Amgen 2011 Annual Report Download - page 141

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Significant components of our deferred tax assets and liabilities are as follows as of December 31, 2011 and
2010 (in millions):
2011 2010
Deferred income tax assets:
Intercompany inventory related items .......................................... $ 387 $ 306
Expense accruals ........................................................... 751 626
Acquired net operating loss and credit carryforwards .............................. 192 147
Expenses capitalized for tax .................................................. 167 188
Stock-based compensation ................................................... 241 269
Deferred revenue .......................................................... 133 117
Other .................................................................... 72 72
Total deferred income tax assets ............................................ 1,943 1,725
Valuation allowance ........................................................ (126) (80)
Net deferred income tax assets .............................................. 1,817 1,645
Deferred income tax liabilities:
Acquired intangibles ........................................................ (832) (739)
Fixed assets ............................................................... (219) (181)
Unremitted foreign earnings .................................................. (61) (118)
Other .................................................................... (110) (142)
Total deferred income tax liabilities .......................................... (1,222) (1,180)
Total deferred income taxes, net .......................................... $ 595 $ 465
The valuation allowance for deferred tax assets increased by $46 million in 2011, due primarily to valuation
allowances established as part of the BioVex and Dun Laoghaire acquisitions and the Company’s expectation
that some state R&D credits will not be utilized, offset partially by the release of valuation allowance related to
the expiration of state investment credits. The valuation allowance for deferred tax assets decreased by $12
million in 2010, due primarily to the utilization and expiration of certain acquired net operating loss
carryforwards. Valuation allowances are provided when we believe our deferred tax assets are not recoverable
based on an assessment of estimated future taxable income that incorporates ongoing, prudent and feasible tax
planning strategies.
At December 31, 2011, we had $44 million of tax credit carryforwards available to reduce future federal
income taxes for which a full valuation allowance has been provided. In addition, we had $176 million of tax
credit carryforwards available to reduce future state income taxes and have provided a valuation allowance for
$67 million of those state tax credit carryforwards. The majority of the state tax credit carryforwards have no
expiry; the remainder expires between 2012 and 2025.
The reconciliation of the total gross amounts of UTBs (excluding interest, penalties, foreign tax credits and
the federal tax benefit of state taxes related to UTBs) for the years ended December 31, 2011, 2010 and 2009, is
as follows (in millions):
2011 2010 2009
Balance at beginning of year .............................................. $920 $1,140 $1,113
Additions based on tax positions related to the current year ...................... 283 305 302
Reductions for tax positions of prior years ................................... (7) (110) (215)
Settlements ............................................................ (221) (415) (60)
Balance at end of year ................................................... $975 $ 920 $1,140
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