Good morning. I would like to turn the call over to Bob Marshall, Vice President, Investor Relations and Treasurer. Mr. Marshall, you may begin your call.

Thanks, Toni. Good morning, and welcome to Zimmer's Fourth Quarter 2013 Earnings Conference Call. I'm here with the CEO, David Dvorak; and our CFO, Jim Crines. Before we start, I'd like to remind you that our discussions during this call will include forward-looking statements. Actual results may differ materially from those indicated by forward-looking statements due to a variety of risks and uncertainties. Please refer to our SEC filings for a detailed discussion of these risks and uncertainties. Also, the discussions during this call will include certain non-GAAP financial measures. Reconciliations with these measures to the most directly comparable GAAP financial measures are included within the earnings release, which is available on our website at investor.zimmer.com. With that, I'll now turn the call over to David.

Thank you, Bob. Good morning, everyone, and welcome to our earnings call for the fourth quarter of 2013. This morning, I'll review our fourth quarter and full year 2013 financial results, including highlights from our performance. Jim will then provide additional financial details, as well as our 2014 guidance. I'll state all sales in constant currency terms and all earnings results on an adjusted basis. Zimmer drove accelerating growth throughout 2013 fueled by the successful commercialization of innovative new solutions across our portfolio from our flagship knee offering, Persona, The Personalized Knee System, to our differentiated Transposal fluid waste management system, which enhances our presence in the OR suite. Zimmer also delivered operating margin expansion through our operational excellence initiatives. As part of that effort, the company continued to make progress toward the achievement of excellence on our global quality infrastructure. These process-driven improvements will promote design for manufacturability and become the platform for the leaner, more efficient and effective manufacturing and distribution of our devices. In 2013, we continued to follow a disciplined approach to capital deployment. As part of our external development strategy, we enhanced our industry-leading portfolio with targeted complementary additions. These have increased the competitiveness of our existing business and has supported our entry into adjacent musculoskeletal markets. In line with our commitment to returning value to our stockholders, the company paid out more than $850 million in 2013 in the form of cash dividends and share repurchases. Our performance throughout the year was a validation of Zimmer's philosophy of growth through innovation and further bolstered our position as a global leader in health care, exclusively focused and fully diversified within musculoskeletal care. As we look to 2014 and beyond, we're confident that the company is well positioned for continued growth in the evolving global health…

Thank you, David. I will review our fourth quarter performance in more detail, and then provide additional information related to our 2014 sales and earnings guidance. Our total revenues for the fourth quarter were $1,241,000,000, a 6.6% constant currency increase compared to the fourth quarter of 2012. Net currency impact for the quarter decreased revenues by 1.5% or $17 million. The negative currency impact for the quarter related principally to our Japanese yen and Australian dollar denominated revenues, partially offset by positive currency translation associated with our Euro-based revenues. Our adjusted gross profit margin was 73.6% for the quarter. The margin ratio declined 130 basis points compared to the fourth quarter of 2012. In the fourth quarter, we recognized approximately 50 basis points of charges related to the medical device tax. Together with higher surgical product sales, inventory obsolescence, manufacturing-related charges of negative price, these factors outweighed foreign currency hedge gains and cost savings from our operational excellence initiatives. The company's R&D expense decreased 16.1% or $9 million on a reported basis to 3.7% of net sales when compared to the prior year. The decrease in R&D expense continues to reflect the natural decline related to the completion of a number of large projects, the dedication of resources to our quality and operational excellence initiatives, as well as the effect of natural leverage associated with a higher top line typically experienced in the fourth quarter. Zimmer's pipeline of new and innovative products, nonetheless, remains robust, which will help drive growth in future periods. Selling, general and administrative expenses were $477 million in the fourth quarter and at 38.4% of sales or 60 basis points below the prior year. In the quarter and for the full year, a portion of the savings generated from our operational excellence initiatives were invested in…

Thanks, Jim. In 2013, Zimmer's focused execution around an expanded portfolio accelerated revenue growth in both our core reconstructive franchises and global businesses. With revolutionary new offerings such as Persona, The Personalized Knee System, we continued to set the pace for the musculoskeletal market with clinically relevant solutions designed to serve the needs of surgeons, their patients and health care institutions. As we advance this strategic vision in 2014 and beyond, we'll remain committed to our core business principles of delivering growth through innovation, cultivating quality and operational excellence and serving as disciplined stewards of capital. We're confident that these critical elements of our value creation framework will continue laying the foundation of our future growth. And now I'd like to ask Toni to begin the Q&A portion of our call.

[Operator Instructions] Your first question comes from the line of Bruce Nudell with Crédit Suisse. Bruce M. Nudell - Crédit Suisse AG, Research Division: Just looking at -- Dave, as you think about 2014 on the back of what looks like a very much improved major joint market, how are you thinking about volume growth in the major territories for major joints U.S., developed x U.S. and emerging markets?

We did see the sequential improvement in procedural demand as 2013 progressed, but I think that we want to be a bit cautious about taking the exit growth rate on procedural demand from Q4 as an extrapolation as to what we're going to see throughout 2014. And so I think you want to think about the demand producing growth numbers that are consistent with all of 2013 as opposed to jumping off of Q4 and carrying that growth trajectory into 2014. Beyond the U.S., and those comments are probably more focused on the U.S., Bruce, I think that we would expect to see some stabilization in the developed markets within Europe. We did see that as 2013 progressed and in particular, in Q4. Now it's different by country within Europe, Middle East and Africa, and it's also different by product category in some jurisdictions within Europe, Middle East and Africa. But as a general trend, we would expect to see stabilization and that was measured against 2013, a bit of improvement in 2014. Bruce M. Nudell - Crédit Suisse AG, Research Division: And so like -- just to kind of -- if we think of the U.S. with units around 4 to 5 and developed x U.S., 2 to 3, and emerging markets solid double digits, is that appropriate to think about kind of the growth rates in volume?

I think that this is directionally correct. I think that the growth rate, obviously, much higher in the emerging markets. I think that the growth rate that you just articulated is going to likely continue to be higher in developed markets in Asia Pacific than developed markets in Europe, Middle East and Africa as well. Bruce M. Nudell - Crédit Suisse AG, Research Division: Perfect. And just in terms of just qualitatively about -- I know the medtech tax is a big headwind next -- first half of next year. Should we, in aggregate, be expecting like around 50 bps of operating margin? Directionally, how should we be thinking about the progression for the company?

I think that's very fair, Bruce, as we -- as I indicated in my scripted remarks, we're anticipating the tax to result in about $10 million of charges running through cost of goods on a quarterly basis in 2014. We -- if you look at how that compares with 2013, we recognize the modest amount of tax in the fourth quarter, so the headwind will persist, if you will, at least for the first 3 quarters before we get into the fourth quarter of 2014 where we have year-over-year comp work in both years.

Your next question comes from the line of Bob Hopkins with Bank of America Merrill Lynch.

So obviously, overall, you guys are growing as fast or faster than most medical device companies at this point. But I wanted to ask you a question specifically about hips because that's an area where you're not quite growing as fast as your peers. And in Europe, despite very easy comps, you had another negative growth performance in the quarter. And so I'm wondering if you can just talk a little bit more about the hip business and the prospects for the hip business and the potential for accelerating growth in 2014.

Sure. In -- the points that you make are appropriate. I would tell you that we believe that we have a very, very competitive portfolio at this point on the hip side. Some of what you're seeing in the Europe, Middle East and Africa performance is a matter of our market share position in those developed markets that have slowed down. We have large share in some of those developed markets in Central Europe, for example, and so we're going to be affected disproportionately by those slowdowns. So that's part of it. I think that there's also a lot of energy and excitement globally about the launch of Persona, and so we'll balance that focus a bit better in 2014. But with that, by the way of background, Bob, I would tell you we're very confident that you'll see improved performance within the hip product category in 2014 for the company.

Okay. And then as a follow-up, I was wondering if I could just ask you about sort of a big picture question, David, as you look at 2014. For the prospects for your balance sheet in terms of use of cash, buyback versus M&A, is it a robust environment from your perspective in terms of M&A opportunities? Or is this likely to be another year where even you're more active with the buyback?

Well, I think that you should plan on the buyback program operating now that's consistent with past periods, but we're going to be active as we have in the past on the M&A front. We'll be disciplined about the returns that we would expect through any of those deals. But I think that, if anything, the momentum that we've created with the new product introductions and the top line... [Technical difficulty]

I'll just pick up and reiterate, Bob, in response to your last question. I was starting to say that you should expect the capital deployment and the disciplines around that to be consistent with past years. We'll be very proactive about examining opportunities on the acquisition front as we have in the past, but we're going to be disciplined about that, and the return metrics will be consistently applied with what we've done in past operating periods. I think, if anything, in response to your question, as far as additional color, I would say that the new product launches and the success and momentum that those are creating within the business, I feel, put us in a great place to examine deals of all sizes in 2014.

Your next question comes from the line of Matthew Taylor with Barclays Capital.

I guess, my first question was, I wanted to just understand how you're thinking about some of the momentum that you saw in the knee business, I guess, as you look at both the Persona launch and any contributions from Gel-One. How should we think about the additional growth that you could see year-over-year based on the pace of your launch of those products? And then, also, do you have a strong view or any kind of view on how much of the fourth quarter growth could have been due to some seasonality in the U.S.?

Sure. I -- the majority of the performance improvement, and obviously, within the knee category in the United States jurisdiction in particular, the performance improvement for the company was substantial over the course of 2013. And we reestablished momentum within that product category. It's a very, very important product category to us for obvious reasons. And what we accomplished in that year was meaningful and will carry momentum into 2014 and beyond. We're extraordinarily excited about the pipeline that we have beyond the initial launch of Persona, both within primary knees and other subsegments. So I expect that momentum to continue, and the success that we believe we're having with competitive surgeons already with the Persona system is part of the basis for that optimism as to what we're going to do in go-forward periods. I would tell you that the contributions within the knee category in the Americas, by way of example, when you mentioned Gel-One, it's -- it isn't material relative to the performance improvement that you saw sequentially from Q1 through Q4 in 2013. So you can read that as the vast majority of our success in 2013 within the knee category is very much driven by the launch of the Persona system. I think that, in response to the second part of your question, Matt, that -- as to what we saw by way of demand -- procedural demand in the fourth quarter in the United States, it was clearly a substantial uptick. I don't think that one should carry that into their expectations as to what we're going to see throughout 2014. I don't know that one wants to describe that as seasonality either in the sense of it's going to repeat in every fourth quarter hereafter. I think that at least an element of…

Just a follow-up quickly on the surgical product segment. So I wanted to understand a little bit better your expectations for the broadening out of some of your instruments as that is opposed to some tough comps with the fluid waste management system this year. How should we expect growth to evolve in OSP and Other this year?

Yes, we're going to be in a good position to continue to grow that business. Obviously, there are some pretty extraordinary comps on a year-over-year basis. Part of what will -- but we'll be in a growth mode to be sure within the Surgical and Other category. Part of what will happen, as we described in the prior call, was that we'll be transitioning a bit from the majority of those incremental sales being capital units being placed to more of the higher-margin consumable aspect of that. And that will help us on the margin front as the quarters progress. But continue to expand that portfolio, more to come in the way of new offerings, enhancements to our competitiveness on the power tool side as the year progresses by a way of example. So we're really bullish on that category and that business performing very, very well.

Your next question comes from the line of Mike Weinstein with JP Morgan. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Could we just spend a couple of minutes on the P&L? So first item, just can you talk about the strategy around the R&D spend? I don't think we went into the year expecting R&D to be down 9% to 10%. So can you talk a little bit about what's going on there and the reallocation of your spending? And then second, I just want to make sure we've got the gross margin mix right. How much was the FX positive to gross margin this quarter?

Sure, Mike. As we described with respect to the R&D spending, there was substantial effort and focus on some of the large product systems that were under development. And so we're expecting that to balance out over time. I would tell you that you ought not to read too much into the Q4 absolute dollar spend. We still are investing, we have a very robust pipeline. I think that you'll see us balancing that out over time. And if anything, in the 2014 time period, an expansion of our investment in research and development. But it's going to be in accordance with our view as to what opportunities that we have in particular points in time. So you'll see it fluctuate back up and you ought not to read anything more significant into it.

And Mike, this is Jim. On the question about hedge gains in the fourth quarter, they contributed about 20 basis points in a favorable way, obviously, through the margin ratio in the fourth quarter. Was there another question on gross margin? Michael N. Weinstein - JP Morgan Chase & Co, Research Division: Yes, Jim. So as you guide going forward, you're still seeing some favorable FX because of your yen hedges?

Yes. Yes, we are definitely. And the guidance, the 73% to 74% guidance we've given for the full year reflects that, as well as expectations for a more favorable mix of revenues. David touched on that in part with respect to the surgical business, but it's also the case as our -- we restored growth, as David talked about, in the knee franchise that, that will contribute in a positive way. As we see more robust growth in the U.S. market relative to the international markets, that contributes in a positive way. We have incremental manufacturing cost savings out of our operational excellence initiatives that will contribute in 2014. And we're also anticipating lower inventory obsolescence charges relative to the last few years. The last few years we experienced some pretty significant charges largely kind of driven by the launch of these new products and cannibalization of the products that they're displacing. So all of those things are taken into account and help to fully offset the headwinds from both the medical device excise tax as well as negative price. Michael N. Weinstein - JP Morgan Chase & Co, Research Division: That's helpful. And maybe Jim, just spend a minute on all these charges, because there's a lot in this quarter. And obviously, with your guidance for GAAP versus adjusted EPS for '14, you're assuming a number of incremental charges and you put them under these banners such as operational excellence and none of us have any idea what that means. So spend a minute on what are you writing off and what is being backed out as you get to adjusted earnings?

Sure. So it's -- I'd have to go back to the announcement that we made a couple of years back indicating that we were kicking off of a program to, among other things, help us drive about $400 million of operating costs savings over the course of a number of operating periods, which will get us to this $400 million of total savings by 2016. There are a number of different initiatives. We've talked from time to time about the various initiatives that are -- will get us to the point where we've achieved the $400 million in savings. As I indicated in my prepared remarks, we're making really good progress on those initiatives. They include quality and manufacturing excellence initiatives, and there's a significant amount of activity and effort. Fees that are incurred both for the consulting partners that we have engaged to help us with those efforts, as well as for the dedicated personnel. And we set it up that way so that we have -- we will have the business units to, say appoint dedicated personnel to the various projects. They have the opportunity to backfill those positions within their businesses and carry on with their sort of strategic and tactical day-to-day activities. And we've got the distribution and logistics initiative. I think we talked about this a little bit. Among other things, it resulted in the closure of a facility here in Warsaw that was our finished goods warehouse, which has been relocated to -- closer to Memphis, Tennessee and is driving operational expense savings in freight and distribution. We have a sourcing initiative which, I will tell you at this point, is contributing a fair share of the over $200 million of savings that we've achieved coming out of 2013 on a run-rate basis. So that's probably just touching on a handful, it doesn't cover all of the initiatives -- of the initiatives, and hopefully, gives you some idea of what we have going on and the costs associated, what those costs are for.

Your next question comes from the line of Derrick Sung with Sanford Bernstein. Derrick Sung - Sanford C. Bernstein & Co., LLC., Research Division: I wanted to start with a follow-up on your comments around sort of this kind of Q4 seasonality that you're seeing. It sounds like you're relatively confident that at least a piece of the market uptick is kind of this pull forward from the implementation of the health care reform. I'm wondering if you're basing those comments on kind of what you're seeing into January. And then, if the kind of deceleration in your Q1 guidance versus the 6.6% constant currency sell-through growth that you saw in Q4, is that all due to kind of that comment around -- and your assumption of lower market growth in hips and knees, or is there something else to that guidance?

No, it really is just a perspective rather than a forward read of what's happening in the first month of 2014. It isn't based upon that, it's based upon the view that these -- one quarter performance within the market and the procedural demand ought not to be overemphasized and developing a mindset that, that's a trend going into 2014. So we just believe that the trailing 4 quarters are more representative of what one should expect to see in 2014, and we're applying that to our annual guidance and the forward view and visibility as it relates to some color around what to expect in the first quarter as well. It's really that simple, Derrick. Derrick Sung - Sanford C. Bernstein & Co., LLC., Research Division: Okay. And that first quarter guidance, is that deceleration then all based on kind of what you just talked about, or is there something maybe beyond the market for hips and knees that's going into that Q1 guidance?

Yes, it's more fundamentally premised on what I just described. Derrick Sung - Sanford C. Bernstein & Co., LLC., Research Division: Okay, great. As a follow-up, I wanted to talk a little about, or focus on your European knee performance this quarter, which had a significant acceleration. Can you just talk a little bit about sort of what drove that pickup this quarter, maybe talk about geographies and put that in context perhaps with the pressure that you've been seeing throughout the year on margins due to sort of unfavorable geographic mix in Europe? How does this acceleration that we're seeing in European knees impact that?

Sure. We -- as you mentioned, we had a really nice quarter in European knees. And I think that the sales execution -- and most of that, frankly, is driven by NexGen, which is a system with terrific clinical results that has been out for some time and is a trusted system and going to continue to be a very important part of our portfolio. And the European team in those developed markets, in particular, did a terrific job on the sales execution front. We also benefited from -- sequentially as the year progressed, as I mentioned, some improvement and stabilization in some of the markets. And for us, where we have significant share in those developed markets, if there's a bit of improvement, that creates a nice tailwind as opposed to the headwind that we had been facing in the past. So I think it was a combination of excellent execution by the sales team and a bit of improvement in some of those large, developed markets that helped us produce a very good result within Europe, Middle East and Africa in the fourth quarter. Derrick Sung - Sanford C. Bernstein & Co., LLC., Research Division: Great. And does that help your sort of margin mix and can you put that into context with that margin pressure that you've been seeing -- the negative margin pressure that you've been seeing from geographic mix over the last few quarters?

Sure. It does, Derrick. As I indicated in response to an earlier question, the positive momentum that's been restored within that franchise globally is -- will have a -- is and will continue to have a positive impact on gross margin.

Your next question comes from the line of Matt Miksic with Piper Jaffray.

I had one on sort of the macro -- your macro view that you talked a little bit about, David, and sort of the demographics for this, so can you maybe take a step back and -- I mean, where we are in this sort of slow recovery in this market? And then I had one on some of your restructuring initiatives, for Jim. So first on the market, I guess, I'd love to understand if you could sort of sketch out where you think we are in terms of working our way back through, I don't know if you look at it this way, patients who've deferred over the past few years, patients who are waving, patients maybe who -- I think you mentioned there are some -- some of the strength in Q4 came out of this sort of uncertainty in that access to doctors. So do you feel like we're sort of back to a state of equilibrium? Do you feel like there are still a lot of patients out there, sort of the demographics and sustainability in the U.S. market? And it'd be great to get your perspective. And then, as I mentioned, one follow-up.

Sure, Matt. I do think it's marching towards a more normalized state. I think that in that process, there are going to be some ups and downs by month and by quarter towards a more normalized state. We never believe that it would be circumstance where even with a better understood macroeconomic environment that there was going to be some bolus that was going to be sustained and pushed, the backlog of patients that had been deferring the election to move forward with these procedures, through all at once. I think that it's going to be a bit more episodic and just a general trend towards normalization. And that's really part of what is informing and what we're expressing this morning about. I think you want to look forward to 2014 and think about the global markets. And you can apply this to the U.S. market as well as generally feeling more like 2013 than necessarily like 2014 if it proves to be the case that there is a continued uptick at any point in 2014. And one can modify the view and you might even examine, at some point, a deeper penetration and acceptance of these solutions. But I think that it's going to march towards an equilibrium, a more normalized state. I don't think that it's going to be a bolus push through and then a drop back off, but there'll be some ups and downs along the way. And the underlying demand in each of these procedures will be the constant in all of that.

Okay. That's helpful. And then, Jim, you mentioned your sourcing initiative and distribution changes that you made, moving the center out of Warsaw. I think you and I talked a little bit about some additional work that you're doing to reduce your inventory burden and maybe take on some more of the distribution initiatives throughout the U.S. in a broader way. I don't know if you're prepared to talk about that. I'd love to understand what other opportunities there are for you to improve its inventory and distribution in the U.S? And then if I could, you went through a bunch of little bits of the gross margin, but I don't think you gave us the basis point impact to D/O [ph] in the quarter?

Okay. I'll start with the -- where you landed at the end. D/O [ph] charges in the quarter represented a drag on the gross margin of somewhere in the neighborhood of 60 to 70 basis points. And that would have been a bit higher than what we would have seen in the prior year, maybe 10 or 20 basis points higher than what we would have seen in the prior year. And then as for the operational excellence initiative that is really focused on distribution, it's a global initiative, so it does not only apply to the U.S., it does extend outside the U.S. as well. We're going to continue to look at our own sort of processes from -- how we distribute out of our own finished goods, warehouse into the field. And then -- and that's -- most of the work we've completed today is really around the piece of the distribution chain that we have full ownership of. The continuing sort of aspects of that particular initiative do involve having us partner more closely with our independent agents in the U.S. and then, also, with our forward-stocking locations that we own outside the U.S. And looking for opportunities to rationalize our footprint, establish better sharing of the inventory across territories. And there's still a lot of work to do on that front, Matt. And we're continuing with that effort and will eventually have an opportunity to reduce the amount of capital that we have tied up in inventory as a consequence. So I think -- not going to see much of that, don't expect to see much of that benefit in 2014. Would expect to begin to see some of that benefit in 2015 and beyond.

Your next question comes from the line of Joanne Wuensch with BMO Capital Markets.

The first question has to do with the Asia Pacific region, in both hips and knees, that continues to be sort of a weak area for you. What does it take to turn that around?

It's not the case, Joanne, that hips and knees were anything but a strength for us through, really, 2013 generally and certainly in the fourth quarter. So, are you adjusting for currency when you look at the numbers?

I may not be looking at it on a fully ex-FX basis. So forgive me on that.

That's okay. We provide that, the breakout, on a constant currency basis and we had good performances in both of those large joint categories.

All right. Well, never mind that one then.

All right then.

Next year, in Asia Pacific, how much are you dialing in for a change in reimbursement?

Yes, I gather that when you talk about Asia Pacific, it's Japan's biannual price adjustment in particular that you're referencing?

Correct.

Yes, we don't have clarity on that at this point. But I think one should plan to see biannual price reductions that are negative in their nature and in a range of something that's consistent with past adjustments. And that's what we have modeled in at this point in time. So that would be something that would have an effect within that particular country of -- a range of negative mid-single digits as it has an effect on 2014 because it will impact 3 quarters of the year.

Your next question comes from the line of Glenn Novarro with RBC Capital Markets.

One segment that came in a little bit lower than our expectations was trauma. I'm just wondering if the issues in trauma are a function of the Johnson & Johnson-Synthes merger finally kind of complete, clicking, and I'm wondering if they gained -- would gain momentum. So just maybe some of your high-level thoughts on trauma and how that recovers and starts to grow in 2014.

Sure, Glenn. I think that as it relates to the U.S. performance in particular in the fourth quarter, and this is likely to be the case in the first quarter of 2014, too, that we benefited from the disruption that they experienced in the prior period with the recall. And so that has -- anniversarying that growth out and the recapture of that business, which everyone anticipated would be the likely case. They've been able to relaunch those products and so that's part of the GAAP in the performance that you see. I think beyond that, we look at our portfolio right now within the trauma business favorably. We think that we have a very competitive offering and we're doing a nice job of selling trauma in many o U.S. markets. We have work to do to develop the right level of focus to fully exploit the opportunities that we have within that portfolio within the United States. And so you should expect us to achieve better performance as 2014 progresses, but we'll start the year with a bit of a headwind because of that anniversarying of the opportunity that we were able to take advantage of last year.

And then just for Jim, on the share buyback for 2014. How should we model that out that? Does that get spread evenly throughout 2014 or does it come more front-end loaded?

Sure. So as Dave said, first of all, you should model out somewhere in the neighborhood of $500 million of spending on share repurchases over the course of 2014, consistent with what we've done in prior periods. I would tell you as well that we would intend to also buy back any dilution that we experience from option exercises as necessary, so that could potentially put us in excess of that $500 million. And then, I'm not going to comment, give guidance on the specific timing of when we would be in the market, Glenn, so I -- and probably the smartest thing to do would be just what you described.

Okay. So just model evenly throughout the year? Okay.

Sure.

Your next question comes from the line of Larry Biegelsen with Wells Fargo Securities.

I just wanted to focus on the guidance for a minute. How are you guys thinking about the 2 less selling days that you had in Q1 of 2013? Are there 2 less selling days in Q1 2014? And your EPS guidance implies only 6% to 10% EPS growth and your goal has been 8% to 12%, with sales in the low- to mid-single digits. So my question is, why the conservatism on the 2014 EPS guidance?

Sure. Let me first of all address the billing day question. We do pick up a billing day in the U.S. in the first quarter of 2014, but that's offset by some loss of billing days in certain markets outside the U.S. So in the aggregate, we're anticipating that we pick up about half the day in the first quarter and then get that back in the second quarter. So not as pronounced as what you might have thought in terms of 2 additional billing days. And that's certainly taking into account the guidance that we provided both for the first quarter and the full year. And then with respect to EPS, I would just -- keep in mind that 2014 -- I suppose unlike some other companies who took on the full effect of the medical device excise tax in 2013, we're taking that on in 2014 just reflecting on what we guided with respect to gross margin and the impact of the medical device excise tax. If you would have add that back to what -- the midpoint of what we're guiding to, you'd be adding back something in the order of $0.15 of earnings, and that would get you closer within that -- the midpoint of that range that you referenced. That's really the issue that we have, frankly, with respect to 2014. That's a headwind that's not, at least at this stage, fully reflected in our results.

That's very helpful. Just one follow-up. You guys have done a great job with these bolt-on acquisitions like Dornoch, which contributed to your growth in 2013. Is there anything in 2014 like that, that you would highlight, such as Subchondroplasty that could augment growth in 2014?

It certainly is the case that, that was successful, not the only successful bolt-on acquisition but probably the one that was most pronounced in fiscal year 2013. Those are tough ones to find, tough ones to repeat. I would tell you that in the aggregate, we continue to be excited about the opportunities. And we always have a pipeline of those types of acquisitions that we're working on at any given point in time. So without getting out ahead of ourselves, I wouldn't foresee that there is a single product category that would allow us to repeat what we did in 2013. But I think in the aggregate, you'll see continued strong performance with those bolt-on acquisitions. And we don't end up picking up much by the way of revenue growth by doing those acquisitions. It truly is the case that, that's organic growth post closing of those deals because we're finding new anatomical sites or other market adjacencies within musculoskeletal health. And we find nice traction being able to push those through our existing distribution channel and leveraging existing relationships. So that's a recipe that you'll see continue. I doubt that there will be a repeat of the Dornoch acquisition in 2014. But in the aggregate, you'll see continued success with those.

Your next question comes from the line of David Lewis with Morgan Stanley.

Dave, I wanted to come back to R&D, but the less focused on the fourth quarter. If you actually look at the guidance for '14, it's going to be the third straight year you're guiding R&D down as a percentage of sales. I wonder, can you give us a greater sense of the type of privatization [ph] happening within the business? And does this trend reflect -- what does this trend reflect, frankly? Does it reflect some sense of product maturity? Does it suggest that you're more likely or need to do more incremental M&A? I'm just trying to put that multiyear trend in context.

Yes, I would start by just clarifying that the guidance that we articulated gives you -- you talk about it as a percentage of sales, but as an absolute dollar figure we would look to spend anywhere from $10 million to $20 million according to our guidance, above what we spend in 2013. So the absolute spend is going to expand and that's going to flex depending upon what we see by way of opportunity both internally and externally as well. So if there's an opportunity for us to accelerate the development of a particular internal project or getting new an adjacency that we think is consistent with our strategy and can create value, then that number is going to go up. So again, I don't think one should be at all alarmed if you look at -- and I don't believe that it's reflective at all of the opportunity to continue to innovate in a clinically relevant way. We're really excited about the opportunities that we have going forward. So we just are birthing the largest product development launch in the company's history and we want to make sure that we're putting our energies to getting the commercialization efforts on Persona just right and fully taking advantage of that launch. But you're going to see continued products rolling out, getting launched, and our pipeline is going to be very healthy.

Good, Dave. Very clear. And maybe just one follow-up either for you or for Jim. Your pricing pressure was a little incrementally heavy in the fourth quarter, but I wouldn't say materially so, at least in our view. But considering the very strong strength we saw in Persona and some of your public commentary about the ability to launch that product as a premium product, I think we would have expected a little better price mix in the fourth quarter given the strength of Persona. Is there something underlying that may be offsetting that Persona strength? Can you maybe comment on the ability to get premium pricing for Persona?

I think you have to remember that when we talk about price, we're calculating now to the best of our ability, on a SKU basis, pure price as opposed to mix. And so the mix and volume we aggregate in discussing our results and then the pure price is what we try to break out for you with a lot of specificity by product category and geographic segment.

So you're still confident, David, that we're getting mix benefit on Persona?

Absolutely.

Your next question comes from the line of Kristen Stewart with Deutsche Bank.

Just as, I guess, a follow-up on the pricing side. It looks like the Americas pricing got a little bit worse this quarter, and I was just wondering if you could maybe just comment on that or whether it's just kind of -- I know it bounces around quarter-to-quarter. But your guidance is down 2% to 3% for the full year, it's also a little incrementally worse, and I understand Japan probably adds in there. But I think you also mentioned Europe. So maybe just walk us through kind of what you're seeing on the price side globally?

Yes, Kristen, this is Jim. First of all, with respect to the Americas, that is the case, that it's incrementally -- that we saw a little more in pure price, as David talked about. So there's some incremental sort of discounting, if you will, of some of the legacy products within our portfolio within the Americas that is being offset by the premium that we're getting on new products that are getting introduced into the U.S. market. And again, that favorable mix benefit is not reflected in the pure price discussion -- disclosures that we're providing. With respect to Europe, in the past, when we were able to offset some of the price pressure we're seeing in some of the developed markets with the forward integration, transactions we had underway in various operating periods. We're far enough down the road with these forward integration transactions, that there's really less opportunity to offset some of that price pressure in some of the developed markets in Europe, but that's where we see some incremental pressure. And then, as you pointed out, we, as everyone knows need to take into account in our guidance for 2014 the fact that there will be a price cut, a reimbursement price cut in Japan that takes effect in April 1. And all of that is what's reflected in that minus 2% to minus 3%.

Okay. So it sounds like all regions, I guess, in your view are likely to see incremental pricing pressure over the next year for all of the reasons you just mentioned?

A modest amount of incremental pressure, that's right.

Okay. And would you say -- I know you mentioned the mix benefit and David mentioned it, too. If one were to look at, say, knees or hips, if you look at just the mix versus price, is it net positive or net negative? Though it seems like it would be more net negative given some of the pricing that you broke out earlier in your prepared marks.

I wouldn't assume that. It's probably the case across the market that -- it's probably a net positive across the market. If you consider some cases, particularly with respect to hips, there are more revision procedures being done, which is something else you have to take into account. But it's also the case that the advanced bearing materials within the hip category are gaining traction. I think that's the case. Certainly the case with respect to our results, you see some indication. That's also the case with some of our competitors' results. And then the new knee systems that are getting introduced. At least we -- can't speak to the other companies, but at least in our case, as David said, we're getting a premium that is sticking and adding in a meaningful way to the growth, the volume mix growth that we are reporting, and were reporting in the back half of 2013.

And then, just a follow-up on the one-time charges. How much of those are going to be cash, and is there any way to just piece that? I know you walked through, with Mike's question, just all the different things. But any way to just kind of bucket that $250 million? Since it is a pretty large offer on a pretax basis, how much is the optimization versus anything else that is in there?

I would tell you the majority of it is for the cost, and they are largely cash cost connected with the operational excellence initiatives there as well. And it's somewhere in the neighborhood of about $20 million out of the $250 million connected with integration of the recent bolt-on acquisitions that we've done. Those costs, although they do include a number of things, they can include employee termination benefits, contract termination fees, facility closing costs. They do also include dedicated personnel costs, as I indicated, and consulting fees. They can also include potential impairment charges, accelerated depreciation for assets that are being taken out of service or maybe pending disposition. All of that is -- we do provide all the detail in our periodic filings as a footnote within our financial statement that we lay out every quarter where the costs are being incurred in detail. But with respect to the $250 million of costs in 2014, what we're anticipating are largely cash costs.

Toni, we have time for one additional question.

Okay. Your final question comes from the line of Bill Plovanic with Canaccord Genuity.

I'm only going to ask one. I mean, Persona is a big product for you, I was wondering if you could categorize for us where are you in the launch stages of that product in terms of new customers, existing customers and then geographically? If you could break that out, that'd be helpful.

Sure. I would tell you that this -- it's still early with the launch of Persona. Pick an analogy or metaphor, I think it's the first quarter, not halftime, with that launch. It's going to be phased with additional elements launched over an extended period of time. And then there's going to be a geographic prioritization. So we are primarily focused on the U.S. market at this point in time, selectively outside the U.S. market in 2013 and in 2014. So it's going to be a launch process that lasts for multiple operating periods. And I think you ought to think about that product launch as kind of a 3- to 5-year, as opposed to a 12- to 24-month process, Bill.

And have you completed the rollout to the U.S. geography and all your existing physicians, or are you still working through that process?

It's ongoing. And there's a lot left to do in that regard. We have a lot of opportunity going forward with the Persona system.

And then have you -- in terms of competitive approaches, I would assume that you've started that and that's part of the contribution from this year. But as we think about that, is that really a 2014, a 2015, where you really start going heavy after competitive accounts or is that a dual track, where it's both the existing and the competitive at the same time?

The latter really, Bill, and that was the case in 2013 as well. I would tell you that probably somewhat uniquely with this launch, because of the interest and the appetite among competitive surgeons, there have been more set placements into the hands of competitive surgeons. So it will be dual track and last for multiple operating periods, not just 2013 nor will it just be 2014 in that regard.

And lastly, for clarification, just on the o U.S., you mentioned selective in '13 and '14, so we should really think that, that becomes a full push in '15 and beyond? Or does that kind of build as we're exiting '14?

Sure, Bill. It will build as we move on. But again, there'll be different elements and different compositions that -- and forms that the Persona launch will take and the intelligent instruments that are very importantly incorporated into the launch. So we'll package that up in different ways for different markets, but it will be ongoing for the coming operating periods. And we'll offer more color on that as the launch continues so that you have some perspective on how much runway we have. At this point in time, the answer is, a great deal. And so with that, I'd like to just, again thank everyone for joining the call today and for your continued interest and support for Zimmer. We look forward to speaking to you on our first quarter conference call, which is scheduled for 8:00 a.m. on April 24. I'll turn the call back to you, Toni.

Thank you, again for participating in today's conference call. You may now disconnect.