A combination cutting and spacer guide has a cutting block portion and a guide arm portion. The cutting block portion has a cutting guide slot and holes to receive pins or drills for mounting the combination cutting and spacer guide to the femur. The cutting guide portion also has a cutting guide slot defining the distal femoral resection plane. The guide arm portion has a planar femoral and tibial surfaces and an elongate slot between the surfaces. A shim has a shim arm with contact surfaces for contacting part of the guide arm and part of one of the bones of the knee and a mounting member connected to the shim arm. The shim arm mounting member is receivable in the elongate slot of the guide arm to mount the shim to the guide arm to adjust the level of the femoral resection plane.