LETTER TO SHAREHOLDERS In my letter to shareholders a year ago, I said that “helping patients  to Live Life Big has driven meaningful market share gains and  outstanding financial performance.” My letter concluded, “What kind  of year do we expect 2003 to be? Even Bigger!” That turned out to be an understatement, as Zimmer became the #1 pure-play orthopaedics company in the world. At the same time, we continued to develop, market, and prove new technologies and products that help patients live life E VEN BIGGER.  So, as we look back at 2003, Zimmer can say, “We’ve had a great year.” And we’ve made it possible for more orthopaedic patients to say that they’ve had a great year, too. The key milestone of 2003 was one of the most significant in Zimmer’s more than 75 year history — the acquisition of Centerpulse AG, the leading orthopaedic reconstructive company in Europe and a worldwide force in its own right. The acquisition, which we termed “The Perfect Fit,” fulfilled key priorities in our long-articulated strategic plan: strengthening of our European market position  and entry into the rapidly growing spinal market. In  addition to those two major factors, Centerpulse brings  us many great established products, a more comprehen- sive research effort in orthobiologics, and a strong busi- ness in the reconstructive dental market. The term “Perfect Fit” is not an idle boast. Zimmer’s strength in the Americas and Asia-Pacific is comple- mented by Centerpulse’s market leadership in Europe. Even our local market strengths in the U.S. and Europe are largely complementary. While most post-acquisition integrations are mainly focused on eliminating costly duplication, ours is principally focused on maximizing the market potential of our combined products and services.  There were other important achievements in the corpo- rate development area during the year that advanced  our strategic goals. We acquired the  TransFx TM External Fixation System, filling an important gap in our trauma product line; we entered into a distribution agreement with Tissue Science Laboratories plc to market the Zimmer Rotator Cuff Repair Patch, an innovative, nonre- sorbable biological patch for the repair of rotator cuff injuries in the shoulder; and we announced our intention Our strong cash flow during 2003 enabled us to achieve several important milestones. By the end of the second quarter, we had paid off all of the approximately $450 million in debt associated with our spin-off in August 2001. And in the fourth quarter, we were able to pay down borrowings related to the Centerpulse acquisition by a total of $255 million, or said differently, we were able to pay down almost 20% of the new opening debt balance for the entire Centerpulse acquisition in our first quarter of consolidated operations. We were also very pleased to receive an upgrade to our credit rating by Standard & Poor’s to BBB, resulting from the financial strength of the combined company. During 2003, on a worldwide consolidated basis, sales increased 39% reported to $1.9 billion, and 35% excluding the impact of favorable currencies. Although the stand alone Zimmer ceased to exist on October 2, 2003, it’s notable that if we still reported that way, our full-year 2003 sales growth would have been 20%. For 2003, adjusted diluted earnings per share were $1.80 (1) (reported $1.64), an increase of 37% (reported 25%) over prior year. In other words, the acquisition of Centerpulse was accretive to earnings in our first quarter as a combined company! to acquire Implex Corp., the company we have affili- ated with since 2000 for development and marketing  of products incorporating the  Trabecular Metal TM Technology. The Implex transaction is expected to  close in April of 2004. NOTEWORTHY FINANCIAL PERFORMANCE HISTORIC ACHIEVEMENTS 1