ITEM 8.01 OTHER EVENTS

As previously disclosed, in 2010 we received a subpoena from the United States Department of Justice (DOJ) related to the sales and marketing of the OtisKnee device. The subpoena concerns allegations of violations of Federal laws related to sales of a device not cleared by the United States Food and Drug Administration. We recently entered into discussion with the DOJ regarding the potential settlement of this matter, and on May 31, 2012 we offered $33 million to the DOJ. During the second quarter of 2012 we will record a non-tax deductible charge of $33 million representing our best estimate of the minimum of the range of probable loss to resolve this matter. There can be no assurance that we will reach a consensual resolution, when such a resolution would occur, or what the final terms of any such resolution may be.
The charge is expected to reduce our reported diluted net earnings per share by approximately $0.09 for the second quarter of 2012 and will be excluded from our adjusted diluted net earnings per share.

FORWARD LOOKING STATEMENTS

Certain statements above may contain information that includes or is based on forward-looking statements within the meaning of the federal securities law that are subject to various risks and uncertainties that could cause the Company's actual results to differ materially from those expressed or implied in such statements. Such factors include, but are not limited to: weakening of economic conditions that could adversely affect the level of demand for the Company's products; pricing pressures generally, including cost-containment measures that could adversely affect the price of or demand for the Company's products; changes in foreign exchange markets; legislative and regulatory actions; unanticipated issues arising in connection with clinical studies and otherwise that affect U.S. Food and Drug Administration approval of new products; changes in reimbursement levels from third-party payors; a significant increase in product liability claims; resolution of tax audits; changes in financial markets; changes in the competitive environment; the Company's ability to integrate acquisitions; and the Company's ability to realize anticipated cost savings as a result of workforce reductions and other restructuring activities. Additional information concerning these and other factors are contained in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.