ZIMMER HOLDINGS, INC. AND SUBSIDIARIES 2003 FORM 10-K and information. The Company has strengthened, and intends to continue to support the clinical needs of Japanese surgeons primarily through sponsorship of medical education conferences relating to orthopaedic surgery. The Company’s business is generally not seasonal in nature; however, many of the Company’s products are used in elective procedures, which typically decline during the summer months and holiday seasons. The Company generally ships its orders via overnight courier. The Company’s operations support local language labeling for all shipments to the European Union member countries. The Company operates distribution facilities, among other places, in Warsaw, Indiana; Dover, Ohio; Statesville, North Carolina; Memphis, Tennessee; Austin, Texas; Carlsbad, California; and internationally in Australia, Belgium, Canada, France, Germany, Italy, Japan, Korea, the Netherlands, Singapore, Spain, Switzerland and the United Kingdom. The Company’s backlog of firm orders is not considered material to an understanding of its business. The Company designs, develops, manufactures and markets reconstructive orthopaedic implants, including joint and dental, spinal implants, and trauma products, and related orthopaedic surgical products. Orthopaedic reconstructive implants restore joint function lost due to disease or trauma in joints such as knees, hips, shoulders, and elbows. Dental reconstructive implants restore function and aesthetics in patients that have lost teeth due to trauma or disease. Spinal implants are utilized by orthopaedic surgeons and neurosurgeons in the treatment of degenerative diseases, deformities and trauma in all regions of the spine. Trauma products are devices used primarily to reattach or stabilize damaged bone or tissue to support the body’s natural healing process. The Company’s related orthopaedic surgical products include surgical supplies and instruments designed to aid in orthopaedic surgical procedures. The Company also has a limited array of sports medicine products. The majority of reconstructive implant procedures restore joint function lost due to degenerative diseases such as arthritis and relieve pain in knees and hips. In 2001, the Company announced that it had established a dedicated business team to maximize the potential patient benefits of applying minimally invasive surgical techniques to orthopaedic surgery, which the Company refers to as  MIS Minimally Invasive Solutions TM (‘‘MIS’’ ) Procedures and Technologies. A distinct medical education center, the Zimmer Institute$^{TM}$, with an approximate 16,000 square foot facility located at the Company’s global headquarters in Warsaw, Indiana, opened in March 2003 and has been used to facilitate the training of over 500 surgeons, sales associates and other medical professionals on several innovative  MIS Procedures. The Company expects another 1,400 surgeons to be trained through the Zimmer Institute and its satellite locations during 2004. The Company is currently working with several global medical centers to evaluate and refine advanced minimally invasive knee and hip replacement procedures. On February 3, 2004, the Company announced that it is working with Johns Hopkins University, a prestigious medical teaching institution, to advance education in  MIS  Procedures and Techniques. The Company has also announced a similar relationship with a group of surgeons affiliated with the University of British Columbia in Vancouver, Canada and the Company has affiliated and plans to continue to affiliate with additional North American and international institutions to provide surgeon education at the Zimmer Institute and its satellite locations. The principal goals of these  MIS  efforts are to reduce the hardships of having a total joint replacement, such as the time a patient must spend in rehabilitation, pain reduction and lost time from work. The Company is continuing its work to develop navigation systems, through the use of image-guided surgical technology, to aid surgeons in learning procedures and gaining confidence in the placement of instrumentation and implants where navigation is difficult due to the small incisions necessary in effectuating MIS  Procedures. The Company is focused both on further commercializing existing  MIS  approaches and investigating new ways to apply  MIS  principles to additional procedures. The Company doubled its financial investment in the  MIS program in 2003 to more than $20 million, excluding instruments. For 2004, the  MIS  investment by the Company is expected to increase to nearly $30 million, excluding instruments. Total knee surgeries typically include a femoral component, a patella (knee cap), a tibial tray and an articulating surface (placed on the tibial tray). Knee replacement surgeries include first-time joint replacement procedures and revision procedures for the replacement, repair or enhancement of an implant product or component from a previous procedure. Knee implants are designed to accommodate different levels of ligament stabilization of the joint. While some knee implant designs, called cruciate retaining (‘‘CR’’) designs, require the retention of the posterior cruciate ligament, other designs, called posterior stabilized (‘‘PS’’) designs, provide joint stability without the posterior cruciate ligament. There are also procedures for partial reconstruction of the knee, which treat limited knee degeneration and involve the replacement of only one side or compartment of the knee with a unicompartmental knee prosthesis. The Company offers a wide range of products for specialized knee procedures, including, among others, the following brands: NexGen ˛  Complete Knee Solution. The  NexGen knee product line is a comprehensive system for knee replacement surgery which has had significant application in PS, CR and revision procedures. The  NexGen  knee system offers joint stability and sizing that can be tailored to 5 Orthopaedic Reconstructive Implants Knee Implants PRODUCTS DISTRIBUTION