Zimmer Biomet (ZBH) 8-K Zimmer Reports Third Quarter 2004 Financial Results

Exhibit 99.1

Contacts:

Media	Investors
Brad Bishop	Marc Ostermann	Sam Leno
574-372-4291	574-371-8515	574-372-4790
bradley.bishop@zimmer.com	marc.ostermann@zimmer.com	sam.leno@zimmer.com

Zimmer Reports Third Quarter 2004 Financial Results

Third Quarter Highlights

• Net Sales increased 76% reported, and 13% combined* (includes 3% increase due to changes in foreign exchange rates) to $700 million

• Worldwide Reconstructive sales increased 83% reported, and 16% combined* (includes 3% increase due to changes in foreign exchange rates)

• Americas Reconstructive sales increased 58% reported, and 20% combined*, with standalone Zimmer up 26%

• Record margins — 76% gross, 27% operating and 18% net reported; 77% gross, 30% operating and 20% net adjusted*

• Diluted EPS were $0.52 reported, and $0.56 adjusted*, an increase of 30% adjusted* over prior year

• Record operating cash flow of $206 million, total debt reduced to $680 million and cash on hand is $62 million

• Increasing Q4 2004 diluted earnings per share guidance to a range of $0.55 to $0.57 reported and $0.62 to $0.64 adjusted*. 2005 diluted earnings per share in a range of $2.68 to $2.73 reported, and $2.80 to $2.85 adjusted*, implying an increase over prior year in excess of 20%.

(WARSAW, IN) October 25, 2004 — Zimmer Holdings, Inc. (NYSE and SWX:ZMH) today reported net sales of $700 million and diluted EPS of $0.52 reported and $0.56 adjusted* for the quarter ended September 30, 2004. The Company’s sales and diluted earnings per share results, on a reported and adjusted* basis, exceeded the high end of the Company’s previous sales and adjusted earnings per share guidance and First Call estimates of $692 million and $0.53 adjusted*, respectively.

The Company’s reported results reflect its acquisition of Centerpulse AG on October 2, 2003, and Implex Corp., on April 23, 2004. Reported results include acquisition and integration expenses, inventory step-up and the prior year cumulative effect of a change in accounting principle for instrumentation, as applicable.

“Our record gross profit margin of 77% adjusted* and earnings per share growth of 30% adjusted* drove operating cash flow to a record $206 million in the quarter,” said Ray Elliott, Zimmer Chairman, President and Chief Executive Officer. “In the bellwether U.S. reconstructive market, we believe Zimmer outpaced the market during the third quarter by at least two percentage points of growth in knees and four percentage points of growth in hips.”

On October 15, 2004, Zimmer announced that it had entered into a satisfactory financial agreement with CeramTec AG of Germany. The Company believes that, pending regulatory approvals, it will be able to enter the U.S. ceramic-on-ceramic hip replacement market in the second half of 2005. With the addition of a proven ceramic-on-ceramic option in the U.S., Zimmer will be able to offer surgeons a complete offering of alternate bearing surface options, including the successfulLongevity® Highly Crosslinked Polyethylene, theMetasul® Metal-on-Metal Tribological Solution and theTrilogy® AB Ceramic-on-Ceramic System. Currently, no company is able to offer all three of these alternate bearing surface options.

Milestones in Zimmer’sMinimally Invasive Solutions™(MIS™) Technologies and Procedures program continue to accelerate. Last week, the Company launched its Computer-Assisted Surgery solution for theMIS2-Incision™ Hip Replacement Procedure, with the initial procedure performed by Dr. Mark Hartzband at the Hackensack University Medical Center in New Jersey. On a relatedMISnote, according to a recent report delivered at Harvard, in excess of $1 billion could be saved by the U.S. health care system if Zimmer’sMIS 2-Incisionand “mini” hip procedures were utilized in an estimated 57% of all hip replacement surgeries. At the Zimmer Institutes, during the

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quarter the Company completed its 100thMIS 2-Incisionprocedure training course since inception and trained its 1,000th surgeon inMIStechniques this year.

The Company is providing a comparison of sales to prior year on a combined* basis in the tables that follow, which includes sales of Centerpulse for the third quarter and the first nine months of 2003.

Net Sales — Three Months Ended September 30, 2004

	Reported					Combined*
	Net		%			% Growth
($ MM)	Sales		Growth			Combined*			FX Impact***
Geographic Segments
Americas	$	430		56	%		15	%		0	%
Europe		167		231			9			9
Asia Pacific		103		44			13			6
Total		700		76			13			3
Product Categories
Reconstructive
Americas	$	342		58	%		20	%		0	%
Europe		151		248			9			8
Asia Pacific		81		52			13			7
Total		574		83			16			3
Hips
Americas	$	124		43	%		17	%		1	%
Europe		84		426			11			9
Asia Pacific		42		61			14			7
Total		250		94			14			4
Knees
Americas	$	190		55	%		21	%		0	%
Europe		57		119			6			8
Asia Pacific		34		30			10			6
Total		281		61			16			2
Trauma	$	40		12	%		2	%		3	%
Spine	$	32		N/A	**		-2	%		2	%
Orthopaedic Surgical Products	$	54		11	%		7	%		2	%

**	Prior year Spine sales were minimal for Zimmer standalone
***	Effect of changes in foreign exchange rates on growth

Net earnings for the quarter were $128 million on a reported basis, and $140 million adjusted*, an increase of 62% adjusted* over the prior year. Diluted earnings per share

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for the quarter were $0.52 reported, and $0.56 adjusted*, an increase of 30% adjusted* over the prior year.

Net Sales — Nine Months Ended September 30, 2004

	Reported					Combined*
	Net		%			% Growth
($ MM)	Sales		Growth			Combined*			FX Impact***
Geographic Segments
Americas	$	1,285		57	%		16	%		0	%
Europe		580		250			14			10
Asia Pacific		315		45			15			9
Total		2,180		82			16			5
Product Categories
Reconstructive
Americas	$	1,014		59	%		20	%		1	%
Europe		528		261			15			11
Asia Pacific		250		53			15			9
Total		1,792		89			18			5
Hips
Americas	$	372		46	%		19	%		1	%
Europe		289		466			15			10
Asia Pacific		132		60			15			10
Total		793		104			17			6
Knees
Americas	$	558		54	%		20	%		0	%
Europe		206		127			13			11
Asia Pacific		103		32			13			9
Total		867		63			18			4
Trauma	$	129		21	%		9	%		4	%
Spine	$	100		N/A	**		3	%		2	%
Orthopaedic Surgical Products	$	159		12	%		8	%		3	%

**	Prior year Spine sales were minimal for Zimmer standalone
***	Effect of changes in foreign exchange rates on growth

Net earnings for the nine months were $342 million on a reported basis, and $421 million adjusted*, an increase of 64% adjusted* over the prior year. Diluted earnings per share for the nine months were $1.38 reported, and $1.70 adjusted*, an increase of 32% adjusted* over the prior year.

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Guidance

The Company is modifying its guidance for the fourth quarter, and is including guidance for 2005. Fourth quarter sales are expected to be within a range of $775 million to $780 million, representing growth of approximately 10% to 11% over the fourth quarter of 2003. This represents a reduction from the top end of the Company’s previous guidance which included a range of $775 million to $790 million. Sales expectations are in line with the original post-Centerpulse acquisition sales growth expectations for the first one to two years communicated in October 2003. When developing its fourth quarter sales guidance, at the end of the second quarter, the Company utilized an incorrect fourth quarter assumption when determining the potential effect of foreign currency, resulting in a $9 million overstatement of constant currency sales expectations for the fourth quarter. The conversion of additional dealer relationships in parts of Scandinavia and Southeast Asia to a direct sales model that had originally been forecasted for the third quarter, were still being negotiated at the end of the quarter. Consequently, the $5 million in sales returns associated with these distributor changes contributed favorably to the Company’s third quarter sales performance and is expected to shift into the fourth quarter. The Company’s two smallest product categories, Spine and Trauma, are expected to continue growing at rates below their respective markets in the short term.

“As a result of improved gross profit and operating profit margins, we are increasing our earnings per share estimates for the fourth quarter to a range of $0.62 to $0.64 adjusted*,” said Sam Leno, Zimmer Chief Financial Officer. “This represents an increase over prior year of approximately 25% adjusted* for the fourth quarter and continues to demonstrate our ability to gain positive leverage from every dollar of sales growth.”

For the full year 2005, the Company estimates sales in the range of $3.325 billion to $3.345 billion, an increase of approximately 13% over 2004. The Company also estimates 2005 diluted earnings per share in a range of $2.68 to $2.73 reported, and $2.80 to $2.85 adjusted*. The 2005 guidance reaffirms the Company’s expectations for the combination of Zimmer and Centerpulse to deliver a minimum of 10% sales growth in 2005, a 20% to 25% diluted earnings per share adjusted* growth in 2005, and the

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potential to exceed a 25% diluted earnings per share adjusted* growth in 2006. Earnings per share guidance for 2005 and 2006 excludes the impact of any potential changes in U.S. GAAP related to accounting for equity-based compensation.

Conference Call

The Company will conduct its third quarter sales and earnings conference call, which will be broadcast live over the Internet, on Tuesday, October 26, 2004, at 8:00 a.m. Eastern Time. The live audio webcast of Zimmer’s conference call will be accessible through the Zimmer website at http://investor.zimmer.com. The webcast will be archived for future replay. Individuals who wish to dial into the conference call may do so at (800) 406-1106. International callers should dial (706) 634-7075. A digital recording will be available two hours after the completion of the conference from October 26, 2004 to October 29, 2004. To access the recording, U.S./Canada callers should dial (800) 642-1687, or for International callers, dial (706) 645-9291, and enter the Conference ID, 1046523. A copy of this press release and any other financial and statistical information about the periods to be presented in the conference call will be accessible through the Zimmer website at http://investor.zimmer.com.

About the Company

Founded in 1927 and headquartered in Warsaw, Indiana, Zimmer is the worldwide #1 pure-play orthopaedic leader in the design, development, manufacture and marketing of reconstructive and spinal implants, trauma and related orthopaedic surgical products. In October 2003, the Company finalized its acquisition of Centerpulse AG, a Switzerland-based orthopaedics company and the leader in the European reconstructive market. The new Zimmer has operations in more than 24 countries around the world and sells products in more than 80 countries. As a result of the acquisition of Centerpulse, reported 2003 sales were $1.9 billion. Full-year 2003 pro forma worldwide sales of Zimmer and Centerpulse were approximately $2.6 billion. The new Zimmer is supported by the efforts of more than 6,500 employees.

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Visit Zimmer on the worldwide web at www.zimmer.com

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*Note on Non-GAAP Financial Measures

As used in this press release, the term“combined”sales includes Centerpulse for the first, second and third quarters of 2003 in order to provide more meaningful year-to-year comparisons. The term“adjusted”refers to operating performance measures that exclude acquisition and integration expenses, inventory step-up and the cumulative effect of the change in accounting principle for instruments. Reconciliations of non-GAAP measures to the most directly comparable GAAP measure are included in this press release.

Zimmer Safe Harbor Statement

This press release contains forward-looking statements within the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 based on current expectations, estimates, forecasts and projections about the orthopaedics industry, management’s beliefs and assumptions made by management. Forward-looking statements may be identified by the use of forward-looking terms such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” and “seeks” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that could cause actual outcomes and results to differ materially. These risks and uncertainties include, but are not limited to, our ability to successfully integrate Centerpulse AG and Implex Corp., the outcome of the pending informal SEC investigation of Centerpulse accounting, price and product competition, rapid technological development, demographic changes, dependence on new product development, the mix of our products and services, supply and prices of raw materials and products, customer demand for our products and services, control of costs and expenses, our ability to form and implement alliances, international growth, governmental laws and regulations affecting our U.S. and international businesses, including tax obligations and risks, product liability and intellectual property litigation losses, reimbursement levels from third-party payors, general industry and market conditions and growth rates and general domestic and international economic conditions including interest rate and currency exchange rate fluctuations. For a further list and description of such risks and uncertainties, see the disclosure materials filed by Zimmer with the U.S. Securities and Exchange Commission. Zimmer disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers of this document are cautioned not to place undue reliance on these forward-looking statements, since, 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 document.

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ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, except per share amounts, unaudited)

	2004		2003		% Inc
Net Sales	$	700.2	$	398.2		76	%
Cost of products sold		169.1		96.8		75
Gross Profit		531.1		301.4		76
Research and development		41.4		24.4		70
Selling, general and administrative		286.2		146.8		95
Acquisition and integration		11.5		1.7		N/A
Operating expenses		339.1		172.9		96
Operating Profit		192.0		128.5		49
Interest expense		7.7		0.7		N/A
Earnings before income taxes and minority interest		184.3		127.8		44
Provision for income taxes		56.4		42.8		32
Minority interest		—		—		N/A
Net Earnings	$	127.9	$	85.0		50
Earnings Per Common Share
Basic	$	0.52	$	0.43		21
Diluted	$	0.52	$	0.43		21
Weighted Average Common Shares Outstanding
Basic		245.0		196.8
Diluted		248.2		199.6

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ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, except per share amounts, unaudited)

	2004		2003		% Inc/(Dec)
Net Sales	$	2,179.8	$	1,199.4		82	%
Cost of products sold		590.5		292.1		102
Gross Profit		1,589.3		907.3		75
Research and development		119.4		68.5		74
Selling, general and administrative		881.3		450.4		96
Acquisition and integration		67.0		3.2		N/A
Operating expenses		1,067.7		522.1		105
Operating Profit		521.6		385.2		35
Interest expense		25.8		3.0		N/A
Earnings before income taxes, cumulative effect of change in accounting principle and minority interest		495.8		382.2		30
Provision for income taxes		154.2		128.0		20
Minority interest		0.2		—
Earnings before cumulative effect of change in accounting principle		341.8		254.2		34
Cumulative effect of change in accounting principle, net of tax		—		55.1		N/A
Net Earnings	$	341.8	$	309.3		11
Earnings Per Common Share — Basic
Earnings before cumulative effect of change in accounting principle	$	1.40	$	1.30		8
Cumulative effect of change in accounting principle, net of tax		—		0.28		N/A
Earnings Per Common Share — Basic	$	1.40	$	1.58		(11	)
Earnings Per Common Share — Diluted
Earnings before cumulative effect of change in accounting principle	$	1.38	$	1.28		8
Cumulative effect of change in accounting principle, net of tax		—		0.27		N/A
Earnings Per Common Share — Diluted	$	1.38	$	1.55		(11	)
Weighted Average Common Shares Outstanding
Basic		244.1		196.3
Diluted		247.3		199.1

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ZIMMER HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2004 AND DECEMBER 31, 2003
(in millions)

	September 30,		December 31,
	2004		2003
	(unaudited)
Assets
Current Assets:
Cash and equivalents	$	45.3	$	77.5
Restricted cash		17.0		14.5
Receivables, net		489.4		486.4
Inventories, net		506.4		527.7
Other current assets		244.9		232.6
Total Current Assets		1,303.0		1,338.7
Property, Plant and Equipment, net		584.1		525.2
Intangible assets		856.3		760.5
Goodwill		2,342.5		2,291.8
Other Assets		184.6		239.8
Total Assets	$	5,270.5	$	5,156.0
Liabilities and Shareholders’ Equity
Current Liabilities	$	520.9	$	544.0
Short-term Debt		12.5		101.3
Other Long-term Liabilities		431.7		352.6
Long-term Debt		667.9		1,007.8
Minority Interest		6.8		7.0
Shareholders’ Equity		3,630.7		3,143.3
Total Liabilities and Shareholders’ Equity	$	5,270.5	$	5,156.0

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ZIMMER HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, unaudited)

	2004			2003
Cash flows provided by (used in) operating activities
Net earnings	$	341.8		$	309.3
Depreciation and amortization		134.6			62.7
Inventory step-up		56.1			—
Cumulative effect of change in accounting principle		—			(89.1	)
Changes in operating assets and liabilities, net of acquired assets and liabilities
Income taxes		122.1			68.4
Receivables		(4.2	)		(30.2	)
Inventories		(32.0	)		(29.0	)
Accounts payable and accrued expenses		(26.0	)		47.6
Other assets and liabilities		11.9			(13.9	)
Net cash provided by operating activities		604.3			325.8
Cash flows provided by (used) in investing activities
Additions to instruments		(106.7	)		(85.2	)
Additions to other property, plant and equipment		(59.6	)		(21.8	)
Centerpulse acquisition costs		(18.2	)		(3.4	)
Implex acquisition, net of acquired cash		(103.7	)		—
Proceeds from note receivable		25.0			—
Investments in other assets		(1.1	)		(15.4	)
Net cash used in investing activities		(264.3	)		(125.8	)
Cash flows provided by (used in) financing activities
Proceeds from exercise of stock options		58.7			46.4
Net payments on lines of credit		(425.1	)		(82.4	)
Debt issuance costs		(0.6	)		(2.5	)
Equity issuance costs		(5.0	)		(1.2	)
Net cash used in financing activities		(372.0	)		(39.7	)
Effect of exchange rates on cash and equivalents		(0.2	)		1.0
Increase (decrease) in cash and equivalents		(32.2	)		161.3
Cash and equivalents, beginning of period		77.5			15.7
Cash and equivalents, end of period	$	45.3		$	177.0

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ZIMMER HOLDINGS, INC.
NET SALES BY GEOGRAPHIC REGION
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, unaudited)

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2004		2003		% Increase			2004		2003		% Increase
Americas	$	430.1	$	276.1		56	%	$	1,285.0	$	815.9		57	%
Europe		167.3		50.5		231			580.1		165.9		250
Asia Pacific		102.8		71.6		44			314.7		217.6		45
Total	$	700.2	$	398.2		76		$	2,179.8	$	1,199.4		82

ZIMMER HOLDINGS, INC.
NET SALES BY PRODUCT CATEGORY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, unaudited)

	Three Months Ended							Nine Months Ended
	September 30,							September 30,
	2004		2003		% Increase			2004		2003		% Increase
Reconstructive	$	573.4	$	312.9		83	%	$	1,792.5	$	949.4		89	%
Trauma		40.5		36.1		12			128.9		106.8		21
Spine		32.3		0.4		N/A			99.6		1.2		N/A
OSP		54.0		48.8		11			158.8		142.0		12
Total	$	700.2	$	398.2		76		$	2,179.8	$	1,199.4		82

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ZIMMER HOLDINGS, INC.
COMBINED* SALES GROWTH
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
(in millions, unaudited)

							Three Months Ended
	Combined* Net Sales						September 30, 2004
	Three Months Ended September 30, 2003						Reported		Combined*
	Zimmer		Centerpulse		Combined*		Net Sales		% Growth
Geographic Segments
Americas	$	276	$	97	$	373	$	430		15	%
Europe		50		104		154		167		9
Asia Pacific		72		19		91		103		13
Total	$	398	$	220	$	618	$	700		13
Product Categories
Reconstructive
Americas	$	217	$	68	$	285	$	342		20	%
Europe		43		95		138		151		9
Asia Pacific		53		19		72		81		13
Total	$	313	$	182	$	495	$	574		16
Hips
Americas	$	87	$	19	$	106	$	124		17	%
Europe		16		60		76		84		11
Asia Pacific		26		11		37		42		14
Total	$	129	$	90	$	219	$	250		14
Knees
Americas	$	123	$	33	$	156	$	190		21	%
Europe		26		28		54		57		6
Asia Pacific		26		5		31		34		10
Total	$	175	$	66	$	241	$	281		16
Trauma	$	36	$	3	$	39	$	40		2	%
Spine	$	—	$	33	$	33	$	32		-2	%
OSP	$	49	$	2	$	51	$	54		7	%

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ZIMMER HOLDINGS, INC.
COMBINED* SALES GROWTH
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(in millions, unaudited)

							Nine Months Ended
	Combined* Net Sales						September 30, 2004
	Nine Months Ended September 30, 2003						Reported		Combined*
	Zimmer		Centerpulse		Combined*		Net Sales		% Growth
Geographic Segments
Americas	$	816	$	291	$	1,107	$	1,285		16	%
Europe		166		341		507		580		14
Asia Pacific		217		57		274		315		15
Total	$	1,199	$	689	$	1,888	$	2,180		16
Product Categories
Reconstructive
Americas	$	639	$	209	$	848	$	1,014		20	%
Europe		146		314		460		528		15
Asia Pacific		164		54		218		250		15
Total	$	949	$	577	$	1,526	$	1,792		18
Hips
Americas	$	254	$	60	$	314	$	372		19	%
Europe		51		200		251		289		15
Asia Pacific		83		32		115		132		15
Total	$	388	$	292	$	680	$	793		17
Knees
Americas	$	362	$	102	$	464	$	558		20	%
Europe		91		91		182		206		13
Asia Pacific		78		14		92		103		13
Total	$	531	$	207	$	738	$	867		18
Trauma	$	107	$	11	$	118	$	129		9	%
Spine	$	1	$	96	$	97	$	100		3	%
OSP	$	142	$	5	$	147	$	159		8	%

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ZIMMER HOLDINGS, INC.
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, unaudited)

	Three Months
	Ended September 30,
	2004			2003
Net Earnings	$	127.9		$	85.0
Acquisition and Integration		11.5			1.7
Inventory Step-up		6.5			—
Tax Benefit of Acquisition and Integration and Inventory Step-up		(6.1	)		(0.6	)
Adjusted Net Earnings	$	139.8		$	86.1

ZIMMER HOLDINGS, INC.
RECONCILIATION OF NET EARNINGS TO ADJUSTED NET EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(in millions, unaudited)

	Nine Months
	Ended September 30,
	2004			2003
Net Earnings	$	341.8		$	309.3
Acquisition and Integration		67.0			3.2
Inventory Step-up		56.1			—
Tax Benefit of Acquisition and Integration and Inventory Step-up		(43.7	)		(1.1	)
Cumulative Effect of Change in Accounting Principle, net of tax		—			(55.1	)
Adjusted Net Earnings	$	421.2		$	256.3

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ZIMMER HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(unaudited)

	Three Months
	Ended September 30,
	2004			2003
Diluted EPS	$	0.52		$	0.43
Acquisition and Integration		0.04			—
Inventory Step-up		0.03			—
Tax Benefit of Acquisition and Integration and Inventory Step-up		(0.03	)		—
Adjusted Diluted EPS	$	0.56		$	0.43

ZIMMER HOLDINGS, INC.
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 and 2003
(unaudited)

	Nine Months
	Ended September 30,
	2004			2003
Diluted EPS	$	1.38		$	1.55
Acquisition and Integration		0.27			0.02
Inventory Step-up		0.23			—
Tax Benefit of Acquisition and Integration and Inventory Step-up		(0.18	)		(0.01	)
Cumulative Effect of Change in Accounting Principle, net of tax		—			(0.27	)
Adjusted Diluted EPS	$	1.70		$	1.29

16

ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED AND ADJUSTED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004
(in millions, except per share amounts, unaudited)

	Reported 2004		Adjustments			Adjusted 2004
Net Sales	$	700.2	$	—		$	700.2
Cost of products sold		169.1		(6.5	)		162.6
Gross Profit		531.1		6.5			537.6
Research and development		41.4		—			41.4
Selling, general and administrative		286.2		—			286.2
Acquisition and integration		11.5		(11.5	)		—
Operating expenses		339.1		(11.5	)		327.6
Operating Profit		192.0		18.0			210.0
Interest expense		7.7		—			7.7
Earnings before income taxes		184.3		18.0			202.3
Provision for income taxes		56.4		6.1			62.5
Net Earnings	$	127.9	$	11.9		$	139.8
Earnings Per Common Share
Basic	$	0.52	$	0.05		$	0.57
Diluted	$	0.52	$	0.04		$	0.56
Weighted Average Common Shares Outstanding
Basic		245.0					245.0
Diluted		248.2					248.2

17

ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED AND ADJUSTED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004
(in millions, except per share amounts, unaudited)

	Reported 2004		Adjustments			Adjusted 2004
Net Sales	$	2,179.8	$	—		$	2,179.8
Cost of products sold		590.5		(56.1	)		534.4
Gross Profit		1,589.3		56.1			1,645.4
Research and development		119.4		—			119.4
Selling, general and administrative		881.3		—			881.3
Acquisition and integration		67.0		(67.0	)		—
Operating expenses		1,067.7		(67.0	)		1,000.7
Operating Profit		521.6		123.1			644.7
Interest expense		25.8		—			25.8
Earnings before income taxes and minority interest		495.8		123.1			618.9
Provision for income taxes		154.2		43.7			197.9
Minority interest		0.2		—			0.2
Net Earnings	$	341.8	$	79.4		$	421.2
Earnings Per Common Share
Basic	$	1.40	$	0.33		$	1.73
Diluted	$	1.38	$	0.32		$	1.70
Weighted Average Common Shares Outstanding
Basic		244.1					244.1
Diluted		247.3					247.3

18

ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED AND ADJUSTED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2003
(in millions, except per share amounts, unaudited)

	Reported 2003		Adjustments			Adjusted 2003
Net Sales	$	398.2	$	—		$	398.2
Cost of products sold		96.8		—			96.8
Gross Profit		301.4		—			301.4
Research and development		24.4		—			24.4
Selling, general and administrative		146.8		—			146.8
Acquisition and integration		1.7		(1.7	)		—
Operating expenses		172.9		(1.7	)		171.2
Operating Profit		128.5		1.7			130.2
Interest expense		0.7		—			0.7
Earnings before income taxes		127.8		1.7			129.5
Provision for income taxes		42.8		0.6			43.4
Net Earnings	$	85.0	$	1.1		$	86.1
Earnings Per Common Share
Basic	$	0.43	$	0.01		$	0.44
Diluted	$	0.43	$	—		$	0.43
Weighted Average Common Shares Outstanding
Basic		196.8					196.8
Diluted		199.6					199.6

19

ZIMMER HOLDINGS, INC.
RECONCILIATION OF REPORTED AND ADJUSTED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003
(in millions, except per share amounts, unaudited)

	Reported 2003		Adjustments			Adjusted 2003
Net Sales	$	1,199.4	$	—		$	1,199.4
Cost of products sold		292.1		—			292.1
Gross Profit		907.3		—			907.3
Research and development		68.5		—			68.5
Selling, general and administrative		450.4		—			450.4
Acquisition and integration		3.2		(3.2	)		—
Operating expenses		522.1		(3.2	)		518.9
Operating Profit		385.2		3.2			388.4
Interest expense		3.0		—			3.0
Earnings before income taxes and cumulative effect of change in accounting principle		382.2		3.2			385.4
Provision for income taxes		128.0		1.1			129.1
Earnings before cumulative effect of change in accounting principle		254.2		2.1			256.3
Cumulative effect of change in accounting principle, net of tax		55.1		(55.1	)		—
Net Earnings	$	309.3	$	(53.0	)	$	256.3
Earnings Per Common Share
Basic	$	1.58	$	(0.27	)	$	1.31
Diluted	$	1.55	$	(0.26	)	$	1.29
Weighted Average Common Shares Outstanding
Basic		196.3					196.3
Diluted		199.1					199.1

20

ZIMMER HOLDINGS, INC.
RECONCILIATION OF NET MARGIN TO ADJUSTED NET MARGIN
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
(unaudited)

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2004			2004
Net Margin		18.3	%		15.7	%
Acquisition and Integration		1.6			3.1
Inventory Step-up		1.0			2.6
Tax Benefit of Acquisition and Integration and Inventory Step-up		(0.9	)		(2.1	)
Adjusted Net Margin		20.0	%		19.3	%

ZIMMER HOLDINGS, INC.
RECONCILIATION OF OPERATING MARGIN TO ADJUSTED OPERATING MARGIN
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
(unaudited)

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2004			2004
Operating Margin		27.4	%		23.9	%
Acquisition and Integration		1.6			3.1
Inventory Step-up		1.0			2.6
Adjusted Operating Margin		30.0	%		29.6	%

ZIMMER HOLDINGS, INC.
RECONCILIATION OF GROSS MARGIN TO ADJUSTED GROSS MARGIN
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2004
(unaudited)

	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2004			2004
Gross Margin		75.8	%		72.9	%
Inventory Step-up		1.0			2.6
Adjusted Gross Margin		76.8	%		75.5	%

21

ZIMMER HOLDINGS, INC.
RECONCILIATION OF PROJECTED DILUTED EPS
TO PROJECTED ADJUSTED DILUTED EPS
(unaudited)

	Projected Three Months
	Ended December 31, 2004
	Low		High
Diluted EPS	$	0.55	$	0.57
Acquisition and Integration, net of tax		0.06		0.06
Inventory Step-up, net of tax		0.01		0.01
Adjusted Diluted EPS	$	0.62	$	0.64

	Projected Year Ended
	December 31, 2005
	Low		High
Diluted EPS	$	2.68	$	2.73
Acquisition and Integration, net of tax		0.11		0.11
Inventory Step-up, net of tax		0.01		0.01
Adjusted Diluted EPS	$	2.80	$	2.85

22