Income Taxes

9 Months Ended

Sep. 30, 2011

Income Taxes [Abstract]

Income Taxes

5. Income Taxes

The effective tax rate for the quarter ended September 30, 2011 was approximately 29% compared to approximately 30% for the same period in 2010. The effective tax rate for the nine months ended September 30, 2011 was approximately 42% compared to approximately 31% for the same period in 2010. The higher tax rate for the current year-to-date period reflected the discrete tax effect of a charge for legal settlements, primarily related to the Hernia Product Claims (see Note 8 of the notes to the condensed financial statements), which were incurred in a low tax jurisdiction. The effective tax rate for both prior year periods reflected the discrete tax effect of a charge of $5.6 million associated with a cash repatriation of approximately $62 million of earnings from operations in certain foreign jurisdictions as a result of tax legislation enacted in the third quarter of 2010. The $5.6 million charge was partially offset by the discrete tax effect of $4.2 million associated with certain tax positions being remeasured as a result of new information related to the U.S. Internal Revenue Service examinations of the tax years 2003 and 2004.

At September 30, 2011, the total amount of liability for unrecognized tax benefits related to federal, state and foreign taxes was $49.6 million (of which $47.5 million would impact the effective tax rate, if recognized) plus $7.7 million of accrued interest. At December 31, 2010, the liability for unrecognized tax benefits was $53.6 million plus $11.4 million of accrued interest. Depending upon open tax examinations and/or the expiration of applicable statutes of limitation, the company believes it is reasonably possible that the total amount of unrecognized tax benefits may decrease by up to $19.0 million within the next 12 months.