monetary penalties. Additionally, requests for Certificates to Foreign Governments related to products manufactured at the Ponce facility may not be granted and premarket approval applications for Class III devices to which the quality system regulation deviations are reasonably related will not be approved until the violations have been corrected. In addition to responding to the warning letter described above, we are in the process of addressing various FDA Form 483 inspectional observations at certain of our manufacturing facilities. The ultimate outcome of these matters is presently uncertain.

On April 24, 2014, we entered into a definitive agreement to merge with LVB Acquisition, Inc. (LVB), the parent company of Biomet, Inc. (Biomet), in a cash and stock transaction valued at approximately $13.35 billion. We will pay $10.35 billion in cash and issue 32.7 million shares of our common stock which had a value of approximately $3.0 billion, based on a stock price of $91.73 per share using the five day volume weighted average price immediately preceding the signing of the agreement. In connection with the merger, we will pay off all of LVB’s outstanding funded debt, and the aggregate cash merger consideration will be reduced by such amount. The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in the first quarter of 2015. The transaction will position the combined company as a leader in the $45 billion musculoskeletal industry.

Biomet’s product portfolio includes knee and hip reconstructive products; sports medicine, extremities and trauma products; spine, bone healing and microfixation products; dental reconstructive products; and cement, biologics and other products. The combination will enhance enterprise diversification with broader franchises in the Knee, Hip, Surgical, Spine and Dental categories, as well as in the faster-growing Sports Medicine, Extremities and Trauma categories.

We expect to fund the cash portion of the purchase price with existing cash on hand, as well as proceeds obtained from a newly committed $3.0 billion senior unsecured term loan and senior notes we intend to issue. In connection with our execution of the definitive agreement, in April 2014 we entered into a $7.66 billion 364-day bridge facility, which we intend to reduce when the new senior notes are issued.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and corresponding notes included elsewhere in this Form 10-Q. Certain percentages presented in this discussion and analysis are calculated from the underlying whole-dollar amounts and therefore may not recalculate from the rounded numbers used for disclosure purposes. In addition, certain amounts in the ~~2012~~2013 condensed consolidated financial statements have been reclassified to conform to the ~~2013~~2014 presentation.

Results for the Three ~~and Nine~~ Month ~~Periods~~Period ended ~~September 30, 2013 (Current Periods)~~March 31, 2014

Our sales results for the ~~Current Periods reflected~~three month period ended March 31, 2014 increased ~~growth as compared with 2012 trends. Sales from new product introductions as well as a stable or slightly improved~~due to increased volume in the joint replacement market ~~drove sales volume~~ and product mix ~~growth.~~growth from premium priced new products, such asPersona^® The Personalized Knee System. This was partially offset by continued pricing pressure, mostly in our Americas and Europe operating segments, as well as negative effects from changes in foreign currency exchange rates.

~~Despite~~The increase in sales resulted in increased ~~sales,~~gross profit. Meanwhile, operating expenses were higher, primarily from spending on our ~~net earnings~~quality and operational excellence initiatives. Since the increase in gross profit was tempered by increases in operating expenses, operating profit for the Current Periods were lower than the prior year periods, primarily due to lower gross margins caused by excess and obsolete inventory charges for products we intend to discontinue, a $47.0 million charge for “Certain claims” (affects the ninethree month period only) and other charges for various legal settlements. Additionally, we continue to incur expenses related to our operational excellence initiatives and such charges were higher in the Current Periods comparedended March 31, 2014 was similar to the same prior year ~~periods. Our operational excellence initiatives are intended~~period. Interest expense, net, decreased due to improve our future operating results and include centralizing or outsourcing certain functions and improving quality, distribution, sourcing, manufacturing and our information technology systems. Research and development (R&D) expenses decreasedfixed-to-variable interest rate swaps we entered into in the ~~Current Periods due to the completion~~second half of ~~certain projects in 2012, such as~~~~Persona~~^TM The Personalized Knee System. Selling, general and administrative expenses (SG&A) were slightly higher in the Current Periods compared to the prior year periods due to sales growth. However, SG&A as a percentage of sales decreased in the Current Periods as a result of savings from2013. Additionally, our ~~operational excellence initiatives. Our~~ effective tax rate (ETR) benefited from ~~changes in~~ the ~~mix~~release of income between taxing jurisdictions. The significant expenses for our excess and obsolete inventory charges, “Certain claims” and “Special items” were primarily incurred in jurisdictions with higher rates of tax, which lowered taxable income in those jurisdictions.a valuation allowance on foreign net operating loss carryforwards. As a result, net earnings increased slightly from the prior year.

The 2014 outlook discussed in this section does not include anticipated expenses associated with the pending merger with Biomet. We expect to incur significant expenses during the remainder of 2014 as we develop acquisition and integration plans in anticipation of the expected closing in the first quarter of 2015. We plan to report expenses related to acquisition and integration as part of “Special items.” Additionally, we will incur additional interest expense (including debt issuance costs) related to new borrowings to fund the cash portion of the pending transaction. Our anticipated new borrowings are further discussed in the “Liquidity and Capital Resources” section of this discussion and analysis. At this time, it is difficult for us to estimate the amount of these expenses with any certainty, but we expect they will be significant relative to our operating results and cash flows in 2014.

We estimate our net sales will grow between 2.5 and 34.5 percent in ~~2013.~~2014. This assumes the market for knee and hip procedures will remain stable and grow in the low ~~single~~to mid-single digits. We expect pricing to have a negative effect on sales growth of ~~approximately~~between 2 and 3 percent, and foreign currency exchange rates to have a negative effect on sales growth of between ~~1.5~~0 and 21 percent based upon ~~September 30, 2013~~March 31, 2014 rates.

Assuming currency rates remain at ~~September 30, 2013~~March 31, 2014 levels, we expect our gross margin to be ~~approximately 72.5~~between 73 and 74 percent of sales in 2014, compared to 72.2 percent for the full year in 2013. In the 2013 ~~which includes inventory step-up~~period, we recognized significant excess and ~~other inventory and manufacturing~~obsolescence charges related to ~~acquisitions~~products we intend to discontinue and ~~operational excellence initiatives. This~~similar significant charges are not expected in 2014. The 2014 range assumes that foreign currency hedge ~~losses~~gains will be ~~lower in 2013~~higher than in ~~2012. This~~2013. The range also takes into consideration the full year impact of the ~~new~~ 2.3 percent medical device excise tax on a majority of our U.S. sales. Based upon the levels of inventory we were carrying before the medical device excise tax was effective on January 1, 2013, we ~~have~~did not ~~recognized a~~recognize any significant ~~amount of~~expenses from the excise tax ~~in the nine months ended September 30, 2013. We expect to start recognizing the excise tax on substantially all U.S. sales for a portion of~~until the fourth quarter inof 2013. ~~Once our cost of products sold starts reflecting this for an entire quarter, we~~We estimate the cost in 2014 will be approximately $10 ~~million to $15~~ million per quarter. Since we recognize the medical device excise tax as a part of the cost of inventory, the amount expensed in any particular quarter will vary according to U.S. sales levels in that quarter.

We ~~do not~~ expect to ~~be able to offset the full impact~~continue making investments in research and development (R&D) of ~~the U.S. medical device excise tax on net earnings through higher pricing on our products or through higher~~between 4 and 4.5 percent of sales ~~volumes resulting from the expansion of health insurance coverage. However, we do expect to offset the tax with cost savings from our operational excellence initiatives.~~

~~We expect R&D~~in 2014. Selling, general and administrative expenses (SG&A) as a percentage of sales ~~in 2013 will be approximately 4.5 percent. SG&A expenses as a percentage of sales are~~is expected to be ~~approximately 39.5~~between 38.5 and 39 percent in ~~2013~~2014 as we realize efficiencies from our quality and operational excellence initiatives and further leverage revenue growth.

We expect to incur approximately ~~$335~~$250 million of expenses in 2014 related to ~~inventory step-up~~our quality and ~~other inventory~~operational excellence initiatives and integration costs from recent acquisitions. The quality and operational excellence programs are intended to improve our future operating results and include centralizing or outsourcing certain functions and improving quality, distribution, sourcing, manufacturing ~~related charges, “Certain claims”~~ and ~~“Special items.”~~information technology systems. We have already recognized $47 million as “Certain claims” in the nine month period ended September 30, 2013, and do not anticipate recognizing any more “Certain claims” expense in 2013 unless our estimated liability for~~Durom~~ Cup-related claims changes as discussed in Note 14. Further, we have already recognized $58 million of inventory step-up and other inventory and manufacturing related charges as part of cost of products sold and $155 million of “Special items” in the nine month period ending September 30, 2013. Of the remaining $75 million of expense,expect to recognize the majority ~~will be recognized as~~of these expenses in “Special items” on our statement of earnings, but some will be related to inventory and ~~will~~ be reflected in ~~cost~~costs of products sold.

Assuming variable interest rates remain at ~~September 30, 2013~~March 31, 2014 levels, we expect interest income and expense, net, ~~of interest income,~~ to be ~~approximately $56 million~~similar to 2013, absent additional interest expense related to the pending transaction with Biomet.

We expect our ETR to increase in 2014 relative to 2013, as we do not anticipate certain significant costs, such as excess and obsolete inventory charges and “Certain claims” that were incurred in jurisdictions with higher tax rates in 2013, ~~which is similar~~ to ~~2012.~~recur, thus increasing the profit in those higher tax jurisdictions.

Based upon the above, we expect reported net earnings and diluted earnings per share to increase in a range of approximately 13 to 17 percent in 2014 as compared to 2013, stemming from anticipated higher sales and an improved gross margin.

The following table presents net sales by operating segment and the components of the percentage changes (dollars in millions):


	Nine Months Ended September 30,				% Inc (Dec)			Volume/ Mix			Price				Foreign Exchange			Three Months Ended March 31,						% Inc		Volume/ Mix		Price			Foreign Exchange
	2013		2012		% Inc (Dec)						Price			2014					2013					% Inc		Volume/ Mix		Price			Foreign Exchange
Americas	$	1,927.7	$	1,832.2		5	%	Volume/ Mix		7	%			(2	Foreign Exchange	)%		—	%	$	638.7		$	634.7		1	%	4	%		(3	)%		—	%
Europe		870.0		851.6		2			2			(1	)			1			326.9			307.5			6		6		(2	)		2
Asia Pacific		585.0		607.4		(4	)		7			(1	)			(10	)		195.9			196.7			—		8		—			(8	)

Total	$	3,382.7	$	3,291.2		3			6			(2	)			(1	)	$	1,161.5		$	1,138.9			2		5		(2	)		(1	)

“Foreign Exchange,” as used in the tables in this report, represents the effect of changes in foreign currency exchange rates on sales.

The following table presents net sales by product category and the components of the percentage changes (dollars in millions):


	Nine Months Ended September 30,				% Inc (Dec)			Volume/ Mix			Price				Foreign Exchange				Three Months Ended March 31,						% Inc (Dec)				Volume/ Mix				Price				Foreign Exchange
	2013		2012		% Inc (Dec)						Price			2014						2013					% Inc (Dec)				Volume/ Mix				Price				Foreign Exchange
Reconstructive								Volume/ Mix
Knees	$	1,386.5	$	1,350.8		3	%		6	%		(2	)%		Foreign Exchange		(1	)%		$	487.9		$	471.0			4	%			8	%			(3	)%			(1	)%
Hips		977.5		993.0		(2	)		2			(2	)			(2	)			331.7			330.8			—				4				(2	)			(2	)
Extremities		141.9		127.0		12			14			(2	)			—				52.1			47.8			9				12				(3	)			—

		2,505.9		2,470.8		1			5			(2	)			(2	)			871.7			849.6			3				7				(3	)			(1	)
Dental		176.2		176.4		—			(1	)		1				—				61.0			59.7			2				2				—				—
Trauma		234.6		223.9		5			7			—				(2	)			79.7			82.0			(3	)			—				(1	)			(2	)
Spine		149.9		155.4		(4	)		(1	)		(2	)			(1	)			48.3			47.7			1				3				(2	)			—
Surgical and other		316.1		264.7		19			23			—				(4	)			100.8			99.9			1				4				(1	)			(2	)

Total	$	3,382.7	$	3,291.2		3			6			(2	)			(1	)		$	1,161.5		$	1,138.9			2				5				(2	)			(1	)

Beginning in 2013, our Knees product category net sales include certain early intervention products that are primarily used in knee procedures. In 2012, these products were included in the Surgical and other product category. Net sales in the three and nine month periods ended September 30, 2012 related to these products have been reclassified to conform to the 2013 presentation. The following table presents net sales by product category by region (dollars in millions):


	Three Months Ended September 30,							Nine Months Ended September 30,							Three Months Ended March 31,
	2013		2012		% Inc (Dec)			2013		2012		% Inc (Dec)			2014		2013		% Inc (Dec)
Reconstructive
Knees
Americas	$	270.0	$	247.9		9	%	$	827.3	$	798.9		4	%	$	283.5	$	275.5		3	%
Europe		91.8		88.4		4			331.9		323.4		3			131.1		122.5		7
Asia Pacific		72.7		75.3		(4	)		227.3		228.5		(1	)		73.3		73.0		—
Hips
Americas		150.5		145.4		3			459.1		451.1		2			150.4		151.9		(1	)
Europe		96.5		95.7		1			322.0		325.6		(1	)		115.5		111.8		3
Asia Pacific		61.3		67.4		(9	)		196.4		216.3		(9	)		65.8		67.1		(2	)
Extremities
Americas		34.9		30.6		14			109.6		98.1		12			38.9		37.3		4
Europe		7.8		6.5		20			24.0		21.1		14			9.9		7.8		28
Asia Pacific		2.8		2.6		9			8.3		7.8		6			3.3		2.7		24

		788.3		759.8		4			2,505.9		2,470.8		1			871.7		849.6		3
Dental
Americas		35.5		33.6		6			106.3		103.7		3			35.0		35.5		(1	)
Europe		14.3		15.9		(10	)		55.3		57.1		(3	)		20.2		19.6		3
Asia Pacific		5.3		5.2		1			14.6		15.6		(6	)		5.8		4.6		24
Trauma
Americas		39.7		39.0		2			117.9		113.7		4			37.6		41.2		(9	)
Europe		19.4		16.3		19			56.4		49.3		14			20.6		18.8		10
Asia Pacific		19.4		19.2		1			60.3		60.9		(1	)		21.5		22.0		(2	)
Spine
Americas		31.4		33.7		(7	)		97.1		105.7		(8	)		30.1		30.7		(2	)
Europe		11.3		10.5		6			37.2		35.6		4			12.5		12.2		2
Asia Pacific		5.3		5.6		(3	)		15.6		14.1		11			5.7		4.8		18
Surgical and other
Americas		70.9		53.3		33			210.4		161.0		31			63.2		62.6		1
Europe		13.9		12.3		14			43.2		39.5		9			17.1		14.8		15
Asia Pacific		19.6		21.1		(7	)		62.5		64.2		(3	)		20.5		22.5		(9	)

Total	$	1,074.3	$	1,025.5		5		$	3,382.7	$	3,291.2		3		$	1,161.5	$	1,138.9		2

Increased volume and changes in the mix of product sales contributed 85 percentage points of year-over-year sales growth during the three month period ended ~~September 30, 2013. Sales~~March 31, 2014. The 5 percentage points of growth were lower than the year-over-year sales growth from volume/mix in the three month period ended ~~September 30, 2013 benefited mostly from new products as well as an additional billing day in our largest operating segment compared to the prior year.~~

December 31, 2013. We believe ~~procedure volumes~~this reflects some seasonality, especially in the ~~broader musculoskeletal market remained stable or improved slightly in the third quarter of 2013 relative to the second quarter of 2013.~~ Americas.

We believe long-term indicators point toward sustained growth driven by an aging global population, growth in emerging markets, obesity, proven clinical benefits, new material technologies, advances in surgical techniques and more active lifestyles, among other factors. In addition, ~~an ongoing shift in~~ demand tofor clinically proven premium products and ~~the introduction of~~ patient specific devices isare expected to continue to positively affect sales ~~growth.~~growth in markets that recognize the value of these advanced technologies.

Global selling prices had a negative effect of ~~1 percent~~2 percentage points on year-over-year sales during the three month period ended ~~September 30, 2013.~~March 31, 2014. Our Americas and Europe reporting segments and certain countries ofin our

Asia Pacific reporting segment continued to experience pricing pressure from governmental healthcare cost containment efforts and from local hospitals and health systems. For the entire year, we expect lower prices will ~~continue to~~ have a negative effect on sales growth of ~~approximately~~between 2 and 3 percent.

For the three month period ended ~~September 30, 2013,~~March 31, 2014, foreign currency exchange rates resulted in a 21 percent decrease in sales, primarily from the strengthening of the U.S. Dollar versus the Japanese Yen in the period. If foreign currency exchange rates remain consistent with ~~September 30, 2013~~March 31, 2014 rates, we estimate that a stronger dollar versus foreign currency exchange rates will have a negative effect on sales growth in ~~2013~~2014 of between ~~1.5~~0 and 21 percent. We address currency risk through regular operating and financing activities and through the use of forward contracts and foreign currency options solely to manage foreign currency volatility and risk. Changes to foreign currency exchange rates affect sales growth, but due to offsetting gains/losses on hedge contracts and options, which are recorded in cost of products sold, the effect on net earnings in the near term is expected to be minimal.

Knee sales increased ~~6 percent and 3~~4 percent in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013, respectively,~~March 31, 2014 when compared to the same prior year ~~periods.~~period. Our Knee product category has benefited from new product introductions, such asPersona The Personalized Knee System and early intervention products.

In ~~2013,~~2014, we have continued a broader launch of our new knee system,Persona The Personalized Knee System. We intend to continue to deploy implant and instrument sets to all geographic regions during the remainder of ~~2013~~2014 and beyond. In the meantime, ourNexGen^® Complete Knee Solution product line is still our leading knee system in terms of sales. Products driving growth in this category in addition toPersona The Personalized Knee System included theZimmer^® ~~Patient Specific Instruments, the~~~~Zimmer~~^® Unicompartmental High Flex Knee and our early intervention products.

In Europe, changes in foreign currency exchange rates positively affected knee sales in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 by ~~3 percent and 1 percent, respectively.~~2 percent. In Asia Pacific, changes in foreign currency exchange rates negatively affected knee sales in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 by ~~13 percent and 9 percent, respectively.~~10 percent.

Hip sales were flat ~~and decreased 2 percent~~ in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013, respectively,~~March 31, 2014 when compared to the same prior year ~~periods. The decrease in the 2013 nine month period compared~~period. Positive volume and mix trends continued to ~~the same prior year period was primarily from~~be offset by pricing pressure and changes in foreign currency exchange rates.

Leading hip stem sales were theZimmer^® M/L Taper Hip Prosthesis, theZimmer^® M/L Taper Hip Prosthesis withKinectiv^® Technology, theCLS^® Spotorno^® Stem from theCLS Hip System ~~and~~ ,the Alloclassic^® Zweymüller^® Hip Stem and theFitmore^® Hip Stem. Products experiencing growth in this category included theAvenir^® Müller Stem, theWagner SL Revision^® Hip Stem, theContinuum^®Acetabular System, theTrilogy^® IT Acetabular System, theAllofit^® ITAlloclassic^®Acetabular System,Vivacit-E^® Highly Crosslinked Polyethylene Liners andBIOLOX^®¹ delta Heads.

In Europe, changes in foreign currency exchange rates positively affected hip sales in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 by ~~3 percent and 1 percent, respectively.~~2 percent. In Asia Pacific, changes in foreign currency exchange rates negatively affected hip sales in the three month period ended March 31, 2014 by 9 percent.

Extremities sales increased by 9 percent in the three month period ended March 31, 2014 when compared to the same prior year period. The sales increase reflects growth from our shoulder systems, such as theZimmer^® Trabecular Metal^TM Reverse Shoulder System and ~~nine month periods ended September 30, 2013 by 14 percent~~theSidus^® Stem-Free Shoulder, and ~~10 percent, respectively.~~a broader product

~~Extremities sales increased by 15 and 12 percent~~portfolio to compete in the ~~three~~foot and ~~nine month periods ended September 30, 2013, respectively, when compared to~~ankle and hand and wrist areas of the ~~same prior year periods.~~Extremities category. The broader portfolio includes theZimmer ~~Trabecular Metal~~^TM ~~Reverse Shoulder System, the~~~~Sidus~~^® ~~Stem-Free Shoulder and the~~~~Zimmer~~ Trabecular Metal Total Ankle ~~drove sales growth.~~~~Trabecular Metal~~ ~~Technology continues to be an effective way to address clinical needs~~and products from the acquisition of NORMED Medizin-Technik GmbH in ~~the extremities market.~~June 2013.

Dental sales increased by 12 percent ~~and were flat~~ in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013, respectively,~~March 31, 2014 when compared to the same prior year ~~periods.~~period. This was the result of ~~slightly~~ improved sales of dental reconstructive implants ~~and digital solutions,~~partially offset by decreases in digital solutions, restorative products and regenerative products. ~~We believe the dental market continues to be challenged both in the U.S. and internationally.~~ Sales were led by theTapered Screw-Vent^® Implant System.

Trauma sales ~~increased 5~~decreased 3 percent in ~~both~~ the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 when compared to the same prior year ~~periods.~~period. In the prior year period, we benefited from certain competitive product issues in this product category, especially in the Americas. In the current year, with the competitive product back on the market, we were not able to achieve the same level of sales as in the prior year. This caused our intramedullary nail product portfolio sales to decline in the current year, which was partially offset by growth in our plates and screws product portfolio. TheZimmer Natural Nail^® System ~~continued to increase sales significantly. In addition to the~~~~Zimmer Natural Nail~~ ~~System, the~~andZimmer^® Periarticular Locking Plates System led Trauma sales.

Spine sales ~~decreased~~increased by 41 percent in ~~both~~ the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 when compared to the same prior year ~~periods. This product category continues~~period. We continue to ~~face challenges related to pricing pressure~~focus on and ~~payor approval.~~have had slightly increased sales in our core fusion portfolio and market adjacencies, including minimally invasive surgeries. Solid sales of thePathFinder NXT^® Minimally Invasive Pedicle Screw System andTrabecular Metal Technology products partly offset a decline in sales of theDynesys^® Dynamic Stabilization System, theTrinica^® Select Anterior Cervical Plate System and other spine products.

Surgical and other sales increased ~~21 percent and 19~~1 percent in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013, respectively,~~March 31, 2014 when compared to the same prior year ~~periods.~~period. The primary driver of sales growth in this product category was theTransposal^® Fluid Waste Management ~~System, which~~System. With this system we ~~acquired through~~sell capital equipment that is used with a one-time disposable manifold. In the prior year, this system benefitted from a competitive product being off the market. While that competitive product is back on the market, sales growth was still achieved as our ~~acquisition of Dornoch Medical Systems, Inc.~~customers continued to purchase the disposable manifolds to be used with the capital equipment. Other products leading sales in ~~October 2012. Other contributing products~~this category werePALACOS^®² Bone Cement, tourniquets and wound debridement devices.


	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
	2013			2012			Inc (Dec)			2013			2012			Inc (Dec)			2014			2013			Inc (Dec)
Cost of products sold		30.6	%		24.9	%		5.7			27.9	%		25.1	%		2.8			26.3	%		25.7	%		0.6
Research and development		4.6			5.2			(0.6	)		4.7			5.2			(0.5	)		4.1			4.7			(0.6	)
Selling, general and administrative		40.8			41.9			(1.1	)		40.1			40.9			(0.8	)		40.0			40.5			(0.5	)
Certain claims		—			—			—			1.4			—			1.4
Special items		4.3			3.6			0.7			4.6			3.1			1.5			4.0			2.9			1.1
Operating profit		19.7			24.3			(4.6	)		21.3			25.7			(4.4	)		25.7			26.2			(0.5	)

The increase in cost of products sold as a percentage of net sales for the three month period ended ~~September 30, 2013~~March 31, 2014 compared to the same prior year period was primarily due to ~~increased excess and obsolescence charges related to products we intend to discontinue. Additionally,~~ the ~~increase in cost of products sold was due to higher average costs per unit sold as a result of changes in product and geographic mix and~~medical device excise tax, lower average selling prices, and certain inventory and manufacturing related charges ~~connected to~~associated with our quality enhancement and remediation efforts. These negative effects were partially offset by hedge gains recorded in the ~~2013~~2014 period from our foreign currency hedging program versus hedge losses recorded in the ~~2012~~2013 period, and lower excess and obsolete inventory charges in the 2014 period.

The ~~increase~~hedge gains were primarily the result of the U.S. Dollar strengthening against the Japanese Yen. Under the hedging program, for derivatives which qualify as hedges of future cash flows, the effective portion of changes in fair value is temporarily recorded in other comprehensive income and then recognized in cost of products sold ~~as a percentage of net sales for~~when the ~~nine month period ended September 30, 2013 compared to the same prior year period was due to similar reasons as the three month period.~~hedged items affects earnings.

R&D expenses and R&D as a percentage of sales ~~decreased~~both declined in ~~both~~ the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 when compared to the same prior year ~~periods. Lower spending reflected a natural decline from certain large projects that achieved full commercialization, including~~~~Persona~~period. The ~~Personalized Knee System, and~~lower expense reflects a dedication of resources to our quality and operational excellence initiatives. We expect R&D spending in ~~2013~~2014 to be ~~approximately~~between 4 and 4.5 percent of sales for the full year.

SG&A expenses increased, but SG&A as a percentage of sales decreased, in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 when compared to the same prior year ~~periods.~~period. The dollar increase ~~in both periods~~ was primarily due to ~~higher selling and distribution expenses from higher sales and~~ increased intangible amortization from ~~acquisitions. This was~~acquisitions and higher employee-related expenses due to an increase in the number of employees and annual salary increases. However, these expense increases were partially offset by ~~lower bad debt expenses~~the effects of our operational excellence initiatives, which resulted in decreases in certain areas such as well as lower legal expenses due to the conclusion of certain matters in the same prior year periods for which we are no longer incurring legal expenses, as well as normal variations in the phases of litigation, including product liability litigation.selling expenses. As a percentage of sales, SG&A ~~has improved~~expenses decreased in the ~~Current Periods~~2014 period as our operational excellence initiatives ~~have~~ produced lower variable and fixed costs in SG~~&A.~~

~~“Certain claims” expense is for estimated liabilities to~~~~Durom~~ Cup patients undergoing revision surgeries. We recorded expense of $15.0 million, $157.8 million, $75.0 million, $35.0 million and $69.0 million during 2012, 2011, 2010, 2009 and 2008, respectively. We recorded additional expense of $47.0 million during the nine month period ended September 30, 2013, bringing the total recorded expense to $398.8 million for these claims, excluding a subset of~~Durom~~ Cup claims that were recorded in SG&A. The additional expense recorded in 2013 was driven primarily by higher estimated claims than were previously expected. For more information regarding these claims, see Note 14 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report.&A as net sales increased.

“Special items” for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 increased ~~significantly~~ compared to the same prior year ~~periods.~~period. The increase was driven by the accelerated amortization on certain intangible assets, increased dedicated project personnel expenses related to our quality and operational excellence initiatives and certain R&D agreements we entered into with upfront payments to acquire intellectual property. We continue to implement our quality and operational excellence initiatives, which are intended to improve our future operating results by centralizing or outsourcing certain functions and improving quality, distribution, sourcing, manufacturing and our information technology systems. “Special items” expenses include consulting and professional fees, dedicated personnel costs, severance benefits as well as other costs for those programs. In addition to expenses for our quality and operational excellence programs, we recognize expenses related to integration of acquired businesses, impairment of assets, certain R&D agreements ~~certain litigation settlements~~ and other items as “Special items.” See Note 2 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report for more information regarding “Special items” charges.

Interest Income, Interest Expense, Income Taxes, ~~and~~ Net Earnings and Segment Operating Profit

Interest income and expense, net, ~~were similar~~decreased in the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 when compared to the same prior year ~~periods.~~period. In the second half of 2013, we entered into additional fixed-to-variable rate interest swaps designated as fair value hedges. In the 2014 period, the variable rates we paid on the swaps were lower than the fixed rate on the hedged debt and therefore interest expense decreased.

The ETR on earnings before income taxes for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013~~March 31, 2014 decreased to ~~22.3~~22.7 percent ~~and 22.8~~compared to 23.1 percent ~~respectively, from 24.3 percent and 25.3 percent, respectively,~~ in the same prior year ~~periods.~~period. The ~~decreases were~~decrease was primarily due to ~~“Certain claims” and “Special items.” Since most~~

an international reorganization resulting in the release of the “Special items” and “Certain claims” expense has been recorded in jurisdictions with higher rates of tax, this favorably affects our ETR because it lowers the income in those jurisdictions.a valuation allowance on foreign net operating loss carryforwards. We anticipate that the outcome of various federal, state and foreign audits, as well as expiration of certain statutes of limitations, could potentially impact our ETR in future quarters. Currently, we cannot reasonably estimate the impact of these items on our financial results.

Net earnings of Zimmer Holdings, Inc. of ~~$154.4 million and $525.1~~$221.5 million for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013, respectively, both decreased 13~~March 31, 2014 increased 1 percent compared to the same prior year ~~periods~~period as a result of the changes in revenues and expenses discussed above. In the three month period ended ~~September 30, 2013,~~March 31, 2014, basic and diluted earnings per share ~~decreased 11~~both

increased 1 percent as well. While we continued to repurchase shares in the first quarter, our overall basic and ~~12 percent, respectively,~~diluted shares outstanding increased compared to the same prior year ~~period. In~~period as an increase in our stock price resulted in significant stock option exercises by our employees and more dilutive shares outstanding as calculated pursuant to the ~~nine~~treasury stock method under GAAP.

For our reporting segments, operating profit increased in Europe and Asia Pacific in the three month period ended ~~September 30, 2013, basic and diluted earnings per share both decreased 10 percent~~March 31, 2014 compared to the same prior year ~~period.~~period, while in the Americas it decreased. The ~~disproportional change~~decrease in ~~earnings per share as compared with net earnings is attributed~~the Americas was primarily from lower gross profit due to the ~~effect~~medical device excise tax and from lower average selling prices. In Europe, the increase in operating profit was driven by a 6 percent increase in sales coupled with controlled operating expenses. Operating expenses increased 2 percent, due to our operational excellence initiatives and the nature of ~~share repurchases.~~fixed versus variable expenses resulting in operating margin expansion in Europe. The increase in operating profit in Asia Pacific was driven by an 8 percent increase in sales from volume/mix. While changes in foreign currency exchange rates decreased sales in Asia Pacific by 8 percent, this decline was largely offset by hedge gains recorded in 2014 versus hedge losses recorded in 2013.

We use ~~non-GAAP~~ financial measures ~~to evaluate our operating performance~~ that differ from financial measures determined in accordance with ~~GAAP.~~GAAP to evaluate our operating performance. These non-GAAP financial measures exclude the impact of inventory step-up, certain inventory and manufacturing related charges connected to quality enhancement and remediation efforts, ~~inventory obsolescence charges associated with product rationalization initiatives, “Certain claims,”~~ “Special items,” and any related effects on our income tax provision associated with these items. We use this information internally and believe it is helpful to investors because it allows more meaningful period-to-period comparisons of our ongoing operating results, it helps to perform trend analysis and to better identify operating trends that may otherwise be masked or distorted by these types of items, and it provides a higher degree of transparency of certain items. Certain of these non-GAAP financial measures are used as metrics for our incentive compensation programs.

Our non-GAAP adjusted net earnings used for internal management purposes for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013 were $215.6~~March 31, 2014 was $258.1 million ~~and $699.8 million, respectively,~~ compared to ~~$202.1~~$240.8 million ~~and $669.0 million, respectively,~~ in the same prior year ~~periods.~~period. Our non-GAAP adjusted diluted earnings per share for the three ~~and nine~~ month ~~periods~~period ended ~~September 30, 2013 were $1.25 and $4.09, respectively,~~March 31, 2014 was $1.50, compared to ~~$1.15 and $3.79, respectively,~~$1.41 in the same prior year ~~periods.~~period.

The following are reconciliations from our GAAP net earnings and diluted earnings per share to our non-GAAP adjusted net earnings and non-GAAP adjusted diluted earnings per share used for internal management purposes.


	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(In millions)	2013			2012			2013			2012			2014			2013
Net Earnings of Zimmer Holdings, Inc.	$	154.4		$	178.1		$	525.1		$	602.2		$	221.5		$	218.6
Inventory step-up and other inventory and manufacturing related charges		43.8			0.5			57.7			2.5			7.7			2.2
Certain claims		—			—			47.0			—
Special items		46.4			36.9			155.5			101.1			45.9			33.5
Taxes on above items*		(29.0	)		(13.4	)		(85.5	)		(36.8	)		(17.0	)		(13.5	)

Adjusted Net Earnings	$	215.6		$	202.1		$	699.8		$	669.0		$	258.1		$	240.8

   Three Months Ended
September 30,    Nine Months Ended
September 30,
   2013 2012    2013 2012
Diluted EPS
   $ 0.90    $ 1.02       $ 3.07    $ 3.41
Inventory step-up and other inventory and manufacturing related charges
   0.25    —       0.34    0.01
Certain claims
   —    —       0.27    —
Special items
   0.27    0.21       0.91    0.58
Taxes on above items*
   (0.17 ) (0.08 )    (0.50 ) (0.21 )




Adjusted Diluted EPS
   $ 1.25    $ 1.15       $ 4.09    $ 3.79

Cash flows provided by operating activities were ~~$662.9~~$188.8 million ~~for~~in the ~~nine~~three month period ended ~~September 30, 2013,~~March 31, 2014, compared to ~~$783.9~~$180.5 million in the same prior year period. The principal source of cash from operating activities was net earnings. Non-cash items included in net earnings accounted for another ~~$310.6~~$114.7 million of operating ~~cash.~~cash in the 2014 period. All other items of operating cash flows reflect a use of ~~$171.5~~$147.0 million of cash in the ~~nine~~three month period ended ~~September 30, 2013,~~March 31, 2014, compared to a use of ~~$133.8~~$137.4 million in the same ~~2012~~2013 period.

The ~~lower~~higher cash flows provided by operating activities in the ~~2013~~2014 period were primarily due to ~~increases in inventory caused by the medical device excise tax and inventory investments to support new product launches. Additionally,~~improved cash flows ~~were unfavorable compared to the prior year due to spending on~~generated from receivables collections, especially significant amounts received in Spain, and lower funding of our ~~quality and operational excellence initiatives.~~U.S. pension plans. These ~~unfavorable~~favorable items were partially offset by ~~lower product liability~~higher tax payments for~~Durom~~ ~~Cup claims, and lower funding required on our U.S. pension plans for 2013.~~ certain unresolved matters in order to limit the potential impact of IRS interest charges.

At ~~September 30, 2013,~~March 31, 2014, we had 7368 days of sales outstanding in trade accounts receivable, which represents an increase of 43 days compared to ~~June 30,~~December 31, 2013 and ~~an increase of 1 day from September 30, 2012.~~is the same as March 31, 2013. At ~~September 30, 2013,~~March 31, 2014, we had ~~297~~334 days of inventory on hand. This is an increase of 449 days compared to ~~June 30,~~December 31, 2013 and ~~a decrease~~an increase of 5315 days from ~~September 30, 2012.~~March 31, 2013. We consider the changes in days of sales outstanding and days of inventory on hand as normal fluctuations for our business.

Cash flows used in investing activities were ~~$272.3~~$98.4 million ~~for~~in the ~~nine~~three month period ended ~~September 30, 2013,~~March 31, 2014, compared to ~~$367.5~~cash inflows of $53.0 million in the same prior year period. Additions to instruments ~~increased in~~were relatively consistent between the 2014 and 2013 ~~period compared~~periods as we continued to ~~the 2012 period due to purchases~~purchase instruments for significant product launches, such asPersona The Personalized Knee System. Spending on other property, plant and equipment ~~was relatively consistent between~~increased in the ~~2013~~2014 period ~~and~~compared to the ~~2012~~2013 period, reflecting cash outlays necessary to complete new product-related investments and to replace older machinery and equipment. We invest some of our cash and cash equivalents in highly-rated debt securities. The purchases and any sales or maturities of these investments are reflected as cash flows from investing activities. The timing of these investments can vary from quarter to quarter depending on the maturity of the debt securities and other cash and cash equivalent needs. ~~Investments in other assets in the 2013 period related primarily to small business acquisitions we have executed.~~

Cash flows used in financing activities were ~~$345.1~~$290.7 million ~~for~~in the ~~nine~~three month period ended ~~September 30, 2013,~~March 31, 2014, compared to ~~$378.4~~$452.5 million in the same ~~2012~~prior year period. In the ~~2013~~2014 period, we returned cash to our stockholders in the form of cash dividends of ~~$98.4~~$34.0 million and share repurchases of ~~$478.3~~$400.5 million. In the 2013 period, we paid off ~~the amount we had borrowed~~outstanding borrowings under our senior credit ~~facility in the fourth quarter of 2012.~~facility. Additionally, an increase in our stock price in late 2013 and into 2014 resulted in many employees exercising stock options, which provided us with additional cash.

In February ~~May and July of 2013,~~2014, our Board of Directors declared a cash ~~dividends~~dividend of ~~$0.20~~$0.22 per share that ~~were~~was paid in April ~~July and October of 2013, respectively.~~2014. We expect to continue paying cash dividends on a quarterly basis; however, future dividends are subject to approval of the Board of Directors and may be adjusted as business needs or market conditions change. The ~~2013~~first quarter 2014 dividend ~~declarations equate~~equates to an annual rate of ~~$0.80~~$0.88 per share, which represents ~~an 11~~a 10 percent increase over the ~~2012~~2013 annualized rate.

As discussed in Note 1411 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report, the IRS has issued proposed adjustments for years 2006 through 2009 reallocating profits between certain of our U.S. and foreign subsidiaries. We have disputed these proposed adjustments and continue to pursue resolution with the IRS. Although the ultimate timing for resolution of the disputed tax issues is uncertain, future payments may be significant to our operating cash flows.

As discussed in Note 15 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report, we are defending a patent infringement lawsuit in which the trial court awarded the plaintiff $210.0 million in damages plus interest and attorneys’ fees. We have filed a Notice of Appeal and have not recorded a liability because we do not believe it is probable that we have incurred a loss. Although we believe we have strong grounds to reverse the trial court’s judgment, we could be required to pay $210.0 million plus interest and attorneys’ fees in the future.

Also as discussed in Note 15 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report, we have recorded a short-term liability of $50.0 million and long-term liability of $322.3 million related toDurom Cup product liability claims. We expect to continue paying these claims over

the next five years. We have also recorded a long-term receivable of $218.0 million that we expect to receive from insurance carriers once we reach our self-insured retention under our insurance programs.

As discussed in Note 16 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report, we have entered into a definitive agreement to merge with Biomet’s parent corporation for $10.35 billion in cash and 32.7 million shares of our common stock which had an aggregate value of $3.0 billion, based on the stock price at the time of the announcement of the transaction. We expect to fund the cash portion of the purchase price with existing cash on hand, as well as proceeds obtained from a newly committed $3.0 billion senior unsecured term loan and senior notes we intend to issue. In connection with our execution of the definitive agreement, in April 2014 we entered into a $7.66 billion 364-day bridge facility (Bridge Facility), which we intend to reduce when the new senior notes are issued.

Currently, we have four tranches of senior notes outstanding: $250 million aggregate principal amount of 1.4 percent notes due November 30, 2014, $500 million aggregate principal amount of 4.625 percent notes due November 30, 2019, $300 million aggregate principal amount of 3.375 percent notes due November 30, 2021 and $500 million aggregate principal amount of 5.75 percent notes due November 30, 2039. Interest on each series is payable on May 30 and November 30 of each year until maturity.

We may redeem the senior notes at our election in whole or in part at any time prior to maturity at a redemption price equal to the greater of 1) 100 percent of the principal amount of the notes being redeemed; or 2) the sum of the present values of the remaining scheduled payments of principal and interest (not including any portion of such payments of interest accrued as of the date of redemption), discounted to the date of redemption on a semi-annual basis at the Treasury Rate (as defined in the debt agreement), plus 15 basis points in the case of the 2014 notes, 20 basis points in the case of the 2019 and 2021 notes, and 25 basis points in the case of the 2039 notes. We will also pay the accrued and unpaid interest on the senior notes to the redemption date.

We intend to refinance our $250 million senior notes due November 30, 2014 by either borrowing against our senior credit facility or by issuing new senior notes.

We have a five year $1,350 million revolving, multi-currency, senior unsecured credit facility maturing May 9, 2017 (Senior Credit Facility). There were no borrowings outstanding under the Senior Credit Facility at ~~September 30, 2013.~~March 31, 2014. Due to the pending Biomet transaction, we expect to renew the Senior Credit Facility later this year.

We and certain of our wholly owned foreign subsidiaries are the borrowers under the Senior Credit Facility. Borrowings under the Senior Credit Facility bear interest at a LIBOR-based rate plus an applicable margin determined by reference to our senior unsecured long-term credit rating and the amounts drawn under the Senior Credit Facility, at an alternate base rate, or at a fixed-rate determined through a competitive bid process. The Senior Credit Facility contains customary affirmative and negative covenants and events of default for an unsecured financing arrangement, including, among other things, limitations on consolidations, mergers and sales or transfers of assets. Financial covenants include a maximum leverage ratio of 3.0 to 1.0. If we fall below an investment grade credit rating, additional restrictions would result, including restrictions on investments, payment of dividends and stock repurchases. We were in compliance with all covenants under the Senior Credit Facility as of ~~September 30, 2013.~~March 31, 2014. Commitments under the Senior Credit Facility are subject to certain fees, including a facility fee and a utilization fee.

We have a term loan agreement (Term Loan) with one of the lenders under the Senior Credit Facility for 11.7 billion Japanese Yen that will mature on May 31, 2016. Borrowings under the Term Loan bear interest at a fixed rate of 0.61 percent per annum until maturity.

We also have available uncommitted credit facilities totaling ~~$82.6~~$50.3 million. The Bridge Facility we entered into in connection with the Biomet transaction will provide up to $7.66 billion for 364 days.

We expect to maintain an investment grade credit ratings by Standard and Poor’s and Moody’s if the Biomet transaction is completed. After the announcement of the Biomet transaction, Standard and Poor’s Ratings Services placed a CreditWatch with negative implications on our rating and expects to lower our rating from A- to BBB if the transaction is completed. Moody’s Investor Services placed our rating on review for downgrade and expects to lower our rating from Baa1 to Baa3 if the transaction is completed.

We place our cash and cash equivalents in highly-rated financial institutions and limit the amount of credit exposure to any one entity. We invest only in high-quality financial instruments in accordance with our internal investment policy.

As of ~~September 30, 2013,~~March 31, 2014, we had short-term and long-term investments in debt securities with a fair value of ~~$856.0~~$823.9 million. These investments are in debt securities of many different issuers and therefore we believe we have no significant concentration of risk with a single issuer. All of these debt securities remain highly-rated and we believe the risk of default by the issuers is low.

As of ~~September 30, 2013, $1,363.3~~March 31, 2014, $786.6 million of our cash and cash equivalents and short-term and long-term investments were held in jurisdictions outside of the U.S. and are expected to be indefinitely reinvested for continued use in foreign operations. Repatriation of these assets to the U.S. may have tax consequences. ~~$1,052.1~~$462.1 million of this amount is denominated in U.S. Dollars and therefore bears no foreign currency translation risk. The balance of these assets is denominated in currencies of the various countries where we operate.

Our ~~concentrations~~concentration of credit risks with respect to trade accounts receivable is limited due to the large number of customers and their dispersion across a number of geographic areas, and by frequent monitoring of the creditworthiness of the customers to whom credit is granted in the normal course of business. Substantially all of our trade receivables are concentrated in the public and private hospital and healthcare industry in the U.S. and internationally or with distributors or dealers who operate in international markets and, accordingly, are exposed to their respective business, economic and country specific variables.

Our ability to collect accounts receivable in some countries depends in part upon the financial stability of these hospital and healthcare sectors and the respective countries’ national economic and healthcare systems. Most notably, in Europe healthcare is typically sponsored by the government. Since we sell products to public hospitals in those countries, we are indirectly exposed to government budget constraints. The ongoing financial uncertainties in the Euro zone ~~impacts~~impact the indirect credit exposure we have to those governments through their public hospitals. As of ~~September 30, 2013,~~March 31, 2014, in Greece, Italy, Portugal and Spain, countries that have been widely recognized as presenting the highest risk, our gross short-term and long-term trade accounts receivable combined were ~~$226.5~~$211.1 million. With allowances for doubtful accounts of ~~$9.8~~$9.9 million recorded in those countries, the net balance was ~~$216.7~~$201.2 million, representing 2523 percent of our total consolidated short-term and long-term trade accounts receivable balance, net. Italy and Spain accounted for ~~$208.6~~$193.5 million of that net amount. We are actively monitoring the situations in these countries. We maintain contact with customers in these countries on a regular basis. We continue to receive payments, albeit at a slower rate than in the past. We believe our allowance for doubtful accounts is adequate in these countries, as ultimately we believe the governments in these countries will be able to pay. To the extent the respective governments’ ability to fund their public hospital programs deteriorates, we may have to record significant bad debt expenses in the future.

~~We may use excess cash to repurchase common stock under our share repurchase program.~~ As of ~~September 30, 2013, $536.4~~March 31, 2014, $599.5 million remained authorized under ~~a $1.5~~our $1.0 billion share repurchase program, which ~~will expire on December 31, 2014.~~has no expiration date. Due to the pending transaction with Biomet, we do not plan to repurchase additional shares in 2014, in order to preserve capital to help fund the transaction. Upon completion of the transaction, in the near to medium term we intend to use our cash flows for debt repayment and dividends instead of share repurchases.

Management believes that cash flows from operations and available borrowings under the Senior Credit Facility or from the public and private debt markets are sufficient to meet our working capital, capital expenditure, ~~and~~ debt service needs and fund our pending transaction with Biomet, as well as return cash to stockholders in the form of ~~dividends and share repurchases.~~dividends. Should additional investment opportunities arise, we believe that our earnings, balance sheet and cash flows will allow us to obtain additional capital, if necessary.

There are no recently issued accounting pronouncements that we have not yet adopted that are expected to have a material effect on our financial position, results of operations or cash flows.

There were no changes in the three month period ended ~~September 30, 2013~~March 31, 2014 to the application of critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, ~~2012.~~2013. As

discussed in that Annual Report on Form 10-K, our annual impairment test of goodwill occurs in the fourth quarter every year. In ~~2012, the annual~~our 2013 impairment test, ~~resulted in an~~while no impairment ~~charge related to~~charges were recorded, we concluded that our U.S. Spine and U.S. Dental reporting ~~unit, reducing goodwill in that reporting unit to $41.0 million. Accordingly, the~~units’ estimated fair ~~value of that reporting unit does~~values did not substantially exceed ~~its~~their respective carrying ~~value.~~values. If ~~the U.S. Spine~~these reporting ~~unit is~~units are not able to achieve ~~its~~their operating plans or if ~~that market deteriorates~~those markets deteriorate beyond our expectations, we may have to record ~~another~~a goodwill impairment charge in the future. We have other reporting units with goodwill assigned to them. As of the annual impairment test in ~~2012,~~2013, the estimated fair values for those reporting units substantially exceeded their carrying values.

This quarterly report contains certain statements that are forward-looking statements within the meaning of federal securities laws. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this report, the words “may,” “will,” “should,” “would,” “could,”

~~“anticipate,~~ “anticipate,” “expect,” “plan,” “seek,” “believe,” “predict,” “estimate,” “potential,” “project,” “target,” “forecast,” “intend,” “strategy,” “future,” “opportunity,” “assume,” “guide” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to:

Our Annual Report on Form 10-K for the year ended December 31, ~~2012 contains a detailed discussion~~2013 and this Quarterly Report on Form 10-Q contain discussions of these and other important factors under the heading “Risk ~~Factors” in Part I, Item 1A of that report.~~Factors.” You should understand that it is not possible to predict or identify all factors that could cause actual results to differ materially from forward-looking statements. Consequently, you should not consider any list or discussion of such factors to be a complete set of all potential risks or uncertainties.

Readers of this report are cautioned not to place undue reliance on these forward-looking statements. While we believe the assumptions on which the forward-looking statements are based are reasonable, there can be no assurance that these forward-looking statements will prove to be accurate. This cautionary statement is applicable to all forward-looking statements contained in this report.

We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any further disclosures we make on related subjects in our Form 10-Q, 8-K and 10-K reports and our other filings with the Securities and Exchange Commission.

There have been no material changes from the information provided in our Annual Report on Form 10-K for the year ended December 31, ~~2012.~~2013.

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the ~~Securities~~ Exchange ~~Act of 1934 (Exchange~~ Act)) that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no

matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective at a reasonable assurance level.

During the quarter ended September 30, 2013, we continued transitioning work to a third-party service provider to outsource certain finance functions that historically have been performed internally in multiple countries throughout Europe and in the U.S. We also continued centralizing other finance functions that historically have been performed in a decentralized manner. This outsourcing and centralization are part of our ongoing operational excellence initiatives, and we plan to continue transitioning work to the service provider and the centralized finance departments over the remainder of 2013.

In connection with the outsourcing and centralization of finance functions and the resulting business process changes, we continue to enhance the design and documentation of our internal control processes to ensure suitable controls over our financial reporting. There ~~were~~was no ~~other changes~~change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended ~~September 30, 2013~~March 31, 2014 that ~~have~~has materially affected, or ~~are~~is reasonably likely to materially affect, our internal control over financial reporting.

Information pertaining to legal proceedings can be found in Note 1415 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report.

~~There~~Other than the addition of the risk factors presented below related to our proposed Biomet transaction, there have been no material changes ~~from~~in the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2012.~~2013.

We may not realize all of the anticipated benefits of the Biomet merger or those benefits may take longer to realize than expected. We may also encounter significant unexpected difficulties in integrating the two businesses.

The success of the merger will depend, in part, on our ability to realize the anticipated benefits and cost savings from combining the businesses of Zimmer and Biomet. Zimmer and Biomet have operated and, until the completion of the merger, will continue to operate, independently. It is possible that the integration process could result in the loss of key employees or distributors, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that could adversely affect the combined company’s ability to maintain relationships with customers or suppliers, or to achieve the anticipated benefits of the merger. If we experience difficulties with the integration process, the anticipated synergies and other benefits of the transaction may not be realized fully or at all, or may take longer to realize than expected. Integration efforts between the two companies may also divert management attention and resources. These integration matters could have an adverse effect on each of Zimmer and Biomet during this transition period and for an undetermined period after completion of the transaction on the combined company.

In addition, even if we successfully integrate Biomet’s business operations with our own, we may not realize the full expected benefits of the transaction, including the synergies, cost savings, sales and growth opportunities that we expect. These benefits may not be achieved within the anticipated time frame, or at all. Additional unanticipated costs may also be incurred in the integration of the companies’ businesses. As a result, we cannot assure you that the combination of Zimmer’s and Biomet’s businesses will result in the realization of the full synergies and other benefits anticipated from the transaction.

Zimmer and Biomet will be subject to business uncertainties while the transaction is pending that may have an adverse effect on Zimmer prior to closing or the combined company after completion of the transaction.

Uncertainty about the effect of the transaction between Zimmer and Biomet on employees, distributors, customers and suppliers may have an adverse effect on the parties prior to closing or the combined company after completion of the transaction. These uncertainties may impair Zimmer’s or Biomet’s ability to attract, retain and motivate key personnel until the transaction is completed, and could cause customers, suppliers and others that deal with Zimmer or Biomet to seek to change existing business relationships with either company. If key employees or distributors depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Zimmer or Biomet, Zimmer’s business or the business of the combined company after completion of the transaction could be harmed.

Failure to consummate the Biomet transaction could negatively impact our share price and our future business and financial results.

If the proposed Biomet transaction is not consummated, our ongoing businesses may be adversely affected and, without realizing any of the benefits of having consummated the transaction, we will be subject to a number of risks, including the following:

If the merger is not consummated, these risks may materialize and may materially adversely affect our business, financial results and share price.

If we consummate the Biomet transaction, we will be required to incur a substantial amount of additional indebtedness and issue equity securities, which could have an adverse effect on our financial health and make it more difficult for us to obtain additional financing in the future.

We currently expect to fund the $13.35 billion purchase price for the Biomet transaction with a combination of $3 billion of equity and $10.35 billion of cash and debt. The increased indebtedness and higher debt-to-equity ratio we will experience could, among other things, limit our ability to obtain financing in the future, reduce our flexibility to respond to changing business and economic conditions and increase our borrowing costs. Furthermore, the issuance of equity securities may result in substantial dilution to our existing stockholders and may have a material adverse effect on the market price of our common stock. Additionally, if we fail to realize the expected benefits from the Biomet transaction or if the financial performance of the combined company does not meet our current expectations, it may make it more difficult for us to service our debt and our results of operations may fail to meet expectations.

Consummation of the transaction is not subject to a financing condition. We may have to obtain financing under the bridge facility if we cannot secure the permanent financing we currently expect to obtain. The interest rates, mandatory prepayment provisions and other terms and covenants for debt incurred pursuant to the bridge facility would generally be less favorable than the permanent financing arrangements that we contemplate.

The required regulatory approvals to complete the Biomet transaction may not be obtained or may contain materially burdensome conditions that could have a material adverse effect on us.

Completion of the Biomet transaction is conditioned upon the receipt of certain governmental approvals, including, without limitation, the expiration or termination of the applicable waiting period under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended, the approval of the European Commission pursuant to applicable antitrust laws and, with respect to certain other jurisdictions, the receipt of regulatory approval or the termination or expiration of applicable waiting periods. Although Zimmer and Biomet have agreed in the merger agreement to take all steps necessary to obtain the requisite antitrust governmental approvals, there can be no assurance that these approvals will be obtained. In addition, the governmental authorities from which these approvals are required may impose conditions on the completion of the transaction or require changes to the terms of the transaction including, without limitation, the sale or divestiture of assets or businesses and the entering into, amendment or termination of contracts or other arrangements. If we are required to divest assets or businesses, there can be no assurance that we will be able to negotiate such divestitures expeditiously or on favorable terms or that the governmental authorities will approve the terms of such divestitures. If we become subject to any material conditions in order to obtain any approvals required to complete the transaction, completion of the transaction could be delayed and our business and results of operations may be materially adversely affected.

Biomet faces litigation risks and is the subject of various legal proceedings, which the combined company would assume if the transaction is consummated.

If we consummate the Biomet transaction, the combined company will assume Biomet’s risks arising from legal proceedings. Like all medical device companies in the current legal environment, Biomet is involved in various patent, product liability, consumer and commercial litigation and claims, government investigations, and other legal proceedings that arise from time to time in the ordinary course of its business. We cannot predict with certainty the eventual outcome of Biomet’s pending or future legal proceedings and the ultimate outcome of such matters could be material to our results of operations, cash flows and financial condition.

The following table summarizes repurchases of common stock settled during the three month period ended ~~September 30, 2013:~~March 31, 2014:

During the three month period ended ~~September 30, 2013,~~March 31, 2014, the Audit Committee of our Board of Directors approved the engagement of PricewaterhouseCoopers LLP, our independent registered public accounting firm, to perform certain non-audit services. This disclosure is made pursuant to Section 10A(i)(2) of the Exchange Act, as added by Section 202 of the Sarbanes-Oxley Act of 2002.

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.


Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
(Do not check if a smaller reporting company)


		Page
	Part I — Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Statements of Earnings for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~		3
	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~		4
	Condensed Consolidated Balance Sheets as of ~~September 30, 2013~~March 31, 2014 and December 31, ~~2012~~2013		5
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2014 and 2013 ~~and 2012~~		6
	Notes to Interim Condensed Consolidated Financial Statements		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		2321
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		3532
Item 4.	Controls and Procedures		3532

	Part II — Other Information
Item 1.	Legal Proceedings		3634
Item 1A.	Risk Factors		3634
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 3.	Defaults Upon Senior Securities		36
Item 4.	Mine Safety Disclosures		36
Item 5.	Other Information		36
Item 6.	Exhibits		37
Signatures			38


	September 30, 2013		December 31, 2012
	(in millions)
Finished goods	$	833.6	$	786.3
Work in progress		71.7		52.3
Raw materials		176.6		156.7

Inventories	$	1,081.9	$	995.3


	March 31, 2014		December 31, 2013
	(in millions)
Finished goods	$	865.3	$	817.0
Work in progress		85.9		77.4
Raw materials		174.7		180.1

Inventories	$	1,125.9	$	1,074.5


	March 31, 2014		December 31, 2013
	(in millions)
Other current liabilities:
Salaries, wages and benefits	$	77.6	$	122.8
Accrued liabilities		530.7		541.3

Total other current liabilities	$	608.3	$	664.1


	Amortized Cost		Gross Unrealized					Fair value
	Amortized Cost		Gains		Losses			Fair value
As of September 30, 2013
Corporate debt securities	$	443.5	$	0.3	$	(0.3	)	$	443.5
U.S. government and agency debt securities		252.9		0.2		—			253.1
Foreign government debt securities		3.1		—		—			3.1
Commercial paper		89.0		—		—			89.0
Certificates of deposit		67.3		—		—			67.3

Total short and long-term investments	$	855.8	$	0.5	$	(0.3	)	$	856.0

As of December 31, 2012
Corporate debt securities	$	383.6	$	0.3	$	(0.1	)	$	383.8
U.S. government and agency debt securities		295.8		0.1		—			295.9
Foreign government debt securities		5.0		—		—			5.0
Commercial paper		138.7		—		—			138.7
Certificates of deposit		92.2		0.1		—			92.3

Total short and long-term investments	$	915.3	$	0.5	$	(0.1	)	$	915.7


	Three Months Ended September 30, 2013									Nine Months Ended September 30, 2013
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	45.4		$	—		$	45.4		$	(51.4	)	$	—		$	(51.4	)
Unrealized cash flow hedge gains/(losses)		(21.4	)		(3.1	)		(18.3	)		46.3			21.8			24.5
Reclassification adjustments on foreign currency hedges		(5.2	)		(1.7	)		(3.5	)		(3.3	)		(1.3	)		(2.0	)
Unrealized gains on securities		0.9			—			0.9			(0.1	)		—			(0.1	)
Adjustments to prior service cost and unrecognized actuarial assumptions		3.7			0.3			3.4			11.1			1.2			9.9

Total Other Comprehensive Gain/(Loss)	$	23.4		$	(4.5	)	$	27.9		$	2.6		$	21.7		$	(19.1	)


	March 31,
	2014			2013
Diluted EPS	$	1.29		$	1.28
Inventory step-up and other inventory and manufacturing related charges		0.04			0.01
Special items		0.27			0.20
Taxes on above items*		(0.10	)		(0.08	)

Adjusted Diluted EPS	$	1.50		$	1.41


	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs*		Approximate Dollar Value of Shares that May Yet Be Purchased Under Plans or Programs
July 2013		—	$	—		—	$	553,912,488
August 2013		208,985		83.92		208,985		536,375,482
September 2013		—		—		—		536,375,482

Total		208,985	$	83.92		208,985	$	536,375,482



10.1		Separation Agreement between Zimmer, Inc. and Jeffery A. McCaulley entered into on January 28, 2014

31.1		Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 of the Chief Executive Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934 of the Chief Financial Officer, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32		Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema Document

101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB		XBRL Taxonomy Extension Label Linkbase Document

101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF		XBRL Taxonomy Extension Definition Linkbase Document


	ZIMMER HOLDINGS, INC.
	(Registrant)

Date: ~~November 12, 2013~~May 6, 2014	By:	/s/ James T. Crines
		James T. Crines
		Executive Vice President, Finance and
		Chief Financial Officer

Date: ~~November 12, 2013~~May 6, 2014	By:	/s/ Derek M. Davis
		Derek M. Davis
		Vice President, Finance and Corporate
		Controller and Chief Accounting Officer