Amgen 2000 Annual Report Download - page 34

37
other reduced uncertainties, the Company reduced amounts pre-
viously provided for potential spillover liabilities by $49 million in the
third quarter of 1999 and $23 million in the fourth quarter of 1998.
Because the Arbitrator ruled that the Company was the success-
ful party in the arbitration, Johnson & Johnson was ordered to pay
to the Company all costs and expenses, including reasonable
attorneys’ fees, that the Company incurred in the arbitration as well
as one-half of the audit costs. On July 17, 2000, the Arbitrator
issued a final order awarding the Company approximately $78 mil-
lion in costs and expenses, including reasonable attorneys’ fees,
that the Company incurred in the arbitration as well as one-half of
the audit costs (the “Fee Award”). As a result, the Company
recorded a net $73.9 million legal award, which represents the Fee
Award reduced by minor amounts related to other miscellaneous
disputes with Johnson & Johnson, in the third quarter of 2000.
Amgen Foundation Contribution
During the fourth quarter of 2000, the Company contributed $25.0
million to the Amgen Foundation. This contribution will allow the
Amgen Foundation to increase its support of non-profit organ-
izations that focus on issues in health and medicine, science
education and other activities that strengthen local communities
over the next several years.
Note 5
Income Taxes
The provision for income taxes includes the following
(in millions):
Years ended December 31, 2000 1999 1998
Current provision:
Federal (including
U.S. possessions) $ 481.7 $ 422.8 $ 339.6
State 47.5 37.2 27.2
Total current provision 529.2 460.0 366.8
Deferred provision (benefit):
Federal (including
U.S. possessions) 9.6 5.3 (4.7)
State (3.0) 4.5 (0.9)
Total deferred provision
(benefit) 6.6 9.8 (5.6)
$ 535.8 $ 469.8 $ 361.2
Deferred income taxes reflect the net tax effects of net operating
loss and credit carryforwards and temporary differences between
the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Significant components of the Company’s deferred tax assets and
liabilities are as follows (in millions):
December 31, 2000 1999
Deferred tax assets:
Acquired net operating loss
and credit carryforwards $ 66.0 $ 64.3
Expenses capitalized for
tax purposes 58.9 27.9
Fixed assets 46.0 22.9
Expense accruals 32.9 84.0
Other 20.0 27.4
Total deferred tax assets 223.8 226.5
Valuation allowance (25.4) (46.0)
Net deferred tax assets 198.4 180.5
Deferred tax liabilities:
Purchase of technology rights (95.9) (78.1)
Marketable securities and
investments (62.6) (10.0)
Other (39.3) (13.9)
Total deferred tax liabilities (197.8) (102.0)
$ 0.6 $ 78.5
At December 31, 2000, the Company had operating loss carry-
forwards available to reduce future federal taxable income of
which $29.3 million expire in 2008, $84.0 million expire in 2009
and $16.8 million expire thereafter. These operating loss carry-
forwards relate to the acquisition of companies. Utilization of these
operating loss carryforwards is limited to approximately $26 million
in 2001, $23 million in 2002 and $16 million per year thereafter.
Notes to Consolidated Financial Statements