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.

Thank you Julie. Good morning and welcome to Zimmer’s Q1 2015 earnings conference call. I'm here with our CEO David Dvorak and our CFO Jim Crines. As a reminder our earnings release and related financial information is available on our investor relations website at investor.zimmer.com. A replay of this call will also be made available on our website. Before we start, I would 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 of these measures to the most directly comparable GAAP financial measures are included within the earnings release, which is available on our web site. Additionally all sales variances will be stated on a constant currency day-rate growth basis. The results in the company’s earnings release this morning reflect constant currency growth rate including the extra billing days in the first quarter of 2015 that resulted from the change in our interim quarter end closing convention for the majority of our international reporting unit from March 25 to March 31 that’s referenced on our previous earnings call. With that, I'll now turn the call over to David Dvorak. David.

Thank you, Bob and good morning, everyone. Before I review our first quarter financial results I would like to take a few moments to share our vision for the future of Zimmer Biomet. I’ll then discuss our first quarter performance and Jim will provide further financial details. As Bob has just noted I’ll state all sales variances on a constant currency day-rate basis and all earnings results on an adjusted basis. During the first quarter we were pleased to announce that the European Commission and the Japan Fair Trade Commission granted clearance of Zimmer’s planned combination with Biomet. We now expect to close the transaction during the month of May as we work towards clearance from the U.S. Federal Trade Commission. If we've communicated previously the rationale behind this merger has always been about enhanced scale and the opportunity to accelerate the pace of innovation across our musculoskeletal portfolio. We think that in the wake of this historic combination we’ll be well positioned to capitalize on future growth opportunities. Zimmer Biomet’s comprehensive and diversified portfolio of musculoskeletal conditions will offer more scalable and predictable revenues as well as immediate cross selling opportunities. Our enhanced scale and broadened product portfolio will also enable us to enter exciting new products categories such as sports medicine as well as continuing to expand our participation in key emerging markets around the globe. There are also a number of financial and operational synergies connected with this transaction that are highly consistent with Zimmer’s longstanding value creation framework. Moreover, we're confident in the organization’s ability to execute effectively on a combined basis following the closure of the deal creating and returning value to our stockholders over the long-term. Against the backdrop of these transformational changes, we remain a company fuelled by innovation and driven by our…

Thank you, David. This morning I will review our first quarter performance in more detail and then provide additional information related to our standalone earnings guidance as well as anticipated accretion and synergies connected with the pending merger with Biomet. Total revenues for the first quarter were $1.13 billion an increase of 1.7% on a constant currency day rate basis when compared to the first quarter of 2014, net currency impact for the quarter decreased revenues by 6.8% or $80 million, our adjusted growth profit margin was 75.8% for the quarter favorable to prior year by 90 basis points after adjusting for non-cash amortization expense. Foreign currency hedge gains together with favorable mix of products in geographic revenues and cost savings from our operational excellence initiatives were offset in part by higher excess in obsolescence charges and the impact of negative price. The company’s R&D expense increased 2.2% or $1 million on a quarter basis to 4.3% of net sales when compared to the prior year. Selling, general and administrative expenses were $425 million in the first quarter and 37.5% of sales with 80 basis points below the prior year quarter after adjusting for non-cash amortization expense. The company continues to make strides in driving efficiencies throughout its operating units in administrative as well as commercial functions. In the quarter, the company recorded pre-tax charges of $87 million in special items and $3.9 million and cost of products sold pertaining to global restructuring, quality and operational excellence initiatives, and recent acquisition. The company also recorded $20.4 million in non-cash amortization charges during the quarter, adjusted first quarter 2015 figures in the earnings release exclude the impact of these charges. Adjusted operating profit in the quarter amounted to $386.2 million at 34% our adjusted operating profit to sales ratio is 150…

Thanks Jim. Zimmer made good progress in the first quarter of 2015 which would not have been possible without the dedication of our team members around the globe. In addition to achieving steady global revenues and driving ongoing commercial releases, we've been fully committed to integration anticipation of our pending combination with Biomet. Our new company will be forged in the principles and best practices that have made both Zimmer and Biomet leaders in the musculoskeletal healthcare. On that basis we look forward to continuing to serve the global healthcare community with innovative solutions and compelling value. And now I would like to ask Julie to begin the Q&A portion of our call.

[Operator Instructions] if you can please limit yourself to one question and one follow-up question. The first question comes from Bob Hopkins from Bank of America, please go ahead.

Great, thank you. Can you hear me okay?

We can Bob. Good morning.

Great. Good morning. So, the first question I want was is just on the actual Biomet deal. It seems like the FTC is taking longer than you initially thought. I was wondering if you could give a sense as to why and is the reason that they want to wait until their remedies are actually executed?

Well, there are differing requirements in different jurisdictions. It is the case that for instance, in Japan you can come to an agreement as to what the divestiture needs to look like and then subsequent to the closing of the primary transaction execute on that, whereas it’s a more concurrent requirement with the closing in jurisdictions like Europe and the United States. But to back up a little bit on the status, Bob, in general, we’re very pleased to have received the clearances from both the European Commission and Japan FTC. As you know that we’re focused on the US FTC, but I would add that we’re encouraged by the substantial progress we’re making to complete the final steps there as well and it is our expectation that we’re going to get the transaction closed in May. And maybe just add a little bit more color to that. In the scheme of the overall transaction, this category is coming up very consistent with what we anticipated in our diligence work pre-execution of the deal and I think we’re going to land in a very good place and it just took a little bit longer than we thought.

But the main reason, just to be clear, for it taking a little bit longer than you thought is the process around remedies, is that a fair statement?

That’s correct.

And then as a follow-up, on the guidance, two quick things. One, just doing some quick math here. It looks like what you’re comfortable with for calendar 2016 is something below $8 a share. So, one, is that correct? And also Jim, could you just highlight the different buckets of what’s changed in the guidance since you last communicated to us at the end of the Q4 call in terms of either specifics on FX or synergy or financing costs, you talked about tax rate. Just wondering what changed and if my math is right that you’re kind of comfortable for now a little bit below $8 for 2016?

So, I guess, first of all, yes, we’re comfortable with something below $8, but 2016 obviously based on the mid-teens or higher, sort of, growth rate expectation. Understanding, Bob, that there is a lot of work to do between now and 2016 in developing operating plans which is what we would typically be doing before providing a more detailed guidance, which will come, eventually. And then with respect to what has changed is really two things, I guess, well, maybe three, the timing. So, the realization of the synergy is, obviously, the basing of the actions that have to occur to capture those synergies doesn’t happen until obviously we close the transaction. To the extent that there’s been a slight delay in our expectations with respect to when the transaction would close, the opportunity we have to capture those synergies just gets deferred. Secondly, the headwind associated with foreign currency translation is the other most - really the most significant change and that’s reflected both in the update that we’ve provided on the standalone guidance as well as the $0.10 take-down and the accretion expectations for the first 12 months post closing. The one other change you I think mentioned as well is the fact that we are anticipating relative to our original modeling a somewhat higher effective tax rate and that really is a result of both the effect of foreign currency translation is having on the foreign earning, post Zimmer and Biomet as well as on the fact that the interest cost associated with the deal financing significantly below what we had originally anticipated. So if you go back to the original deal model we would have had a more significant tax shelter in the U.S. associated with the deal financing and those - that really covers the three things that I said that are impacting on the change in the outlook.

I just one more and I will let others jump in here, but could you give us - what was the FX hit on the combined company in Q4 versus the FX hit now because the guidance before was including some other things like you said for Biomet it was $0.30 offset by $0.20 of savings from interest and then Zimmer was $0.20 net of hedging. Can you just give us a sense as to how much currency is a headwind now versus the beginning of the year?

Sure, well on a standalone basis it is another $0.05 or so a quarter obviously with take down of $0.20 and that is a combination of the FX as well as the pressure we are seeing with respect to the effect of tax rate and on Biomet it is a little more than the $0.10 take down because there is an offset in the form of some interest savings relative to what our expectations were prior to launching the senior notes.

Very good. I will get back in queue. Thank you.

Thank you. The next question comes from Matt Taylor from Barclays. Please go ahead.

Hi thanks for taking the question. I just wanted to ask you guys about the closing here, you are saying May now instead of April. Can you just talk about the last steps for closing in the U.S. and what is your guidance imply when you’re talking about the lower growth for the year in terms of U.S. divestiture? Can you talk about what it looks like versus Europe or Japan?

There really isn’t too much more to add Matt to the status of the clearances, it’s U.S. focused at this point in time and we do anticipate receiving FTC clearance in the United States and being able to bring the transaction to close in the month of May.

Yes, and with respect to the divestitures when we quote the 1.5% to 2% constant currency growth expectation for the top line that is over pro forma 2014 revenues so where that is really an apples and apples comparison we stripped out the anticipated divested revenues out of 2014, and then where the divestiture, the divested revenues hasn’t impacted obviously on the accretion expectations and nothing has changed with respect to the impact that those divested - product lines divestitures are going to have in relation to accretion. What has changed as I said is the foreign currency headwind that we’ve now factored into the updated guidance on accretion.

And maybe just taking a step back if you think about the guidance that you’ve provided along for the transaction conceptually I guess number one, are you seeing any disruption with the combination around the corner and do you still expect that you can grow in line with the market and faster than the market after the merger closes?

We absolutely do Matt being that we characterize the progression from the point of close integration beyond this guidance is consistent with that in line with market in the initial stages accelerating above market is we get deeper into executing these plans, so no changes whatsoever it come of our integration plan, I would tell you that the intermediate to longer term I think there would be opportunity is even greater to create value by virtue of this combination and that should be reflected in the intermediate to long term on the top line?

Great, thank you very much.

You are welcome. Operator Thank you the next question comes from Mike Weinstein from JP Morgan. Please go ahead.

Hi good morning guys, just want to start with the quarter Jim can you just outline for us the impact of difference in selling days outside the U.S. think you had couple more days this quarter than you had the year ago?

That is very Mike so that accounts for about 2.5 points of growth on the top line and that is why the all the growth rate that we quoted in our comments had been adjusted to strip out the effects of the extra billing days to help you have an opportunity to go back through the transcript will get the day rate growth both consolidated and by product category.

Okay. That’s very helpful thanks Jim. So, let me just circle back now on the 2015 implied guidance, you know, Bob asked the question. Are you basically endorsing something below $8, but maybe just to be a little bit clearer that because the mid teens are better growth could apply anything from $7.50 all the way up to $8? Do you want to be any tighter relative to that band just to street expectations or corporately release that?

Well, you know, at this stage, again, to the extent that we haven’t done, you know, the bottom up operating plans for 2016, it’s right to think about a wider range perhaps then to put a finer point to it. You know, something in the order of 15% to 20%, but I think you’ll get beyond that. The range gets to be a bit too wide.

Yes, understood. Let me just ask the last question, maybe then just on the comment you made about pro forma revenue growth and I think what you said was 1.5%, 2% revenue growth, and correct me if I am wrong, pro forma once the deal is closed. That’s what included the impact to divestiture. So, are you saying that the divestiture is way down to 1.5% to 2% or that’s adjusted for the divestitures?

Adjusted. So, it’s1.5% to 2.0% and we’ve taken out…

Apart.

Yes, we’ve taken out what we anticipate will be the divestiture revenues out of the base.

So, you…

Yes.

So, that basically would imply pro forma growth pretty consistent with what the company is doing right now?

That’s correct and understand, you know, with the deal is now anticipated to close in May. I mentioned that there is a lag capturing cost synergies. There’s also a lag in capturing the cross selling opportunities. Those will wrap up over time and that’s reflected in that top line expectation for calendar year 2015.

Okay and one last question I’ll sneak in. So, are you at a point where you can give us a little bit more in terms of what you’re doing with the sales organization to maybe tie up some of the better reps and distributors post close?

We have very well-developed plans, but wouldn’t want to start articulating anything, you know, specific in advance of the closing and the execution of those plans, Mike. I think in that area though, it’s probably worth noting that our stability within the sales force is quite good on a global basis. We’re not seeing accelerated attrition rates and I think we are going to enter the period to execute this plan in a very good position.

Great. Thank you guys.

Appreciate it.

You’re welcome.

Thank you. The next question comes from Glenn Novarro from RBC Capital Markets. Please go ahead.

Hi! Good morning guys. One of the things you did this morning is you raised your net annual sales synergy guidance from $270 million to $350 million and in the guidance there is an assumption for sales dis-synergies near-term plus costs savings. So, can you walk us through what’s changed, are the dis-synergies a little bit greater and the cost saving is a little bit greater, serving as an offset. Just a little bit more clarity there.

Yeah, Glenn I think that we haven’t provided a breakout. You’re right to reference that synergy number as a net number, but just to give you a directional response. It is more related to opportunity on the expense synergy side than any change in assumption on revenue dis-synergy.

Okay, and what are you saying from a cost savings point of view today that gives you more confidence that it would come in greater?

Well, we obviously had the ability over the last many months to get access to a lot more information and bring teams together and do a lot more detailed planning and it’s really with that information and the process that we’ve been executing to on the development of these plans that clarify the opportunity and we feel very, very confident in the opportunity, the plans that have been developed, and in our capability to execute and realize those savings.

Okay, and then just one quick on the end market. Your hip number relative to our expectations came in a little bit light, but so did some of the competition as well and I know from year-to-year, some years knees do better than hips and so forth. Do you have a feel for why maybe hips have come in a little bit lighter to start off the year and then as a follow up, do you have a view on robotics coming out of AAOS, you heard more than robotics, you heard Smith & Nephew and J&J doing some partnering. Just your view on robotics going forward as well?

I think that the worldwide hip market does look like it has stepped down a bit from what it came in at for the entire year 2014; I wouldn’t over read that one quarter data point. However, it felt to us though more of that was driven in the United States we had a little bit of a step down market growth rate wise as well noted in Asia Pacific but I don’t see any major trend that is driving that that would be indicative what one should anticipate for the balance of the year and would still try to take more towards an expectation of 2015 is going to look a lot like 2014 and 2013 overall with respect to robotics again we very much believe in innovating our way that improves the quality of care and outcomes and at the same time does so in economically responsible in responsive way to various stakeholders within the system for several years now. We have been developing technologies that we believe are smaller, cheaper, faster to bring about better clinical solutions and reproducible solutions in a cost efficient way and continue to believe that those platform technologies including our high assist and patient specific instruments in soft tissue balancing systems pre operative planning systems and then as I mentioned these inter-operative technologies are going to be able to serve customers and patients very well in that regard. So we think that the need is there, our solution and strategy within that space is a bit different approach and we are very confident that we are on a great track to deliver value to those stakeholders. We don’t think that going backwards in procedure time for example for changing the work flow in a fundamental way is going to lead to better patient outcomes and in fact those patients outcomes could be said in reverse relative to current capabilities and that is one area that one is going to have to be mindful of but it’s an exciting area for innovation in general and we like our platform technologies and the strategies that we have in place and we are executing to.

Okay, thank you.

You’re welcome.

Thank you. The next question comes from Rich Newitter from Leerink Partners. Please go ahead.

Hi thanks for taking the question. I just was wondering just going back to the timing of the deal, I know that you feel confident in the deal closing in the May but I’m just curious how should we or how can you help us get comfortable that the deal close in May is in fact the right time when previously it was April and then before that you were very confident that it was 1Q, 2015 just maybe help us get a better feeling that May is in fact probably the last potential push out or is that even a fair conclusion to draw?

We are confident in closing in the month of May and I guess that the fact these split would emphasize with you is that we have regulatory filings across the globe as it relates and you’re trying to estimate the specific timing for close with a lot of variables in that equation originally we are now down to the point where we have one jurisdiction and you should assume that we are pretty knowledgeable about what is outstanding within that jurisdiction and what our path forward the optionality to address any issues that are open within United States and so it’s a shorter list, we’re very knowledgeable and well positioned to address what needs to get addressed and on that basis are expressing a high degree of confidence that we’re going to get it done in May.

Got it. And then just one follow-up, I was on another call earlier, so if someone asked this, I apologize but just we’ve also have heard from some competitors that are attempting to move down a more value implant route there has been talk of value implants. can you provide your thoughts on how the market may or may not accept this type of offering and what is Zimmer and Biomet’s competitive response should it actually begin to take off? Thanks.

Well I think that the positioning of technologies and the solutions, one needs to make sure that we are innovating in a way and delivering value to a system that is going to increasingly become cost conscious and has for the last many years. The data points that I think are worth emphasizing is the stability of the pricing environment, it’s a pretty narrow bandwidth in our experience over the last not just quarter or two but couple of years, by way of price experience, we’re continuing to maintain price and retrieve mix opportunities for our premium technologies and all those price points. And the last point that I think is worth emphasizing is that competition is healthy if we can prove out value for the premium technologies then those prices won’t be held but that’s a fair challenge that should be placed on anyone that’s operating within these marketplaces. It’s going to be the case, however, that if one of these so called value implant providers cause harmful effects to patient outcomes that with the movement away from fee for service in jurisdictions like the United States and the cost of re-admissions or complications in those cases being internalized relative to the provider they are going to care deeply about making sure that they get a right for the patient as they should. So if someone is out to save a little bit of money in exchange for not delivering the right kind of patient outcome, the economic system is going to penalize that provider in a material way in a much more significant manner than it has historically. So we like the clinical results, the quality systems, the attention to detail in the design, manufacture, and commercialization of these solutions living this world and are highly confident that we understand what the stakeholders and customers expectations are and how to partner even more deeply with those providers to bring about a great patient outcome in a cost effective way in the future. And if anything are even more excited about our opportunity and confident in our capability to contribute to that to that equation by virtue of the Biomet combination.

Thank you.

You’re welcome.

Thank you. The next question comes is from David Roman from Goldman Sachs. Please, go ahead.

Thank you. Good morning, everybody. I want to switch back to the business a little bit and ask a couple of product line questions. And specifically, I was hoping you could just give us a little bit of an update on the trauma business given what has been some fluctuation in the growth rate in the past couple of quarters that looked to have stabilized, but maybe help us understand the opportunities there going forward. And then secondly, spine, I think you are now going on three pretty solid quarters particularly in the United State. Could you may be just help us understand what are the drivers underpinning that turnaround and can we see that growth continues as the comparisons get harder in the back half of this year?

Sure. With respect to trauma we stepped backwards a little bit initially over the last few quarters and our U.S. performance maintained pretty solid performance in the OUS markets and there sort of a simple answer to the progress that we’ve made, we’ve invested in our product portfolio an innovation the Zimmer Natural Nail line is an example of that, the NCB periprosthetic plating system is another good example of that. Our XtraFix system showing up that capability on the external fixation has lead us to a much more competitive portfolio more recently just a radius platting system getting launched and we’ve really rounded out our portfolio and put our commercial teams in a better position to compete. And the other half of that is sales force specialization and focus and I think that we’ve advanced more rapidly in the OUS markets, in the U.S. markets. But I think we’re beginning to catch up in the U.S. markets. When you look at the platform that we’ve created on the Zimmer side and add to that which is a substantial ad what Biomet possesses by way of product portfolio, all the does is enhance our capability to win and take share within the trauma space post closing the deal. It also enhances our capability to build out sales forces that are specialized within the trauma marketplace wherever that makes sense to do so geographically across the globe. So, it’s one of the areas among several sports, medicine, extremities, trauma, surgical, where this combination and the scale are going to greatly enhance our growth opportunities and I’m very confident that were you going to see is those businesses collectively picking up our overall top line performance as we get deeper into the integration and executing the cross-sell opportunities and the build out of the commercial team. Spine is a similar story. You know, it was all about investing and innovation. We had about 12 launches in 2014. There is a lot of a runway with those launches in the pipeline and the Zimmer side is rich. The person were picking up through the Biomet combination are very, very complimentary to the Zimmer portfolio. So, day one, we’re going to end up with a very competitive offering on the core fusion side and some really terrific innovations within the pipeline, and again, a stronger than ever sales Force team on a global basis. So, I would expect us to continue to perform very well. You know, obviously, have more visibility to the Zimmer spine business at this point in time, but I’m highly confident in our ability to sustain those attractive growth rates or if anything accelerate on the Zimmer side going forward for our spine business.

Okay, that’s helpful and maybe just as a follow-up on the P&L, Jim. I know in your prepared remarks you talked about some of the drivers of gross margin. Can you maybe just go into a little bit more detail just on how much of that is hedging, where it’s hedging gains versus performance in the underlying business and then presumably foreign currency rates hold where they are, that has benefit becomes a headwind as you analyze that. So, the underlying gross margin of the business probably being a little bit lower, than that [7.5%, 8%] [ph] the year quoting for this quarter?

Okay, well so let me start with the foreign currency hedge gains that were recognized in the quarter. We recognized, David, $28 million in cash flow hedge gains in the quarter compared to approximately $5 million in the prior year quarter. You know that’s a detail that we provide in our periodic disclosures. You’ll be able to track, you know, what’s getting recognized and what we expect to recognize over the next 12 months. That difference year-over-year, by itself about two points of improvement in the ratio, but that is offset by approximately 130 basis points related to higher access and obsolescence charges in the quarter compared to the prior year quarter. The higher charges you know, charges were driven by ongoing commercialization in new products as well as the effect of placing more inventories into distributor and hospital consignments and a product recall as well in the quarter that higher-level of charges in the quarter is expected to moderate going forward.

Got it. Okay. Thank you very much.

You’re welcome.

Thank you. The next question comes from Bill Plovanic from Canaccord. Please go ahead.

Great. Thanks. Good morning. Can you hear me okay?

We can Bill, good morning.

Good morning. So, actually just a point of clarification if I could. As you discuss divestitures, you’ve already divested the European assets and then as you look at what you know what you have two divest in Japan and then, you know, there’s a range for which you were you looking at in the US. I was just wondering if you could provide nominally the combined Biomet/Zimmer, you know, what was that on a nominal basis whether an exact or a range, it’s just to help us for modeling. Then, secondly, when you talked about closure in many you know, should we think late May or June 1 or May 1. How should we think about that in the model?

Sure. Well, first of all, I don’t want to at this stage because, you know, we haven’t closed the transaction or completed the divestitures even in Europe. Although, we have, obviously, signed definitive agreements, we have still yet to close. You know, that’s a detail, Bill, that were just going to hold off providing until the transaction closes but one we understand that will need to be provided once it does close and then your other…

Just for the closing day, should we - you’re talking about May. When in May should we…

Yeah. Well, I’ll just share with you the basis for some of the internal modeling that we’ve done and further guidance, you know, that we’ve provided, just a bit naked a little simpler for us; maybe for you as well the end of May.

Okay. Great. That’s all I had. Thank you.

Thank you. The next question comes from David Lewis from Morgan Stanley.

Good morning. I thought I’d come back to the 16 synergies for a second. So, you have a couple of dynamics. You’re obviously raising long-term synergy numbers around 20%, but the 16 number obviously is falling below a lot of the consensus expectations and you talked about a few issues FX, tax, and timing, but tax and FX seem largely accounted for. So, the biggest factor seems to be timing and I’m trying to figure out is this deal close timing or the realization of synergy timing because it feels like the latter, but could you give us a lot more detail on that second piece if it truly is the realization of synergy timing because it doesn’t seem like a four to six week delay in the deal would move the number in 2016 that dramatically. So it must be on the backend, but it’s hard to understand exactly what that is and if you could give us more detail that would be great, and a quick follow-up.

I should tell you, David, that it is deal close timing. You know, as you know, we’ve reiterated our expectations for synergies in the first 12 months following the closing of the transaction at $135 million. So, that’s not changed and then we’ve actually increased, as you said, the guidance for total synergies by years three to $350 million from $270 million. Now, it is the case that, that additional $80 million will come later, not in the first 12 months obviously, but it will come in years two and three following the closing of the transaction. In reference to an earlier question, I talked about the three things that have really changed relative to the earlier expectations. Europe, one is timing, one is the currency head win, the tax rate is the other thing that has changed. I will say and this is a reason we’ve provided detail in our scripted comments that when we look at some of the analyst models that are out there that it does seem as if in many cases the average share count is getting understated for 2016. I think that’s something to look at. Again, we’ve provided on this call very specific guidance on what we’re expecting to see in the average share account remembering that we’ve put the share repurchase program on hold. We’re going to be issuing another 32 million shares to consummate the transaction and then beyond that we’re going to continue to see an increase, you know, until such time that we put the share repurchase program back in place and in average shares associated with the employee equity incentive program.

Okay and then maybe just - may be a quick question on ‘15 guidance for a second. I know there was currency tailwinds and some other obsolescence and the inventory headwinds, but it does seem like there was 70 bips of underlying margin improvement and that particular margin for me, Jim, in the first quarter; dinner, why would that not help to offset some of the incremental Fx and tax pressures in ‘15? It looks like that would have, you know, maybe offset at least half the $0.10 or $0.15 incremental ‘15 headwind.

Well, again, it’s the $80 million of currency headwind in the quarter and that’s high margin revenue. So, while the hedging program is effective and, at least, partially offsetting the effect of that, it just doesn’t fully offset it, and some of this, as well, has to do with where, you know, what’s happening. Where there is very significant currency headwinds, for example, is in some of the emerging markets and in those markets while we do hedge, we don’t hedge to the same level because the cost of hedging is so expensive with respect to those currencies.

Okay but should the underlying margin performance, you know, if there was underlying improvement in the first quarter, should we expect that improvement to sustain itself throughout the remainder of the year or not?

Yes. Now, we’ll continue to see that through the remainder of that is reflected in the updated guidance that we provided.

Okay. Thank you very much.

Sure.

Julie, we have time for one additional question.

Okay. Thank you. The last question comes from Larry Biegelsen from Wells Fargo Securities. Please go ahead.

Hi guys. It’s actually Craig on for Larry. Thanks for squeezing us in.

Sure.

I just wanted to quickly ask about EPS growth beyond 2016, I know you provided guidance of mid-teens or higher in 2016 and then just wanted to know for the combined company what should we expect from EPS growth?

I'll just reference the longer term, what we have talked about in the past and continue to focus to put together our longer term strategic plans and that is to drive in the range of 8% to 10%growth in adjusted earnings per share over the long-term. Obviously with the combination and now the updated guidance that we provided on synergies in the near-term that growth rate is going to be higher but long-term as I said you know we've put together our five year plans, strategic plans, the management team is going t0o be focusing on what it need to do to drive that earnings growth in a range of 8% to 10%.

Okay thanks and then just as a follow-up the tax rate, you mentioned the tax rate increasing in 2016 and just want to see where that goes in 2017 and beyond. Can you get back down to what your original thoughts were on the combined tax rate?

That’s a very good question, there are a couple of things that we - there is a lot of tax planning that is already underway with respect to the combined - the anticipated closing of the transaction. And I will tell you that that has been more focused on what the combined enterprise can do to get access to the cash that’s going to be accumulating offshore and there are some things that we will be able to do that will enable us to access quite a bit of cash that’s going to be accumulating offshore something in the range of $3 billion to $4 billion overtime. And that obviously is going to provide the management team with some opportunity to do some things that could potentially drive leverage on the bottom-line including getting ahead of share repurchase program back in play at some point accelerating the debt repayments during the leverage ratio inline with something that is more inline with what you would expect to see for an investment grade credit. And then we will be pivoting to once the deal is closed some tax planning initiative that will focus on what the enterprise can do to drive down the effective tax rate overtime. We know that that’s going to involve among other things moving manufacturing source in some cases sourcing more of the demand that’s offshore from our offshore manufacturing facilities and do believe that that’s going to provide opportunity to bring that effective tax rate down.

Is that something that’s going to happen immediately after close? Can you start seeing the benefit?

Well the planning will certainly happen immediately, but the steps that it will take to actually realize the benefit will take more time, because particularly when you are talking about changing sourcing within our own network, we certainly have control of that but that takes time, those manufacturing transfers take time and then it take time to show up in the P&L to the extent that that inventory - the tax benefit will be recognized as inventory that’s getting sourced from new locations is getting so.

Okay. Thanks for taking the questions.

I would like to 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 second quarter conference call, which is scheduled for 8:00 AM on July 30, 2015. With that, I'll turn the call back to you, Julie.