ZIMMER HOLDINGS, INC. AND SUBSIDIARIES 2003 FORM 10-K Notes to Consolidated Financial Statements (Continued) Net sales, segment operating profit and year-end assets are as follows (in millions): Net Sales Operating Profit Year-End Assets 2003 2002 2001 2003 2002 2001 2003 2002 Americas $1,208.3 $ 932.9 $ 790.7 $ 619.2 $ 450.2 $ 374.9 $3,065.0 $597.2 Europe 366.0 169.9 132.7 96.4 41.4 25.9 1,743.0 102.8 Asia Pacific 326.7 269.6 255.2 148.1 124.3 115.8 348.0 158.9 Net sales $1,901.0 $1,372.4 $1,178.6 Inventory step-up (42.7) – – Acquisition and integration (79.6) – – In-process research and development (11.2) – – Separation Costs – – (70.0) Global operations and corporate expenses (279.5) (215.0) (198.3) Operating profit $ 450.7 $ 400.9 $ 248.3 Total assets $5,156.0 $858.9 U.S. sales were $1,152.0 million, $892.3 million and $753.0 million for the years ended December 31, 2003, 2002 and 2001, respectively. Net sales by product category are as follows (in millions): obligations under the Terminated Facility established by the Company and its former parent with then outstanding borrowings of $290 million. With additional borrowings under the Terminated Facility, the Company repaid amounts due to its former parent of approximately $90 million, and finally, the Company assumed an additional $22 million of borrowings under the Terminated Facility for separation costs. The Company also recognized certain liabilities and obligations for pension, post-retirement, long-term disability and U.S. sales agent benefits. Recognition of these liabilities and obligations reduced the net investment in Zimmer by its former parent. The Company incurred $70.0 million ($49.9 million net of taxes) in 2001 in costs, fees and expenses relating to the separation from its former parent and distribution of Company common stock to the Bristol-Myers Squibb stockholders (‘‘Separation Costs’’). These costs, fees and expenses were primarily for retention bonuses; legal separation matters; professional expenses; and costs of producing, printing, mailing and distributing the information statement related to the Distribution. 2003 2002 2001 Reconstructive implants $1,521.0 $1,061.7 $ 886.5 Trauma 151.6 133.8 128.3 Spine 33.6 – – Orthopaedic surgical products 194.8 176.9 163.8 Total $1,901.0 $1,372.4 $1,178.6 The Americas, Europe and Asia Pacific long-lived assets were $344.9 million, $143.8 million and $36.5 million at December 31, 2003, respectively, and $143.2 million, $3.8 million and $10.8 million at December 31, 2002, respectively. Depreciation and amortization are as follows (in millions): 2003 2002 2001 Americas $ 38.4 $ 22.9 $ 21.3 Europe 55.2 1.3 1.3 Asia Pacific 9.7 1.1 0.8 $103.3 $ 25.3 $ 23.4 18. SEPARATION FROM BRISTOL-MYERS SQUIBB COMPANY 19. TRANSACTIONS WITH FORMER PARENT The Company was incorporated in Delaware as a wholly- owned subsidiary of Bristol-Myers Squibb, its former parent, on January 12, 2001. On July 25, 2001, Bristol-Myers Squibb transferred the assets and liabilities of its orthopaedic business to the Company. On August 6, 2001, Bristol-Myers Squibb distributed all 193.6 million shares of Company common stock to Bristol-Myers Squibb stockholders in the form of a dividend of one share of Company common stock and the associated preferred stock purchase right, for every 10 shares of Bristol-Myers Squibb common stock (the ‘‘Distribution’’). The Distribution qualified as a tax-free distribution made under Section 355 and 368(a)(1)(1) of the Internal Revenue Code of 1986 as more fully-described in Note 14. On August 6, 2001, the Company assumed all Prior to the Distribution, the former parent of the Company provided certain services, including administration of treasury, insurance, payroll, employee compensation and benefits, travel and meeting services, public and investor relations, real estate services, internal audit, corporate aviation and related services, telecommunications, computing services, corporate income tax and selected legal services. Management of the Company believes that the methods used to allocate expenses to the Company for these services were reasonable, although it cannot be assured that all the expenses that would have been incurred had the Company been a separate, standalone entity have been reflected in financial results prior to the Distribution. These services accounted for a total expense of $17.2 million for the period January 1, 2001 through the Distribution. 54