10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016

Commission File Number 001-16407

ZIMMER BIOMET HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	13-4151777
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

345 East Main Street, Warsaw, IN 46580

(Address of principal executive offices)

Telephone: (574) 267-6131

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 of Regulation S-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.

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

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 August 3, 2016, 200,012,486 shares of the registrant’s $.01 par value common stock were outstanding.

ZIMMER BIOMET HOLDINGS, INC.

INDEX TO FORM 10-Q

June 30, 2016

	Page
Part I—Financial Information
Item 1.
Financial Statements (unaudited)
Condensed Consolidated Statements of Earnings for the Three and Six Months Ended June 30, 2016 and 2015		3
Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2016 and 2015		4
Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015		5
Condensed Consolidated Statements of Cash Flows for the Three and Six Months Ended June 30, 2016 and 2015		6
Notes to Interim Condensed Consolidated Financial Statements		7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations		32
Item 3.
Quantitative and Qualitative Disclosures About Market Risk		46
Item 4.
Controls and Procedures		46
Part II—Other Information
Item 1.
Legal Proceedings		46
Item 1A.
Risk Factors		46
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds		49
Item 3.
Defaults Upon Senior Securities		49
Item 4.
Mine Safety Disclosures		49
Item 5.
Other Information		49
Item 6.
Exhibits		50
Signatures		51

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Part I—Financial Information

Item 1. Financial Statements

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share amounts, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net Sales	$	1,934.0		$	1,167.6		$	3,838.0		$	2,302.0
Cost of products sold, excluding intangible asset amortization		640.1			294.3			1,280.7			579.2
Intangible asset amortization		133.8			33.0			260.4			53.4
Research and development		88.6			51.3			174.3			99.6
Selling, general and administrative		732.0			444.2			1,448.9			868.3
Certain claims (Note 15)		—			7.7			—			7.7
Special items (Note 2)		137.9			469.2			226.6			556.0
Operating expenses		1,732.4			1,299.7			3,390.9			2,164.2
Operating Profit (Loss)		201.6			(132.1	)		447.1			137.8
Other expense, net		(3.8	)		(26.3	)		(7.6	)		(48.9	)
Interest income		0.8			2.5			2.1			5.1
Interest expense		(88.1	)		(82.7	)		(176.3	)		(105.8	)
Earnings (loss) before income taxes		110.5			(238.6	)		265.3			(11.8	)
Provision (benefit) for income taxes		142.2			(64.8	)		188.3			(9.1	)
Net (Loss) Earnings		(31.7	)		(173.8	)		77.0			(2.7	)
Less: Net loss attributable to noncontrolling interest		(0.4	)		(0.2	)		(0.5	)		(0.5	)
Net (Loss) Earnings of Zimmer Biomet Holdings, Inc.	$	(31.3	)	$	(173.6	)	$	77.5		$	(2.2	)
(Loss) Earnings Per Common Share
Basic	$	(0.16	)	$	(1.00	)	$	0.39		$	(0.01	)
Diluted	$	(0.16	)	$	(1.00	)	$	0.38		$	(0.01	)
Weighted Average Common Shares Outstanding
Basic		199.4			173.0			199.8			171.5
Diluted		199.4			173.0			202.1			171.5
Cash Dividends Declared Per Common Share	$	0.24		$	0.22		$	0.48		$	0.44

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

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ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net (loss) earnings	$	(31.7	)	$	(173.8	)	$	77.0		$	(2.7	)
Other Comprehensive Income:
Foreign currency cumulative translation adjustments		(78.6	)		10.3			55.6			(139.6	)
Unrealized cash flow hedge gains (losses), net of tax		0.8			(13.1	)		(43.3	)		39.3
Reclassification adjustments on foreign currency hedges, net of tax		(19.7	)		(25.1	)		(44.1	)		(46.7	)
Unrealized (losses) gains on securities, net of tax		—			(0.1	)		0.4			0.5
Adjustments to prior service cost and unrecognized actuarial assumptions, net of tax		1.1			1.5			21.1			5.4
Total Other Comprehensive Loss		(96.4	)		(26.5	)		(10.3	)		(141.1	)
Comprehensive (Loss) Income		(128.1	)		(200.3	)		66.7			(143.8	)
Comprehensive loss attributable to the noncontrolling interest		(0.4	)		(0.2	)		(0.6	)		—
Comprehensive (Loss) Income attributable to Zimmer Biomet Holdings, Inc.	$	(127.7	)	$	(200.1	)	$	67.3		$	(143.8	)

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

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ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(in millions, unaudited)

	June 30, 2016			December 31, 2015
ASSETS
Current Assets:
Cash and cash equivalents	$	976.3		$	1,459.3
Short-term investments		—			164.6
Accounts receivable, less allowance for doubtful accounts		1,593.3			1,446.5
Inventories		1,962.1			2,254.1
Prepaid expenses and other current assets		518.9			529.2
Total Current Assets		5,050.6			5,853.7
Property, plant and equipment, net		2,033.8			2,062.6
Goodwill		9,976.6			9,934.2
Intangible assets, net		8,386.9			8,746.3
Other assets		523.4			563.8
Total Assets	$	25,971.3		$	27,160.6
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	243.8		$	284.8
Income taxes payable		193.6			147.2
Current portion of long-term debt		500.0			—
Other current liabilities		1,163.8			1,185.9
Total Current Liabilities		2,101.2			1,617.9
Deferred income taxes		2,824.2			3,150.2
Other long-term liabilities		963.1			1,005.7
Long-term debt		10,533.5			11,497.4
Total Liabilities		16,422.0			17,271.2
Commitments and Contingencies (Note 15)
Stockholders’ Equity:
Zimmer Biomet Holdings, Inc. Stockholders’ Equity:
Common stock, $0.01 par value, one billion shares authorized, 303.9 million shares issued in 2016 (302.7 million in 2015)		3.0			3.0
Paid-in capital		8,293.6			8,195.3
Retained earnings		8,331.9			8,347.7
Accumulated other comprehensive loss		(339.3	)		(329.0	)
Treasury stock, 104.2 million shares in 2016 (100.0 million shares in 2015)		(6,740.8	)		(6,329.1	)
Total Zimmer Biomet Holdings, Inc. stockholders’ equity		9,548.4			9,887.9
Noncontrolling interest		0.9			1.5
Total Stockholders’ Equity		9,549.3			9,889.4
Total Liabilities and Stockholders’ Equity	$	25,971.3		$	27,160.6

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

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ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)

	For the Six Months Ended June 30,
	2016			2015
Cash flows provided by (used in) operating activities:
Net earnings (loss)	$	77.0		$	(2.7	)
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization		499.2			188.6
Share-based compensation		30.7			21.2
Non-cash Biomet merger consideration compensation expense		—			164.1
Intangible asset impairment		28.0			—
Excess income tax benefit from stock option exercises		—			(9.1	)
Inventory step-up		286.4			10.5
Loss on divestiture of assets		—			3.4
Changes in operating assets and liabilities, net of effect of acquisitions:
Income taxes		13.6			95.9
Receivables		(120.8	)		(59.3	)
Inventories		60.2			(140.8	)
Accounts payable and accrued expenses		(141.9	)		102.4
Other assets and liabilities		(80.0	)		(85.5	)
Net cash provided by operating activities		652.4			288.7
Cash flows provided by (used in) investing activities:
Additions to instruments		(157.3	)		(104.0	)
Additions to other property, plant and equipment		(73.7	)		(64.8	)
Purchases of investments		(1.2	)		(152.6	)
Sales of investments		273.3			398.9
Proceeds from divestiture of assets		—			24.1
Biomet acquisition, net of acquired cash		—			(7,812.9	)
Other business combination investments, net of acquired cash		(184.1	)		—
Investments in other assets		(27.4	)		(9.4	)
Net cash used in investing activities		(170.4	)		(7,720.7	)
Cash flows provided by (used in) financing activities:
Proceeds from senior notes		—			7,628.2
Proceeds from term loan		—			3,000.0
Redemption of senior notes		—			(2,740.0	)
Payments on term loan		(500.0	)		—
Net proceeds (payments on) under revolving credit facilities		(18.8	)		0.9
Dividends paid to stockholders		(92.4	)		(74.7	)
Proceeds from employee stock compensation plans		78.6			34.6
Excess income tax benefit from stock option exercises		—			9.1
Restricted stock witholdings		(5.2	)		(10.4	)
Debt issuance costs		—			(58.4	)
Repurchase of common stock		(415.5	)		—
Net cash (used in) provided by financing activities		(953.3	)		7,789.3
Effect of exchange rates on cash and cash equivalents		(11.7	)		(16.0	)
(Decrease) increase in cash and cash equivalents		(483.0	)		341.3
Cash and cash equivalents, beginning of year		1,459.3			1,083.3
Cash and cash equivalents, end of period	$	976.3		$	1,424.6

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

6

ZIMMER BIOMET HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The financial data presented herein is unaudited and should be read in conjunction with the consolidated financial statements and accompanying notes included in the 2015 Annual Report on Form 10-K filed by Zimmer Biomet Holdings, Inc.

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, 2015 condensed consolidated 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.

On June 24, 2015 (the “Closing Date”), pursuant to an agreement and plan of merger dated April 24, 2014, we acquired LVB Acquisition, Inc. (“LVB”), the parent company of Biomet, Inc. (“Biomet”), and LVB and Biomet became our wholly-owned subsidiaries (sometimes hereinafter referred to as the “Biomet merger” or the “merger”). For more information on the merger, see Note 3. In connection with the merger, we changed our name from Zimmer Holdings, Inc. to Zimmer Biomet Holdings, Inc.

The words “we,” “us,” “our” and similar words and “Zimmer Biomet” refer to Zimmer Biomet Holdings, Inc. and its subsidiaries. “Zimmer Biomet Holdings” refers to the parent company only. “Zimmer” used alone refers to the business or information of us and our subsidiaries on a stand-alone basis without inclusion of the business or information of LVB or any of its subsidiaries. Unless the context indicates or requires otherwise, references to “LVB” and “Biomet” refer to LVB and its subsidiaries.

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2. Significant Accounting Policies

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Biomet-related
Merger consideration compensation expense	$	—	$	164.1	$	—	$	164.1
Retention plans		—		73.0		—		73.0
Consulting and professional fees		43.3		62.4		79.4		86.6
Employee termination benefits		3.1		64.5		7.2		64.9
Dedicated project personnel		21.2		8.1		42.9		9.1
Relocated facilities		6.3		0.9		8.0		0.9
Contract terminations		15.2		15.9		25.3		15.9
Information technology integration		3.1		—		4.5		—
Intangible asset impairment		28.0		—		28.0		—
Other		0.4		1.7		4.4		1.9
Total Biomet-related		120.6		390.6		199.7		416.4
Other
Consulting and professional fees		8.8		39.6		15.7		79.3
Employee termination benefits		—		0.7		—		0.8
Dedicated project personnel		1.5		10.1		3.3		22.5
Impairment/loss on disposal of assets		1.1		—		1.1		2.3
Relocated facilities		—		—		0.2		0.5
Certain litigation matters		—		20.3		—		20.3
Contract terminations		1.0		—		1.0		—
Information technology integration		0.2		—		0.3		—
Contingent consideration adjustments		—		—		—		2.3
Accelerated software amortization		—		—		—		1.5
Other		4.7		7.9		5.3		10.1
Total Other		17.3		78.6		26.9		139.6
Special items	$	137.9	$	469.2	$	226.6	$	556.0

As part of the Biomet merger, we recognized $209.0 million of intangible assets for in-process research and development (“IPR&D”) projects. During the three month period ended June 30, 2016, we recorded an impairment loss of $28.0 million related to these IPR&D intangible assets. The impairment was primarily due to the termination of certain IPR&D projects.

8

After the Closing Date of the Biomet merger, we started to implement our integration plans to drive operational synergies. Part of these integration plans included termination of employees and certain contracts. Expenses attributable to these integration plans that were recognized in the three and six month periods ended June 30, 2016 and 2015 as part of “Special items” related to employee termination benefits and contract termination expense associated with agreements with independent agents, distributors, suppliers and lessors. Our integration plans are expected to last through 2018 and we expect to incur a total of $170 million for employee termination benefits and $130 million for contract termination expense in that time period. As of June 30, 2016, we have incurred a cumulative total of $108.2 million for employee termination benefits and $120.3 million for contract termination expense. The following table summarizes the liabilities related to these integration plans (in millions):

	Employee Termination Benefits			Contract Terminations			Total
Balance at December 31, 2015	$	46.8		$	56.0		$	102.8
Additions		7.2			25.3			32.5
Cash payments		(16.7	)		(41.5	)		(58.2	)
Foreign currency exchange rate changes		(0.4	)		—			(0.4	)
Balance at June 30, 2016	$	36.9		$	39.8		$	76.7

Recent Accounting Pronouncements—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09—Revenue from Contracts with Customers (Topic 606). This ASU provides a five-step model for revenue recognition that all industries will apply to recognize revenue when a customer obtains control of a good or service. The ASU will be effective for us beginning January 1, 2018. We are in the initial phases of our adoption plans and, accordingly, we are unable to estimate any effect this may have on our revenue recognition practices.

In April 2015, the FASB issued ASU 2015-03—Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. This ASU does not affect the measurement and recognition of debt issuance costs in our statement of earnings. We adopted ASU 2015-03 during the first quarter of 2016 on a retrospective basis. Accordingly, we reclassified the debt issuance costs on our December 31, 2015 consolidated balance sheet, which decreased long-term debt by $58.9 million, other current assets by $9.2 million and other assets by $49.7 million.

In February 2016, the FASB issued ASU 2016-02—Leases. This ASU requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet. This ASU will be effective for us beginning January 1, 2019. Early adoption is permitted. The ASU must be adopted using a modified retrospective transition approach at the beginning of the earliest comparative period in the consolidated financial statements. We own most of our manufacturing facilities, but lease various office space throughout the world. We are currently evaluating the impact this ASU will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09—Improvements to Employee Share-Based Payment Accounting. This ASU simplifies several aspects of the accounting for employee share-based payments, including the accounting for employer tax withholding on share-based compensation, forfeitures and the financial statement presentation of excess tax benefits and deficiencies. The ASU also clarifies the statement of cash flows presentation for certain components of share-based awards. The ASU will be effective for us beginning January 1, 2017. Early adoption is permitted.

We elected to early adopt ASU 2016-09 during the second quarter of 2016, which required us to revise applicable items in the first quarter of 2016, since it was an interim period in the year of adoption. As a result of the adoption, we are required to recognize excess tax benefits in our provision for income taxes, rather than paid-in capital for all periods in 2016.

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Additionally, ASU 2016-09 requires us to amend the presentation of employee shared-based payment-related items in our statement of cash flows as follows: (i) excess tax benefits are presented as an operating activity (such cash flows were previously included in cash flows from financing activities), and (ii) cash paid for employee taxes on withheld shares from equity awards is presented as a financing activity (such cash flows were previously included in cash flows from operating activities). We elected to apply the change in cash flow classification for excess tax benefits on a prospective basis. Further, we applied the change in cash flow classification for cash paid for withheld shares on a retrospective basis, as required.

Lastly, we elected to continue to estimate the number of forfeitures related to share-based payments, rather than account for forfeitures as they occur.

We recognized excess tax benefits of $4.0 million and $6.9 million in our provision for income taxes rather than paid-in capital for the three and six months ended June 30, 2016, respectively. Additionally, the change in cash flow classification resulted in a reclassification that increased each of net cash provided by operating activities and net cash used in financing activities by $12.4 million for the six month period ended June 30, 2016.

Following is a summary of the financial statement line items impacted as a result of the adoption of ASU 2016-09 for the periods presented in this Form 10-Q (in millions, except per share amounts).

Revised Consolidated Statement of Earnings and Comprehensive Income

	Three Months Ended March 31, 2016
	As Reported		Adjustment			As Revised
Provision for income taxes	$	49.0	$	(2.9	)	$	46.1
Net earnings		105.8		2.9			108.7
Net Earnings of Zimmer Biomet Holdings, Inc.		105.9		2.9			108.8
Weighted Average Common Shares Outstanding—Diluted		202.0		0.2			202.2
Earnings Per Common Share—Basic	$	0.53	$	0.01		$	0.54
Earnings Per Common Share—Diluted		0.52		0.02			0.54
Comprehensive Income	$	191.9	$	2.9		$	194.8
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.		192.1		2.9			195.0

Revised Balance Sheet

	As of March 31, 2016
	As Reported		Adjustment			As Revised
Paid-in capital	$	8,233.5	$	(2.9	)	$	8,230.6
Retained earnings		8,407.5		2.9			8,410.4

Revised Statements of Cash Flows

	Three Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
Net cash provided by operating activities	$	265.2		$	7.6		$	272.8
Net cash used in financing activities		(825.3	)		(7.6	)		(832.9	)

	Six Months Ended June 30, 2015
	As Reported		Adjustment			As Revised
Net cash provided by operating activities	$	278.3	$	10.4		$	288.7
Net cash provided by financing activities		7,799.7		(10.4	)		7,789.3

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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.

3. Business Combinations

Biomet Merger

On the Closing Date, we completed our merger with LVB, the parent company of Biomet. We paid $12,030.3 million in cash and stock and assumed Biomet’s senior notes. The total amount of merger consideration utilized for the acquisition method of accounting, as reduced by the merger consideration paid to holders of unvested LVB stock options and LVB stock-based awards of $90.4 million, was $11,939.9 million.

In the three month period ended June 30, 2016, we finalized our valuation of the assets acquired and liabilities assumed in the Biomet merger. The measurement period adjustments in 2016 primarily related to refinements to intangible assets for certain less significant brands, the finalization of tax accounts, including the allocation of acquired intangible assets and goodwill on a jurisdictional basis, and finalizing the estimation of certain contingent liabilities. All other adjustments were not significant. Under GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. With respect to intangible asset amortization expense, the adjustments resulted in a decrease of $6.7 million in the six month period ended June 30, 2016, which related to the year ended December 31, 2015 on a retrospective basis. With respect to inventory fair value, in the three month period ended June 30, 2016, an adjustment was made which decreased cost of products sold, excluding intangible asset amortization, by $6.9 million, of which $2.3 million related to the three month period ended March 31, 2016 and $4.6 million related to the year ended December 31, 2015 on a retrospective basis. Through the finalization of tax accounts, we recognized an increase in our provision for income taxes of $73.2 million and $52.7 million in the three and six month periods ended June 30, 2016, respectively, of which $20.5 million related to the three month period ended March 31, 2016 and $52.7 million related to the year ended December 31, 2015 on a retrospective basis.

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The following table summarizes the updated and final fair values of the assets acquired and liabilities assumed at the Closing Date (in millions):

	Closing Date
	(as adjusted as of March 31, 2016)		Adjustments			Final Values
Cash	$	494.8	$	—		$	494.8
Accounts receivable, net		528.1		(0.2	)		527.9
Inventory		1,237.5		(13.4	)		1,224.1
Other current assets		26.4		(1.0	)		25.4
Property, plant and equipment		783.3		(8.0	)		775.3
Intangible assets not subject to amortization:
Trademarks and trade names		479.0		—			479.0
In-process research and development (IPR&D)		246.0		(37.0	)		209.0
Intangible assets subject to amortization:
Technology		2,332.1		—			2,332.1
Customer relationships		4,946.0		15.0			4,961.0
Trademarks and trade names		360.0		—			360.0
Other assets		50.6		(8.0	)		42.6
Goodwill		7,717.2		(284.0	)		7,433.2
Total assets acquired		19,201.0		(336.6	)		18,864.4
Current liabilities		615.0		(31.0	)		584.0
Long-term debt		2,740.0		—			2,740.0
Deferred taxes		3,849.6		(352.0	)		3,497.6
Other long-term liabilities		56.5		46.4			102.9
Total liabilities assumed		7,261.1		(336.6	)		6,924.5
Net assets acquired	$	11,939.9	$	—		$	11,939.9

The following sets forth unaudited pro forma financial information derived from (i) the unaudited financial statements of Zimmer for the three and six month periods ended June 30, 2015; and (ii) the unaudited financial statements of LVB for the periods April 1, 2015 to June 23, 2015 and January 1, 2015 to June 23, 2015. The pro forma financial information has been adjusted to give effect to the merger as if it had occurred on January 1, 2014.

	Three Months Ended June 30, 2015		Six Months Ended June 30, 2015
	(in millions)
Net Sales	$	1,880.2	$	3,822.0
Net Earnings	$	19.0	$	226.2

These unaudited pro forma results have been prepared for comparative purposes only and include adjustments such as inventory step-up, amortization of acquired intangible assets and interest expense on debt incurred to finance the Biomet merger. Material, nonrecurring pro forma adjustments directly attributable to the Biomet merger include:

• The $164.1 million of merger consideration compensation expense for unvested LVB stock options and LVB stock-based awards was removed from net earnings for the three and six month periods ended June 30, 2015.

• The $73.0 million of retention plan expense was removed from net earnings for the three and six month periods ended June 30, 2015.

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Other acquisitions

During the three months ended June 30, 2016, we completed individually immaterial acquisitions of companies including Cayenne Medical, Inc. (“Cayenne Medical”), a sports medicine company, and Compression Therapy Concepts, Inc. (“CTC”), a provider of non-invasive products for the prevention of deep vein thrombosis. The total aggregate cash consideration was $189.0 million. These acquisitions were completed primarily to expand our product offerings. We have assigned a preliminary fair value of $32.5 million for additional payments related to these acquisitions that are contingent on the respective acquired companies’ product sales and certain cost savings. The estimated fair value of the aggregate contingent payment liabilities was calculated based on the probability of achieving the specified sales growth and cost savings and discounting to present value the estimated payments. None of the goodwill related to these acquisitions is expected to be deductible for tax purposes.

The following table summarizes the aggregate preliminary fair values of the assets acquired and liabilities assumed related to the Cayenne Medical, CTC and other immaterial acquisitions during the three months ended June 30, 2016 (in millions):

Current assets	$	26.9
Intangible assets		118.6
Goodwill		139.6
Other assets		2.9
Total assets acquired		288.0
Current liabilities		4.3
Long-term liabilities		62.2
Total liabilities assumed		66.5
Net assets acquired	$	221.5

We have not included pro forma information and other information required by GAAP for the Cayenne Medical or CTC acquisitions because, individually and in aggregate, they did not have a material impact on our financial position or results of operations.

The following table summarizes the changes in the carrying amount of our goodwill (in millions):

	Americas			EMEA			Asia Pacific			Product Category Operating Segments			Total
Balance at December 31, 2015
Goodwill	$	7,328.0		$	1,291.0		$	548.9		$	1,139.3		$	10,307.2
Accumulated impairment loss		—			—			—			(373.0	)		(373.0	)
		7,328.0			1,291.0			548.9			766.3			9,934.2
Biomet purchase accounting adjustments		(51.4	)		(10.4	)		(61.3	)		(17.6	)		(140.7	)
Other acquisitions		136.7			2.9			—			—			139.6
Currency translation		21.1			4.7			16.0			1.7			43.5
Balance at June 30, 2016
Goodwill		7,434.4			1,288.2			503.6			1,123.4			10,349.6
Accumulated impairment loss		—			—			—			(373.0	)		(373.0	)
	$	7,434.4		$	1,288.2		$	503.6		$	750.4		$	9,976.6

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4. Inventories

	June 30, 2016		December 31, 2015
	(in millions)
Finished goods	$	1,596.1	$	1,827.9
Work in progress		129.0		146.1
Raw materials		237.0		280.1
Inventories	$	1,962.1	$	2,254.1

Finished goods inventory as of June 30, 2016 and December 31, 2015 included $8.2 million and $284.4 million, respectively, to step-up acquired inventory to fair value.

5. Property, Plant and Equipment

	June 30, 2016			December 31, 2015
	(in millions)
Land	$	39.4		$	39.6
Buildings and equipment		1,809.4			1,789.3
Capitalized software costs		381.8			330.1
Instruments		2,418.0			2,160.5
Construction in progress		113.7			108.4
		4,762.3			4,427.9
Accumulated depreciation		(2,728.5	)		(2,365.3	)
Property, plant and equipment, net	$	2,033.8		$	2,062.6

6. Investments

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

	Amortized Cost		Gross Unrealized
			Gains		Losses			Fair Value
As of December 31, 2015
Corporate debt securities	$	245.7	$	0.1	$	(0.4	)	$	245.4
U.S. government and agency debt securities		21.6		-		(0.1	)		21.5
Commercial paper		4.2		-		-			4.2
Certificates of deposit		2.0		-		-			2.0
Total short and long-term investments	$	273.5	$	0.1	$	(0.5	)	$	273.1

During the three months ended June 30, 2016, we sold all of our short and long-term investments for $49.8 million in proceeds. The realized gain/loss on these sales was minimal.

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7. Debt

Our debt consisted of the following (in millions):

	June 30, 2016			December 31, 2015
Current portion of long-term debt
1.450% Senior Notes due 2017	$	500.0		$	—
Long-term debt
1.450% Senior Notes due 2017	$	—		$	500.0
2.000% Senior Notes due 2018		1,150.0			1,150.0
4.625% Senior Notes due 2019		500.0			500.0
2.700% Senior Notes due 2020		1,500.0			1,500.0
3.375% Senior Notes due 2021		300.0			300.0
3.150% Senior Notes due 2022		750.0			750.0
3.550% Senior Notes due 2025		2,000.0			2,000.0
4.250% Senior Notes due 2035		500.0			500.0
5.750% Senior Notes due 2039		500.0			500.0
4.450% Senior Notes due 2045		1,250.0			1,250.0
U.S. Term Loan		2,000.0			2,500.0
Japan Term Loan		113.8			96.8
Other long-term debt		4.5			4.6
Debt discount and issuance costs		(75.5	)		(80.8	)
Adjustment related to interest rate swaps		40.7			26.8
Total long-term debt	$	10,533.5		$	11,497.4

At June 30, 2016, our total debt balance consisted of $8.95 billion aggregate principal amount of our senior notes, a $2.0 billion U.S. term loan (“U.S. Term Loan”) and an 11.7 billion Japanese Yen term loan agreement (“Japan Term Loan”) that will mature on May 31, 2018, partially reduced by the net amount of other debt, debt discount and issuance costs and fair value adjustments, which was $30.3 million.

The U.S. Term Loan is part of our $4.35 billion senior credit agreement (the “Credit Agreement”) that contains: (i) a 5-year unsecured term loan facility in the principal amount of $3.0 billion (the “U.S. Term Loan Facility”), and (ii) a 5-year unsecured multicurrency revolving facility in the principal amount of $1.35 billion (the “Multicurrency Revolving Facility”). The Credit Agreement 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 of assets. Financial covenants include a consolidated indebtedness to consolidated EBITDA ratio of no greater than 5.0 to 1.0 through June 24, 2016 and no greater than 4.5 to 1.0 thereafter. If our credit rating falls below investment grade, additional restrictions would result, including restrictions on investments and payment of dividends. We were in compliance with all covenants under the Credit Agreement as of June 30, 2016.

On June 24, 2015, we borrowed $3.0 billion under the U.S. Term Loan Facility to fund a portion of the Biomet merger. Under the terms of the U.S. Term Loan Facility, starting September 30, 2015, principal payments are due as follows: $75.0 million on a quarterly basis during the first three years, $112.5 million on a quarterly basis during the fourth year, and $412.5 million on a quarterly basis during the fifth year. We have paid $1.0 billion in principal under the U.S. Term Loan Facility, resulting in $2.0 billion in outstanding borrowings as of June 30, 2016.

Borrowings under the Multicurrency Revolving Facility may be used for general corporate purposes. There were no borrowings outstanding under the Multicurrency Revolving Facility as of June 30, 2016.

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Of the total $8.95 billion aggregate principal amount of senior notes outstanding at June 30, 2016, we issued $7.65 billion of this amount in March 2015 (the “Merger Notes”), the proceeds of which were used to finance a portion of the cash consideration payable in the Biomet merger, pay merger related fees and expenses and pay a portion of Biomet’s funded debt. The Merger Notes consist of the following seven tranches: the 1.450% Senior Notes due 2017, the 2.000% Senior Notes due 2018, the 2.700% Senior Notes due 2020, the 3.150% Senior Notes due 2022, the 3.550% Senior Notes due 2025, the 4.250% Senior Notes due 2035 and the 4.450% Senior Notes due 2045.

We may, at our option, redeem our senior notes, in whole or in part, at any time upon payment of the principal, any applicable make-whole premium, and accrued and unpaid interest to the date of redemption. In addition, the Merger Notes and the 3.375% Senior Notes due 2021 may be redeemed at our option without any make-whole premium at specified dates ranging from one month to six months in advance of the scheduled maturity date.

The estimated fair value of our senior notes as of June 30, 2016, based on quoted prices for the specific securities from transactions in over-the-counter markets (Level 2), was $9,251.5 million. The estimated fair value of the Japan Term Loan as of June 30, 2016, based upon publicly available market yield curves and the terms of the debt (Level 2), was $112.9 million. The carrying value of the U.S. Term Loan approximates fair value as it bears interest at short-term variable market rates.

8. Accumulated Other Comprehensive Income

Accumulated other comprehensive income (“AOCI”) 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 AOCI may be reclassified to net earnings upon the occurrence of certain events.

Our AOCI 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. Amounts related to defined benefit plans that are in AOCI 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 12 for more information on our defined benefit plans.

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

	Foreign Currency Translation			Cash Flow Hedges			Unrealized (Losses) Gains on Securities			Defined Benefit Plan Items
Balance at December 31, 2015	$	(193.4	)	$	29.8		$	(0.6	)	$	(164.8	)
AOCI before reclassifications		55.6			(43.3	)		0.4			17.3
Reclassifications		—			(44.1	)		—			3.8
Balance at June 30, 2016	$	(137.8	)	$	(57.6	)	$	(0.2	)	$	(143.7	)

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

	Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended June 30,						Six Months Ended June 30,						Location on Statement of Earnings
Component of AOCI	2016			2015			2016			2015
Cash flow hedges
Foreign exchange forward contracts	$	26.3		$	33.1		$	58.4		$	61.2		Cost of products sold
Forward starting interest rate swaps		(0.5	)		(0.4	)		(0.9	)		(0.5	)	Interest expense
		25.8			32.7			57.5			60.7		Total before tax
		6.1			7.6			13.4			14.0		Provision (benefit) for income taxes
	$	19.7		$	25.1		$	44.1		$	46.7		Net of tax
Defined benefit plans
Prior service cost	$	2.0		$	1.2		$	3.9		$	2.3		*
Unrecognized actuarial (loss)		(5.0	)		(4.2	)		(10.0	)		(8.5	)	*
		(3.0	)		(3.0	)		(6.1	)		(6.2	)	Total before tax
		(1.2	)		(1.5	)		(2.3	)		(0.8	)	Provision (benefit) for income taxes
	$	(1.8	)	$	(1.5	)	$	(3.8	)	$	(5.4	)	Net of tax
Total reclassifications	$	17.9		$	23.6		$	40.3		$	41.3		Net of tax

* These AOCI components are included in the computation of net periodic pension expense (see Note 12).

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

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	(78.6	)	$	—		$	(78.6	)	$	55.6		$	—		$	55.6
Unrealized cash flow hedge (losses) gains		(8.3	)		(9.1	)		0.8			(64.8	)		(21.5	)		(43.3	)
Reclassification adjustments on foreign currency hedges		(25.8	)		(6.1	)		(19.7	)		(57.5	)		(13.4	)		(44.1	)
Unrealized gains on securities		—			—			—			0.4			—			0.4
Adjustments to prior service cost and unrecognized actuarial assumptions		2.0			0.9			1.1			23.4			2.3			21.1
Total Other Comprehensive Loss	$	(110.7	)	$	(14.3	)	$	(96.4	)	$	(42.9	)	$	(32.6	)	$	(10.3	)
	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	10.3		$	—		$	10.3		$	(139.6	)	$	—		$	(139.6	)
Unrealized cash flow hedge (losses) gains		(11.0	)		2.1			(13.1	)		40.7			1.4			39.3
Reclassification adjustments on foreign currency hedges		(32.7	)		(7.6	)		(25.1	)		(60.7	)		(14.0	)		(46.7	)
Unrealized (losses) gains on securities		(0.1	)		—			(0.1	)		0.5			—			0.5
Adjustments to prior service cost and unrecognized actuarial assumptions		3.0			1.5			1.5			6.2			0.8			5.4
Total Other Comprehensive Loss	$	(30.5	)	$	(4.0	)	$	(26.5	)	$	(152.9	)	$	(11.8	)	$	(141.1	)

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9. Fair Value Measurement of Assets and Liabilities

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

	As of June 30, 2016
	Recorded Balance		Fair Value Measurements at Reporting Date Using:
Description			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivatives, current and long-term
Foreign currency forward contracts	$	23.3	$	—	$	23.3	$	—
Interest rate swaps		40.7		—		40.7		—
	$	64.0	$	—	$	64.0	$	—
Liabilities
Derivatives, current and long-term
Foreign currency forward contracts	$	34.7	$	—	$	34.7	$	—

	As of December 31, 2015
	Recorded Balance		Fair Value Measurements at Reporting Date Using:
Description			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	$	245.4	$	—	$	245.4	$	—
U.S. government and agency debt securities		21.5		—		21.5		—
Commercial paper		4.2		—		4.2		—
Certificates of deposit		2.0		—		2.0		—
Total available-for-sale securities		273.1		—		273.1		—
Derivatives, current and long-term
Foreign currency forward contracts		96.9		—		96.9		—
Interest rate swaps		26.8		—		26.8		—
	$	396.8	$	—	$	396.8	$	—
Liabilities
Derivatives, current and long-term
Foreign currency forward contracts	$	1.6	$	—	$	1.6	$	—

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.

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10. Derivative Instruments and Hedging Activities

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.

Interest Rate Risk

Derivatives Designated as Fair Value Hedges

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 4.625% Senior Notes due 2019 and 3.375% Senior Notes due 2021. The total notional amounts are $250 million and $300 million for the 4.625% Senior Notes due 2019 and 3.375% Senior Notes due 2021, respectively. On the interest rate swap agreements for the 4.625% 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 3.375% 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.

Derivatives Designated as Cash Flow Hedges

In 2014, we entered into forward starting interest rate swaps that were designated as cash flow hedges of the thirty year tranche of senior notes we expected to issue in 2015. The forward starting interest rate swaps mitigated the risk of changes in interest rates prior to the completion of the Merger Notes offering. The total notional amounts of the forward starting interest rate swaps were $1 billion and settled in March 2015 at a loss of $97.6 million. The loss is being recognized using the effective interest rate method over the maturity period of the 4.450% Senior Notes due 2045.

Foreign Currency Exchange Rate Risk

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.

Derivatives Designated as Cash Flow Hedges

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

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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 confirming 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. On our condensed consolidated statement of cash flows, the settlements of these cash flow hedges are recognized in operating cash flows.

For foreign currency exchange forward contracts and options outstanding at June 30, 2016, 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 July 2016 through December 2018. As of June 30, 2016, the notional amounts of outstanding forward contracts and options entered into with third parties to purchase U.S. Dollars were $1,575.9 million. As of June 30, 2016, the notional amounts of outstanding forward contracts and options entered into with third parties to purchase Swiss Francs were $297.4 million.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward exchange contracts with terms of one month to manage currency exposures for monetary assets and liabilities denominated in a currency other than an entity’s functional currency. As a result, any foreign currency re-measurement gains/losses recognized in earnings are generally offset with gains/losses on the foreign currency forward exchange contracts in the same reporting period. The net amount of these offsetting gains/losses is recorded in other expense. 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 $1.5 billion to $2.0 billion per quarter.

Income Statement Presentation

Derivatives Designated as Fair Value Hedges

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
			Three Months Ended					Six Months Ended					Three Months Ended					Six Months Ended
	Location on Statement of Earnings		June 30,					June 30,					June 30,					June 30,
Derivative Instrument			2016		2015			2016		2015			2016			2015		2016			2015
Interest rate swaps		Interest expense	$	3.1	$	(8.0	)	$	13.9	$	(0.8	)	$	(3.1	)	$	8.0	$	(13.9	)	$	0.8

We had no ineffective fair value hedging instruments during the three and six month periods ended June 30, 2016 and 2015.

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Derivatives Designated as Cash Flow Hedges

Derivative instruments designated as cash flow hedges had the following effects, before taxes, on AOCI 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 AOCI												Location on Statement of Earnings		Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended June 30,						Six Months Ended June 30,								Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument	2016			2015			2016			2015					2016			2015			2016			2015
Foreign exchange forward contracts	$	(8.3	)	$	(11.0	)	$	(64.8	)	$	79.0			Cost of products sold	$	26.3		$	33.1		$	58.4		$	61.2
Forward starting interest rate swaps		—			—			—			(38.3	)		Interest expense		(0.5	)		(0.4	)		(0.9	)		(0.5	)
	$	(8.3	)	$	(11.0	)	$	(64.8	)	$	40.7				$	25.8		$	32.7		$	57.5		$	60.7

The net amounts recognized in earnings during the three and six month periods ended June 30, 2016 and 2015 due to ineffectiveness and amounts excluded from the assessment of hedge effectiveness were not significant.    

The fair value of outstanding derivative instruments designated as cash flow hedges and recorded on the balance sheet at June 30, 2016, together with settled derivatives where the hedged item has not yet affected earnings, was a net unrealized loss of $96.3 million, or $57.6 million after taxes, which is deferred in AOCI. A gain of $24.3 million, or $20.5 million after taxes, is expected to be reclassified to earnings over the next twelve months. The disproportionate amount of net unrealized loss deferred in AOCI and the expected gain reclassification over the next twelve months is due to the significant loss from the forward starting interest rate swaps deferred in AOCI which will be reclassified to earnings over the maturity period of the 4.450% Senior Notes due 2045.

Derivatives Not Designated as Hedging Instruments

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

	Location on Statement of Earnings	Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument		2016			2015			2016			2015
Foreign exchange forward contracts	Other expense, net	$	(15.9	)	$	(1.6	)	$	(37.2	)	$	13.6

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

Balance Sheet Presentation

As of June 30, 2016 and December 31, 2015, all derivative instruments designated as fair value hedges and cash flow hedges 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

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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):

	June 30, 2016			December 31, 2015
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Asset Derivatives
Foreign exchange forward contracts	Other current assets	$	45.8	Other current assets	$	100.5
Foreign exchange forward contracts	Other assets		10.9	Other assets		19.8
Interest rate swaps	Other assets		40.7	Other assets		26.8
Total asset derivatives		$	97.4		$	147.1
Liability Derivatives
Foreign exchange forward contracts	Other current liabilities	$	44.5	Other current liabilities	$	16.7
Foreign exchange forward contracts	Other long-term liabilities		23.6	Other long-term liabilities		8.3
Total liability derivatives		$	68.1		$	25.0

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

		As of June 30, 2016						As of December 31, 2015
Description	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		$45.8		26.3		$19.5		$100.5		$16.3		$84.2
Cash flow hedges	Other assets		10.9		7.1		3.8		19.8		7.1		12.7
Liability Derivatives
Cash flow hedges	Other current liabilities		44.5		26.3		18.2		16.7		16.3		0.4
Cash flow hedges	Other long-term liabilities		23.6		7.1		16.5		8.3		7.1		1.2

11. Income Taxes

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 amount of tax liability for unrecognized tax benefits may change within the next twelve months 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. Although the ultimate timing for resolution of the disputed tax issues is uncertain, we may resolve certain tax matters within the next twelve months and pay amounts for other unresolved tax matters in order to limit the potential impact of interest charges. Final resolution of these matters could have a material impact on our income tax expense, results of operations and cash flows for future periods. Currently, we cannot reasonably estimate the amount by which our unrecognized tax benefits will change.

Our U.S. federal income tax returns have been audited through 2009 and are currently under audit for years 2010 through 2014. The Internal Revenue Service (“IRS”) has proposed adjustments for years 2005 through 2009, reallocating profits between certain of our U.S. and foreign subsidiaries. We have disputed these adjustments and intend to continue to vigorously defend our positions. For years 2005 through 2007, we have filed a petition with the U.S. Tax Court. For years 2008 through 2009, we are pursuing resolution through the IRS Administrative Appeals Process. The U.S. federal income tax returns of the acquired Biomet consolidated group have been audited through fiscal year 2008.

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Our effective tax rate for the three month periods ended June 30, 2016 and 2015 represented a tax provision of 128.7 percent and a tax benefit of 27.1 percent, respectively. For the six month periods ended June 30, 2016 and 2015, our effective tax rate represented a tax provision of 71.0 percent and a tax benefit of 77.1 percent, respectively. The unusually high tax rates in the 2016 periods primarily relate to the finalization of tax accounts for the Biomet merger. We recognized an increase in our provision for income taxes of $73.2 million and $52.7 million in the three and six month periods ended June 30, 2016, respectively, of which $20.5 million related to the three month period ended March 31, 2016 and $52.7 million related to the year ended December 31, 2015. Under GAAP, these non-cash measurement period adjustments are recognized on a prospective basis in the period of change.

12. Retirement Benefit Plans

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 pension plans are as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Service cost	$	7.7		$	7.6		$	15.2		$	15.2
Interest cost		7.4			5.6			14.6			11.1
Expected return on plan assets		(12.7	)		(10.9	)		(25.4	)		(21.8	)
Curtailment gain		(0.3	)		—			(0.6	)		—
Amortization of prior service cost		(2.0	)		(1.2	)		(3.9	)		(2.3	)
Amortization of unrecognized actuarial loss		5.0			4.2			10.0			8.5
Net periodic pension expense	$	5.1		$	5.3		$	9.9		$	10.7

We expect that we will have minimal legally required funding obligations in 2016 for our U.S. and Puerto Rico defined benefit pension plans, and therefore we have not made, nor do we voluntarily expect to make, any material contributions to these plans during 2016. We contributed $7.4 million to our foreign-based defined benefit pension plans in the six month period ended June 30, 2016, and we expect to contribute $8.4 million to these foreign-based plans during the remainder of 2016.

13. Earnings Per Share

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Weighted average shares outstanding for basic net earnings per share		199.4		173.0		199.8		171.5
Effect of dilutive stock options and other equity awards		—		—		2.3		—
Weighted average shares outstanding for diluted net earnings per share		199.4		173.0		202.1		171.5

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During the six month period ended June 30, 2016, an average of 0.7 million options to purchase shares of common stock were not included in the computation of diluted earnings per share because the exercise prices of these options were greater than the average market price of our common stock. For periods in which we incurred a net loss, no dilutive stock options or other equity awards were included as diluted shares.

In the three month period ended June 30, 2016, we did not repurchase any of our common stock. In the six month period ended June 30, 2016, we repurchased 4.2 million shares of our common stock at an average price of $98.50 per share for a total cash outlay of $415.5 million, including commissions.

14. Segment Information

We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial (“CMF”) and thoracic products; dental implants; and related surgical products. Due to the Biomet merger, we changed our senior management organizational structure which resulted in a change to our operating segments. We now allocate resources to achieve our operating profit goals through seven operating segments. Our operating segments are comprised of both geographic and product category business units. The geographic operating segments are the Americas, which is comprised principally of the U.S. and includes other North, Central and South American markets; EMEA, 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. The product category operating segments are Americas Spine, Bone Healing, CMF and Dental. The geographic operating segments include results from all of our product categories except those in the product category operating segments. The Bone Healing, CMF and Dental product category operating segments reflect those respective product category results from all regions, whereas the Americas Spine operating segment only includes spine product results from the Americas.

As it relates to the geographic operating segments, management evaluates performance based upon segment operating profit exclusive of operating expenses pertaining to inventory step-up and certain other inventory and manufacturing related charges, “Certain claims,” goodwill impairment, intangible asset amortization, “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, manufacturing operations and logistics and share-based payment expense. As it relates to each product category operating segment, research, development engineering, medical education, brand management and other various costs that are specific to the product category operating segment’s operations are reflected in its operating profit results. Due to these additional costs included in the product category operating segments, profitability metrics between the geographic operating segments and product category operating segments are not comparable. Intercompany transactions have been eliminated from segment operating profit.

These seven operating segments are the basis for our reportable segment information provided below. The four product category operating segments are individually insignificant to our consolidated results and therefore do not constitute a reportable segment either individually or combined. For presentation purposes, these product category operating segments have been aggregated. Prior period reportable segment financial information has been restated to conform to the current period.

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Net sales and operating profit by segment are as follows (in millions):

	Net Sales				Operating Profit
	Three Months Ended June 30,				Three Months Ended June 30,
	2016		2015		2016			2015
Americas	$	981.7	$	601.1	$	522.6		$	314.3
EMEA		416.1		270.6		137.0			102.1
Asia Pacific		275.8		193.2		115.2			97.0
Product Category Operating Segments		260.4		102.7		75.7			20.4
Global Operations and Corporate Functions		—		—		(220.6	)		(141.3	)
Total	$	1,934.0	$	1,167.6
Inventory step-up and other inventory and manufacturing related charges						(156.6	)		(14.7	)
Intangible asset amortization						(133.8	)		(33.0	)
Certain claims						—			(7.7	)
Special items						(137.9	)		(469.2	)
Operating profit					$	201.6		$	(132.1	)

	Net Sales				Operating Profit
	Six Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016			2015
Americas	$	1,966.4	$	1,178.8	$	1,057.6		$	611.1
EMEA		832.7		551.8		278.3			211.6
Asia Pacific		532.4		380.7		225.8			194.7
Product Category Operating Segments		506.5		190.7		133.9			34.5
Global Operations and Corporate Functions		—		—		(426.6	)		(278.4	)
Total	$	3,838.0	$	2,302.0
Inventory step-up and other inventory and manufacturing related charges						(334.9	)		(18.6	)
Intangible asset amortization						(260.4	)		(53.4	)
Certain claims						—			(7.7	)
Special items						(226.6	)		(556.0	)
Operating profit					$	447.1		$	137.8

Net sales by product category are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Knees	$	696.9	$	468.9	$	1,400.2	$	932.8
Hips		477.2		319.0		945.1		630.4
S.E.T		412.4		222.5		813.5		440.9
Dental		118.0		61.0		226.6		116.8
Spine & CMF		145.8		58.9		287.0		108.4
Other		83.7		37.3		165.6		72.7
Total	$	1,934.0	$	1,167.6	$	3,838.0	$	2,302.0

“S.E.T” refers to our surgical, sports medicine, biologics, foot and ankle, extremities and trauma product category.

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15. Commitments and Contingencies

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.

Litigation

Durom^® Cup-related claims: On July 22, 2008, we temporarily suspended marketing and distribution of the Durom Cup in the U.S. Subsequently, a number of product liability lawsuits were filed against us in various U.S. and foreign jurisdictions. The plaintiffs seek damages for personal injury, and they generally allege that the Durom Cup contains defects that result in complications and premature revision of the device. We have settled some of these claims and others are still pending. The majority of the pending U.S. lawsuits are currently in a federal Multidistrict Litigation (“MDL”) in the District of New Jersey (In Re: Zimmer Durom Hip Cup Products Liability Litigation). Multi-plaintiff state court cases are pending in St. Clair County, Illinois (Santas, et al. v. Zimmer, Inc., et al.) and Los Angeles County, California (McAllister, et al. v. Zimmer, Inc., et al.). The initial trial in Santas took place in November 2014, the initial trial in the MDL took place in May 2015 and the initial trial in McAllister took place in July 2015. Other lawsuits are pending in various jurisdictions, and additional claims may be asserted in the future.

Since 2008, we have recognized expense of $479.4 million for Durom Cup-related claims. Our estimate of our total liability for these claims as of June 30, 2016 remains consistent with our estimate as of December 31, 2015, and, accordingly, we did not record any additional expense during the three and six month periods ended June 30, 2016. With respect to the same prior year periods, we recognized $7.7 million in expense for Durom Cup-related claims.

We maintain insurance for product liability claims, subject to self-insurance retention requirements. As of June 30, 2016, we have exhausted our self-insured retention under our insurance program and 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, it is probable that we will recover some amount from our insurance carriers. We have received a portion of the insurance proceeds we estimate we will recover. We have a $95.3 million receivable in “Other assets” remaining on our consolidated balance sheet as of June 30, 2016 for estimated insurance recoveries for Durom Cup-related claims. 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 June 30, 2016 of the remaining liability for all Durom Cup-related claims is $303.2 million, of which $50.0 million is classified as short-term in “Other current liabilities” and $253.2 million is classified as long-term in “Other long-term liabilities” on our consolidated balance sheet. We expect to pay the majority of the Durom Cup-related claims within the next few years.

Our understanding of clinical outcomes with the Durom Cup and other large diameter hip cups continues to evolve. We rely on significant estimates in determining the provisions for Durom Cup-related claims, including our estimate of the number of claims that we will receive and the average amount we will pay per claim. The actual number of claims and the actual 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 from Durom Cup-related claims in excess of the losses we have accrued.

Margo and Daniel Polett v. Zimmer, Inc. et al.: On August 20, 2008, Margo and Daniel Polett filed an action against us and an unrelated third party, Public Communications, Inc. (“PCI”), in the Court of Common

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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 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-argument en banc, and on March 28, 2013, we filed our response in opposition. On May 9, 2013, the Superior Court of Pennsylvania granted plaintiffs’ motion for re-argument en banc. Oral argument (re-argument en banc) before the Superior Court of Pennsylvania was held on October 16, 2013. 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, which was granted on May 21, 2014. Oral argument before the Supreme Court of Pennsylvania took place on October 8, 2014. On October 27, 2015, the Supreme Court of Pennsylvania reversed the order of the Superior Court of Pennsylvania and remanded the case to that court to consider the question of whether the trial court erred in refusing to remit the jury’s compensatory damages award. On June 6, 2016, an en banc panel of the Superior Court of Pennsylvania vacated the $27.6 million verdict and remanded the case back to the trial court for remittitur. 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 the NexGen Knee System suffer from defects that cause them to loosen prematurely. The majority of the cases are currently pending in a federal MDL in the Northern District of Illinois (In Re: Zimmer NexGen Knee Implant Products Liability Litigation). Other cases are pending in other state and federal courts, and additional lawsuits may be filed. As of June 30, 2016, discovery in these lawsuits was ongoing. The initial bellwether trial took place in October 2015. 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.

Biomet metal-on-metal hip implant claims: Biomet is a defendant in a number of product liability lawsuits relating to metal-on-metal hip implants. The majority of these cases involve the M2a-Magnum^TM hip system. The majority of the cases are currently consolidated in one federal MDL proceeding in the U.S. District Court for the Northern District of Indiana (In Re: Biomet M2a Magnum Hip Implant Product Liability Litigation). Other cases are pending in various state and foreign courts.

On February 3, 2014, Biomet announced the settlement of the MDL. Lawsuits filed in the MDL by April 15, 2014 may participate in the settlement. Biomet continues to evaluate the inventory of lawsuits in the MDL pursuant to the categories and procedures set forth in the settlement agreement. The final amount of payments under the settlement is uncertain. The settlement does not affect certain other claims relating to Biomet’s metal-on-metal hip products that are pending in various state and foreign courts, or other claims that may be filed in the future. Our estimate as of June 30, 2016 of the remaining liability for all Biomet metal-on-metal hip implant claims is $69.0 million.

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Biomet has exhausted the self-insured retention in its insurance program and has been reimbursed for claims related to its metal-on-metal products up to its policy limits in the program. Zimmer Biomet will be responsible for any amounts by which the ultimate losses exceed the amount of Biomet’s third-party insurance coverage. As of June 30, 2016, Biomet had received all of the insurance proceeds it expects to recover under the excess policies. Although we are vigorously defending these lawsuits, their ultimate resolution is uncertain.

Heraeus trade secret misappropriation lawsuits: In December 2008, Heraeus Kulzer GmbH (together with its affiliates, “Heraeus”) initiated legal proceedings in Germany against Biomet, Inc., Biomet Europe BV and certain other subsidiaries of Biomet, Inc., alleging that Biomet, Inc. and Biomet Europe BV misappropriated Heraeus trade secrets when developing Biomet Europe’s Refobacin and Biomet Bone Cement line of cements (“European Cements”). The lawsuit sought to preclude the defendants from producing, marketing and offering for sale their current line of European Cements and to compensate Heraeus for any damages incurred (alleged to be in excess of €30.0 million). On December 20, 2012, the trial court dismissed Biomet, Inc., Biomet Europe BV, Biomet Deutschland GmbH and other defendants from the lawsuit. Biomet Orthopaedics Switzerland GmbH was the only Biomet entity remaining as a defendant.

Following an appeal by Heraeus, on June 5, 2014, the German appeals court in Frankfurt (i) enjoined Biomet, Inc., Biomet Europe BV and Biomet Deutschland GmbH from manufacturing, selling or offering the European Cements to the extent they contain certain raw materials in particular specifications; (ii) held the defendants jointly and severally liable to Heraeus for any damages from the sale of European Cements since 2005; and (iii) ruled that no further review may be sought (the “Frankfurt Decision”). The Heraeus and Biomet parties both sought appeal against the Frankfurt Decision. In a decision dated June 16, 2016, the German Supreme Court dismissed the parties’ appeals without reaching the merits, and no other ordinary appeal is available. The Frankfurt Decision is thus final. As of June 30, 2016, Heraeus had not made a demand for damages.

As a result, Biomet Europe BV and Biomet Deutschland GmbH are enjoined from the manufacture, marketing, sale and offering of European Cements in Germany. Heraeus has taken the position that the judgment prohibits the manufacture, marketing, sale and offering of European Cements outside of Germany as well and is attempting to enforce or extend the judgment in a number of other European jurisdictions. Biomet, Inc., Biomet Europe BV and Biomet Deutschland GmbH are vigorously contesting any enforcement of the judgment beyond Germany and thus filed a declaratory action in Germany on August 3, 2014 to have the court determine the reach of the Frankfurt Decision. In a decision dated April 28, 2016, the German appeals court confirmed Biomet’s position that the Frankfurt Decision applies only to acts within Germany. Heraeus has appealed this decision, and no prediction can be made as to the likelihood of review being granted by Germany’s Supreme Court.

On September 8, 2014, Heraeus filed a complaint against a Biomet supplier, Esschem, Inc. (“Esschem”), in the United States District Court for the Eastern District of Pennsylvania. The lawsuit contains allegations that focus on two copolymer compounds that Esschem sells to Biomet, which Biomet incorporates into certain bone cement products that compete with Heraeus’ bone cement products. The complaint alleges that Biomet helped Esschem to develop these copolymers, using Heraeus trade secrets that Biomet allegedly misappropriated. The complaint asserts a claim under the Pennsylvania Trade Secrets Act, as well as other various common law tort claims, all based upon the same trade secret misappropriation theory. Heraeus is seeking to enjoin Esschem from supplying the copolymers to any third party and actual damages in an unspecified amount. The complaint also seeks punitive damages, costs and attorneys’ fees. If Esschem is enjoined, Biomet may not be able to obtain the copolymers from another supplier and as a result may not be able to continue to manufacture the subject bone cement products. Although Heraeus has not named Biomet as a party to this lawsuit, Biomet has agreed, at Esschem’s request and subject to certain limitations, to indemnify Esschem for any liability, damages and legal costs related to this matter. On November 3, 2014, the court entered an order denying Heraeus’ motion for a temporary restraining order. On June 30, 2016, the court entered an order denying Heraeus’ request to give preclusive effect to the factual findings in the Frankfurt Decision. Discovery is ongoing, and a trial date has not yet been set.

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On October 15, 2015, Heraeus initiated expedited proceedings against Biomet France, Biomet SAS, Biomet Europe BV, Biomet, Inc., Biomet Orthopedics Switzerland GmbH and Biomet Global Supply Chain Center BV before the Commercial Court in Paris seeking to enjoin these entities from importing certain raw materials subject to the rulings in Germany and from manufacturing, selling or exporting the bone cements made from those raw materials, including under the names of the European Cements. On November 16, 2015, the presiding judge ruled that it had no jurisdiction over Biomet, Inc. and on December 4, 2015, the judge denied the preliminary measures requested by Heraeus. Heraeus has not appealed this ruling or filed an action on the merits before the Commercial Court in Paris. On December 8, 2015, Heraeus filed separate proceedings against Biomet France, Biomet SAS and Biomet France Holding before the Commercial Court of Roman-Sur-Isere seeking to gain access to certain documents which had been seized during searches of Biomet France’s premises in June 2015. Biomet is defending itself vigorously in this proceeding, which is still ongoing.

Heraeus continues to initiate other related legal proceedings in Europe seeking various forms of relief, including injunctive relief and damages, against Biomet-related entities relating to the European Cements.

We have not accrued an estimated loss relating to these lawsuits because we do not believe 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.

Stryker 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 our Pulsavac^® 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. Oral argument before the Court of Appeals for the Federal Circuit took place on September 8, 2014. On December 19, 2014, the Federal Circuit issued a decision affirming the $70.0 million lost profits award but reversed the willfulness finding, vacating the treble damages award and vacating and remanding the attorneys’ fees award. We accrued an estimated loss of $70.0 million related to this matter in the three month period ended December 31, 2014. On January 20, 2015, Stryker filed a motion with the Federal Circuit for a rehearing en banc. On March 23, 2015, the Federal Circuit denied Stryker’s petition. Stryker subsequently filed a petition for certiorari to the U.S. Supreme Court. In July 2015, we paid the final award of $90.3 million, which includes the original $70.0 million plus pre-and post-judgment interest and damages for sales that occurred post-trial but prior to our entry into a license agreement with Stryker. On October 19, 2015, the U.S. Supreme Court granted Stryker’s petition for certiorari. Oral argument took place on February 23, 2016. On June 13, 2016, the U.S. Supreme Court issued its decision, vacating the judgment of the Federal Circuit and remanding the case for further proceedings related to the willfulness issue. Although we are defending this lawsuit vigorously, the ultimate resolution of this matter is uncertain. In the future, we could be required to record a charge of up to $140.0 million that could have a material adverse effect on our results of operations and cash flows.

Regulatory Matters, Government Investigations and Other Matters

FDA warning letters: In September 2012, Zimmer received a warning letter from the U.S. Food and Drug Administration (“FDA”) citing concerns relating to certain processes pertaining to products manufactured at our Ponce, Puerto Rico manufacturing facility. In June 2015, Biomet received a warning letter from the FDA that requested additional information to allow the FDA to evaluate the adequacy of Biomet’s responses to certain Form 483 observations issued following an inspection of Biomet’s Zhejiang, China manufacturing facility in January 2015. In May 2016, Zimmer received a warning letter from the FDA related to observed non-conformities with current good manufacturing practice requirements of the Quality System regulation at our

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facility in Montreal, Quebec, Canada. 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, Zhejiang and Montreal. As of June 30, 2016, these warning letters remained 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 at these facilities are reasonably related will not be approved until the violations have been corrected. In addition to responding to the warning letters 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.

Biomet DPA and Consent: On March 26, 2012, Biomet entered into a Deferred Prosecution Agreement (“DPA”) with the U.S. Department of Justice, Criminal Division, Fraud Section (“DOJ”) and a Consent to Final Judgment (“Consent”) with the U.S. Securities and Exchange Commission (“SEC”) related to an investigation by the DOJ and the SEC into possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) in the marketing and sale of medical devices in certain foreign countries. Pursuant to the DPA, the DOJ agreed to defer prosecution of Biomet in connection with those matters, provided that Biomet satisfies its obligations under the DPA over the term of the DPA. The DPA had a three-year term and provided that it could be extended in the sole discretion of the DOJ for an additional year. Pursuant to the Consent, Biomet consented to the entry of a Final Judgment which, among other things, permanently enjoined Biomet from violating the provisions of the FCPA. In addition, pursuant to the terms of the DPA, an independent external compliance monitor was appointed to review Biomet’s compliance with the DPA, particularly in relation to Biomet’s international sales practices. The Consent that Biomet entered into with the SEC mirrors the DPA’s provisions with respect to the compliance monitor.

In October 2013, Biomet became aware of certain alleged improprieties regarding its operations in Brazil and Mexico, including alleged improprieties that predated the entry of the DPA. Biomet retained counsel and other experts to investigate both matters. Based on the results of the ongoing investigations, Biomet has terminated, suspended or otherwise disciplined certain of the employees and executives involved in these matters, and has taken certain other remedial measures. Additionally, pursuant to the terms of the DPA, in April 2014 and thereafter, Biomet disclosed these matters to and discussed these matters with the independent compliance monitor and the DOJ and SEC. On July 2, 2014 and July 13, 2015, the SEC issued subpoenas to Biomet requiring that Biomet produce certain documents relating to such matters. These matters remain under investigation by the DOJ.

On March 13, 2015, the DOJ informed Biomet that the DPA and the independent compliance monitor’s appointment had been extended for an additional year. On April 2, 2015, at the request of the staff of the SEC, Biomet consented to an amendment to the Final Judgment to extend the term of the compliance monitor’s appointment for one year from the date of entry of the Amended Final Judgment.

The DPA as originally extended was set to expire on March 26, 2016. However, the DOJ and the SEC continue to evaluate the alleged misconduct in Brazil and Mexico, as well as any issues relating to Biomet’s compliance program. The DOJ, the SEC and Biomet have agreed to continue to evaluate and discuss these matters and, therefore, the matter is ongoing as of the date of the filing of this Form 10-Q. Pursuant to the DPA, the DOJ has sole discretion to determine whether conduct by Biomet constitutes a violation or breach of the DPA, and the DOJ has notified Biomet that it believes a breach occurred. The DOJ has informed Biomet that it retains its rights under the DPA to bring further action against Biomet relating to the conduct in Brazil and Mexico disclosed in 2014 or the violations set forth in the DPA. The DOJ could, among other things, revoke the DPA or prosecute Biomet and/or the involved employees and executives. Biomet continues to cooperate with the SEC and the DOJ, and expects that discussions with the SEC and the DOJ will continue. There is no assurance that Biomet will enter into a consensual resolution of this matter with the SEC or the DOJ, and the terms and conditions of any such potential resolution are uncertain. We believe it is probable that Biomet will incur

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additional liabilities related to these investigations, which we have accrued in “Other current liabilities” as of the Closing Date. It is reasonably possible our estimates may change in the near future once the DOJ and SEC complete their investigations and we conclude our discussions regarding possible resolution.

16. Subsequent Events

On July 13, 2016, we acquired all of the outstanding shares of LDR Holding Corporation (“LDR”), a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders, for $1,086.8 million. The addition of LDR will differentiate and enhance our Spine technology portfolio. We funded this acquisition primarily by borrowing under our Multicurrency Revolving Facility. We anticipate repaying the funds borrowed under our Multicurrency Revolving Facility in 2016 by entering into other debt instruments. At the date of issuance of the interim condensed consolidated financial statements contained in this Form 10-Q, the initial business combination accounting was not complete for this acquisition given the timing of the transaction.

On July 18, 2016, we acquired 58.8 percent of the outstanding share capital of Medtech SA (“Medtech”), as well as all outstanding convertible bonds and warrants previously issued by Medtech, for an aggregate purchase price of €96.0 million, or $107.0 million. In accordance with French law, we will launch, as soon as possible, an all-cash simplified tender offer to acquire the remaining outstanding shares of Medtech. Medtech is a French medical technology company specializing in designing, developing and marketing surgical assistance robots. Medtech currently offers two FDA-approved surgical robots that allow for minimally invasive brain and spine procedures. We expect the acquisition of Medtech to enhance our presence in the musculoskeletal market. At the date of issuance of the interim condensed consolidated financial statements contained in this Form 10-Q, the initial business combination accounting was not complete for this acquisition given the timing of the transaction.

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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 2015 condensed consolidated financial statements have been reclassified to conform to the 2016 presentation.

On June 24, 2015, we completed our merger with Biomet and its results of operations have been included in our results subsequent to that date. The Biomet merger was a transformational event for us and has had significant effects on all aspects of our business. Accordingly, our revenues and expenses increased significantly in the three month and six month periods ended June 30, 2016 compared to the same prior year periods.

In portions of this discussion and analysis, we also present sales information on a supplemental pro forma basis for the three and six month periods ended June 30, 2015. This supplemental pro forma information includes Zimmer and Biomet sales in those periods as if the merger occurred on January 1, 2015. Accordingly, the supplemental pro forma net sales information for periods prior to the Closing Date includes the net sales of Biomet, including sales from certain product line rights and assets that were divested after the Closing Date. We believe this supplemental pro forma analysis is beneficial for investors because it represents how the merged companies may have performed on a combined basis in the three and six month periods ended June 30, 2015. Such supplemental pro forma net sales information may not be indicative, however, of future operating performance.

Executive Level Overview

Results for the Three and Six Month Periods ended June 30, 2016

Our results have been significantly impacted by the Biomet merger. In 2016, we have continued to make progress in our commercial and operational integration across all geographies and functions. As we expected, our sales growth rates were below market growth rates in the first half of 2016, but we saw sequential improvement from the second half of 2015 and expect to end 2016 at or above market growth rates.

Our sales for the three and six month periods ended June 30, 2016 increased by 65.6 percent and 66.7 percent, respectively, due primarily to the Biomet merger. Volume/mix growth from the merger was partially offset by the negative effects of continued, but stable, pricing pressure in all of our geographic regions.

In the three and six month periods ended June 30, 2016, our net loss decreased and our net earnings increased, respectively, compared to the same prior year periods. The primary drivers of the improved earnings performance were the absence in the 2016 periods of significant expenses incurred in the prior year periods in connection with completing the Biomet merger. As a result of the merger, we recognized significant expenses in the 2015 periods due to the acceleration of unvested LVB stock options and LVB stock-based awards, retention bonuses paid to Biomet employees and third-party sales agents who remained with Biomet through the Closing Date, severance expense, a loss related to a call premium on Biomet debt we redeemed, third party fees, and other acquisition and integration charges.

2016 Outlook

To date in 2016, we have completed our acquisitions of Cayenne, CTC, LDR and a controlling interest in Medtech. These acquisitions bring important complementary technologies to the Zimmer Biomet product portfolio. While the acquisitions of these companies will increase our sales, we expect to incur additional expenses as we integrate these companies.

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As of June 30, 2016, we have recognized all of the expense associated with stepping up the acquired Biomet inventory to fair value. Therefore, in the second half of 2016, our cost of products sold for Biomet products will reflect their cost value, resulting in lower expense and improved gross profits. However, we estimate that we will recognize lower gains from our hedging program in the second half of 2016 compared to the same prior year period, which will partially offset the favorability from the decreased inventory step-up expense. We expect R&D expense will increase in the second half of 2016 compared to the first half of 2016 due to R&D expense of the acquired businesses, but will continue to be in a range of 4.5 to 5.0 percent of sales for the year. Selling, general and administrative (“SG&A”) expense in 2016 is expected to approximate 38 percent of sales, which would be an improvement from 2015 as we realize synergies from the merger. We estimate special items expense will continue to be significant in the second half of 2016 as we continue our Biomet integration activities as well as begin our integration activities with the recently acquired companies. Interest expense will increase slightly in the second half of 2016 compared to the first half of 2016 due to the debt borrowed to fund the LDR acquisition.

Results of Operations

We analyze sales by three geographies, the Americas, EMEA and Asia Pacific, and by the following product categories: Knees, Hips, S.E.T., Dental, Spine & CMF and Other. This sales analysis differs from our reportable operating segments, which are based upon our senior management organizational structure and how we allocate resources towards achieving operating profit goals. We analyze sales by geography because the underlying market trends in any particular geography tend to be similar across product categories and because we primarily sell the same products in all geographies.

Net Sales by Geography

The following tables present our net sales by geography and the percentage changes (dollars in millions):

	Three Months Ended June 30,
	2016		2015		% Inc
Americas	$	1,181.0	$	679.5		73.8	%
EMEA		460.9		290.1		58.9
Asia Pacific		292.1		198.0		47.5
Total	$	1,934.0	$	1,167.6		65.6

	Six Months Ended June 30,
	2016		2015		% Inc
Americas	$	2,358.2	$	1,324.7		78.0	%
EMEA		917.2		589.0		55.7
Asia Pacific		562.6		388.3		44.9
Total	$	3,838.0	$	2,302.0		66.7

The following tables present our three and six months ended June 30, 2016 net sales, and our three and six months ended June 30, 2015 pro forma net sales by geography and the components of the percentage changes (dollars in millions):

	Three Months Ended June 30,
	2016		Pro forma 2015		% Inc			Volume / Mix			Price			Divestiture Impact			Foreign Exchange
Americas	$	1,181.0	$	1,163.9		1.5	%		5.0	%		(1.4	)%		(1.8	)%		(0.3	)%
EMEA		460.9		449.6		2.5			5.1			(0.6	)		(1.5	)		(0.5	)
Asia Pacific		292.1		266.7		9.5			9.5			(1.3	)		(0.8	)		2.1
Total	$	1,934.0	$	1,880.2		2.9			5.7			(1.2	)		(1.6	)		—

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	Six Months Ended June 30,
	2016		Pro forma 2015		% Inc (Dec)			Volume / Mix			Price			Divestiture Impact			Foreign Exchange
Americas	$	2,358.2	$	2,347.4		0.5	%		3.8	%		(1.2	)%		(1.8	)%		(0.3	)%
EMEA		917.2		939.1		(2.3	)		1.6			(0.3	)		(1.3	)		(2.3	)
Asia Pacific		562.6		535.5		5.1			7.2			(1.3	)		(0.7	)		(0.1	)
Total	$	3,838.0	$	3,822.0		0.4			3.8			(1.0	)		(1.6	)		(0.8	)

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

Net Sales by Product Category

The following tables present our net sales by product category and the percentage changes (dollars in millions):

	Three Months Ended June 30,
	2016		2015		% Inc
Knees	$	696.9	$	468.9		48.6	%
Hips		477.2		319.0		49.6
S.E.T.		412.4		222.5		85.4
Dental		118.0		61.0		93.4
Spine & CMF		145.8		58.9		147.6
Other		83.7		37.3		123.5
Total	$	1,934.0	$	1,167.6		65.6
	Six Months Ended June 30,
	2016		2015		% Inc
Knees	$	1,400.2	$	932.8		50.1	%
Hips		945.1		630.4		49.9
S.E.T.		813.5		440.9		84.5
Dental		226.6		116.8		94.0
Spine & CMF		287.0		108.4		164.7
Other		165.6		72.7		127.9
Total	$	3,838.0	$	2,302.0		66.7

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The following tables present our three and six month periods ended June 30, 2016 net sales, and our three and six month periods ended June 30, 2015 pro forma net sales by product category and the components of the percentage changes (dollars in millions):

	Three Months Ended June 30,
	2016		Pro Forma 2015		% Inc (Dec)			Volume / Mix			Price			Divestiture Impact			Foreign Exchange
Knees	$	696.9	$	681.9		2.2	%		6.5	%		(1.5	)%		(2.5	)%		(0.3	)%
Hips		477.2		461.6		3.4			5.3			(2.1	)		(0.1	)		0.3
S.E.T.		412.4		387.0		6.5			8.5			(1.3	)		(0.9	)		0.2
Dental		118.0		118.6		(0.5	)		(5.6	)		4.8			—			0.3
Spine & CMF		145.8		143.8		1.4			2.8			(1.4	)		—			—
Other		83.7		87.3		(4.1	)		9.2			(1.2	)		(12.0	)		(0.1	)
Total	$	1,934.0	$	1,880.2		2.9			5.7			(1.2	)		(1.6	)		—

	Six Months Ended June 30,
	2016		Pro Forma 2015		% Inc (Dec)			Volume / Mix			Price			Divestiture Impact			Foreign Exchange
Knees	$	1,400.2	$	1,392.1		0.6	%		5.7	%		(1.4	)%		(2.5	)%		(1.2	)%
Hips		945.1		935.9		1.0			3.8			(1.9	)		(0.1	)		(0.8	)
S.E.T.		813.5		795.0		2.3			4.5			(0.9	)		(0.8	)		(0.5	)
Dental		226.6		235.8		(3.9	)		(8.1	)		4.7			—			(0.5	)
Spine & CMF		287.0		287.5		(0.2	)		1.6			(1.4	)		—			(0.4	)
Other		165.6		175.7		(5.7	)		7.8			(1.0	)		(11.9	)		(0.6	)
Total	$	3,838.0	$	3,822.0		0.4			3.8			(1.0	)		(1.6	)		(0.8	)

The following tables present our net sales by geography for our Knees and Hips product categories, which represent our most significant product categories (dollars in millions):

	Three Months Ended June 30,							Six Months Ended June 30,
	2016		2015		% Inc			2016		2015		% Inc
Knees
Americas	$	417.1	$	277.0		50.6	%	$	846.6	$	548.9		54.2	%
EMEA		168.7		113.7		48.3			342.6		234.4		46.2
Asia Pacific		111.1		78.2		42.0			211.0		149.5		41.1
Total	$	696.9	$	468.9		48.6		$	1,400.2	$	932.8		50.1
Hips
Americas	$	248.4	$	155.0		60.3	%		494.4	$	300.2		64.7	%
EMEA		138.8		100.0		38.8			275.6		202.9		35.8
Asia Pacific		90.0		64.0		40.6			175.1		127.3		37.6
Total	$	477.2	$	319.0		49.6		$	945.1	$	630.4		49.9

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The following tables present our three and six month periods ended June 30, 2016 net sales and our three and six month periods ended June 30, 2015 pro forma net sales by geography for our Knees and Hips product categories, which represent our most significant product categories (dollars in millions):

	Three Months Ended June 30,							Six Months Ended June 30,
	2016		Pro forma 2015		% Inc			2016		Pro forma 2015		% Inc (Dec)
Knees
Americas	$	417.1	$	415.0		0.5	%	$	846.6	$	842.1		0.5	%
EMEA		168.7		164.1		2.8			342.6		348.8		(1.8	)
Asia Pacific		111.1		102.8		8.0			211.0		201.2		4.8
Total	$	696.9	$	681.9		2.2		$	1,400.2	$	1,392.1		0.6
Hips
Americas	$	248.4	$	246.2		0.9	%	$	494.4	$	490.7		0.8
EMEA		138.8		135.0		2.8			275.6		280.9		(1.9	)
Asia Pacific		90.0		80.4		11.9			175.1		164.3		6.6
Total	$	477.2	$	461.6		3.4		$	945.1	$	935.9		1.0

The year-over-year increases in net sales by geography, by product category and in total were driven primarily by increased volume/mix due to the Biomet merger. The following is a discussion of the impact of the factors affecting the year-over-year change in net sales in the three and six month periods ended June 30, 2016 on a supplemental pro forma basis.

Demand (Volume and Mix) Trends

Increased volume and changes in the mix of product sales contributed 5.7 and 3.8 percentage points of year-over-year sales growth during the three and six month periods ended June 30, 2016, respectively, on a pro forma basis. Volume/mix growth was driven by recent product introductions, cross selling opportunities realized from the Biomet merger, sales in key emerging markets and an aging population.

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, demand for clinically proven premium products and patient specific devices are expected to continue to positively affect sales growth in markets that recognize the value of these advanced technologies.

Pricing Trends

Global selling prices had a negative effect of 1.2 and 1.0 percentage points on year-over-year sales during the three and six month periods ended June 30, 2016, respectively, on a pro forma basis. The negative effect on year-over-year sales was slightly improved from what we have experienced over the past three years. The majority of countries in which we operate continue to experience pricing pressure from governmental healthcare cost containment efforts and from local hospitals and health systems.

Foreign Currency Exchange Rates

For the three and six month periods ended June 30, 2016, changes in foreign currency exchange rates had a minimal effect and a negative 0.8 percentage points effect on year-over-year sales, respectively. If foreign currency exchange rates remain consistent with June 30, 2016 rates, we estimated the effect of foreign currency exchange rates will have a negative effect of approximately 0.5 percent on our year-over-year sales. We address

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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 reduced.

Sales by Product Category

Knees

Knee sales increased in the three and six month periods ended June 30, 2016 when compared to the same prior year periods due to the Biomet merger. On a pro forma basis, Knee sales increased in both 2016 periods driven by volume/mix growth from Persona^® The Personalized Knee System, the Vanguard^® 360 Revision Knee System and the Oxford^® Partial Knee. This growth was partially offset by the divestiture of certain product line rights and assets, continued pricing pressure and changes in foreign currency exchange rates.

Hips

Hip sales increased in the three and six month periods ended June 30, 2016 when compared to the same prior year periods due to the Biomet merger. On a pro forma basis, Hip sales increased in both 2016 periods due to volume/mix growth, partially offset by continued pricing pressure. Hip sales growth was led by our Taperloc^® Hip System and our vitamin E advanced bearing materials.

S.E.T.

Our S.E.T product category sales increased in the three and six month periods ended June 30, 2016 when compared to the same prior year periods due to the Biomet merger. On a pro forma basis, S.E.T. sales increased in both 2016 periods due to volume/mix growth. On a pro forma basis within this product category, we were able to achieve sales growth relative to the prior year period in each of the sub-categories.

Dental

Dental sales increased in the three and six month periods ended June 30, 2016 when compared to the same prior year periods due to the Biomet merger. On a pro forma basis, Dental sales declined in both 2016 periods primarily due to a supply disruption related to a voluntary field action initiated in the fourth quarter of 2015. In the second quarter we successfully resolved the disruption.

Spine and CMF

Spine and CMF sales increased in the three and six month periods ended June 30, 2016 when compared to the same prior year periods due to the Biomet merger. On a pro forma basis, Spine and CMF sales experienced an increase in the three month period ended June 30, 2016, but declined slightly in the six month period ended June 30, 2016. Strong sales of our CMF products were partially offset by a decline in Spine product sales.

Expenses as a Percentage of Net Sales

	Three Months Ended June 30,						% Inc (Dec)			Six Months Ended June 30,						% Inc (Dec)
	2016			2015						2016			2015
Cost of products sold, excluding intangible asset amortization		33.1	%		25.2	%		7.9	%		33.4	%		25.2	%		8.2
Intangible asset amortization		6.9			2.8			4.1			6.8			2.3			4.5
Research and development		4.6			4.4			0.2			4.5			4.3			0.2
Selling, general and administrative		37.8			38.0			(0.2	)		37.8			37.7			0.1
Special items		7.2			40.2			(33.0	)		5.9			24.2			(18.3	)
Operating profit		10.4			(11.3	)		21.7			11.6			6.0			5.6

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The increase in cost of products sold as a percentage of net sales for the 2016 periods compared to the same prior year periods was primarily due to $132.7 million and $286.4 million of expense in the three and six month periods ended June 30, 2016, respectively, from stepping up the acquired Biomet inventory to fair value. Other factors that contributed to the increases in cost of products sold as a percentage of net sales were lower hedge gains, increased excess and obsolete inventory charges from products we intend to discontinue and the effect of lower average selling prices. 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 items affect earnings.

Intangible asset amortization expense and intangible asset amortization as a percentage of sales for the 2016 periods compared to the same prior year periods increased due to amortization expense associated with the intangible assets acquired as a result of the Biomet merger.

R&D expenses and R&D as a percentage of sales increased in the 2016 periods compared to the same prior year periods. The primary driver of the increased expense was the Biomet merger. The combination of our R&D functions subsequent to the merger will allow us to allocate a greater portion of the combined R&D spending towards innovations to address unmet needs and create new-market adjacencies. We expect R&D spending in 2016 to be between 4.5 and 5.0 percent of sales.

SG&A expenses increased in the 2016 periods when compared to the same prior year periods, while SG&A expenses as a percentage of sales were similar in the 2016 periods when compared to the same prior year periods. The primary driver of the increased expense was the Biomet merger. Initially after the Biomet merger, SG&A as a percentage of sales was higher while we were executing on our integration plans to realize synergy benefits of the merger. One year post-merger, we are starting to experience a higher level of these synergies as illustrated by a slight decline in SG&A as a percentage of sales in the three month period ended June 30, 2016 when compared to the same prior year period.

“Special items” expenses decreased in dollars and as a percentage of sales in the 2016 periods compared to the same prior year periods. The decreases were primarily due to expenses related to completing the Biomet merger being lower in the 2016 periods than in the 2015 periods. 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.

Other Expense, Net, Interest Income, Interest Expense and Income Taxes

In both 2016 periods, other expense, net, is primarily related to remeasuring monetary assets and liabilities denominated in a foreign currency other than an entity’s functional currency, offset by foreign currency forward exchange contracts we enter into to mitigate any gain or loss. In the 2015 periods, in addition to the foreign currency-related expense, other expense, net, included the call premium expense we recognized when we repaid Biomet’s senior notes and costs that we recognized for the bridge credit agreement that we entered into in May 2014 in connection with the Biomet merger (applicable to the six month period only).

Net interest expense increased in the three and six month periods ended June 30, 2016, compared to the same prior year periods, due to the issuance of Merger Notes in March 2015 in anticipation of the Biomet merger.

The effective tax rate (“ETR”) on earnings before income taxes represented a tax provision of 128.7 percent and a tax benefit of 27.1 percent in the three month periods ended June 30, 2016 and 2015, respectively, and a tax provision of 71.0 percent and a tax benefit of 77.1 percent in the six month periods ended June 30, 2016 and 2015, respectively. The unusually high ETRs in the 2016 periods primarily relate to the finalization of tax accounts for the Biomet merger. We recognized an increase in our provision for income taxes of $73.2 million and $52.7 million in the three and six month periods ended June 30, 2016, respectively, of which $20.5 million

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related to the three month period ended March 31, 2016 and $52.7 million related to the year ended December 31, 2015. Under GAAP, these non-cash measurement period adjustments are recognized on a prospective basis in the period of change. We anticipate that future “Special items” expense, 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.

Segment Operating Profit

Similar to our consolidated results, our segment operating profit has been significantly impacted by the addition of Biomet sales and expenses to these segments. In the Americas, operating profit as a percentage of sales increased in the three and six month periods ended June 30, 2016 compared to the same prior year periods due to synergies from the Biomet merger and a two year moratorium on the U.S. medical device excise tax. Under the applicable accounting rules that we apply to the U.S. medical device excise tax, we still have a portion of the tax paid prior to the moratorium included in the cost of inventory and we will continue to recognize expense, albeit at a lower level than in 2015, related to the tax through the fourth quarter of 2016. We intend to invest the savings from the medical device excise tax moratorium into our business in areas such as R&D.

In the EMEA operating segment, operating profit as a percentage of sales declined in the three and six month periods ended June 30, 2016 compared to the same prior year periods due to the increased expenses related to the Biomet merger and a reduced impact of hedge gains. In EMEA, even though our integration plans are on schedule, it will take longer to realize the full synergies of the merger compared to other segments due to complexities of the various countries in which we operate.

In the Asia Pacific segment, operating profit as a percentage of sales declined in the three and six month periods ended June 30, 2016 compared to the same prior year periods due to the increased expenses related to the Biomet merger, higher excess and obsolete inventory charges and a reduced impact of hedge gains.

Non-GAAP Operating Performance Measures

We use financial measures that differ from financial measures determined in accordance with 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, intangible asset amortization, “Special items,” other expenses related to financing obtained for the Biomet merger, the interest expense incurred on Merger Notes during the period prior to the consummation of the Biomet merger 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 provides useful 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 additional transparency of certain items. Certain of these non-GAAP financial measures are used as metrics for our incentive compensation programs.

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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 (in millions, except per share amounts):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Net (Loss) Earnings of Zimmer Biomet Holdings, Inc.	$	(31.3	)	$	(173.6	)	$	77.5		$	(2.2	)
Inventory step-up and other inventory and manufacturing-related charges		156.6			14.7			334.9			18.6
Certain claims		—			7.7			—			7.7
Intangible asset amortization		133.8			33.0			260.4			53.4
Special items
Biomet merger-related		120.6			390.6			199.7			416.4
Other special items		17.3			78.6			26.9			139.6
Merger-related expenses in other expense, net		1.5			25.5			1.5			45.0
Interest expense on Biomet merger financing		—			61.5			—			70.0
Taxes on above items(1)		(96.3	)		(190.8	)		(185.3	)		(234.4	)
Biomet merger-related measurement period tax adjustments(2)		73.2			—			52.7			—
Other certain tax adjustments(3)		31.7			29.7			46.0			29.7
Adjusted Net Earnings	$	407.1		$	276.9		$	814.3		$	543.8

⁽¹⁾  The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes, as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory rates where the items were incurred.

⁽²⁾  The 2016 period includes negative effects from finalizing the tax accounts for the Biomet merger. Under the applicable GAAP rules, these measurement period adjustments are recognized on a prospective basis in the period of change.

⁽³⁾  Other certain tax adjustments primarily include internal restructuring transactions that provide us access to offshore funds in a tax efficient manner.

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Diluted EPS	$	(0.16	)	$	(1.00	)	$	0.38		$	(0.01	)
Inventory step-up and other inventory and manufacturing-related charges		0.77			0.08			1.66			0.11
Certain claims		—			0.04			—			0.04
Intangible asset amortization		0.66			0.19			1.29			0.31
Special items
Biomet merger-related		0.60			2.22			0.98			2.38
Other special items		0.09			0.45			0.13			0.80
Merger-related expenses in other expense, net		0.01			0.15			0.01			0.26
Interest expense on Biomet merger financing		—			0.35			—			0.40
Taxes on above items(1)		(0.48	)		(1.09	)		(0.91	)		(1.34	)
Biomet merger-related measurement period tax adjustments(2)		0.36			—			0.26			—
Other certain tax adjustments(3)		0.16			0.17			0.23			0.17
Effect of dilutive shares assuming net earnings(4)		0.01			0.02			—			—
Adjusted Diluted EPS	$	2.02		$	1.58		$	4.03		$	3.12

⁽¹⁾  The tax effect for the U.S. jurisdiction is calculated based on an effective rate considering federal and state taxes, as well as permanent items. For jurisdictions outside the U.S., the tax effect is calculated based upon the statutory rates where the items were incurred.

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⁽²⁾  The 2016 period includes negative effects from finalizing the tax accounts for the Biomet merger. Under the applicable GAAP rules, these measurement period adjustments are recognized on a prospective basis    

in the period of change.    

⁽³⁾  Other certain tax adjustments primarily include internal restructuring transactions that provide us    

access to offshore funds in a tax efficient manner.    

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
(4) Diluted share count used in Adjusted Diluted EPS:
Diluted shares		199.4		173.0		Not		171.5
Dilutive shares assuming net earnings		2.5		2.6		Applicable		2.7
Adjusted diluted shares		201.9		175.6				174.2

Liquidity and Capital Resources

Cash flows provided by operating activities were $652.4 million in the six month period ended June 30, 2016, compared to $288.7 million in the same prior year period. The increased cash flows provided by operating activities in the 2016 period were primarily due to a $97.6 million loss on our forward starting interest rate swaps we settled in March 2015, lower inventory investments in 2016 compared to 2015, cash outflows related to completing the Biomet merger in the 2015 period and increased cash flows from owning Biomet for the entire 2016 period.

Cash flows used in investing activities were $170.4 million in the six month period ended June 30, 2016, compared to $7,720.7 million in the same prior year period. Instrument and property, plant and equipment additions increased due to the Biomet merger as we continue to invest in the combined company product portfolio and optimize our manufacturing and logistics network. Purchases of investments in debt maturities have declined because as investments matured we used the cash to pay off debt and repurchase shares of our common stock. In 2016, we have invested in the Cayenne and CTC acquisitions and other various assets.

Cash flows used in financing activities were $953.3 million in the six month period ended June 30, 2016, compared to cash inflows of $7,789.3 million in the same prior year period. We issued the Merger Notes in the 2015 period in anticipation of the Biomet merger, which resulted in proceeds and related debt issuance costs. In the six month period ended June 30, 2016, we paid off a portion of the debt incurred for the Biomet merger and repurchased shares of our common stock.

In each of February, May and July 2016, our Board of Directors declared a cash dividend of $0.24 per share, which was an increase of 9.1 percent over the cash dividend declared in the same prior year periods. 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. As further discussed below, our debt facilities restrict the payment of dividends in certain circumstances.

In February 2016, our Board of Directors authorized a new $1.0 billion share repurchase program effective March 1, 2016, with no expiration date. The previous program expired on February 29, 2016. As of June 30, 2016, all $1.0 billion remained authorized.

We will continue to exercise disciplined capital allocation designed to drive stockholder value creation. We intend to use available cash for reinvestment in the business, debt repayment, dividends and opportunistic share repurchases. If the right opportunities arise, we may also use available cash to pursue business development opportunities.

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In order to achieve operational synergies, we expect cash outlays related to our integration plans to be approximately $290 million in 2016. These cash outlays are necessary to achieve our integration goals of net annual pre-tax operating profit synergies of $350.0 million by the end of the third year post-Closing Date.

As discussed in Note 11 to our 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.

Also as discussed in Note 15 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report, as of June 30, 2016, a short-term liability of $50.0 million and long-term liability of $253.2 million related to Durom Cup product liability claims were recorded on our condensed consolidated balance sheet. We expect to continue paying these claims over the next few years. We expect to be reimbursed a portion of these payments for product liability claims from insurance carriers. As of June 30, 2016, we have received a portion of the insurance proceeds we estimate we will recover. We have a long-term receivable of $95.3 million remaining for future expected reimbursements from our insurance carriers. As of June 30, 2016, we also had a short-term liability of $69.0 million related to Biomet metal-on-metal hip implant claims.

At June 30, 2016, we had ten tranches of senior notes outstanding, as follows (dollars in millions):

Principal		Interest Rate			Maturity Date
$	500.0		1.450	%	April 1, 2017
	1,150.0		2.000		April 1, 2018
	500.0		4.625		November 30, 2019
	1,500.0		2.700		April 1, 2020
	300.0		3.375		November 30, 2021
	750.0		3.150		April 1, 2022
	2,000.0		3.550		April 1, 2025
	500.0		4.250		August 15, 2035
	500.0		5.750		November 30, 2039
	1,250.0		4.450		August 15, 2045

We may, at our option, redeem our senior notes, in whole or in part, at any time upon payment of the principal, any applicable make-whole premium, and accrued and unpaid interest to the date of redemption. In addition, the Merger Notes and the 3.375% Senior Notes due 2021 may be redeemed at our option without any make-whole premium at specified dates ranging from one month to six months in advance of the scheduled maturity date.

We have a $4.35 billion Credit Agreement that contains: (i) a 5-year unsecured U.S. Term Loan Facility in the principal amount of $3.0 billion, and (ii) a 5-year unsecured Multicurrency Revolving Facility in the principal amount of $1.35 billion. The Multicurrency Revolving Facility will mature in May 2019, with two one-year extensions available at our option. Borrowings under the Multicurrency Revolving Facility may be used for general corporate purposes. There were no borrowings outstanding under the Multicurrency Revolving Facility as of June 30, 2016. On June 24, 2015, we borrowed the full $3.0 billion available under the U.S. Term Loan Facility. The U.S. Term Loan Facility will mature in June 2020, with principal payments due beginning September 30, 2015, as follows: $75.0 million on a quarterly basis during the first three years, $112.5 million on a quarterly basis during the fourth year, and $412.5 million on a quarterly basis during the fifth year. We have paid $1.0 billion in principal under the U.S. Term Loan Facility, resulting in $2.0 billion in outstanding borrowings as of June 30, 2016.

We and certain of our wholly owned foreign subsidiaries are the borrowers under the Credit Agreement. Borrowings under the Credit Agreement bear interest at floating rates based upon indices determined

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by the currency of the borrowings plus an applicable margin determined by reference to our senior unsecured long-term credit rating, or at an alternate base rate, or, in the case of borrowings under the Multicurrency Revolving Facility only, at a fixed rate determined through a competitive bid process. The Credit Agreement 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 of assets. Financial covenants include a consolidated indebtedness to consolidated EBITDA ratio of no greater than 5.0 to 1.0 through June 24, 2016 and no greater than 4.5 to 1.0 thereafter. If our credit rating falls below investment grade, additional restrictions would result, including restrictions on investments and payment of dividends. We were in compliance with all covenants under the Credit Agreement as of June 30, 2016.

Commitments under the Credit Agreement are subject to certain fees. On the Multicurrency Revolving Facility, we pay a facility fee at a rate determined by reference to our senior unsecured long-term credit rating.

We have a Japan Term Loan agreement with one of the lenders under the Credit Agreement that will mature on May 31, 2018, under which 11.7 billion Japanese Yen was outstanding as of June 30, 2016. Borrowings under the Japan Term Loan bear interest at a fixed rate of 0.61 percent per annum until maturity.

We also have other available uncommitted credit facilities totaling $45.4 million as of June 30, 2016.

As discussed in Note 16 to our interim condensed consolidated financial statements included in Part I, Item 1 of this report, on July 13, 2016, we acquired all of the outstanding shares of LDR for $1,086.8 million. We funded this acquisition primarily by borrowing under our Multicurrency Revolving Facility. We anticipate repaying the funds borrowed under our Multicurrency Revolving Facility in 2016 by entering into other debt instruments. On July 18, 2016, we acquired 58.8 percent of the outstanding share capital of Medtech, as well as all outstanding convertible bonds and warrants previously issued by Medtech, for an aggregate purchase price of €96.0 million, or $107.0 million. We expect to acquire the remaining Medtech shares later this year.

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 June 30, 2016, $603.6 million of our cash and cash equivalents and short-term and long-term investments were held in jurisdictions outside of the U.S. Of this amount, $262.7 million 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.

In light of our commitments under various credit facilities, as well as our expectation for continued business development, we have plans to repatriate a significant portion of our offshore earnings to the U.S. In particular, as a result of the Biomet merger, we have unremitted foreign earnings of $4,639.6 million, which we plan to repatriate to the U.S. in future periods. We have estimated a long-term deferred tax liability of $1,560.8 million for the estimated tax impact of this repatriation.

Our concentrations 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 the 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

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hospitals in those countries, we are indirectly exposed to government budget constraints. The ongoing financial uncertainties in the Euro zone impact the indirect credit exposure we have to those governments through their public hospitals. As of June 30, 2016, 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 $270.6 million. With allowances for doubtful accounts of $19.6 million recorded in those countries, the net balance was $251.0 million, representing 16 percent of our total consolidated short-term and long-term trade accounts receivable balance, net. Italy and Spain accounted for $221.0 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 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.

Management believes that cash flows from operations and available borrowings under the Multicurrency Revolving Facility are sufficient to meet our working capital, capital expenditure and debt service needs, as well as return cash to stockholders in the form of dividends and share repurchases. Should additional investment opportunities arise, we believe that our earnings, balance sheet and cash flows will allow us to obtain additional capital, if necessary.

Recent Accounting Pronouncements

Information pertaining to recent accounting pronouncements can be found in Note 2 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report.

Critical Accounting Estimates

Our financial results are affected by the selection and application of accounting policies and methods. There were no changes in the three or six month periods ended June 30, 2016 to the application of critical accounting policies as described in our Annual Report on Form 10-K for the year ended December 31, 2015.

Forward-Looking Statements and Factors That May Affect Future Results

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,” “can,” “should,” “would,” “could,” “anticipate,” “expect,” “plan,” “seek,” “believe,” “are confident that,” “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:

• the possibility that the anticipated synergies and other benefits from mergers and acquisitions will not be realized, or will not be realized within the expected time periods;

• the risks and uncertainties related to our ability to successfully integrate the operations, products, employees and distributors of acquired companies;

• the effect of the potential disruption of management’s attention from ongoing business operations due to integration matters related to mergers and acquisitions;

• the effect of mergers and acquisitions on our relationships with customers, vendors and lenders and on our operating results and business generally;

• Biomet’s compliance with the terms of its Deferred Prosecution Agreement, as extended;

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• the outcome of government investigations;

• competition;

• pricing pressures;

• the impact of the federal healthcare reform measures, reductions in reimbursement levels by third-party payors and cost-containment efforts of healthcare purchasing organizations;

• challenges relating to changes in and compliance with governmental laws and regulations affecting our U.S. and international businesses, including regulations of the FDA and foreign government regulators, such as more stringent requirements for regulatory clearance of our products;

• our ability to remediate matters identified in any inspectional observations or warning letters issued by the FDA;

• the success of our quality and operational excellence initiatives;

• changes in tax obligations arising from tax reform measures or examinations by tax authorities;

• changes in general domestic and international economic conditions, including interest rate and currency exchange rate fluctuations;

• changes in general industry and market conditions, including domestic and international growth rates;

• changes in customer demand for our products and services caused by demographic changes or other factors;

• dependence on new product development, technological advances and innovation;

• product liability and intellectual property litigation losses;

• our ability to obtain and maintain adequate intellectual property protection;

• our ability to retain the independent agents and distributors who market our products;

• our dependence on a limited number of suppliers for key raw materials and outsourced activities;

• our ability to form and implement alliances;

• the impact of the ongoing financial and political uncertainty on countries in the Euro zone on our ability to collect accounts receivable in affected countries;

• changes in prices of raw materials and products and our ability to control costs and expenses; and

• shifts in our product category sales mix or our regional sales mix away from products or geographic regions that generate higher operating margins.

Our Annual Report on Form 10-K for the year ended December 31, 2015 and this Quarterly Report on Form 10-Q contain detailed discussions of these and other important factors under the heading “Risk 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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes from the information provided in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“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 Securities and Exchange Commission’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.

Changes in Internal Control Over Financial Reporting

As previously reported, we completed the Biomet merger on June 24, 2015. In our Annual Report on Form 10-K for the year ended December 31, 2015, we excluded Biomet from our assessment of internal control over financial reporting. We are in the process of documenting and testing Biomet’s internal control over financial reporting and will incorporate Biomet into our assessment of internal control over financial reporting as of December 31, 2016. We have extended our oversight and monitoring processes that support internal control over financial reporting to include Biomet’s operations and we are continuing to integrate the acquired operations of Biomet. Therefore, there were changes in our internal controls. There were no other changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II – Other Information

Item 1. Legal Proceedings

Information pertaining to legal proceedings can be found in Note 15 to the interim condensed consolidated financial statements included in Part I, Item 1 of this report and is incorporated herein by reference.

Item 1A. Risk Factors

Except as set forth below, there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2015.

The following risk factors are added:

We may not be able to effectively integrate newly acquired businesses into our operations or achieve expected cost savings or profitability from our acquisitions.

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Our acquisitions involve numerous risks, including:

• unforeseen difficulties in integrating operations, technologies, services, accounting and personnel;

• diversion of financial and management resources from existing operations;

• unforeseen difficulties related to entering geographic regions where we do not have prior experience;

• potential loss of key employees;

• unforeseen liabilities associated with businesses acquired; and

• inability to generate sufficient revenue or realize sufficient cost savings to offset acquisition or investment costs.

As a result, if we fail to evaluate and execute acquisitions properly, we might not achieve the anticipated benefits of such acquisitions and we may incur costs in excess of what we anticipate. These risks would likely be greater in the case of larger acquisitions.

Recent developments relating to the United Kingdom’s referendum vote in favor of leaving the European Union could adversely affect us.

The United Kingdom (UK) held a referendum on June 23, 2016 in which voters approved the UK’s voluntary exit from the European Union (EU), commonly referred to as “Brexit”. It is expected that the UK government will initiate a process to withdraw from the EU and begin negotiating the terms of its separation. The announcement of Brexit caused significant volatility in global stock markets and currency exchange rate fluctuations that resulted in the strengthening of the U.S. dollar relative to other foreign currencies in which we conduct business. The effects of Brexit are expected to be far-reaching. Brexit and the perceptions as to its impact may adversely affect business activity and economic conditions in Europe and globally and could continue to contribute to instability in global financial and foreign exchange markets. Brexit could also have the effect of disrupting the free movement of goods, services and people between the UK and the EU; however, the full effects of Brexit are uncertain and will depend on any agreements the UK may make to retain access to EU markets. Brexit could also lead to legal uncertainty and potentially divergent national laws and regulations as the UK determines which EU laws to replace or replicate. Also, as a result of the Brexit, other European countries may seek to conduct referenda with respect to their continuing membership with the EU. Given these possibilities and others we may not anticipate, as well as the lack of comparable precedent, the full extent to which our business, results of operations and financial condition could be adversely affected by Brexit is uncertain.

The risk factor entitled “Certain investors continue to have influence over us, including in connection with decisions that require the approval of stockholders, which could limit other stockholders’ ability to influence the outcome of key transactions, including a change of control” is deleted.

The risk factor set forth below replaces in its entirety the risk factor with the same title:

Future sales, or the perception of future sales, by us or our existing stockholders in the public market could cause the market price for our common stock to decline.

In connection with our acquisition of Biomet, we entered into a stockholders agreement (the “stockholders agreement”) with LVB Acquisition Holding, LLC and its owners party thereto (collectively, the “Sponsors”). Pursuant to the stockholders agreement, we filed a shelf registration statement with the SEC, registering shares of our common stock for resale by the Sponsors. The Sponsors have completed sales of approximately 22.1 million shares of our common stock in underwritten public offerings under the resale registration statement and own approximately 7.4 million additional shares that may be offered and sold thereunder, subject to the terms of the stockholders’ agreement. The sale of a substantial number of shares of our common stock in the public market by

47

us or our existing stockholders, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

The risk factor set forth below replaces in its entirety the risk factor with the same title:

Biomet is involved in ongoing governmental investigations, the results of which may adversely impact our business and results of operations. Further, if Biomet fails to comply with the terms of the DPA that it entered into in March 2012, it may be subject to criminal prosecution and/or exclusion from federal healthcare programs.

On March 26, 2012, Biomet entered into a DPA with the DOJ and a Consent with the SEC related to an investigation by the DOJ and the SEC into possible violations of the FCPA in the marketing and sale of medical devices in certain foreign countries. Pursuant to the DPA, the DOJ agreed to defer prosecution of Biomet in connection with those matters, provided that Biomet satisfies its obligations under the DPA over the term of the DPA. The DPA had a three-year term and provided that it could be extended in the sole discretion of the DOJ for an additional year.

Pursuant to the Consent, Biomet consented to the entry of a Final Judgment which, among other things, permanently enjoined Biomet from violating the provisions of the FCPA. In addition, pursuant to the terms of the DPA, an independent external compliance monitor was appointed to review Biomet’s compliance with the DPA, particularly in relation to Biomet’s international sales practices. The Consent that Biomet entered into with the SEC mirrors the DPA’s provisions with respect to the compliance monitor.

In October 2013, Biomet became aware of certain alleged improprieties regarding its operations in Brazil and Mexico, including alleged improprieties that predated the entry of the DPA. Biomet retained counsel and other experts to investigate both matters. Based on the results of the ongoing investigations, Biomet has terminated, suspended or otherwise disciplined certain of the employees and executives involved in these matters, and has taken certain other remedial measures. Additionally, pursuant to the terms of the DPA, in April 2014 and thereafter, Biomet disclosed these matters to and discussed these matters with the independent compliance monitor and the DOJ and SEC. On July 2, 2014 and July 13, 2015, the SEC issued subpoenas to Biomet requiring that Biomet produce certain documents relating to such matters. These matters remain under investigation by the DOJ.

On March 13, 2015, the DOJ informed Biomet that the DPA and the independent compliance monitor’s appointment had been extended for an additional year. On April 2, 2015, at the request of the staff of the SEC, Biomet consented to an amendment to the Final Judgment to extend the term of the compliance monitor’s appointment for one year from the date of entry of the Amended Final Judgment.

The DPA as originally extended was set to expire on March 26, 2016. However, the DOJ and the SEC continue to evaluate the alleged misconduct in Brazil and Mexico, as well as any issues relating to Biomet’s compliance program. The DOJ, the SEC and Biomet have agreed to continue to evaluate and discuss these matters and, therefore, the matter is ongoing as of the date of the filing of this Form 10-Q. Pursuant to the DPA, the DOJ has sole discretion to determine whether conduct by Biomet constitutes a violation or breach of the DPA, and the DOJ has notified Biomet that it believes a breach occurred. The DOJ has informed Biomet that it retains its rights under the DPA to bring further action against Biomet relating to the conduct in Brazil and Mexico disclosed in 2014 or the violations set forth in the DPA. The DOJ could, among other things, revoke the DPA or prosecute Biomet and/or the involved employees and executives. Biomet continues to cooperate with the SEC and the DOJ, and expects that discussions with the SEC and the DOJ will continue. There is no assurance that Biomet will enter into a consensual resolution of this matter with the SEC or the DOJ, and the terms and conditions of any such potential resolution are uncertain. We believe it is probable that Biomet will incur

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additional liabilities related to these investigations, which we have accrued in “Other current liabilities” as of the Closing Date. It is reasonably possible our estimates may change in the near future once the DOJ and SEC complete their investigations and we conclude our discussions regarding potential resolution.

As a result of the merger, all obligations and liabilities of Biomet related to the above matters have been assumed by us as the combined company. From time to time, we are, and may continue to be, the subject of additional investigations. If, as a result of the investigations described above or any additional investigations, we are found to have violated one or more applicable laws, our business, financial condition, results of operations and cash flows could be materially adversely affected. If some of our existing business practices are challenged as unlawful, we may have to modify those practices, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

Not applicable

Item 5. Other Information

During the three month period ended June 30, 2016, 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.

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Item 6. Exhibits

The following exhibits are filed or furnished as part of this report:

2.1*	Agreement and Plan of Merger, dated as of June 6, 2016, by and among Zimmer Biomet Holdings, Inc., LH Merger Sub, Inc. and LDR Holding Corporation (incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed June 7, 2016)
10.1**	Zimmer Biomet Holdings, Inc. 2009 Stock Incentive Plan (As Amended on May 3, 2016) (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed May 9, 2016)
10.2	Underwriting Agreement, dated as of June 13, 2016, among Zimmer Biomet Holdings, Inc., Goldman, Sachs & Co. and J.P. Morgan Securities LLC, and each of the selling stockholders named in Schedule II thereto (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed June 16, 2016)
10.3	Waiver letter, dated June 16, 2016, among Zimmer Biomet Holdings, Inc. and each of the stockholders of Zimmer Biomet Holdings, Inc. party thereto (incorporated by reference to Exhibit 99.3 to the Registrant’s Current Report on Form 8-K filed June 16, 2016)
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

* Schedules and Exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby agrees to supplementally furnish to the SEC upon request any omitted schedule or exhibit to the Agreement and Plan of Merger.

** Management contract or compensatory plan or arrangement

50

SIGNATURES

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.

	ZIMMER BIOMET HOLDINGS, INC.
	(Registrant)
Date: August 8, 2016	By:	/s/ Daniel P. Florin
		Daniel P. Florin
		Senior Vice President and Chief Financial Officer
Date: August 8, 2016	By:	/s/ Tony W. Collins
		Tony W. Collins
		Vice President, Corporate Controller and Chief Accounting Officer

51

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, David C. Dvorak, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Zimmer Biomet Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2016

/s/ David C. Dvorak

David C. Dvorak

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13a-14(a)/15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Daniel P. Florin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Zimmer Biomet Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2016

/s/ Daniel P. Florin

Daniel P. Florin

Senior Vice President

and Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Zimmer Biomet Holdings, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David C. Dvorak

David C. Dvorak

President and Chief Executive Officer

August 8, 2016

/s/ Daniel P. Florin

Daniel P. Florin

Senior Vice President

and Chief Financial Officer

August 8, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 03, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Trading Symbol	ZBH
Entity Registrant Name	ZIMMER BIOMET HOLDINGS, INC.
Entity Central Index Key	0001136869
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		200,012,486

XML

Condensed Consolidated Statements of Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
Net Sales	$ 1,934.0	$ 1,167.6	$ 3,838.0	$ 2,302.0
Cost of products sold, excluding intangible asset amortization	640.1	294.3	1,280.7	579.2
Intangible asset amortization	133.8	33.0	260.4	53.4
Research and development	88.6	51.3	174.3	99.6
Selling, general and administrative	732.0	444.2	1,448.9	868.3
Certain claims (Note 15)		7.7		7.7
Special items (Note 2)	137.9	469.2	226.6	556.0
Operating expenses	1,732.4	1,299.7	3,390.9	2,164.2
Operating Profit (Loss)	201.6	(132.1)	447.1	137.8
Other expense, net	(3.8)	(26.3)	(7.6)	(48.9)
Interest income	0.8	2.5	2.1	5.1
Interest expense	(88.1)	(82.7)	(176.3)	(105.8)
Earnings (loss) before income taxes	110.5	(238.6)	265.3	(11.8)
Provision (benefit) for income taxes	142.2	(64.8)	188.3	(9.1)
Net (Loss) Earnings	(31.7)	(173.8)	77.0	(2.7)
Less: Net loss attributable to noncontrolling interest	(0.4)	(0.2)	(0.5)	(0.5)
Net (Loss) Earnings of Zimmer Biomet Holdings, Inc.	$ (31.3)	$ (173.6)	$ 77.5	$ (2.2)
(Loss) Earnings Per Common Share
Basic	$ (0.16)	$ (1.00)	$ 0.39	$ (0.01)
Diluted	$ (0.16)	$ (1.00)	$ 0.38	$ (0.01)
Weighted Average Common Shares Outstanding
Basic	199.4	173.0	199.8	171.5
Diluted	199.4	173.0	202.1	171.5
Cash Dividends Declared Per Common Share	$ 0.24	$ 0.22	$ 0.48	$ 0.44

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net (loss) earnings	$ (31.7)	$ (173.8)	$ 77.0	$ (2.7)
Other Comprehensive Income:
Foreign currency cumulative translation adjustments	(78.6)	10.3	55.6	(139.6)
Unrealized cash flow hedge gains (losses), net of tax	0.8	(13.1)	(43.3)	39.3
Reclassification adjustments on foreign currency hedges, net of tax	(19.7)	(25.1)	(44.1)	(46.7)
Unrealized (losses) gains on securities, net of tax		(0.1)	0.4	0.5
Adjustments to prior service cost and unrecognized actuarial assumptions, net of tax	1.1	1.5	21.1	5.4
Total Other Comprehensive Loss	(96.4)	(26.5)	(10.3)	(141.1)
Comprehensive (Loss) Income	(128.1)	(200.3)	66.7	(143.8)
Comprehensive loss attributable to the noncontrolling interest	(0.4)	(0.2)	(0.6)	0.0
Comprehensive (Loss) Income attributable to Zimmer Biomet Holdings, Inc.	$ (127.7)	$ (200.1)	$ 67.3	$ (143.8)

XML

Condensed Consolidated Balance Sheet (Unaudited) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 976.3	$ 1,459.3
Short-term investments		164.6
Accounts receivable, less allowance for doubtful accounts	1,593.3	1,446.5
Inventories	1,962.1	2,254.1
Prepaid expenses and other current assets	518.9	529.2
Total Current Assets	5,050.6	5,853.7
Property, plant and equipment, net	2,033.8	2,062.6
Goodwill	9,976.6	9,934.2
Intangible assets, net	8,386.9	8,746.3
Other assets	523.4	563.8
Total Assets	25,971.3	27,160.6
Current Liabilities:
Accounts payable	243.8	284.8
Income taxes payable	193.6	147.2
Current portion of long-term debt	500.0
Other current liabilities	1,163.8	1,185.9
Total Current Liabilities	2,101.2	1,617.9
Deferred income taxes	2,824.2	3,150.2
Other long-term liabilities	963.1	1,005.7
Long-term debt	10,533.5	11,497.4
Total Liabilities	16,422.0	17,271.2
Commitments and Contingencies (Note 15)
Stockholders' Equity:
Common stock, $0.01 par value, one billion shares authorized, 303.9 million shares issued in 2016 (302.7 million in 2015)	3.0	3.0
Paid-in capital	8,293.6	8,195.3
Retained earnings	8,331.9	8,347.7
Accumulated other comprehensive loss	(339.3)	(329.0)
Treasury stock, 104.2 million shares in 2016 (100.0 million shares in 2015)	(6,740.8)	(6,329.1)
Total Zimmer Biomet Holdings, Inc. stockholders' equity	9,548.4	9,887.9
Noncontrolling interest	0.9	1.5
Total Stockholders' Equity	9,549.3	9,889.4
Total Liabilities and Stockholders' Equity	$ 25,971.3	$ 27,160.6

XML

Condensed Consolidated Balance Sheet (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares issued	303,900,000	302,700,000
Treasury stock, shares	104,200,000	100,000,000

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Cash flows provided by (used in) operating activities:
Net earnings (loss)	$ 77.0	$ (2.7)
Adjustments to reconcile net earnings to cash provided by operating activities:
Depreciation and amortization	499.2	188.6
Share-based compensation	30.7	21.2
Non-cash Biomet merger consideration compensation expense		164.1
Intangible asset impairment	28.0
Excess income tax benefit from stock option exercises		(9.1)
Inventory step-up	286.4	10.5
Loss on divestiture of assets		3.4
Changes in operating assets and liabilities, net of effect of acquisitions:
Income taxes	13.6	95.9
Receivables	(120.8)	(59.3)
Inventories	60.2	(140.8)
Accounts payable and accrued expenses	(141.9)	102.4
Other assets and liabilities	(80.0)	(85.5)
Net cash provided by operating activities	652.4	288.7
Cash flows provided by (used in) investing activities:
Additions to instruments	(157.3)	(104.0)
Additions to other property, plant and equipment	(73.7)	(64.8)
Purchases of investments	(1.2)	(152.6)
Sales of investments	273.3	398.9
Proceeds from divestiture of assets		24.1
Biomet acquisition, net of acquired cash		(7,812.9)
Other business combination investments, net of acquired cash	(184.1)
Investments in other assets	(27.4)	(9.4)
Net cash used in investing activities	(170.4)	(7,720.7)
Cash flows provided by (used in) financing activities:
Proceeds from senior notes		7,628.2
Proceeds from term loan		3,000.0
Redemption of senior notes		(2,740.0)
Payments on term loan	(500.0)
Net proceeds (payments on) under revolving credit facilities	(18.8)	0.9
Dividends paid to stockholders	(92.4)	(74.7)
Proceeds from employee stock compensation plans	78.6	34.6
Excess income tax benefit from stock option exercises		9.1
Restricted stock witholdings	(5.2)	(10.4)
Debt issuance costs		(58.4)
Repurchase of common stock	(415.5)
Net cash (used in) provided by financing activities	(953.3)	7,789.3
Effect of exchange rates on cash and cash equivalents	(11.7)	(16.0)
(Decrease) increase in cash and cash equivalents	(483.0)	341.3
Cash and cash equivalents, beginning of year	1,459.3	1,083.3
Cash and cash equivalents, end of period	$ 976.3	$ 1,424.6

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1. Basis of Presentation

The financial data presented herein is unaudited and should be read in conjunction with the consolidated financial statements and accompanying notes included in the 2015 Annual Report on Form 10-K filed by Zimmer Biomet Holdings, Inc.

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, 2015 condensed consolidated 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.

On June 24, 2015 (the “Closing Date”), pursuant to an agreement and plan of merger dated April 24, 2014, we acquired LVB Acquisition, Inc. (“LVB”), the parent company of Biomet, Inc. (“Biomet”), and LVB and Biomet became our wholly-owned subsidiaries (sometimes hereinafter referred to as the “Biomet merger” or the “merger”). For more information on the merger, see Note 3. In connection with the merger, we changed our name from Zimmer Holdings, Inc. to Zimmer Biomet Holdings, Inc.

The words “we,” “us,” “our” and similar words and “Zimmer Biomet” refer to Zimmer Biomet Holdings, Inc. and its subsidiaries. “Zimmer Biomet Holdings” refers to the parent company only. “Zimmer” used alone refers to the business or information of us and our subsidiaries on a stand-alone basis without inclusion of the business or information of LVB or any of its subsidiaries. Unless the context indicates or requires otherwise, references to “LVB” and “Biomet” refer to LVB and its subsidiaries.

XML

Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Significant Accounting Policies

2. Significant Accounting Policies

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Biomet-related
Merger consideration compensation expense	$	—	$	164.1	$	—	$	164.1
Retention plans		—		73.0		—		73.0
Consulting and professional fees		43.3		62.4		79.4		86.6
Employee termination benefits		3.1		64.5		7.2		64.9
Dedicated project personnel		21.2		8.1		42.9		9.1
Relocated facilities		6.3		0.9		8.0		0.9
Contract terminations		15.2		15.9		25.3		15.9
Information technology integration		3.1		—		4.5		—
Intangible asset impairment		28.0		—		28.0		—
Other		0.4		1.7		4.4		1.9
Total Biomet-related		120.6		390.6		199.7		416.4
Other
Consulting and professional fees		8.8		39.6		15.7		79.3
Employee termination benefits		—		0.7		—		0.8
Dedicated project personnel		1.5		10.1		3.3		22.5
Impairment/loss on disposal of assets		1.1		—		1.1		2.3
Relocated facilities		—		—		0.2		0.5
Certain litigation matters		—		20.3		—		20.3
Contract terminations		1.0		—		1.0		—
Information technology integration		0.2		—		0.3		—
Contingent consideration adjustments		—		—		—		2.3
Accelerated software amortization		—		—		—		1.5
Other		4.7		7.9		5.3		10.1
Total Other		17.3		78.6		26.9		139.6
Special items	$	137.9	$	469.2	$	226.6	$	556.0

As part of the Biomet merger, we recognized $209.0 million of intangible assets for in-process research and development (“IPR&D”) projects. During the three month period ended June 30, 2016, we recorded an impairment loss of $28.0 million related to these IPR&D intangible assets. The impairment was primarily due to the termination of certain IPR&D projects.

After the Closing Date of the Biomet merger, we started to implement our integration plans to drive operational synergies. Part of these integration plans included termination of employees and certain contracts. Expenses attributable to these integration plans that were recognized in the three and six month periods ended June 30, 2016 and 2015 as part of “Special items” related to employee termination benefits and contract termination expense associated with agreements with independent agents, distributors, suppliers and lessors. Our integration plans are expected to last through 2018 and we expect to incur a total of $170 million for employee termination benefits and $130 million for contract termination expense in that time period. As of June 30, 2016, we have incurred a cumulative total of $108.2 million for employee termination benefits and $120.3 million for contract termination expense. The following table summarizes the liabilities related to these integration plans (in millions):

	Employee Termination Benefits			Contract Terminations			Total
Balance at December 31, 2015	$	46.8		$	56.0		$	102.8
Additions		7.2			25.3			32.5
Cash payments		(16.7	)		(41.5	)		(58.2	)
Foreign currency exchange rate changes		(0.4	)		—			(0.4	)
Balance at June 30, 2016	$	36.9		$	39.8		$	76.7

Recent Accounting Pronouncements—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09—Revenue from Contracts with Customers (Topic 606). This ASU provides a five-step model for revenue recognition that all industries will apply to recognize revenue when a customer obtains control of a good or service. The ASU will be effective for us beginning January 1, 2018. We are in the initial phases of our adoption plans and, accordingly, we are unable to estimate any effect this may have on our revenue recognition practices.

In April 2015, the FASB issued ASU 2015-03—Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. This ASU does not affect the measurement and recognition of debt issuance costs in our statement of earnings. We adopted ASU 2015-03 during the first quarter of 2016 on a retrospective basis. Accordingly, we reclassified the debt issuance costs on our December 31, 2015 consolidated balance sheet, which decreased long-term debt by $58.9 million, other current assets by $9.2 million and other assets by $49.7 million.

In February 2016, the FASB issued ASU 2016-02—Leases. This ASU requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet. This ASU will be effective for us beginning January 1, 2019. Early adoption is permitted. The ASU must be adopted using a modified retrospective transition approach at the beginning of the earliest comparative period in the consolidated financial statements. We own most of our manufacturing facilities, but lease various office space throughout the world. We are currently evaluating the impact this ASU will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09—Improvements to Employee Share-Based Payment Accounting. This ASU simplifies several aspects of the accounting for employee share-based payments, including the accounting for employer tax withholding on share-based compensation, forfeitures and the financial statement presentation of excess tax benefits and deficiencies. The ASU also clarifies the statement of cash flows presentation for certain components of share-based awards. The ASU will be effective for us beginning January 1, 2017. Early adoption is permitted.

We elected to early adopt ASU 2016-09 during the second quarter of 2016, which required us to revise applicable items in the first quarter of 2016, since it was an interim period in the year of adoption. As a result of the adoption, we are required to recognize excess tax benefits in our provision for income taxes, rather than paid-in capital for all periods in 2016.

Additionally, ASU 2016-09 requires us to amend the presentation of employee shared-based payment-related items in our statement of cash flows as follows: (i) excess tax benefits are presented as an operating activity (such cash flows were previously included in cash flows from financing activities), and (ii) cash paid for employee taxes on withheld shares from equity awards is presented as a financing activity (such cash flows were previously included in cash flows from operating activities). We elected to apply the change in cash flow classification for excess tax benefits on a prospective basis. Further, we applied the change in cash flow classification for cash paid for withheld shares on a retrospective basis, as required.

Lastly, we elected to continue to estimate the number of forfeitures related to share-based payments, rather than account for forfeitures as they occur.

We recognized excess tax benefits of $4.0 million and $6.9 million in our provision for income taxes rather than paid-in capital for the three and six months ended June 30, 2016, respectively. Additionally, the change in cash flow classification resulted in a reclassification that increased each of net cash provided by operating activities and net cash used in financing activities by $12.4 million for the six month period ended June 30, 2016.

Following is a summary of the financial statement line items impacted as a result of the adoption of ASU 2016-09 for the periods presented in this Form 10-Q (in millions, except per share amounts).

Revised Consolidated Statement of Earnings and Comprehensive Income

	Three Months Ended March 31, 2016
	As Reported		Adjustment			As Revised
Provision for income taxes	$	49.0	$	(2.9	)	$	46.1
Net earnings		105.8		2.9			108.7
Net Earnings of Zimmer Biomet Holdings, Inc.		105.9		2.9			108.8
Weighted Average Common Shares Outstanding—Diluted		202.0		0.2			202.2
Earnings Per Common Share—Basic	$	0.53	$	0.01		$	0.54
Earnings Per Common Share—Diluted		0.52		0.02			0.54
Comprehensive Income	$	191.9	$	2.9		$	194.8
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.		192.1		2.9			195.0

Revised Balance Sheet

	As of March 31, 2016
	As Reported		Adjustment			As Revised
Paid-in capital	$	8,233.5	$	(2.9	)	$	8,230.6
Retained earnings		8,407.5		2.9			8,410.4

Revised Statements of Cash Flows

	Three Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
Net cash provided by operating activities	$	265.2		$	7.6		$	272.8
Net cash used in financing activities		(825.3	)		(7.6	)		(832.9	)

	Six Months Ended June 30, 2015
	As Reported		Adjustment			As Revised
Net cash provided by operating activities	$	278.3	$	10.4		$	288.7
Net cash provided by financing activities		7,799.7		(10.4	)		7,789.3

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.

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Business Combinations

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Business Combinations

3. Business Combinations

Biomet Merger

On the Closing Date, we completed our merger with LVB, the parent company of Biomet. We paid $12,030.3 million in cash and stock and assumed Biomet’s senior notes. The total amount of merger consideration utilized for the acquisition method of accounting, as reduced by the merger consideration paid to holders of unvested LVB stock options and LVB stock-based awards of $90.4 million, was $11,939.9 million.

In the three month period ended June 30, 2016, we finalized our valuation of the assets acquired and liabilities assumed in the Biomet merger. The measurement period adjustments in 2016 primarily related to refinements to intangible assets for certain less significant brands, the finalization of tax accounts, including the allocation of acquired intangible assets and goodwill on a jurisdictional basis, and finalizing the estimation of certain contingent liabilities. All other adjustments were not significant. Under GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. With respect to intangible asset amortization expense, the adjustments resulted in a decrease of $6.7 million in the six month period ended June 30, 2016, which related to the year ended December 31, 2015 on a retrospective basis. With respect to inventory fair value, in the three month period ended June 30, 2016, an adjustment was made which decreased cost of products sold, excluding intangible asset amortization, by $6.9 million, of which $2.3 million related to the three month period ended March 31, 2016 and $4.6 million related to the year ended December 31, 2015 on a retrospective basis. Through the finalization of tax accounts, we recognized an increase in our provision for income taxes of $73.2 million and $52.7 million in the three and six month periods ended June 30, 2016, respectively, of which $20.5 million related to the three month period ended March 31, 2016 and $52.7 million related to the year ended December 31, 2015 on a retrospective basis.

The following table summarizes the updated and final fair values of the assets acquired and liabilities assumed at the Closing Date (in millions):

	Closing Date
	(as adjusted as of March 31, 2016)		Adjustments			Final Values
Cash	$	494.8	$	—		$	494.8
Accounts receivable, net		528.1		(0.2	)		527.9
Inventory		1,237.5		(13.4	)		1,224.1
Other current assets		26.4		(1.0	)		25.4
Property, plant and equipment		783.3		(8.0	)		775.3
Intangible assets not subject to amortization:
Trademarks and trade names		479.0		—			479.0
In-process research and development (IPR&D)		246.0		(37.0	)		209.0
Intangible assets subject to amortization:
Technology		2,332.1		—			2,332.1
Customer relationships		4,946.0		15.0			4,961.0
Trademarks and trade names		360.0		—			360.0
Other assets		50.6		(8.0	)		42.6
Goodwill		7,717.2		(284.0	)		7,433.2
Total assets acquired		19,201.0		(336.6	)		18,864.4
Current liabilities		615.0		(31.0	)		584.0
Long-term debt		2,740.0		—			2,740.0
Deferred taxes		3,849.6		(352.0	)		3,497.6
Other long-term liabilities		56.5		46.4			102.9
Total liabilities assumed		7,261.1		(336.6	)		6,924.5
Net assets acquired	$	11,939.9	$	—		$	11,939.9

The following sets forth unaudited pro forma financial information derived from (i) the unaudited financial statements of Zimmer for the three and six month periods ended June 30, 2015; and (ii) the unaudited financial statements of LVB for the periods April 1, 2015 to June 23, 2015 and January 1, 2015 to June 23, 2015. The pro forma financial information has been adjusted to give effect to the merger as if it had occurred on January 1, 2014.

	Three Months Ended June 30, 2015		Six Months Ended June 30, 2015
	(in millions)
Net Sales	$	1,880.2	$	3,822.0
Net Earnings	$	19.0	$	226.2

These unaudited pro forma results have been prepared for comparative purposes only and include adjustments such as inventory step-up, amortization of acquired intangible assets and interest expense on debt incurred to finance the Biomet merger. Material, nonrecurring pro forma adjustments directly attributable to the Biomet merger include:

• The $164.1 million of merger consideration compensation expense for unvested LVB stock options and LVB stock-based awards was removed from net earnings for the three and six month periods ended June 30, 2015.

• The $73.0 million of retention plan expense was removed from net earnings for the three and six month periods ended June 30, 2015.

Other acquisitions

During the three months ended June 30, 2016, we completed individually immaterial acquisitions of companies including Cayenne Medical, Inc. (“Cayenne Medical”), a sports medicine company, and Compression Therapy Concepts, Inc. (“CTC”), a provider of non-invasive products for the prevention of deep vein thrombosis. The total aggregate cash consideration was $189.0 million. These acquisitions were completed primarily to expand our product offerings. We have assigned a preliminary fair value of $32.5 million for additional payments related to these acquisitions that are contingent on the respective acquired companies’ product sales and certain cost savings. The estimated fair value of the aggregate contingent payment liabilities was calculated based on the probability of achieving the specified sales growth and cost savings and discounting to present value the estimated payments. None of the goodwill related to these acquisitions is expected to be deductible for tax purposes.

The following table summarizes the aggregate preliminary fair values of the assets acquired and liabilities assumed related to the Cayenne Medical, CTC and other immaterial acquisitions during the three months ended June 30, 2016 (in millions):

Current assets	$	26.9
Intangible assets		118.6
Goodwill		139.6
Other assets		2.9
Total assets acquired		288.0
Current liabilities		4.3
Long-term liabilities		62.2
Total liabilities assumed		66.5
Net assets acquired	$	221.5

We have not included pro forma information and other information required by GAAP for the Cayenne Medical or CTC acquisitions because, individually and in aggregate, they did not have a material impact on our financial position or results of operations.

The following table summarizes the changes in the carrying amount of our goodwill (in millions):

	Americas			EMEA			Asia Pacific			Product Category Operating Segments			Total
Balance at December 31, 2015
Goodwill	$	7,328.0		$	1,291.0		$	548.9		$	1,139.3		$	10,307.2
Accumulated impairment loss		—			—			—			(373.0	)		(373.0	)
		7,328.0			1,291.0			548.9			766.3			9,934.2
Biomet purchase accounting adjustments		(51.4	)		(10.4	)		(61.3	)		(17.6	)		(140.7	)
Other acquisitions		136.7			2.9			—			—			139.6
Currency translation		21.1			4.7			16.0			1.7			43.5
Balance at June 30, 2016
Goodwill		7,434.4			1,288.2			503.6			1,123.4			10,349.6
Accumulated impairment loss		—			—			—			(373.0	)		(373.0	)
	$	7,434.4		$	1,288.2		$	503.6		$	750.4		$	9,976.6

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Inventories

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

4. Inventories

	June 30, 2016		December 31, 2015
	(in millions)
Finished goods	$	1,596.1	$	1,827.9
Work in progress		129.0		146.1
Raw materials		237.0		280.1
Inventories	$	1,962.1	$	2,254.1

Finished goods inventory as of June 30, 2016 and December 31, 2015 included $8.2 million and $284.4 million, respectively, to step-up acquired inventory to fair value.

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Property, Plant and Equipment

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

5. Property, Plant and Equipment

	June 30, 2016			December 31, 2015
	(in millions)
Land	$	39.4		$	39.6
Buildings and equipment		1,809.4			1,789.3
Capitalized software costs		381.8			330.1
Instruments		2,418.0			2,160.5
Construction in progress		113.7			108.4
		4,762.3			4,427.9
Accumulated depreciation		(2,728.5	)		(2,365.3	)
Property, plant and equipment, net	$	2,033.8		$	2,062.6

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Investments

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investments

6. Investments

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

	Amortized Cost		Gross Unrealized
			Gains		Losses			Fair Value
As of December 31, 2015
Corporate debt securities	$	245.7	$	0.1	$	(0.4	)	$	245.4
U.S. government and agency debt securities		21.6		-		(0.1	)		21.5
Commercial paper		4.2		-		-			4.2
Certificates of deposit		2.0		-		-			2.0
Total short and long-term investments	$	273.5	$	0.1	$	(0.5	)	$	273.1

During the three months ended June 30, 2016, we sold all of our short and long-term investments for $49.8 million in proceeds. The realized gain/loss on these sales was minimal.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

7. Debt

Our debt consisted of the following (in millions):

	June 30, 2016			December 31, 2015
Current portion of long-term debt
1.450% Senior Notes due 2017	$	500.0		$	—
Long-term debt
1.450% Senior Notes due 2017	$	—		$	500.0
2.000% Senior Notes due 2018		1,150.0			1,150.0
4.625% Senior Notes due 2019		500.0			500.0
2.700% Senior Notes due 2020		1,500.0			1,500.0
3.375% Senior Notes due 2021		300.0			300.0
3.150% Senior Notes due 2022		750.0			750.0
3.550% Senior Notes due 2025		2,000.0			2,000.0
4.250% Senior Notes due 2035		500.0			500.0
5.750% Senior Notes due 2039		500.0			500.0
4.450% Senior Notes due 2045		1,250.0			1,250.0
U.S. Term Loan		2,000.0			2,500.0
Japan Term Loan		113.8			96.8
Other long-term debt		4.5			4.6
Debt discount and issuance costs		(75.5	)		(80.8	)
Adjustment related to interest rate swaps		40.7			26.8
Total long-term debt	$	10,533.5		$	11,497.4

At June 30, 2016, our total debt balance consisted of $8.95 billion aggregate principal amount of our senior notes, a $2.0 billion U.S. term loan (“U.S. Term Loan”) and an 11.7 billion Japanese Yen term loan agreement (“Japan Term Loan”) that will mature on May 31, 2018, partially reduced by the net amount of other debt, debt discount and issuance costs and fair value adjustments, which was $30.3 million.

The U.S. Term Loan is part of our $4.35 billion senior credit agreement (the “Credit Agreement”) that contains: (i) a 5-year unsecured term loan facility in the principal amount of $3.0 billion (the “U.S. Term Loan Facility”), and (ii) a 5-year unsecured multicurrency revolving facility in the principal amount of $1.35 billion (the “Multicurrency Revolving Facility”). The Credit Agreement 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 of assets. Financial covenants include a consolidated indebtedness to consolidated EBITDA ratio of no greater than 5.0 to 1.0 through June 24, 2016 and no greater than 4.5 to 1.0 thereafter. If our credit rating falls below investment grade, additional restrictions would result, including restrictions on investments and payment of dividends. We were in compliance with all covenants under the Credit Agreement as of June 30, 2016.

On June 24, 2015, we borrowed $3.0 billion under the U.S. Term Loan Facility to fund a portion of the Biomet merger. Under the terms of the U.S. Term Loan Facility, starting September 30, 2015, principal payments are due as follows: $75.0 million on a quarterly basis during the first three years, $112.5 million on a quarterly basis during the fourth year, and $412.5 million on a quarterly basis during the fifth year. We have paid $1.0 billion in principal under the U.S. Term Loan Facility, resulting in $2.0 billion in outstanding borrowings as of June 30, 2016.

Borrowings under the Multicurrency Revolving Facility may be used for general corporate purposes. There were no borrowings outstanding under the Multicurrency Revolving Facility as of June 30, 2016.

Of the total $8.95 billion aggregate principal amount of senior notes outstanding at June 30, 2016, we issued $7.65 billion of this amount in March 2015 (the “Merger Notes”), the proceeds of which were used to finance a portion of the cash consideration payable in the Biomet merger, pay merger related fees and expenses and pay a portion of Biomet’s funded debt. The Merger Notes consist of the following seven tranches: the 1.450% Senior Notes due 2017, the 2.000% Senior Notes due 2018, the 2.700% Senior Notes due 2020, the 3.150% Senior Notes due 2022, the 3.550% Senior Notes due 2025, the 4.250% Senior Notes due 2035 and the 4.450% Senior Notes due 2045.

We may, at our option, redeem our senior notes, in whole or in part, at any time upon payment of the principal, any applicable make-whole premium, and accrued and unpaid interest to the date of redemption. In addition, the Merger Notes and the 3.375% Senior Notes due 2021 may be redeemed at our option without any make-whole premium at specified dates ranging from one month to six months in advance of the scheduled maturity date.

The estimated fair value of our senior notes as of June 30, 2016, based on quoted prices for the specific securities from transactions in over-the-counter markets (Level 2), was $9,251.5 million. The estimated fair value of the Japan Term Loan as of June 30, 2016, based upon publicly available market yield curves and the terms of the debt (Level 2), was $112.9 million. The carrying value of the U.S. Term Loan approximates fair value as it bears interest at short-term variable market rates.

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Accumulated Other Comprehensive Income

8. Accumulated Other Comprehensive Income

Accumulated other comprehensive income (“AOCI”) 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 AOCI may be reclassified to net earnings upon the occurrence of certain events.

Our AOCI 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. Amounts related to defined benefit plans that are in AOCI 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 12 for more information on our defined benefit plans.

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

	Foreign Currency Translation			Cash Flow Hedges			Unrealized (Losses) Gains on Securities			Defined Benefit Plan Items
Balance at December 31, 2015	$	(193.4	)	$	29.8		$	(0.6	)	$	(164.8	)
AOCI before reclassifications		55.6			(43.3	)		0.4			17.3
Reclassifications		—			(44.1	)		—			3.8
Balance at June 30, 2016	$	(137.8	)	$	(57.6	)	$	(0.2	)	$	(143.7	)

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

	Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended June 30,						Six Months Ended June 30,						Location on Statement of Earnings
Component of AOCI	2016			2015			2016			2015
Cash flow hedges
Foreign exchange forward contracts	$	26.3		$	33.1		$	58.4		$	61.2		Cost of products sold
Forward starting interest rate swaps		(0.5	)		(0.4	)		(0.9	)		(0.5	)	Interest expense
		25.8			32.7			57.5			60.7		Total before tax
		6.1			7.6			13.4			14.0		Provision (benefit) for income taxes
	$	19.7		$	25.1		$	44.1		$	46.7		Net of tax
Defined benefit plans
Prior service cost	$	2.0		$	1.2		$	3.9		$	2.3		*
Unrecognized actuarial (loss)		(5.0	)		(4.2	)		(10.0	)		(8.5	)	*
		(3.0	)		(3.0	)		(6.1	)		(6.2	)	Total before tax
		(1.2	)		(1.5	)		(2.3	)		(0.8	)	Provision (benefit) for income taxes
	$	(1.8	)	$	(1.5	)	$	(3.8	)	$	(5.4	)	Net of tax
Total reclassifications	$	17.9		$	23.6		$	40.3		$	41.3		Net of tax

* These AOCI components are included in the computation of net periodic pension expense (see Note 12).

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

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	(78.6	)	$	—		$	(78.6	)	$	55.6		$	—		$	55.6
Unrealized cash flow hedge (losses) gains		(8.3	)		(9.1	)		0.8			(64.8	)		(21.5	)		(43.3	)
Reclassification adjustments on foreign currency hedges		(25.8	)		(6.1	)		(19.7	)		(57.5	)		(13.4	)		(44.1	)
Unrealized gains on securities		—			—			—			0.4			—			0.4
Adjustments to prior service cost and unrecognized actuarial assumptions		2.0			0.9			1.1			23.4			2.3			21.1
Total Other Comprehensive Loss	$	(110.7	)	$	(14.3	)	$	(96.4	)	$	(42.9	)	$	(32.6	)	$	(10.3	)
	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	10.3		$	—		$	10.3		$	(139.6	)	$	—		$	(139.6	)
Unrealized cash flow hedge (losses) gains		(11.0	)		2.1			(13.1	)		40.7			1.4			39.3
Reclassification adjustments on foreign currency hedges		(32.7	)		(7.6	)		(25.1	)		(60.7	)		(14.0	)		(46.7	)
Unrealized (losses) gains on securities		(0.1	)		—			(0.1	)		0.5			—			0.5
Adjustments to prior service cost and unrecognized actuarial assumptions		3.0			1.5			1.5			6.2			0.8			5.4
Total Other Comprehensive Loss	$	(30.5	)	$	(4.0	)	$	(26.5	)	$	(152.9	)	$	(11.8	)	$	(141.1	)

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Fair Value Measurement of Assets and Liabilities

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

9. Fair Value Measurement of Assets and Liabilities

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

	As of June 30, 2016
	Recorded Balance		Fair Value Measurements at Reporting Date Using:
Description			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivatives, current and long-term
Foreign currency forward contracts	$	23.3	$	—	$	23.3	$	—
Interest rate swaps		40.7		—		40.7		—
	$	64.0	$	—	$	64.0	$	—
Liabilities
Derivatives, current and long-term
Foreign currency forward contracts	$	34.7	$	—	$	34.7	$	—

	As of December 31, 2015
	Recorded Balance		Fair Value Measurements at Reporting Date Using:
Description			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	$	245.4	$	—	$	245.4	$	—
U.S. government and agency debt securities		21.5		—		21.5		—
Commercial paper		4.2		—		4.2		—
Certificates of deposit		2.0		—		2.0		—
Total available-for-sale securities		273.1		—		273.1		—
Derivatives, current and long-term
Foreign currency forward contracts		96.9		—		96.9		—
Interest rate swaps		26.8		—		26.8		—
	$	396.8	$	—	$	396.8	$	—
Liabilities
Derivatives, current and long-term
Foreign currency forward contracts	$	1.6	$	—	$	1.6	$	—

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.

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Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

10. Derivative Instruments and Hedging Activities

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.

Interest Rate Risk

Derivatives Designated as Fair Value Hedges

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 4.625% Senior Notes due 2019 and 3.375% Senior Notes due 2021. The total notional amounts are $250 million and $300 million for the 4.625% Senior Notes due 2019 and 3.375% Senior Notes due 2021, respectively. On the interest rate swap agreements for the 4.625% 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 3.375% 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.

Derivatives Designated as Cash Flow Hedges

In 2014, we entered into forward starting interest rate swaps that were designated as cash flow hedges of the thirty year tranche of senior notes we expected to issue in 2015. The forward starting interest rate swaps mitigated the risk of changes in interest rates prior to the completion of the Merger Notes offering. The total notional amounts of the forward starting interest rate swaps were $1 billion and settled in March 2015 at a loss of $97.6 million. The loss is being recognized using the effective interest rate method over the maturity period of the 4.450% Senior Notes due 2045.

Foreign Currency Exchange Rate Risk

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.

Derivatives Designated as Cash Flow Hedges

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 confirming 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. On our condensed consolidated statement of cash flows, the settlements of these cash flow hedges are recognized in operating cash flows.

For foreign currency exchange forward contracts and options outstanding at June 30, 2016, 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 July 2016 through December 2018. As of June 30, 2016, the notional amounts of outstanding forward contracts and options entered into with third parties to purchase U.S. Dollars were $1,575.9 million. As of June 30, 2016, the notional amounts of outstanding forward contracts and options entered into with third parties to purchase Swiss Francs were $297.4 million.

Derivatives Not Designated as Hedging Instruments

We enter into foreign currency forward exchange contracts with terms of one month to manage currency exposures for monetary assets and liabilities denominated in a currency other than an entity’s functional currency. As a result, any foreign currency re-measurement gains/losses recognized in earnings are generally offset with gains/losses on the foreign currency forward exchange contracts in the same reporting period. The net amount of these offsetting gains/losses is recorded in other expense. 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 $1.5 billion to $2.0 billion per quarter.

Income Statement Presentation

Derivatives Designated as Fair Value Hedges

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
			Three Months Ended					Six Months Ended					Three Months Ended					Six Months Ended
	Location on Statement of Earnings		June 30,					June 30,					June 30,					June 30,
Derivative Instrument			2016		2015			2016		2015			2016			2015		2016			2015
Interest rate swaps		Interest expense	$	3.1	$	(8.0	)	$	13.9	$	(0.8	)	$	(3.1	)	$	8.0	$	(13.9	)	$	0.8

We had no ineffective fair value hedging instruments during the three and six month periods ended June 30, 2016 and 2015.

Derivatives Designated as Cash Flow Hedges

Derivative instruments designated as cash flow hedges had the following effects, before taxes, on AOCI 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 AOCI												Location on Statement of Earnings		Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended June 30,						Six Months Ended June 30,								Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument	2016			2015			2016			2015					2016			2015			2016			2015
Foreign exchange forward contracts	$	(8.3	)	$	(11.0	)	$	(64.8	)	$	79.0			Cost of products sold	$	26.3		$	33.1		$	58.4		$	61.2
Forward starting interest rate swaps		—			—			—			(38.3	)		Interest expense		(0.5	)		(0.4	)		(0.9	)		(0.5	)
	$	(8.3	)	$	(11.0	)	$	(64.8	)	$	40.7				$	25.8		$	32.7		$	57.5		$	60.7

The net amounts recognized in earnings during the three and six month periods ended June 30, 2016 and 2015 due to ineffectiveness and amounts excluded from the assessment of hedge effectiveness were not significant.    

The fair value of outstanding derivative instruments designated as cash flow hedges and recorded on the balance sheet at June 30, 2016, together with settled derivatives where the hedged item has not yet affected earnings, was a net unrealized loss of $96.3 million, or $57.6 million after taxes, which is deferred in AOCI. A gain of $24.3 million, or $20.5 million after taxes, is expected to be reclassified to earnings over the next twelve months. The disproportionate amount of net unrealized loss deferred in AOCI and the expected gain reclassification over the next twelve months is due to the significant loss from the forward starting interest rate swaps deferred in AOCI which will be reclassified to earnings over the maturity period of the 4.450% Senior Notes due 2045.

Derivatives Not Designated as Hedging Instruments

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

	Location on Statement of Earnings	Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument		2016			2015			2016			2015
Foreign exchange forward contracts	Other expense, net	$	(15.9	)	$	(1.6	)	$	(37.2	)	$	13.6

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

Balance Sheet Presentation

As of June 30, 2016 and December 31, 2015, all derivative instruments designated as fair value hedges and cash flow hedges 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):

	June 30, 2016			December 31, 2015
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Asset Derivatives
Foreign exchange forward contracts	Other current assets	$	45.8	Other current assets	$	100.5
Foreign exchange forward contracts	Other assets		10.9	Other assets		19.8
Interest rate swaps	Other assets		40.7	Other assets		26.8
Total asset derivatives		$	97.4		$	147.1
Liability Derivatives
Foreign exchange forward contracts	Other current liabilities	$	44.5	Other current liabilities	$	16.7
Foreign exchange forward contracts	Other long-term liabilities		23.6	Other long-term liabilities		8.3
Total liability derivatives		$	68.1		$	25.0

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

		As of June 30, 2016						As of December 31, 2015
Description	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		$45.8		26.3		$19.5		$100.5		$16.3		$84.2
Cash flow hedges	Other assets		10.9		7.1		3.8		19.8		7.1		12.7
Liability Derivatives
Cash flow hedges	Other current liabilities		44.5		26.3		18.2		16.7		16.3		0.4
Cash flow hedges	Other long-term liabilities		23.6		7.1		16.5		8.3		7.1		1.2

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Income Taxes

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

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 amount of tax liability for unrecognized tax benefits may change within the next twelve months 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. Although the ultimate timing for resolution of the disputed tax issues is uncertain, we may resolve certain tax matters within the next twelve months and pay amounts for other unresolved tax matters in order to limit the potential impact of interest charges. Final resolution of these matters could have a material impact on our income tax expense, results of operations and cash flows for future periods. Currently, we cannot reasonably estimate the amount by which our unrecognized tax benefits will change.

Our U.S. federal income tax returns have been audited through 2009 and are currently under audit for years 2010 through 2014. The Internal Revenue Service (“IRS”) has proposed adjustments for years 2005 through 2009, reallocating profits between certain of our U.S. and foreign subsidiaries. We have disputed these adjustments and intend to continue to vigorously defend our positions. For years 2005 through 2007, we have filed a petition with the U.S. Tax Court. For years 2008 through 2009, we are pursuing resolution through the IRS Administrative Appeals Process. The U.S. federal income tax returns of the acquired Biomet consolidated group have been audited through fiscal year 2008.

Our effective tax rate for the three month periods ended June 30, 2016 and 2015 represented a tax provision of 128.7 percent and a tax benefit of 27.1 percent, respectively. For the six month periods ended June 30, 2016 and 2015, our effective tax rate represented a tax provision of 71.0 percent and a tax benefit of 77.1 percent, respectively. The unusually high tax rates in the 2016 periods primarily relate to the finalization of tax accounts for the Biomet merger. We recognized an increase in our provision for income taxes of $73.2 million and $52.7 million in the three and six month periods ended June 30, 2016, respectively, of which $20.5 million related to the three month period ended March 31, 2016 and $52.7 million related to the year ended December 31, 2015. Under GAAP, these non-cash measurement period adjustments are recognized on a prospective basis in the period of change.

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Retirement Benefit Plans

6 Months Ended

Jun. 30, 2016

Compensation and Retirement Disclosure [Abstract]

Retirement Benefit Plans

12. Retirement Benefit Plans

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 pension plans are as follows (in millions):

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Service cost	$	7.7		$	7.6		$	15.2		$	15.2
Interest cost		7.4			5.6			14.6			11.1
Expected return on plan assets		(12.7	)		(10.9	)		(25.4	)		(21.8	)
Curtailment gain		(0.3	)		—			(0.6	)		—
Amortization of prior service cost		(2.0	)		(1.2	)		(3.9	)		(2.3	)
Amortization of unrecognized actuarial loss		5.0			4.2			10.0			8.5
Net periodic pension expense	$	5.1		$	5.3		$	9.9		$	10.7

We expect that we will have minimal legally required funding obligations in 2016 for our U.S. and Puerto Rico defined benefit pension plans, and therefore we have not made, nor do we voluntarily expect to make, any material contributions to these plans during 2016. We contributed $7.4 million to our foreign-based defined benefit pension plans in the six month period ended June 30, 2016, and we expect to contribute $8.4 million to these foreign-based plans during the remainder of 2016.

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Earnings Per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share

13. Earnings Per Share

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Weighted average shares outstanding for basic net earnings per share		199.4		173.0		199.8		171.5
Effect of dilutive stock options and other equity awards		—		—		2.3		—
Weighted average shares outstanding for diluted net earnings per share		199.4		173.0		202.1		171.5

During the six month period ended June 30, 2016, an average of 0.7 million options to purchase shares of common stock were not included in the computation of diluted earnings per share because the exercise prices of these options were greater than the average market price of our common stock. For periods in which we incurred a net loss, no dilutive stock options or other equity awards were included as diluted shares.

In the three month period ended June 30, 2016, we did not repurchase any of our common stock. In the six month period ended June 30, 2016, we repurchased 4.2 million shares of our common stock at an average price of $98.50 per share for a total cash outlay of $415.5 million, including commissions.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

14. Segment Information

We design, manufacture and market orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial (“CMF”) and thoracic products; dental implants; and related surgical products. Due to the Biomet merger, we changed our senior management organizational structure which resulted in a change to our operating segments. We now allocate resources to achieve our operating profit goals through seven operating segments. Our operating segments are comprised of both geographic and product category business units. The geographic operating segments are the Americas, which is comprised principally of the U.S. and includes other North, Central and South American markets; EMEA, 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. The product category operating segments are Americas Spine, Bone Healing, CMF and Dental. The geographic operating segments include results from all of our product categories except those in the product category operating segments. The Bone Healing, CMF and Dental product category operating segments reflect those respective product category results from all regions, whereas the Americas Spine operating segment only includes spine product results from the Americas.

As it relates to the geographic operating segments, management evaluates performance based upon segment operating profit exclusive of operating expenses pertaining to inventory step-up and certain other inventory and manufacturing related charges, “Certain claims,” goodwill impairment, intangible asset amortization, “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, manufacturing operations and logistics and share-based payment expense. As it relates to each product category operating segment, research, development engineering, medical education, brand management and other various costs that are specific to the product category operating segment’s operations are reflected in its operating profit results. Due to these additional costs included in the product category operating segments, profitability metrics between the geographic operating segments and product category operating segments are not comparable. Intercompany transactions have been eliminated from segment operating profit.

These seven operating segments are the basis for our reportable segment information provided below. The four product category operating segments are individually insignificant to our consolidated results and therefore do not constitute a reportable segment either individually or combined. For presentation purposes, these product category operating segments have been aggregated. Prior period reportable segment financial information has been restated to conform to the current period.

Net sales and operating profit by segment are as follows (in millions):

	Net Sales				Operating Profit
	Three Months Ended June 30,				Three Months Ended June 30,
	2016		2015		2016			2015
Americas	$	981.7	$	601.1	$	522.6		$	314.3
EMEA		416.1		270.6		137.0			102.1
Asia Pacific		275.8		193.2		115.2			97.0
Product Category Operating Segments		260.4		102.7		75.7			20.4
Global Operations and Corporate Functions		—		—		(220.6	)		(141.3	)
Total	$	1,934.0	$	1,167.6
Inventory step-up and other inventory and manufacturing related charges						(156.6	)		(14.7	)
Intangible asset amortization						(133.8	)		(33.0	)
Certain claims						—			(7.7	)
Special items						(137.9	)		(469.2	)
Operating profit					$	201.6		$	(132.1	)

	Net Sales				Operating Profit
	Six Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016			2015
Americas	$	1,966.4	$	1,178.8	$	1,057.6		$	611.1
EMEA		832.7		551.8		278.3			211.6
Asia Pacific		532.4		380.7		225.8			194.7
Product Category Operating Segments		506.5		190.7		133.9			34.5
Global Operations and Corporate Functions		—		—		(426.6	)		(278.4	)
Total	$	3,838.0	$	2,302.0
Inventory step-up and other inventory and manufacturing related charges						(334.9	)		(18.6	)
Intangible asset amortization						(260.4	)		(53.4	)
Certain claims						—			(7.7	)
Special items						(226.6	)		(556.0	)
Operating profit					$	447.1		$	137.8

Net sales by product category are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Knees	$	696.9	$	468.9	$	1,400.2	$	932.8
Hips		477.2		319.0		945.1		630.4
S.E.T		412.4		222.5		813.5		440.9
Dental		118.0		61.0		226.6		116.8
Spine & CMF		145.8		58.9		287.0		108.4
Other		83.7		37.3		165.6		72.7
Total	$	1,934.0	$	1,167.6	$	3,838.0	$	2,302.0

“S.E.T” refers to our surgical, sports medicine, biologics, foot and ankle, extremities and trauma product category.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

15. Commitments and Contingencies

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.

Litigation

Durom^® Cup-related claims: On July 22, 2008, we temporarily suspended marketing and distribution of the Durom Cup in the U.S. Subsequently, a number of product liability lawsuits were filed against us in various U.S. and foreign jurisdictions. The plaintiffs seek damages for personal injury, and they generally allege that the Durom Cup contains defects that result in complications and premature revision of the device. We have settled some of these claims and others are still pending. The majority of the pending U.S. lawsuits are currently in a federal Multidistrict Litigation (“MDL”) in the District of New Jersey (In Re: Zimmer Durom Hip Cup Products Liability Litigation). Multi-plaintiff state court cases are pending in St. Clair County, Illinois (Santas, et al. v. Zimmer, Inc., et al.) and Los Angeles County, California (McAllister, et al. v. Zimmer, Inc., et al.). The initial trial in Santas took place in November 2014, the initial trial in the MDL took place in May 2015 and the initial trial in McAllister took place in July 2015. Other lawsuits are pending in various jurisdictions, and additional claims may be asserted in the future.

Since 2008, we have recognized expense of $479.4 million for Durom Cup-related claims. Our estimate of our total liability for these claims as of June 30, 2016 remains consistent with our estimate as of December 31, 2015, and, accordingly, we did not record any additional expense during the three and six month periods ended June 30, 2016. With respect to the same prior year periods, we recognized $7.7 million in expense for Durom Cup-related claims.

We maintain insurance for product liability claims, subject to self-insurance retention requirements. As of June 30, 2016, we have exhausted our self-insured retention under our insurance program and 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, it is probable that we will recover some amount from our insurance carriers. We have received a portion of the insurance proceeds we estimate we will recover. We have a $95.3 million receivable in “Other assets” remaining on our consolidated balance sheet as of June 30, 2016 for estimated insurance recoveries for Durom Cup-related claims. 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 June 30, 2016 of the remaining liability for all Durom Cup-related claims is $303.2 million, of which $50.0 million is classified as short-term in “Other current liabilities” and $253.2 million is classified as long-term in “Other long-term liabilities” on our consolidated balance sheet. We expect to pay the majority of the Durom Cup-related claims within the next few years.

Our understanding of clinical outcomes with the Durom Cup and other large diameter hip cups continues to evolve. We rely on significant estimates in determining the provisions for Durom Cup-related claims, including our estimate of the number of claims that we will receive and the average amount we will pay per claim. The actual number of claims and the actual 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 from Durom Cup-related claims in excess of the losses we have accrued.

Margo and Daniel Polett v. Zimmer, Inc. et al.: On August 20, 2008, 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 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-argument en banc, and on March 28, 2013, we filed our response in opposition. On May 9, 2013, the Superior Court of Pennsylvania granted plaintiffs’ motion for re-argument en banc. Oral argument (re-argument en banc) before the Superior Court of Pennsylvania was held on October 16, 2013. 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, which was granted on May 21, 2014. Oral argument before the Supreme Court of Pennsylvania took place on October 8, 2014. On October 27, 2015, the Supreme Court of Pennsylvania reversed the order of the Superior Court of Pennsylvania and remanded the case to that court to consider the question of whether the trial court erred in refusing to remit the jury’s compensatory damages award. On June 6, 2016, an en banc panel of the Superior Court of Pennsylvania vacated the $27.6 million verdict and remanded the case back to the trial court for remittitur. 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 the NexGen Knee System suffer from defects that cause them to loosen prematurely. The majority of the cases are currently pending in a federal MDL in the Northern District of Illinois (In Re: Zimmer NexGen Knee Implant Products Liability Litigation). Other cases are pending in other state and federal courts, and additional lawsuits may be filed. As of June 30, 2016, discovery in these lawsuits was ongoing. The initial bellwether trial took place in October 2015. 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.

Biomet metal-on-metal hip implant claims: Biomet is a defendant in a number of product liability lawsuits relating to metal-on-metal hip implants. The majority of these cases involve the M2a-Magnum^TM hip system. The majority of the cases are currently consolidated in one federal MDL proceeding in the U.S. District Court for the Northern District of Indiana (In Re: Biomet M2a Magnum Hip Implant Product Liability Litigation). Other cases are pending in various state and foreign courts.

On February 3, 2014, Biomet announced the settlement of the MDL. Lawsuits filed in the MDL by April 15, 2014 may participate in the settlement. Biomet continues to evaluate the inventory of lawsuits in the MDL pursuant to the categories and procedures set forth in the settlement agreement. The final amount of payments under the settlement is uncertain. The settlement does not affect certain other claims relating to Biomet’s metal-on-metal hip products that are pending in various state and foreign courts, or other claims that may be filed in the future. Our estimate as of June 30, 2016 of the remaining liability for all Biomet metal-on-metal hip implant claims is $69.0 million.

Biomet has exhausted the self-insured retention in its insurance program and has been reimbursed for claims related to its metal-on-metal products up to its policy limits in the program. Zimmer Biomet will be responsible for any amounts by which the ultimate losses exceed the amount of Biomet’s third-party insurance coverage. As of June 30, 2016, Biomet had received all of the insurance proceeds it expects to recover under the excess policies. Although we are vigorously defending these lawsuits, their ultimate resolution is uncertain.

Heraeus trade secret misappropriation lawsuits: In December 2008, Heraeus Kulzer GmbH (together with its affiliates, “Heraeus”) initiated legal proceedings in Germany against Biomet, Inc., Biomet Europe BV and certain other subsidiaries of Biomet, Inc., alleging that Biomet, Inc. and Biomet Europe BV misappropriated Heraeus trade secrets when developing Biomet Europe’s Refobacin and Biomet Bone Cement line of cements (“European Cements”). The lawsuit sought to preclude the defendants from producing, marketing and offering for sale their current line of European Cements and to compensate Heraeus for any damages incurred (alleged to be in excess of €30.0 million). On December 20, 2012, the trial court dismissed Biomet, Inc., Biomet Europe BV, Biomet Deutschland GmbH and other defendants from the lawsuit. Biomet Orthopaedics Switzerland GmbH was the only Biomet entity remaining as a defendant.

Following an appeal by Heraeus, on June 5, 2014, the German appeals court in Frankfurt (i) enjoined Biomet, Inc., Biomet Europe BV and Biomet Deutschland GmbH from manufacturing, selling or offering the European Cements to the extent they contain certain raw materials in particular specifications; (ii) held the defendants jointly and severally liable to Heraeus for any damages from the sale of European Cements since 2005; and (iii) ruled that no further review may be sought (the “Frankfurt Decision”). The Heraeus and Biomet parties both sought appeal against the Frankfurt Decision. In a decision dated June 16, 2016, the German Supreme Court dismissed the parties’ appeals without reaching the merits, and no other ordinary appeal is available. The Frankfurt Decision is thus final. As of June 30, 2016, Heraeus had not made a demand for damages.

As a result, Biomet Europe BV and Biomet Deutschland GmbH are enjoined from the manufacture, marketing, sale and offering of European Cements in Germany. Heraeus has taken the position that the judgment prohibits the manufacture, marketing, sale and offering of European Cements outside of Germany as well and is attempting to enforce or extend the judgment in a number of other European jurisdictions. Biomet, Inc., Biomet Europe BV and Biomet Deutschland GmbH are vigorously contesting any enforcement of the judgment beyond Germany and thus filed a declaratory action in Germany on August 3, 2014 to have the court determine the reach of the Frankfurt Decision. In a decision dated April 28, 2016, the German appeals court confirmed Biomet’s position that the Frankfurt Decision applies only to acts within Germany. Heraeus has appealed this decision, and no prediction can be made as to the likelihood of review being granted by Germany’s Supreme Court.

On September 8, 2014, Heraeus filed a complaint against a Biomet supplier, Esschem, Inc. (“Esschem”), in the United States District Court for the Eastern District of Pennsylvania. The lawsuit contains allegations that focus on two copolymer compounds that Esschem sells to Biomet, which Biomet incorporates into certain bone cement products that compete with Heraeus’ bone cement products. The complaint alleges that Biomet helped Esschem to develop these copolymers, using Heraeus trade secrets that Biomet allegedly misappropriated. The complaint asserts a claim under the Pennsylvania Trade Secrets Act, as well as other various common law tort claims, all based upon the same trade secret misappropriation theory. Heraeus is seeking to enjoin Esschem from supplying the copolymers to any third party and actual damages in an unspecified amount. The complaint also seeks punitive damages, costs and attorneys’ fees. If Esschem is enjoined, Biomet may not be able to obtain the copolymers from another supplier and as a result may not be able to continue to manufacture the subject bone cement products. Although Heraeus has not named Biomet as a party to this lawsuit, Biomet has agreed, at Esschem’s request and subject to certain limitations, to indemnify Esschem for any liability, damages and legal costs related to this matter. On November 3, 2014, the court entered an order denying Heraeus’ motion for a temporary restraining order. On June 30, 2016, the court entered an order denying Heraeus’ request to give preclusive effect to the factual findings in the Frankfurt Decision. Discovery is ongoing, and a trial date has not yet been set.

On October 15, 2015, Heraeus initiated expedited proceedings against Biomet France, Biomet SAS, Biomet Europe BV, Biomet, Inc., Biomet Orthopedics Switzerland GmbH and Biomet Global Supply Chain Center BV before the Commercial Court in Paris seeking to enjoin these entities from importing certain raw materials subject to the rulings in Germany and from manufacturing, selling or exporting the bone cements made from those raw materials, including under the names of the European Cements. On November 16, 2015, the presiding judge ruled that it had no jurisdiction over Biomet, Inc. and on December 4, 2015, the judge denied the preliminary measures requested by Heraeus. Heraeus has not appealed this ruling or filed an action on the merits before the Commercial Court in Paris. On December 8, 2015, Heraeus filed separate proceedings against Biomet France, Biomet SAS and Biomet France Holding before the Commercial Court of Roman-Sur-Isere seeking to gain access to certain documents which had been seized during searches of Biomet France’s premises in June 2015. Biomet is defending itself vigorously in this proceeding, which is still ongoing.

Heraeus continues to initiate other related legal proceedings in Europe seeking various forms of relief, including injunctive relief and damages, against Biomet-related entities relating to the European Cements.

We have not accrued an estimated loss relating to these lawsuits because we do not believe 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.

Stryker 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 our Pulsavac^® 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. Oral argument before the Court of Appeals for the Federal Circuit took place on September 8, 2014. On December 19, 2014, the Federal Circuit issued a decision affirming the $70.0 million lost profits award but reversed the willfulness finding, vacating the treble damages award and vacating and remanding the attorneys’ fees award. We accrued an estimated loss of $70.0 million related to this matter in the three month period ended December 31, 2014. On January 20, 2015, Stryker filed a motion with the Federal Circuit for a rehearing en banc. On March 23, 2015, the Federal Circuit denied Stryker’s petition. Stryker subsequently filed a petition for certiorari to the U.S. Supreme Court. In July 2015, we paid the final award of $90.3 million, which includes the original $70.0 million plus pre-and post-judgment interest and damages for sales that occurred post-trial but prior to our entry into a license agreement with Stryker. On October 19, 2015, the U.S. Supreme Court granted Stryker’s petition for certiorari. Oral argument took place on February 23, 2016. On June 13, 2016, the U.S. Supreme Court issued its decision, vacating the judgment of the Federal Circuit and remanding the case for further proceedings related to the willfulness issue. Although we are defending this lawsuit vigorously, the ultimate resolution of this matter is uncertain. In the future, we could be required to record a charge of up to $140.0 million that could have a material adverse effect on our results of operations and cash flows.

Regulatory Matters, Government Investigations and Other Matters

FDA warning letters: In September 2012, Zimmer received a warning letter from the U.S. Food and Drug Administration (“FDA”) citing concerns relating to certain processes pertaining to products manufactured at our Ponce, Puerto Rico manufacturing facility. In June 2015, Biomet received a warning letter from the FDA that requested additional information to allow the FDA to evaluate the adequacy of Biomet’s responses to certain Form 483 observations issued following an inspection of Biomet’s Zhejiang, China manufacturing facility in January 2015. In May 2016, Zimmer received a warning letter from the FDA related to observed non-conformities with current good manufacturing practice requirements of the Quality System regulation at our facility in Montreal, Quebec, Canada. 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, Zhejiang and Montreal. As of June 30, 2016, these warning letters remained 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 at these facilities are reasonably related will not be approved until the violations have been corrected. In addition to responding to the warning letters 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.

Biomet DPA and Consent: On March 26, 2012, Biomet entered into a Deferred Prosecution Agreement (“DPA”) with the U.S. Department of Justice, Criminal Division, Fraud Section (“DOJ”) and a Consent to Final Judgment (“Consent”) with the U.S. Securities and Exchange Commission (“SEC”) related to an investigation by the DOJ and the SEC into possible violations of the U.S. Foreign Corrupt Practices Act (“FCPA”) in the marketing and sale of medical devices in certain foreign countries. Pursuant to the DPA, the DOJ agreed to defer prosecution of Biomet in connection with those matters, provided that Biomet satisfies its obligations under the DPA over the term of the DPA. The DPA had a three-year term and provided that it could be extended in the sole discretion of the DOJ for an additional year. Pursuant to the Consent, Biomet consented to the entry of a Final Judgment which, among other things, permanently enjoined Biomet from violating the provisions of the FCPA. In addition, pursuant to the terms of the DPA, an independent external compliance monitor was appointed to review Biomet’s compliance with the DPA, particularly in relation to Biomet’s international sales practices. The Consent that Biomet entered into with the SEC mirrors the DPA’s provisions with respect to the compliance monitor.

In October 2013, Biomet became aware of certain alleged improprieties regarding its operations in Brazil and Mexico, including alleged improprieties that predated the entry of the DPA. Biomet retained counsel and other experts to investigate both matters. Based on the results of the ongoing investigations, Biomet has terminated, suspended or otherwise disciplined certain of the employees and executives involved in these matters, and has taken certain other remedial measures. Additionally, pursuant to the terms of the DPA, in April 2014 and thereafter, Biomet disclosed these matters to and discussed these matters with the independent compliance monitor and the DOJ and SEC. On July 2, 2014 and July 13, 2015, the SEC issued subpoenas to Biomet requiring that Biomet produce certain documents relating to such matters. These matters remain under investigation by the DOJ.

On March 13, 2015, the DOJ informed Biomet that the DPA and the independent compliance monitor’s appointment had been extended for an additional year. On April 2, 2015, at the request of the staff of the SEC, Biomet consented to an amendment to the Final Judgment to extend the term of the compliance monitor’s appointment for one year from the date of entry of the Amended Final Judgment.

The DPA as originally extended was set to expire on March 26, 2016. However, the DOJ and the SEC continue to evaluate the alleged misconduct in Brazil and Mexico, as well as any issues relating to Biomet’s compliance program. The DOJ, the SEC and Biomet have agreed to continue to evaluate and discuss these matters and, therefore, the matter is ongoing as of the date of the filing of this Form 10-Q. Pursuant to the DPA, the DOJ has sole discretion to determine whether conduct by Biomet constitutes a violation or breach of the DPA, and the DOJ has notified Biomet that it believes a breach occurred. The DOJ has informed Biomet that it retains its rights under the DPA to bring further action against Biomet relating to the conduct in Brazil and Mexico disclosed in 2014 or the violations set forth in the DPA. The DOJ could, among other things, revoke the DPA or prosecute Biomet and/or the involved employees and executives. Biomet continues to cooperate with the SEC and the DOJ, and expects that discussions with the SEC and the DOJ will continue. There is no assurance that Biomet will enter into a consensual resolution of this matter with the SEC or the DOJ, and the terms and conditions of any such potential resolution are uncertain. We believe it is probable that Biomet will incur additional liabilities related to these investigations, which we have accrued in “Other current liabilities” as of the Closing Date. It is reasonably possible our estimates may change in the near future once the DOJ and SEC complete their investigations and we conclude our discussions regarding possible resolution.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

16. Subsequent Events

On July 13, 2016, we acquired all of the outstanding shares of LDR Holding Corporation (“LDR”), a global medical device company focused on designing and commercializing novel and proprietary surgical technologies for the treatment of patients suffering from spine disorders, for $1,086.8 million. The addition of LDR will differentiate and enhance our Spine technology portfolio. We funded this acquisition primarily by borrowing under our Multicurrency Revolving Facility. We anticipate repaying the funds borrowed under our Multicurrency Revolving Facility in 2016 by entering into other debt instruments. At the date of issuance of the interim condensed consolidated financial statements contained in this Form 10-Q, the initial business combination accounting was not complete for this acquisition given the timing of the transaction.

On July 18, 2016, we acquired 58.8 percent of the outstanding share capital of Medtech SA (“Medtech”), as well as all outstanding convertible bonds and warrants previously issued by Medtech, for an aggregate purchase price of €96.0 million, or $107.0 million. In accordance with French law, we will launch, as soon as possible, an all-cash simplified tender offer to acquire the remaining outstanding shares of Medtech. Medtech is a French medical technology company specializing in designing, developing and marketing surgical assistance robots. Medtech currently offers two FDA-approved surgical robots that allow for minimally invasive brain and spine procedures. We expect the acquisition of Medtech to enhance our presence in the musculoskeletal market. At the date of issuance of the interim condensed consolidated financial statements contained in this Form 10-Q, the initial business combination accounting was not complete for this acquisition given the timing of the transaction.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Special Items

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Biomet-related
Merger consideration compensation expense	$	—	$	164.1	$	—	$	164.1
Retention plans		—		73.0		—		73.0
Consulting and professional fees		43.3		62.4		79.4		86.6
Employee termination benefits		3.1		64.5		7.2		64.9
Dedicated project personnel		21.2		8.1		42.9		9.1
Relocated facilities		6.3		0.9		8.0		0.9
Contract terminations		15.2		15.9		25.3		15.9
Information technology integration		3.1		—		4.5		—
Intangible asset impairment		28.0		—		28.0		—
Other		0.4		1.7		4.4		1.9
Total Biomet-related		120.6		390.6		199.7		416.4
Other
Consulting and professional fees		8.8		39.6		15.7		79.3
Employee termination benefits		—		0.7		—		0.8
Dedicated project personnel		1.5		10.1		3.3		22.5
Impairment/loss on disposal of assets		1.1		—		1.1		2.3
Relocated facilities		—		—		0.2		0.5
Certain litigation matters		—		20.3		—		20.3
Contract terminations		1.0		—		1.0		—
Information technology integration		0.2		—		0.3		—
Contingent consideration adjustments		—		—		—		2.3
Accelerated software amortization		—		—		—		1.5
Other		4.7		7.9		5.3		10.1
Total Other		17.3		78.6		26.9		139.6
Special items	$	137.9	$	469.2	$	226.6	$	556.0

As part of the Biomet merger, we recognized $209.0 million of intangible assets for in-process research and development (“IPR&D”) projects. During the three month period ended June 30, 2016, we recorded an impairment loss of $28.0 million related to these IPR&D intangible assets. The impairment was primarily due to the termination of certain IPR&D projects.

After the Closing Date of the Biomet merger, we started to implement our integration plans to drive operational synergies. Part of these integration plans included termination of employees and certain contracts. Expenses attributable to these integration plans that were recognized in the three and six month periods ended June 30, 2016 and 2015 as part of “Special items” related to employee termination benefits and contract termination expense associated with agreements with independent agents, distributors, suppliers and lessors. Our integration plans are expected to last through 2018 and we expect to incur a total of $170 million for employee termination benefits and $130 million for contract termination expense in that time period. As of June 30, 2016, we have incurred a cumulative total of $108.2 million for employee termination benefits and $120.3 million for contract termination expense. The following table summarizes the liabilities related to these integration plans (in millions):

	Employee Termination Benefits			Contract Terminations			Total
Balance at December 31, 2015	$	46.8		$	56.0		$	102.8
Additions		7.2			25.3			32.5
Cash payments		(16.7	)		(41.5	)		(58.2	)
Foreign currency exchange rate changes		(0.4	)		—			(0.4	)
Balance at June 30, 2016	$	36.9		$	39.8		$	76.7

Recent Accounting Pronouncements

Recent Accounting Pronouncements—In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2014-09—Revenue from Contracts with Customers (Topic 606). This ASU provides a five-step model for revenue recognition that all industries will apply to recognize revenue when a customer obtains control of a good or service. The ASU will be effective for us beginning January 1, 2018. We are in the initial phases of our adoption plans and, accordingly, we are unable to estimate any effect this may have on our revenue recognition practices.

In April 2015, the FASB issued ASU 2015-03—Simplifying the Presentation of Debt Issuance Costs. This ASU requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability, consistent with the presentation of a debt discount. This ASU does not affect the measurement and recognition of debt issuance costs in our statement of earnings. We adopted ASU 2015-03 during the first quarter of 2016 on a retrospective basis. Accordingly, we reclassified the debt issuance costs on our December 31, 2015 consolidated balance sheet, which decreased long-term debt by $58.9 million, other current assets by $9.2 million and other assets by $49.7 million.

In February 2016, the FASB issued ASU 2016-02—Leases. This ASU requires lessees to recognize right-of-use assets and lease liabilities on the balance sheet. This ASU will be effective for us beginning January 1, 2019. Early adoption is permitted. The ASU must be adopted using a modified retrospective transition approach at the beginning of the earliest comparative period in the consolidated financial statements. We own most of our manufacturing facilities, but lease various office space throughout the world. We are currently evaluating the impact this ASU will have on our consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09—Improvements to Employee Share-Based Payment Accounting. This ASU simplifies several aspects of the accounting for employee share-based payments, including the accounting for employer tax withholding on share-based compensation, forfeitures and the financial statement presentation of excess tax benefits and deficiencies. The ASU also clarifies the statement of cash flows presentation for certain components of share-based awards. The ASU will be effective for us beginning January 1, 2017. Early adoption is permitted.

We elected to early adopt ASU 2016-09 during the second quarter of 2016, which required us to revise applicable items in the first quarter of 2016, since it was an interim period in the year of adoption. As a result of the adoption, we are required to recognize excess tax benefits in our provision for income taxes, rather than paid-in capital for all periods in 2016.

Additionally, ASU 2016-09 requires us to amend the presentation of employee shared-based payment-related items in our statement of cash flows as follows: (i) excess tax benefits are presented as an operating activity (such cash flows were previously included in cash flows from financing activities), and (ii) cash paid for employee taxes on withheld shares from equity awards is presented as a financing activity (such cash flows were previously included in cash flows from operating activities). We elected to apply the change in cash flow classification for excess tax benefits on a prospective basis. Further, we applied the change in cash flow classification for cash paid for withheld shares on a retrospective basis, as required.

Lastly, we elected to continue to estimate the number of forfeitures related to share-based payments, rather than account for forfeitures as they occur.

We recognized excess tax benefits of $4.0 million and $6.9 million in our provision for income taxes rather than paid-in capital for the three and six months ended June 30, 2016, respectively. Additionally, the change in cash flow classification resulted in a reclassification that increased each of net cash provided by operating activities and net cash used in financing activities by $12.4 million for the six month period ended June 30, 2016.

Following is a summary of the financial statement line items impacted as a result of the adoption of ASU 2016-09 for the periods presented in this Form 10-Q (in millions, except per share amounts).

Revised Consolidated Statement of Earnings and Comprehensive Income

	Three Months Ended March 31, 2016
	As Reported		Adjustment			As Revised
Provision for income taxes	$	49.0	$	(2.9	)	$	46.1
Net earnings		105.8		2.9			108.7
Net Earnings of Zimmer Biomet Holdings, Inc.		105.9		2.9			108.8
Weighted Average Common Shares Outstanding—Diluted		202.0		0.2			202.2
Earnings Per Common Share—Basic	$	0.53	$	0.01		$	0.54
Earnings Per Common Share—Diluted		0.52		0.02			0.54
Comprehensive Income	$	191.9	$	2.9		$	194.8
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.		192.1		2.9			195.0

Revised Balance Sheet

	As of March 31, 2016
	As Reported		Adjustment			As Revised
Paid-in capital	$	8,233.5	$	(2.9	)	$	8,230.6
Retained earnings		8,407.5		2.9			8,410.4

Revised Statements of Cash Flows

	Three Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
Net cash provided by operating activities	$	265.2		$	7.6		$	272.8
Net cash used in financing activities		(825.3	)		(7.6	)		(832.9	)

	Six Months Ended June 30, 2015
	As Reported		Adjustment			As Revised
Net cash provided by operating activities	$	278.3	$	10.4		$	288.7
Net cash provided by financing activities		7,799.7		(10.4	)		7,789.3

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.

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Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Summary of Expenses in Special Items

“Special items” included (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Biomet-related
Merger consideration compensation expense	$	—	$	164.1	$	—	$	164.1
Retention plans		—		73.0		—		73.0
Consulting and professional fees		43.3		62.4		79.4		86.6
Employee termination benefits		3.1		64.5		7.2		64.9
Dedicated project personnel		21.2		8.1		42.9		9.1
Relocated facilities		6.3		0.9		8.0		0.9
Contract terminations		15.2		15.9		25.3		15.9
Information technology integration		3.1		—		4.5		—
Intangible asset impairment		28.0		—		28.0		—
Other		0.4		1.7		4.4		1.9
Total Biomet-related		120.6		390.6		199.7		416.4
Other
Consulting and professional fees		8.8		39.6		15.7		79.3
Employee termination benefits		—		0.7		—		0.8
Dedicated project personnel		1.5		10.1		3.3		22.5
Impairment/loss on disposal of assets		1.1		—		1.1		2.3
Relocated facilities		—		—		0.2		0.5
Certain litigation matters		—		20.3		—		20.3
Contract terminations		1.0		—		1.0		—
Information technology integration		0.2		—		0.3		—
Contingent consideration adjustments		—		—		—		2.3
Accelerated software amortization		—		—		—		1.5
Other		4.7		7.9		5.3		10.1
Total Other		17.3		78.6		26.9		139.6
Special items	$	137.9	$	469.2	$	226.6	$	556.0

Summary of Liabilities Related to Integration Plans

The following table summarizes the liabilities related to these integration plans (in millions):

	Employee Termination Benefits			Contract Terminations			Total
Balance at December 31, 2015	$	46.8		$	56.0		$	102.8
Additions		7.2			25.3			32.5
Cash payments		(16.7	)		(41.5	)		(58.2	)
Foreign currency exchange rate changes		(0.4	)		—			(0.4	)
Balance at June 30, 2016	$	36.9		$	39.8		$	76.7

Schedule of Prior Period Adjustment

Revised Consolidated Statement of Earnings and Comprehensive Income

	Three Months Ended March 31, 2016
	As Reported		Adjustment			As Revised
Provision for income taxes	$	49.0	$	(2.9	)	$	46.1
Net earnings		105.8		2.9			108.7
Net Earnings of Zimmer Biomet Holdings, Inc.		105.9		2.9			108.8
Weighted Average Common Shares Outstanding—Diluted		202.0		0.2			202.2
Earnings Per Common Share—Basic	$	0.53	$	0.01		$	0.54
Earnings Per Common Share—Diluted		0.52		0.02			0.54
Comprehensive Income	$	191.9	$	2.9		$	194.8
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.		192.1		2.9			195.0

Revised Balance Sheet

	As of March 31, 2016
	As Reported		Adjustment			As Revised
Paid-in capital	$	8,233.5	$	(2.9	)	$	8,230.6
Retained earnings		8,407.5		2.9			8,410.4

Revised Statements of Cash Flows

	Three Months Ended March 31, 2016
	As Reported			Adjustment			As Revised
Net cash provided by operating activities	$	265.2		$	7.6		$	272.8
Net cash used in financing activities		(825.3	)		(7.6	)		(832.9	)

	Six Months Ended June 30, 2015
	As Reported		Adjustment			As Revised
Net cash provided by operating activities	$	278.3	$	10.4		$	288.7
Net cash provided by financing activities		7,799.7		(10.4	)		7,789.3

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Business Combinations (Tables)

6 Months Ended

Jun. 30, 2016

Pro forma Financial Information Adjusted to Give Effect to the Merger

The pro forma financial information has been adjusted to give effect to the merger as if it had occurred on January 1, 2014.

	Three Months Ended June 30, 2015		Six Months Ended June 30, 2015
	(in millions)
Net Sales	$	1,880.2	$	3,822.0
Net Earnings	$	19.0	$	226.2

Changes in Carrying Amount of Goodwill

The following table summarizes the changes in the carrying amount of our goodwill (in millions):

	Americas			EMEA			Asia Pacific			Product Category Operating Segments			Total
Balance at December 31, 2015
Goodwill	$	7,328.0		$	1,291.0		$	548.9		$	1,139.3		$	10,307.2
Accumulated impairment loss		—			—			—			(373.0	)		(373.0	)
		7,328.0			1,291.0			548.9			766.3			9,934.2
Biomet purchase accounting adjustments		(51.4	)		(10.4	)		(61.3	)		(17.6	)		(140.7	)
Other acquisitions		136.7			2.9			—			—			139.6
Currency translation		21.1			4.7			16.0			1.7			43.5
Balance at June 30, 2016
Goodwill		7,434.4			1,288.2			503.6			1,123.4			10,349.6
Accumulated impairment loss		—			—			—			(373.0	)		(373.0	)
	$	7,434.4		$	1,288.2		$	503.6		$	750.4		$	9,976.6

Biomet [Member]

Summary of Aggregate Preliminary Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the updated and final fair values of the assets acquired and liabilities assumed at the Closing Date (in millions):

	Closing Date
	(as adjusted as of March 31, 2016)		Adjustments			Final Values
Cash	$	494.8	$	—		$	494.8
Accounts receivable, net		528.1		(0.2	)		527.9
Inventory		1,237.5		(13.4	)		1,224.1
Other current assets		26.4		(1.0	)		25.4
Property, plant and equipment		783.3		(8.0	)		775.3
Intangible assets not subject to amortization:
Trademarks and trade names		479.0		—			479.0
In-process research and development (IPR&D)		246.0		(37.0	)		209.0
Intangible assets subject to amortization:
Technology		2,332.1		—			2,332.1
Customer relationships		4,946.0		15.0			4,961.0
Trademarks and trade names		360.0		—			360.0
Other assets		50.6		(8.0	)		42.6
Goodwill		7,717.2		(284.0	)		7,433.2
Total assets acquired		19,201.0		(336.6	)		18,864.4
Current liabilities		615.0		(31.0	)		584.0
Long-term debt		2,740.0		—			2,740.0
Deferred taxes		3,849.6		(352.0	)		3,497.6
Other long-term liabilities		56.5		46.4			102.9
Total liabilities assumed		7,261.1		(336.6	)		6,924.5
Net assets acquired	$	11,939.9	$	—		$	11,939.9

Cayenne Medical, CTC [Member]

Summary of Aggregate Preliminary Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the aggregate preliminary fair values of the assets acquired and liabilities assumed related to the Cayenne Medical, CTC and other immaterial acquisitions during the three months ended June 30, 2016 (in millions):

Current assets	$	26.9
Intangible assets		118.6
Goodwill		139.6
Other assets		2.9
Total assets acquired		288.0
Current liabilities		4.3
Long-term liabilities		62.2
Total liabilities assumed		66.5
Net assets acquired	$	221.5

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Summary of Inventories

	June 30, 2016		December 31, 2015
	(in millions)
Finished goods	$	1,596.1	$	1,827.9
Work in progress		129.0		146.1
Raw materials		237.0		280.1
Inventories	$	1,962.1	$	2,254.1

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Property, Plant and Equipment (Tables)

6 Months Ended

Jun. 30, 2016

Property, Plant and Equipment [Abstract]

Summary of Property, Plant and Equipment

	June 30, 2016			December 31, 2015
	(in millions)
Land	$	39.4		$	39.6
Buildings and equipment		1,809.4			1,789.3
Capitalized software costs		381.8			330.1
Instruments		2,418.0			2,160.5
Construction in progress		113.7			108.4
		4,762.3			4,427.9
Accumulated depreciation		(2,728.5	)		(2,365.3	)
Property, plant and equipment, net	$	2,033.8		$	2,062.6

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Investments (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investments in Short and Long-Term Classified as Available-for-Sale Securities

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

	Amortized Cost		Gross Unrealized
			Gains		Losses			Fair Value
As of December 31, 2015
Corporate debt securities	$	245.7	$	0.1	$	(0.4	)	$	245.4
U.S. government and agency debt securities		21.6		-		(0.1	)		21.5
Commercial paper		4.2		-		-			4.2
Certificates of deposit		2.0		-		-			2.0
Total short and long-term investments	$	273.5	$	0.1	$	(0.5	)	$	273.1

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Summary of Debt Instruments

Our debt consisted of the following (in millions):

	June 30, 2016			December 31, 2015
Current portion of long-term debt
1.450% Senior Notes due 2017	$	500.0		$	—
Long-term debt
1.450% Senior Notes due 2017	$	—		$	500.0
2.000% Senior Notes due 2018		1,150.0			1,150.0
4.625% Senior Notes due 2019		500.0			500.0
2.700% Senior Notes due 2020		1,500.0			1,500.0
3.375% Senior Notes due 2021		300.0			300.0
3.150% Senior Notes due 2022		750.0			750.0
3.550% Senior Notes due 2025		2,000.0			2,000.0
4.250% Senior Notes due 2035		500.0			500.0
5.750% Senior Notes due 2039		500.0			500.0
4.450% Senior Notes due 2045		1,250.0			1,250.0
U.S. Term Loan		2,000.0			2,500.0
Japan Term Loan		113.8			96.8
Other long-term debt		4.5			4.6
Debt discount and issuance costs		(75.5	)		(80.8	)
Adjustment related to interest rate swaps		40.7			26.8
Total long-term debt	$	10,533.5		$	11,497.4

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Changes in Components of Accumulated Other Comprehensive Income, Net of Tax

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

	Foreign Currency Translation			Cash Flow Hedges			Unrealized (Losses) Gains on Securities			Defined Benefit Plan Items
Balance at December 31, 2015	$	(193.4	)	$	29.8		$	(0.6	)	$	(164.8	)
AOCI before reclassifications		55.6			(43.3	)		0.4			17.3
Reclassifications		—			(44.1	)		—			3.8
Balance at June 30, 2016	$	(137.8	)	$	(57.6	)	$	(0.2	)	$	(143.7	)

Reclassification Adjustments from Accumulated Other Comprehensive Income

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

	Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended June 30,						Six Months Ended June 30,						Location on Statement of Earnings
Component of AOCI	2016			2015			2016			2015
Cash flow hedges
Foreign exchange forward contracts	$	26.3		$	33.1		$	58.4		$	61.2		Cost of products sold
Forward starting interest rate swaps		(0.5	)		(0.4	)		(0.9	)		(0.5	)	Interest expense
		25.8			32.7			57.5			60.7		Total before tax
		6.1			7.6			13.4			14.0		Provision (benefit) for income taxes
	$	19.7		$	25.1		$	44.1		$	46.7		Net of tax
Defined benefit plans
Prior service cost	$	2.0		$	1.2		$	3.9		$	2.3		*
Unrecognized actuarial (loss)		(5.0	)		(4.2	)		(10.0	)		(8.5	)	*
		(3.0	)		(3.0	)		(6.1	)		(6.2	)	Total before tax
		(1.2	)		(1.5	)		(2.3	)		(0.8	)	Provision (benefit) for income taxes
	$	(1.8	)	$	(1.5	)	$	(3.8	)	$	(5.4	)	Net of tax
Total reclassifications	$	17.9		$	23.6		$	40.3		$	41.3		Net of tax

* These AOCI components are included in the computation of net periodic pension expense (see Note 12).

Tax Effects on Each Component of Accumulated Other Comprehensive Income Recognized in Statements of Comprehensive Income

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

	Three Months Ended June 30, 2016									Six Months Ended June 30, 2016
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	(78.6	)	$	—		$	(78.6	)	$	55.6		$	—		$	55.6
Unrealized cash flow hedge (losses) gains		(8.3	)		(9.1	)		0.8			(64.8	)		(21.5	)		(43.3	)
Reclassification adjustments on foreign currency hedges		(25.8	)		(6.1	)		(19.7	)		(57.5	)		(13.4	)		(44.1	)
Unrealized gains on securities		—			—			—			0.4			—			0.4
Adjustments to prior service cost and unrecognized actuarial assumptions		2.0			0.9			1.1			23.4			2.3			21.1
Total Other Comprehensive Loss	$	(110.7	)	$	(14.3	)	$	(96.4	)	$	(42.9	)	$	(32.6	)	$	(10.3	)
	Three Months Ended June 30, 2015									Six Months Ended June 30, 2015
	Before Tax			Tax			Net of Tax			Before Tax			Tax			Net of Tax
Foreign currency cumulative translation adjustments	$	10.3		$	—		$	10.3		$	(139.6	)	$	—		$	(139.6	)
Unrealized cash flow hedge (losses) gains		(11.0	)		2.1			(13.1	)		40.7			1.4			39.3
Reclassification adjustments on foreign currency hedges		(32.7	)		(7.6	)		(25.1	)		(60.7	)		(14.0	)		(46.7	)
Unrealized (losses) gains on securities		(0.1	)		—			(0.1	)		0.5			—			0.5
Adjustments to prior service cost and unrecognized actuarial assumptions		3.0			1.5			1.5			6.2			0.8			5.4
Total Other Comprehensive Loss	$	(30.5	)	$	(4.0	)	$	(26.5	)	$	(152.9	)	$	(11.8	)	$	(141.1	)

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Fair Value Measurement of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurement of Assets and Liabilities

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

	As of June 30, 2016
	Recorded Balance		Fair Value Measurements at Reporting Date Using:
Description			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets
Derivatives, current and long-term
Foreign currency forward contracts	$	23.3	$	—	$	23.3	$	—
Interest rate swaps		40.7		—		40.7		—
	$	64.0	$	—	$	64.0	$	—
Liabilities
Derivatives, current and long-term
Foreign currency forward contracts	$	34.7	$	—	$	34.7	$	—

	As of December 31, 2015
	Recorded Balance		Fair Value Measurements at Reporting Date Using:
Description			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	$	245.4	$	—	$	245.4	$	—
U.S. government and agency debt securities		21.5		—		21.5		—
Commercial paper		4.2		—		4.2		—
Certificates of deposit		2.0		—		2.0		—
Total available-for-sale securities		273.1		—		273.1		—
Derivatives, current and long-term
Foreign currency forward contracts		96.9		—		96.9		—
Interest rate swaps		26.8		—		26.8		—
	$	396.8	$	—	$	396.8	$	—
Liabilities
Derivatives, current and long-term
Foreign currency forward contracts	$	1.6	$	—	$	1.6	$	—

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments Designated as Fair Value Hedges

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
			Three Months Ended					Six Months Ended					Three Months Ended					Six Months Ended
	Location on Statement of Earnings		June 30,					June 30,					June 30,					June 30,
Derivative Instrument			2016		2015			2016		2015			2016			2015		2016			2015
Interest rate swaps		Interest expense	$	3.1	$	(8.0	)	$	13.9	$	(0.8	)	$	(3.1	)	$	8.0	$	(13.9	)	$	0.8

Gross Unrealized Losses from Derivative Instruments

Derivative instruments designated as cash flow hedges had the following effects, before taxes, on AOCI 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 AOCI												Location on Statement of Earnings		Amount of Gain (Loss) Reclassified from AOCI
	Three Months Ended June 30,						Six Months Ended June 30,								Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument	2016			2015			2016			2015					2016			2015			2016			2015
Foreign exchange forward contracts	$	(8.3	)	$	(11.0	)	$	(64.8	)	$	79.0			Cost of products sold	$	26.3		$	33.1		$	58.4		$	61.2
Forward starting interest rate swaps		—			—			—			(38.3	)		Interest expense		(0.5	)		(0.4	)		(0.9	)		(0.5	)
	$	(8.3	)	$	(11.0	)	$	(64.8	)	$	40.7				$	25.8		$	32.7		$	57.5		$	60.7

Derivative Instruments Not Designated as Hedging Instruments

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

	Location on Statement of Earnings	Three Months Ended June 30,						Six Months Ended June 30,
Derivative Instrument		2016			2015			2016			2015
Foreign exchange forward contracts	Other expense, net	$	(15.9	)	$	(1.6	)	$	(37.2	)	$	13.6

Fair Value of Derivative Instruments on Gross Basis

The fair value of derivative instruments on a gross basis is as follows (in millions):

	June 30, 2016			December 31, 2015
	Balance Sheet Location	Fair Value		Balance Sheet Location	Fair Value
Asset Derivatives
Foreign exchange forward contracts	Other current assets	$	45.8	Other current assets	$	100.5
Foreign exchange forward contracts	Other assets		10.9	Other assets		19.8
Interest rate swaps	Other assets		40.7	Other assets		26.8
Total asset derivatives		$	97.4		$	147.1
Liability Derivatives
Foreign exchange forward contracts	Other current liabilities	$	44.5	Other current liabilities	$	16.7
Foreign exchange forward contracts	Other long-term liabilities		23.6	Other long-term liabilities		8.3
Total liability derivatives		$	68.1		$	25.0

Schedule of Effects of Master Netting Agreements on Condensed Consolidated Balance Sheets

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

		As of June 30, 2016						As of December 31, 2015
Description	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		$45.8		26.3		$19.5		$100.5		$16.3		$84.2
Cash flow hedges	Other assets		10.9		7.1		3.8		19.8		7.1		12.7
Liability Derivatives
Cash flow hedges	Other current liabilities		44.5		26.3		18.2		16.7		16.3		0.4
Cash flow hedges	Other long-term liabilities		23.6		7.1		16.5		8.3		7.1		1.2

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Retirement Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2016

Compensation and Retirement Disclosure [Abstract]

Components of Net Pension Expense

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

	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Service cost	$	7.7		$	7.6		$	15.2		$	15.2
Interest cost		7.4			5.6			14.6			11.1
Expected return on plan assets		(12.7	)		(10.9	)		(25.4	)		(21.8	)
Curtailment gain		(0.3	)		—			(0.6	)		—
Amortization of prior service cost		(2.0	)		(1.2	)		(3.9	)		(2.3	)
Amortization of unrecognized actuarial loss		5.0			4.2			10.0			8.5
Net periodic pension expense	$	5.1		$	5.3		$	9.9		$	10.7

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Reconciliation of Weighted Average Shares for Basic and Diluted Shares Computations

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Weighted average shares outstanding for basic net earnings per share		199.4		173.0		199.8		171.5
Effect of dilutive stock options and other equity awards		—		—		2.3		—
Weighted average shares outstanding for diluted net earnings per share		199.4		173.0		202.1		171.5

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Summary of Net sales and Operating Profit by Segment

Net sales and operating profit by segment are as follows (in millions):

	Net Sales				Operating Profit
	Three Months Ended June 30,				Three Months Ended June 30,
	2016		2015		2016			2015
Americas	$	981.7	$	601.1	$	522.6		$	314.3
EMEA		416.1		270.6		137.0			102.1
Asia Pacific		275.8		193.2		115.2			97.0
Product Category Operating Segments		260.4		102.7		75.7			20.4
Global Operations and Corporate Functions		—		—		(220.6	)		(141.3	)
Total	$	1,934.0	$	1,167.6
Inventory step-up and other inventory and manufacturing related charges						(156.6	)		(14.7	)
Intangible asset amortization						(133.8	)		(33.0	)
Certain claims						—			(7.7	)
Special items						(137.9	)		(469.2	)
Operating profit					$	201.6		$	(132.1	)

	Net Sales				Operating Profit
	Six Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016			2015
Americas	$	1,966.4	$	1,178.8	$	1,057.6		$	611.1
EMEA		832.7		551.8		278.3			211.6
Asia Pacific		532.4		380.7		225.8			194.7
Product Category Operating Segments		506.5		190.7		133.9			34.5
Global Operations and Corporate Functions		—		—		(426.6	)		(278.4	)
Total	$	3,838.0	$	2,302.0
Inventory step-up and other inventory and manufacturing related charges						(334.9	)		(18.6	)
Intangible asset amortization						(260.4	)		(53.4	)
Certain claims						—			(7.7	)
Special items						(226.6	)		(556.0	)
Operating profit					$	447.1		$	137.8

Summary of Net Sales by Product Category

Net sales by product category are as follows (in millions):

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Knees	$	696.9	$	468.9	$	1,400.2	$	932.8
Hips		477.2		319.0		945.1		630.4
S.E.T		412.4		222.5		813.5		440.9
Dental		118.0		61.0		226.6		116.8
Spine & CMF		145.8		58.9		287.0		108.4
Other		83.7		37.3		165.6		72.7
Total	$	1,934.0	$	1,167.6	$	3,838.0	$	2,302.0

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Significant Accounting Policies - Summary of Expenses in Special Items (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Biomet-related
Merger consideration compensation expense		$ 164.1		$ 164.1
Retention plans		73.0		73.0
Consulting and professional fees	$ 43.3	62.4	$ 79.4	86.6
Employee termination benefits	3.1	64.5	7.2	64.9
Dedicated project personnel	21.2	8.1	42.9	9.1
Relocated facilities	6.3	0.9	8.0	0.9
Contract terminations	15.2	15.9	25.3	15.9
Information technology integration	3.1		4.5
Intangible asset impairment	28.0		28.0
Other	0.4	1.7	4.4	1.9
Total Biomet-related	120.6	390.6	199.7	416.4
Other
Consulting and professional fees	8.8	39.6	15.7	79.3
Employee termination benefits		0.7		0.8
Dedicated project personnel	1.5	10.1	3.3	22.5
Impairment/loss on disposal of assets	1.1		1.1	2.3
Relocated facilities			0.2	0.5
Certain litigation matters		20.3		20.3
Contract terminations	1.0		1.0
Information technology integration	0.2		0.3
Contingent consideration adjustments				2.3
Accelerated software amortization				1.5
Other	4.7	7.9	5.3	10.1
Total Other	17.3	78.6	26.9	139.6
Special items	$ 137.9	$ 469.2	$ 226.6	$ 556.0

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Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Business And Significant Accounting Policies [Line Items]
Intangible asset impairment		$ 28.0
Reclassification of other current assets to debt			$ 9.2
Decrease in long-term debt			58.9
Reclassification of other assets to debt			$ 49.7
Provision for income tax expense benefit	$ 4.0	6.9
Increase in net cash provided by operating activities		12.4
Increase in net cash provided by financing activities		12.4
Employee Severance [Member]
Business And Significant Accounting Policies [Line Items]
Restructuring Cost	170.0	170.0
Cumulative restructuring cost	108.2	108.2
Contract Terminations [Member]
Business And Significant Accounting Policies [Line Items]
Restructuring Cost	130.0	130.0
Cumulative restructuring cost	120.3	120.3
In Process Research and Development (IPR&D) [Member]
Business And Significant Accounting Policies [Line Items]
Intangible assets recognized as part of merger	209.0	$ 209.0
Intangible asset impairment	$ 28.0

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Significant Accounting Policies - Summary of Liabilities Related to Integration Plans (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Schedule Of Business Acquisitions Liabilities Related To Integration Plans [Line Items]
Beginning Balance	$ 102.8
Additions	32.5
Cash payments	(58.2)
Foreign currency exchange rate changes	(0.4)
Closing Balance	76.7
Employee Termination Benefits [Member]
Schedule Of Business Acquisitions Liabilities Related To Integration Plans [Line Items]
Beginning Balance	46.8
Additions	7.2
Cash payments	(16.7)
Foreign currency exchange rate changes	(0.4)
Closing Balance	36.9
Contract Terminations [Member]
Schedule Of Business Acquisitions Liabilities Related To Integration Plans [Line Items]
Beginning Balance	56.0
Additions	25.3
Cash payments	(41.5)
Closing Balance	$ 39.8

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Significant Accounting Policies - Revised Consolidated Statement of Earnings and Comprehensive Income (Detail) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Provision for income taxes	$ 142.2	$ 46.1	$ (64.8)	$ 188.3	$ (9.1)
Net earnings	(31.7)	108.7	(173.8)	77.0	(2.7)
Net Earnings of Zimmer Biomet Holdings, Inc.	$ (31.3)	$ 108.8	$ (173.6)	$ 77.5	$ (2.2)
Weighted Average Common Shares Outstanding-Diluted	199.4	202.2	173.0	202.1	171.5
Earnings Per Common Share-Basic	$ (0.16)	$ 0.54	$ (1.00)	$ 0.39	$ (0.01)
Earnings Per Common Share-Diluted	$ (0.16)	$ 0.54	$ (1.00)	$ 0.38	$ (0.01)
Comprehensive Income	$ (128.1)	$ 194.8	$ (200.3)	$ 66.7	$ (143.8)
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.	$ (127.7)	195.0	$ (200.1)	$ 67.3	$ (143.8)
As Reported [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Provision for income taxes		49.0
Net earnings		105.8
Net Earnings of Zimmer Biomet Holdings, Inc.		$ 105.9
Weighted Average Common Shares Outstanding-Diluted		202.0
Earnings Per Common Share-Basic		$ 0.53
Earnings Per Common Share-Diluted		$ 0.52
Comprehensive Income		$ 191.9
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.		192.1
Adjustments [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Provision for income taxes		(2.9)
Net earnings		2.9
Net Earnings of Zimmer Biomet Holdings, Inc.		$ 2.9
Weighted Average Common Shares Outstanding-Diluted		0.2
Earnings Per Common Share-Basic		$ 0.01
Earnings Per Common Share-Diluted		$ 0.02
Comprehensive Income		$ 2.9
Comprehensive Income attributable to Zimmer Biomet Holdings, Inc.		$ 2.9

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Significant Accounting Policies - Revised Balance Sheet (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Paid-in capital	$ 8,293.6	$ 8,230.6	$ 8,195.3
Retained earnings	$ 8,331.9	8,410.4	$ 8,347.7
As Reported [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Paid-in capital		8,233.5
Retained earnings		8,407.5
Adjustments [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Paid-in capital		(2.9)
Retained earnings		$ 2.9

XML

Significant Accounting Policies - Revised Statements of Cash Flows (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Mar. 31, 2016	Jun. 30, 2016	Jun. 30, 2015
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net cash provided by operating activities	$ 272.8	$ 652.4	$ 288.7
Net cash provided by financing activities	(832.9)	$ (953.3)	7,789.3
As Reported [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net cash provided by operating activities	265.2		278.3
Net cash provided by financing activities	(825.3)		7,799.7
Adjustments [Member]
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Net cash provided by operating activities	7.6		10.4
Net cash provided by financing activities	$ (7.6)		$ (10.4)

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Business Combinations - Additional Information (Detail) - USD ($) $ in Millions		3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 24, 2015	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Business Acquisition [Line Items]
Biomet merger consideration compensation expense				$ 164.1		$ 164.1
Cost of products sold, excluding intangible asset amortization		$ 640.1		294.3	$ 1,280.7	579.2
Decrease to intangible asset amortization					6.7
Merger retention plans, expenses recognized				73.0		73.0
LVB Acquisition Inc [Member]
Business Acquisition [Line Items]
Total consideration	$ 12,030.3
Biomet merger consideration compensation expense	90.4
Net assets acquired	$ 11,939.9
Cost of products sold, excluding intangible asset amortization		6.9	$ 2.3				$ 4.6
Increase in provision for income taxes		73.2	$ 20.5		52.7		$ 52.7
LVB Acquisition Inc [Member] | Operating Expense [Member]
Business Acquisition [Line Items]
Biomet merger consideration compensation expense				164.1		164.1
Merger retention plans, expenses recognized				$ 73.0		$ 73.0
Cayenne Medical, CTC [Member]
Business Acquisition [Line Items]
Total consideration		189.0
Net assets acquired		221.5			221.5
Contingent consideration fair value		$ 32.5			$ 32.5

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Business Combinations - Summary of Updated and Final Fair Values of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015
Business Acquisition [Line Items]
Goodwill	$ 9,976.6		$ 9,934.2
In Process Research and Development (IPR&D) [Member]
Business Acquisition [Line Items]
Intangible assets subject to amortization	209.0
Biomet [Member]
Business Acquisition [Line Items]
Cash	494.8
Accounts receivable, net	527.9
Inventory	1,224.1
Other current assets	25.4
Property, plant and equipment	775.3
Other assets	42.6
Goodwill	7,433.2
Total assets acquired	18,864.4
Current liabilities	584.0
Long-term debt	2,740.0
Deferred taxes	3,497.6
Other long-term liabilities	102.9
Total liabilities assumed	6,924.5
Net assets acquired	11,939.9
Biomet [Member] | As Reported [Member]
Business Acquisition [Line Items]
Cash		$ 494.8
Accounts receivable, net		528.1
Inventory		1,237.5
Other current assets		26.4
Property, plant and equipment		783.3
Other assets		50.6
Goodwill		7,717.2
Total assets acquired		19,201.0
Current liabilities		615.0
Long-term debt		2,740.0
Deferred taxes		3,849.6
Other long-term liabilities		56.5
Total liabilities assumed		7,261.1
Net assets acquired		11,939.9
Biomet [Member] | Adjustments [Member]
Business Acquisition [Line Items]
Accounts receivable, net	(0.2)
Inventory	(13.4)
Other current assets	(1.0)
Property, plant and equipment	(8.0)
Other assets	(8.0)
Goodwill	(284.0)
Total assets acquired	(336.6)
Current liabilities	(31.0)
Deferred taxes	(352.0)
Other long-term liabilities	46.4
Total liabilities assumed	(336.6)
Biomet [Member] | In Process Research and Development (IPR&D) [Member]
Business Acquisition [Line Items]
Intangible assets not subject to amortization	209.0
Biomet [Member] | In Process Research and Development (IPR&D) [Member] | As Reported [Member]
Business Acquisition [Line Items]
Intangible assets not subject to amortization		246.0
Biomet [Member] | In Process Research and Development (IPR&D) [Member] | Adjustments [Member]
Business Acquisition [Line Items]
Intangible assets not subject to amortization	(37.0)
Biomet [Member] | Technology [Member]
Business Acquisition [Line Items]
Intangible assets subject to amortization	2,332.1
Biomet [Member] | Technology [Member] | As Reported [Member]
Business Acquisition [Line Items]
Intangible assets subject to amortization		2,332.1
Biomet [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Intangible assets subject to amortization	4,961.0
Biomet [Member] | Customer Relationships [Member] | As Reported [Member]
Business Acquisition [Line Items]
Intangible assets subject to amortization		4,946.0
Biomet [Member] | Customer Relationships [Member] | Adjustments [Member]
Business Acquisition [Line Items]
Intangible assets subject to amortization	15.0
Biomet [Member] | Trademarks and Trade Names [Member]
Business Acquisition [Line Items]
Intangible assets not subject to amortization	479.0
Intangible assets subject to amortization	$ 360.0
Biomet [Member] | Trademarks and Trade Names [Member] | As Reported [Member]
Business Acquisition [Line Items]
Intangible assets not subject to amortization		479.0
Intangible assets subject to amortization		$ 360.0

XML

Business Combinations - Pro forma Financial Information Adjusted to Give Effect to the Merger (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015
Business Combination Increase Decrease To Reflect Liabilities Acquired At Fair Value [Abstract]
Net Sales	$ 1,880.2	$ 3,822.0
Net Earnings	$ 19.0	$ 226.2

XML

Business Combinations - Summary of Aggregate Preliminary Fair Values of Assets Acquired and Liabilities Assumed (Detail) - Cayenne Medical, CTC [Member] $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Business Acquisition [Line Items]
Current assets	$ 26.9
Intangible assets	118.6
Goodwill	139.6
Other assets	2.9
Total assets acquired	288.0
Current liabilities	4.3
Long-term liabilities	62.2
Total liabilities assumed	66.5
Net assets acquired	$ 221.5

XML

Business Combinations - Changes in Carrying Amount of Goodwill (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Goodwill [Line Items]
Goodwill, Beginning Balance	$ 10,307.2
Accumulated impairment loss, Beginning Balance	(373.0)
Goodwill, net of accumulated impairment loss, Beginning Balance	9,934.2
Purchase accounting adjustments	139.6
Currency translation	43.5
Goodwill, Ending Balance	10,349.6
Accumulated impairment loss, Ending Balance	(373.0)
Goodwill, net of accumulated impairment loss, Ending Balance	9,976.6
Biomet [Member]
Goodwill [Line Items]
Purchase accounting adjustments	(140.7)
Goodwill, net of accumulated impairment loss, Ending Balance	7,433.2
Americas [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	7,328.0
Goodwill, net of accumulated impairment loss, Beginning Balance	7,328.0
Purchase accounting adjustments	136.7
Currency translation	21.1
Goodwill, Ending Balance	7,434.4
Goodwill, net of accumulated impairment loss, Ending Balance	7,434.4
Americas [Member] | Biomet [Member]
Goodwill [Line Items]
Purchase accounting adjustments	(51.4)
EMEA [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	1,291.0
Goodwill, net of accumulated impairment loss, Beginning Balance	1,291.0
Purchase accounting adjustments	2.9
Currency translation	4.7
Goodwill, Ending Balance	1,288.2
Goodwill, net of accumulated impairment loss, Ending Balance	1,288.2
EMEA [Member] | Biomet [Member]
Goodwill [Line Items]
Purchase accounting adjustments	(10.4)
Asia Pacific [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	548.9
Goodwill, net of accumulated impairment loss, Beginning Balance	548.9
Currency translation	16.0
Goodwill, Ending Balance	503.6
Goodwill, net of accumulated impairment loss, Ending Balance	503.6
Asia Pacific [Member] | Biomet [Member]
Goodwill [Line Items]
Purchase accounting adjustments	(61.3)
Product Category Operating Segments [Member]
Goodwill [Line Items]
Goodwill, Beginning Balance	1,139.3
Accumulated impairment loss, Beginning Balance	(373.0)
Goodwill, net of accumulated impairment loss, Beginning Balance	766.3
Currency translation	1.7
Goodwill, Ending Balance	1,123.4
Accumulated impairment loss, Ending Balance	(373.0)
Goodwill, net of accumulated impairment loss, Ending Balance	750.4
Product Category Operating Segments [Member] | Biomet [Member]
Goodwill [Line Items]
Purchase accounting adjustments	$ (17.6)

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Inventories - Summary of Inventories (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Finished goods	$ 1,596.1	$ 1,827.9
Work in progress	129.0	146.1
Raw materials	237.0	280.1
Inventories	$ 1,962.1	$ 2,254.1

XML

Inventories - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Finished goods inventory step-up	$ 8.2	$ 284.4

XML

Property, Plant and Equipment - Summary of Property, Plant and Equipment (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	$ 4,762.3	$ 4,427.9
Accumulated depreciation	(2,728.5)	(2,365.3)
Property, plant and equipment, net	2,033.8	2,062.6
Land [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	39.4	39.6
Buildings And Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	1,809.4	1,789.3
Capitalized Software Costs [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	381.8	330.1
Instruments [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	2,418.0	2,160.5
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, plant and equipment, Gross	$ 113.7	$ 108.4

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Investments - Investments in Short and Long-Term Classified as Available-for-Sale Securities (Detail) $ in Millions	Dec. 31, 2015 USD ($)
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	$ 273.5
Available-for-sale Securities, Gross Unrealized Gains	0.1
Available-for-sale Securities, Gross Unrealized Losses	(0.5)
Available-for-sale Securities, Fair Value	273.1
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	245.7
Available-for-sale Securities, Gross Unrealized Gains	0.1
Available-for-sale Securities, Gross Unrealized Losses	(0.4)
Available-for-sale Securities, Fair Value	245.4
U.S. Government and Agency Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	21.6
Available-for-sale Securities, Gross Unrealized Losses	(0.1)
Available-for-sale Securities, Fair Value	21.5
Commercial Paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	4.2
Available-for-sale Securities, Fair Value	4.2
Certificates of Deposit [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Amortized Cost	2.0
Available-for-sale Securities, Fair Value	$ 2.0

XML

Investments - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
Proceeds from investments		$ 273.3	$ 398.9
Corporate Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Proceeds from investments	$ 49.8

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Debt - Summary of Debt Instruments (Detail) $ in Millions, ¥ in Billions	Jun. 30, 2016 USD ($)	Jun. 30, 2016 JPY (¥)	Dec. 31, 2015 USD ($)
Current portion of long-term debt
1.450% Senior Notes due 2017	$ 500.0
Long-term debt
Senior Notes due	8,950.0
Other long-term debt	4.5		$ 4.6
Debt discount and issuance costs	(75.5)		(80.8)
Adjustment related to interest rate swaps	40.7		26.8
Total long-term debt	10,533.5		11,497.4
Senior Notes [Member] | 1.450% [Member] | Due in 2017 [Member]
Current portion of long-term debt
1.450% Senior Notes due 2017	500.0
Long-term debt
Senior Notes due			500.0
Senior Notes [Member] | 2.0% [Member] | Due in 2018 [Member]
Long-term debt
Senior Notes due	1,150.0		1,150.0
Senior Notes [Member] | 4.625% [Member] | Due in 2019 [Member]
Long-term debt
Senior Notes due	500.0		500.0
Senior Notes [Member] | 2.70% [Member] | Due in 2020 [Member]
Long-term debt
Senior Notes due	1,500.0		1,500.0
Senior Notes [Member] | 3.375% [Member] | Due in 2021 [Member]
Long-term debt
Senior Notes due	300.0		300.0
Senior Notes [Member] | 3.150% [Member] | Due in 2022 [Member]
Long-term debt
Senior Notes due	750.0		750.0
Senior Notes [Member] | 3.550% [Member] | Due in 2025 [Member]
Long-term debt
Senior Notes due	2,000.0		2,000.0
Senior Notes [Member] | 4.250% [Member] | Due in 2035 [Member]
Long-term debt
Senior Notes due	500.0		500.0
Senior Notes [Member] | 5.750% [Member] | Due in 2039 [Member]
Long-term debt
Senior Notes due	500.0		500.0
Senior Notes [Member] | 4.450% [Member] | Due in 2045 [Member]
Long-term debt
Senior Notes due	1,250.0		1,250.0
U.S. Term Loan [Member]
Long-term debt
Term loan	2,000.0		2,500.0
Japan Term Loan [Member]
Long-term debt
Term loan	$ 113.8	¥ 11.7	$ 96.8

XML

Debt - Summary of Debt Instruments (Parenthetical) (Detail) - Senior Notes [Member]	Jun. 30, 2016	Dec. 31, 2015
1.450% [Member] | Due in 2017 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	1.45%	1.45%
2.0% [Member] | Due in 2018 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	2.00%	2.00%
4.625% [Member] | Due in 2019 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	4.625%	4.625%
2.70% [Member] | Due in 2020 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	2.70%	2.70%
3.375% [Member] | Due in 2021 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	3.375%	3.375%
3.150% [Member] | Due in 2022 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	3.15%	3.15%
3.550% [Member] | Due in 2025 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	3.55%	3.55%
4.250% [Member] | Due in 2035 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	4.25%	4.25%
5.750% [Member] | Due in 2039 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	5.75%	5.75%
4.450% [Member] | Due in 2045 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes	4.45%	4.45%

XML

Debt - Additional Information (Detail) ¥ in Billions	1 Months Ended	6 Months Ended
	Mar. 31, 2015 USD ($)	Jun. 30, 2016 USD ($) Ratio	Jun. 30, 2016 JPY (¥)	Dec. 31, 2015 USD ($)	Jun. 24, 2015 USD ($)
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 8,950,000,000
Other debt, debt discount and issuance costs and fair value adjustments		30,300,000
Payments on term loan		500,000,000
Proceeds from senior notes	$ 7,650,000,000
Estimated fair value of Senior Notes and term loan		9,251,500,000
Senior Credit Facility [Member]
Debt Instrument [Line Items]
Principal amount, unsecured credit facility		$ 4,350,000,000
Principal amount, term loan description		Senior credit agreement (the "Credit Agreement") that contains (i) a 5-year unsecured term loan facility in the principal amount of $3.0 billion (the "U.S. Term Loan Facility"), and (ii) a 5-year unsecured multicurrency revolving facility in the principal amount of $1.35 billion (the "Multicurrency Revolving Facility").
Leverage ratio description under line of credit facility on financial covenants		Financial covenants include a consolidated indebtedness to consolidated EBITDA ratio of no greater than 5.0 to 1.0 through June 24, 2016 and no greater than 4.5 to 1.0 thereafter.
U.S. Term Loan [Member]
Debt Instrument [Line Items]
Term loan current		$ 2,000,000,000
Term loan		2,000,000,000		$ 2,500,000,000
Principal amount, unsecured credit facility					$ 3,000,000,000
Principal payments due on a quarterly basis starting September 30, 2015, during first three years		75,000,000
Principal payments due on a quarterly basis starting September 30, 2015, during fourth year		112,500,000
Principal payments due on a quarterly basis starting September 30, 2015, during fifth year		412,500,000
Payments on term loan		1,000,000,000
Japan Term Loan [Member]
Debt Instrument [Line Items]
Term loan		$ 113,800,000	¥ 11.7	96,800,000
Maturity date of term loan		May 31, 2018
Estimated fair value of Senior Notes and term loan		$ 112,900,000
Term Loan [Member] | Senior Credit Facility [Member]
Debt Instrument [Line Items]
Principal amount, unsecured credit facility		$ 3,000,000,000
Debt instrument term		5 years
Multicurrency Revolving Facility [Member]
Debt Instrument [Line Items]
Outstanding Senior Credit Facility		$ 0
Multicurrency Revolving Facility [Member] | Senior Credit Facility [Member]
Debt Instrument [Line Items]
Principal amount, unsecured credit facility		$ 1,350,000,000
Debt instrument term		5 years
Term Loan Through June 24, 2016 [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio | Ratio		5.0
Thereafter Term Loan [Member]
Debt Instrument [Line Items]
Maximum Leverage Ratio | Ratio		4.5
1.450% [Member] | Due in 2017 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes				$ 500,000,000
Interest rate of Senior Notes		1.45%	1.45%	1.45%
2.0% [Member] | Due in 2018 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 1,150,000,000		$ 1,150,000,000
Interest rate of Senior Notes		2.00%	2.00%	2.00%
2.70% [Member] | Due in 2020 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 1,500,000,000		$ 1,500,000,000
Interest rate of Senior Notes		2.70%	2.70%	2.70%
3.150% [Member] | Due in 2022 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 750,000,000		$ 750,000,000
Interest rate of Senior Notes		3.15%	3.15%	3.15%
3.550% [Member] | Due in 2025 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 2,000,000,000		$ 2,000,000,000
Interest rate of Senior Notes		3.55%	3.55%	3.55%
4.250% [Member] | Due in 2035 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 500,000,000		$ 500,000,000
Interest rate of Senior Notes		4.25%	4.25%	4.25%
4.450% [Member] | Due in 2045 [Member] | Senior Notes [Member]
Debt Instrument [Line Items]
Aggregate principal amount of Senior Notes		$ 1,250,000,000		$ 1,250,000,000
Interest rate of Senior Notes		4.45%	4.45%	4.45%
3.375% Senior Notes due 2021 [Member]
Debt Instrument [Line Items]
Interest rate of Senior Notes		3.375%	3.375%
Minimum [Member] | 3.375% Senior Notes due 2021 [Member]
Debt Instrument [Line Items]
Debt instrument redemption period		1 month
Maximum [Member] | 3.375% Senior Notes due 2021 [Member]
Debt Instrument [Line Items]
Debt instrument redemption period		6 months

XML

Accumulated Other Comprehensive Income - Changes in Components of Accumulated Other Comprehensive Income, Net of Tax (Detail) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income, Beginning Balance	$ (329.0)
Accumulated Other Comprehensive Income, Ending Balance	(339.3)
Foreign Currency Translation [Member]
Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income, Beginning Balance	(193.4)
AOCI before reclassifications	55.6
Accumulated Other Comprehensive Income, Ending Balance	(137.8)
Unrealized (Losses) Gains on Securities [Member]
Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income, Beginning Balance	(0.6)
AOCI before reclassifications	0.4
Accumulated Other Comprehensive Income, Ending Balance	(0.2)
Defined Benefit Plan Items [Member]
Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income, Beginning Balance	(164.8)
AOCI before reclassifications	17.3
Reclassifications	3.8
Accumulated Other Comprehensive Income, Ending Balance	(143.7)
Cash Flow Hedges [Member]
Other Comprehensive Income Loss [Line Items]
Accumulated Other Comprehensive Income, Beginning Balance	29.8
AOCI before reclassifications	(43.3)
Reclassifications	(44.1)
Accumulated Other Comprehensive Income, Ending Balance	$ (57.6)

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Accumulated Other Comprehensive Income - Reclassification Adjustments from Accumulated Other Comprehensive Income (Detail) - USD ($) $ in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Other Comprehensive Income Loss [Line Items]
Cost of products sold	$ 640.1		$ 294.3	$ 1,280.7	$ 579.2
Earnings (loss) before income taxes	110.5		(238.6)	265.3	(11.8)
Provision (benefit) for income taxes	142.2	$ 46.1	(64.8)	188.3	(9.1)
Reclassification out of Accumulated Other Comprehensive Income [Member]
Other Comprehensive Income Loss [Line Items]
Net of tax	17.9		23.6	40.3	41.3
Reclassification out of Accumulated Other Comprehensive Income [Member] | Cash Flow Hedges [Member]
Other Comprehensive Income Loss [Line Items]
Earnings (loss) before income taxes	25.8		32.7	57.5	60.7
Provision (benefit) for income taxes	6.1		7.6	13.4	14.0
Net of tax	19.7		25.1	44.1	46.7
Reclassification out of Accumulated Other Comprehensive Income [Member] | Cash Flow Hedges [Member] | Foreign Exchange Forward Contracts [Member]
Other Comprehensive Income Loss [Line Items]
Cost of products sold	26.3		33.1	58.4	61.2
Reclassification out of Accumulated Other Comprehensive Income [Member] | Cash Flow Hedges [Member] | Forward Starting Interest Rate Swaps [Member]
Other Comprehensive Income Loss [Line Items]
Interest expenses	(0.5)		(0.4)	(0.9)	(0.5)
Reclassification out of Accumulated Other Comprehensive Income [Member] | Defined Benefit Plan Items [Member]
Other Comprehensive Income Loss [Line Items]
Prior service cost	2.0		1.2	3.9	2.3
Unrecognized actuarial (loss)	(5.0)		(4.2)	(10.0)	(8.5)
Earnings (loss) before income taxes	(3.0)		(3.0)	(6.1)	(6.2)
Provision (benefit) for income taxes	(1.2)		(1.5)	(2.3)	(0.8)
Net of tax	$ (1.8)		$ (1.5)	$ (3.8)	$ (5.4)

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Accumulated Other Comprehensive Income - Tax Effects on Each Component of Accumulated Other Comprehensive Income Recognized in Statements of Comprehensive Income (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Foreign currency cumulative translation adjustments, Before Tax	$ (78.6)	$ 10.3	$ 55.6	$ (139.6)
Unrealized cash flow hedge (losses) gains, Before Tax	(8.3)	(11.0)	(64.8)	40.7
Reclassification adjustments on foreign currency hedges, Before Tax	(25.8)	(32.7)	(57.5)	(60.7)
Unrealized (losses) gains on securities ,Before Tax		(0.1)	0.4	0.5
Adjustments to prior service cost and unrecognized actuarial assumptions, Before Tax	2.0	3.0	23.4	6.2
Total Other Comprehensive Gain (Loss), Before Tax	(110.7)	(30.5)	(42.9)	(152.9)
Foreign currency cumulative translation adjustments, Tax	0.0	0.0	0.0	0.0
Unrealized cash flow hedge (losses) gains, Tax	(9.1)	2.1	(21.5)	1.4
Reclassification adjustments on foreign currency hedges, Tax	(6.1)	(7.6)	(13.4)	(14.0)
Unrealized (losses) gains on securities, Tax	0.0	0.0	0.0	0.0
Adjustments to prior service cost and unrecognized actuarial assumptions, Tax	0.9	1.5	2.3	0.8
Total Other Comprehensive Gain (Loss), Tax	(14.3)	(4.0)	(32.6)	(11.8)
Foreign currency cumulative translation adjustments, net of tax	(78.6)	10.3	55.6	(139.6)
Unrealized cash flow hedge (losses) gains, net Tax	0.8	(13.1)	(43.3)	39.3
Reclassification adjustments on foreign currency hedges, net of tax	(19.7)	(25.1)	(44.1)	(46.7)
Unrealized (losses) gains on securities, net of tax		(0.1)	0.4	0.5
Adjustments to prior service cost and unrecognized actuarial assumptions, net of tax	1.1	1.5	21.1	5.4
Total Other Comprehensive Loss, net of tax	$ (96.4)	$ (26.5)	$ (10.3)	$ (141.1)

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Fair Value Measurement of Assets and Liabilities - Fair Value Measurement of Assets and Liabilities (Detail) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		$ 273.1
Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total fair value measurement of assets	$ 64.0	396.8
Total fair value measurement of liabilities	34.7
Available-for-sale Securities, Fair Value		273.1
Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		245.4
Fair Value, Measurements, Recurring [Member] | U.S. Government and Agency Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		21.5
Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		4.2
Fair Value, Measurements, Recurring [Member] | Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		2.0
Fair Value, Measurements, Recurring [Member] | Foreign Exchange Forward Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, current and long-term	23.3	96.9
Derivatives, current and long-term		1.6
Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, current and long-term	40.7	26.8
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total fair value measurement of assets	64.0	396.8
Total fair value measurement of liabilities	34.7
Available-for-sale Securities, Fair Value		273.1
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		245.4
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | U.S. Government and Agency Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		21.5
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Commercial Paper [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		4.2
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of Deposit [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value		2.0
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Foreign Exchange Forward Contracts [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, current and long-term	23.3	96.9
Derivatives, current and long-term		1.6
Fair Value Measurements at Reporting Date Using: Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Interest Rate Swaps [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Derivatives, current and long-term	$ 40.7	$ 26.8

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Derivative Instruments and Hedging Activities - Additional Information (Detail) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Mar. 31, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total	$ 1,000,000,000
Loss on settlement of forward starting interest rate swaps	$ 97,600,000
Expected months of hedging of inter company sales of inventory to minimize the effects of foreign exchange rate movements				30 months
Amounts excluded from the assessment of hedge effectiveness		$ 0	$ 0	$ 0	$ 0
Fair value of outstanding derivative instruments, net unrealized loss deferred in accumulated other comprehensive income		96,300,000		96,300,000
Fair value of outstanding derivative instruments, gain, expected to be reclassified to earnings		24,300,000		24,300,000
Fair value of outstanding derivative instruments, gain, net of taxes expected to be reclassified to earnings		$ 20,500,000		$ 20,500,000
4.450% Senior Notes due 2045 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest rate of Senior Notes		4.45%		4.45%
Hedged senior notes maturity period				30 years
4.625% Senior Notes due 2019 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total		$ 250,000,000		$ 250,000,000
Interest rate of Senior Notes		4.625%		4.625%
Description of terms of Interest rate Derivatives terms				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.
Description of variable interest rate basis				Three-month LIBOR
3.375% Senior Notes due 2021 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total		$ 300,000,000		$ 300,000,000
Interest rate of Senior Notes		3.375%		3.375%
Description of terms of Interest rate Derivatives terms				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.
Description of variable interest rate basis				Three-month LIBOR
LIBOR [Member] | 4.625% Senior Notes due 2019 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest rate swap basis spread on variable rate		1.33%		1.33%
LIBOR [Member] | 3.375% Senior Notes due 2021 [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Interest rate swap basis spread on variable rate		0.99%		0.99%
Cash Flow Hedges [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Fair value of outstanding derivative instruments, unrealized loss net of taxes deferred in accumulated other comprehensive income		$ 57,600,000		$ 57,600,000
U.S. Dollars [Member] | Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total		1,575,900,000		1,575,900,000
Swiss Francs [Member] | Foreign Exchange Contract [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total		297,400,000		297,400,000
Minimum [Member] | Nondesignated [Member] | Foreign Exchange Forward Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total		1,500,000,000		1,500,000,000
Maximum [Member] | Nondesignated [Member] | Foreign Exchange Forward Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Derivative notional amount, Total		$ 2,000,000,000		$ 2,000,000,000

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Derivative Instruments and Hedging Activities - Derivative Instruments Designated as Fair Value Hedges (Detail) - Interest Rate Swaps [Member] - Interest Expense [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gain (Loss) on Instrument	$ 3.1	$ (8.0)	$ 13.9	$ (0.8)
Gain (Loss) on Hedged Item	$ (3.1)	$ 8.0	$ (13.9)	$ 0.8

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Derivative Instruments and Hedging Activities - Gross Unrealized Losses from Derivative Instruments (Detail) - Cash Flow Hedges [Member] - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain / (Loss) Recognized in AOCI	$ (8.3)	$ (11.0)	$ (64.8)	$ 40.7
Amount of Gain / (Loss) Reclassified from AOCI	25.8	32.7	57.5	60.7
Foreign Exchange Forward Contracts [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain / (Loss) Recognized in AOCI	(8.3)	(11.0)	(64.8)	79.0
Foreign Exchange Forward Contracts [Member] | Cost of Products Sold [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain / (Loss) Reclassified from AOCI	26.3	33.1	58.4	61.2
Forward Starting Interest Rate Swaps [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain / (Loss) Recognized in AOCI				(38.3)
Forward Starting Interest Rate Swaps [Member] | Interest Expense [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain / (Loss) Reclassified from AOCI	$ (0.5)	$ (0.4)	$ (0.9)	$ (0.5)

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Derivative Instruments and Hedging Activities - Derivative Instruments Not Designated as Hedging Instruments (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Nondesignated [Member] | Foreign Exchange Forward Contracts [Member] | Other Expense, Net [Member]
Derivative Instruments, Gain (Loss) [Line Items]
(Losses) gains from derivative instruments not designated as hedging instruments	$ (15.9)	$ (1.6)	$ (37.2)	$ 13.6

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Derivative Instruments and Hedging Activities - Fair Value of Derivative Instruments on Gross Basis (Detail) - Designated as Hedging Instrument [Member] - USD ($) $ in Millions	Jun. 30, 2016	Dec. 30, 2015
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 97.4	$ 147.1
Derivative Liabilities	68.1	25.0
Foreign Exchange Forward Contracts [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets	45.8	100.5
Foreign Exchange Forward Contracts [Member] | Other Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets	10.9	19.8
Foreign Exchange Forward Contracts [Member] | Other Current Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities	44.5	16.7
Foreign Exchange Forward Contracts [Member] | Other Long-term Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative Liabilities	23.6	8.3
Interest Rate Swaps [Member] | Other Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative Assets	$ 40.7	$ 26.8

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Derivative Instruments and Hedging Activities - Schedule of Effects of Master Netting Agreements on Condensed Consolidated Balance Sheets (Detail) - Cash Flow Hedges [Member] - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Other Current Assets [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gross Amount	$ 45.8	$ 100.5
Offset	26.3	16.3
Net Amount in Balance Sheet	19.5	84.2
Other Assets [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gross Amount	10.9	19.8
Offset	7.1	7.1
Net Amount in Balance Sheet	3.8	12.7
Other Current Liabilities [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gross Amount	44.5	16.7
Offset	26.3	16.3
Net Amount in Balance Sheet	18.2	0.4
Other Long-term Liabilities [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Gross Amount	23.6	8.3
Offset	7.1	7.1
Net Amount in Balance Sheet	$ 16.5	$ 1.2

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Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended			6 Months Ended		12 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Effective tax rate provision (benefit)	128.70%		27.10%	71.00%	77.10%
Increase in provision for income taxes recognized	$ 73.2	$ 20.5		$ 52.7		$ 52.7

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Retirement Benefit Plans - Components of Net Pension Expense (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Compensation and Retirement Disclosure [Abstract]
Service cost	$ 7.7	$ 7.6	$ 15.2	$ 15.2
Interest cost	7.4	5.6	14.6	11.1
Expected return on plan assets	(12.7)	(10.9)	(25.4)	(21.8)
Curtailment gain	(0.3)		(0.6)
Amortization of prior service cost	(2.0)	(1.2)	(3.9)	(2.3)
Amortization of unrecognized actuarial loss	5.0	4.2	10.0	8.5
Net periodic pension expense	$ 5.1	$ 5.3	$ 9.9	$ 10.7

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Retirement Benefit Plans - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016 USD ($)
Foreign-based Defined Benefit Plans [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Contribution towards defined benefit plans	$ 7,400,000
Expected contribution during remainder of year	8,400,000
U.S. and Puerto Rico [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Contribution towards defined benefit plans	0
Expected contribution during remainder of year	$ 0

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Earnings Per Share - Reconciliation of Weighted Average Shares for Basic and Diluted Shares Computations (Detail) - shares shares in Millions	3 Months Ended			6 Months Ended
	Jun. 30, 2016	Mar. 31, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Weighted average shares outstanding for basic net earnings per share	199.4		173.0	199.8	171.5
Effect of dilutive stock options and other equity awards				2.3
Weighted average shares outstanding for diluted net earnings per share	199.4	202.2	173.0	202.1	171.5

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Earnings Per Share - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016
Earnings Per Share [Abstract]
Options to purchase shares of common stock not included in the computation of diluted earnings per share		700,000
Repurchased shares of common stock	0	4,200,000
Average price per share		$ 98.50
Total cash outlay		$ 415.5
Effect of dilutive stock options and other equity awards		2,300,000

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Segment Information - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2016 Segment
Segment Reporting [Abstract]
Number of operating segments	7

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Segment Information - Summary of Net sales and Operating Profit by Segment (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net Sales and Operating Profit Information [Line Items]
Net Sales	$ 1,934.0	$ 1,167.6	$ 3,838.0	$ 2,302.0
Operating profit	201.6	(132.1)	447.1	137.8
Intangible asset amortization	(133.8)	(33.0)	(260.4)	(53.4)
Certain claims		(7.7)		(7.7)
Special items	(137.9)	(469.2)	(226.6)	(556.0)
Operating Segments [Member] | Americas [Member]
Net Sales and Operating Profit Information [Line Items]
Net Sales	981.7	601.1	1,966.4	1,178.8
Operating profit	522.6	314.3	1,057.6	611.1
Operating Segments [Member] | EMEA [Member]
Net Sales and Operating Profit Information [Line Items]
Net Sales	416.1	270.6	832.7	551.8
Operating profit	137.0	102.1	278.3	211.6
Operating Segments [Member] | Asia Pacific [Member]
Net Sales and Operating Profit Information [Line Items]
Net Sales	275.8	193.2	532.4	380.7
Operating profit	115.2	97.0	225.8	194.7
Operating Segments [Member] | Product Category Operating Segments [Member]
Net Sales and Operating Profit Information [Line Items]
Net Sales	260.4	102.7	506.5	190.7
Operating profit	75.7	20.4	133.9	34.5
Segment Reconciling Items [Member]
Net Sales and Operating Profit Information [Line Items]
Inventory step-up and other inventory and manufacturing related charges	(156.6)	(14.7)	(334.9)	(18.6)
Intangible asset amortization	(133.8)	(33.0)	(260.4)	(53.4)
Certain claims		(7.7)		(7.7)
Special items	(137.9)	(469.2)	(226.6)	(556.0)
Global Operations and Corporate Functions [Member]
Net Sales and Operating Profit Information [Line Items]
Global Operations and Corporate Functions	$ (220.6)	$ (141.3)	$ (426.6)	$ (278.4)

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Segment Information - Summary of Net Sales by Product Category (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenue from External Customer [Line Items]
Net Sales	$ 1,934.0	$ 1,167.6	$ 3,838.0	$ 2,302.0
Knees [Member]
Revenue from External Customer [Line Items]
Net Sales	696.9	468.9	1,400.2	932.8
Hips [Member]
Revenue from External Customer [Line Items]
Net Sales	477.2	319.0	945.1	630.4
S.E.T [Member]
Revenue from External Customer [Line Items]
Net Sales	412.4	222.5	813.5	440.9
Dental [Member]
Revenue from External Customer [Line Items]
Net Sales	118.0	61.0	226.6	116.8
Spine and CMF [Member]
Revenue from External Customer [Line Items]
Net Sales	145.8	58.9	287.0	108.4
Other [Member]
Revenue from External Customer [Line Items]
Net Sales	$ 83.7	$ 37.3	$ 165.6	$ 72.7

XML

Commitments and Contingencies - Additional Information (Detail)		1 Months Ended		3 Months Ended		6 Months Ended
	Feb. 05, 2013 USD ($)	Jul. 31, 2015 USD ($)	Dec. 31, 2008 EUR (€)	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)	Jun. 30, 2016 USD ($) Patents	Jun. 30, 2015 USD ($)	Jun. 13, 2016 USD ($)	Jun. 06, 2016 USD ($)	Mar. 01, 2013 USD ($)	Jun. 10, 2011 USD ($)
Loss Contingencies [Line Items]
Certain claims				$ 7,700,000			$ 7,700,000
Compensatory damages awarded						$ 27,600,000
Percentage of fault apportioned to plaintiffs						30.00%
Percentage of fault apportioned to company						34.00%
Percentage of fault apportioned to unrelated third party						36.00%
Verdict in full and entered judgment											$ 20,300,000
Compensatory damages vacated									$ 27,600,000	$ 27,600,000
Durom Cup Related Claims [Member]
Loss Contingencies [Line Items]
Certain claims				$ 7,700,000		$ 479,400,000	$ 7,700,000
Co-payment requirement						20.00%
Estimated liability outstanding						$ 303,200,000
Estimated liability classified as short-term						50,000,000
Estimated liability classified as long-term						253,200,000
Durom Cup Related Claims [Member] | Other Assets [Member]
Loss Contingencies [Line Items]
Estimated insurance recoveries						95,300,000
Biomet Metal On Metal Hip Implant Claims [Member]
Loss Contingencies [Line Items]
Estimated liability classified as short-term						$ 69,000,000
Heraeus Trade Secret Misappropriation Lawsuits [Member] | Minimum [Member]
Loss Contingencies [Line Items]
Loss Contingency, Damages incurred | €			€ 30,000,000
Stryker Corporation [Member]
Loss Contingencies [Line Items]
Number of patents infringed | Patents						3
Monetary damages for lost profits	$ 70,000,000
Estimated charges		$ 90,300,000			$ 70,000,000
Stryker Corporation [Member] | Maximum [Member]
Loss Contingencies [Line Items]
Estimated charges								$ 140,000,000

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Subsequent Events - Additional Information (Detail) - Subsequent Event [Member] € in Millions, $ in Millions	Jul. 18, 2016 USD ($) Surgical_Robot	Jul. 18, 2016 EUR (€) Surgical_Robot	Jul. 13, 2016 USD ($)
Subsequent Event [Line Items]
Number of surgical robots offered by Medtech | Surgical_Robot	2	2
LDR Holding Corporation [Member]
Subsequent Event [Line Items]
Payments to acquire business | $			$ 1,086.8
Medtech SA [Member]
Subsequent Event [Line Items]
Payments to acquire business	$ 107.0	€ 96.0
Percentage of outstanding share capital acquired	58.80%	58.80%