1136869--2/28/2007--ZIMMER_HOLDINGS

related topics

{regulation, government, change}

{product, market, service}

{property, intellectual, protect}

{operation, international, foreign}

{product, liability, claim}

{financial, litigation, operation}

{customer, product, revenue}

{loss, insurance, financial}

If third-party payors decline to reimburse our customers for our products or reduce reimbursement levels, the demand for our products may decline and our ability to sell our products profitably may be harmed. We are subject to cost-containment efforts of healthcare purchasing organizations, which may have a material adverse effect on our financial condition and results of operations. We are involved in ongoing investigations by the United States Department of Justice of companies in the orthopaedics industry, the results of which may have a material adverse effect on our sales, financial condition and results of operations. We and our customers are subject to various governmental regulations and we may incur significant expenses to comply with these regulations and develop products compatible with these regulations. We are subject to health care fraud and abuse regulations that could require us to change our business practices and restrict our operations in the future. We may incur product liability losses, and insurance coverage may be inadequate or unavailable to cover these losses. RISKS RELATED TO OUR BUSINESS If we fail to effectively utilize the skills and knowledge of orthopaedic surgeons, customers may not buy our products and our revenue and profitability may decline. If we fail to retain the independent agents and distributors upon whom we rely heavily to market our products, customers may not buy our products and our revenue and profitability may decline. If we do not introduce new products in a timely manner, our products may become obsolete over time, customers may not buy our products and our revenue and profitability may decline. We conduct a significant amount of our sales activity outside of the United States, which subjects us to additional business risks and may cause our profitability to decline due to increased costs. We are subject to risks arising from currency exchange rate fluctuations, which can increase our costs and may cause our profitability to decline. We may fail to adequately protect our proprietary technology and other intellectual property, which would allow competitors or others to take advantage of our research and development efforts. We may be subject to intellectual property litigation and infringement claims, which could cause us to incur significant expenses or prevent us from selling our products.

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1136869--2/28/2007--ZIMMER_HOLDINGS_INC