Amgen 2012 Annual Report Download - page 74

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The increase in SG&A expense for 2012 was driven primarily by higher ENBREL profit share expenses of $207 million as
well as international expansion of $87 million, offset partially by lower U.S. healthcare reform federal excise fee expense of $106
million in 2012 compared with 2011, which includes a $61 million favorable adjustment related to the 2011 fee.
The increase in SG&A expense for 2011 was driven primarily by the U.S. healthcare reform estimated federal excise fee of
$151 million; higher ENBREL profit share expense of $104 million; increased expenses related to the launches of Prolia® and
XGEVA® and expansion of our international operations of $89 million; and the unfavorable impact of foreign exchange of $67
million.
For the years ended December 31, 2012, 2011 and 2010, the expenses associated with the ENBREL profit share were $1,495
million, $1,288 million and $1,184 million, respectively.
Other
Other operating expenses for 2012 included certain charges related to our cost savings initiatives of $175 million, which
includes severance and expenses associated with abandoning leased facilities, legal proceedings charges of $64 million and other
operating expenses of $56 million, which includes adjustments to our estimated contingent consideration liability related to a
prior-year business combination.
Other operating expenses for 2011 included primarily a legal settlement charge of $780 million and certain charges related
to cost savings initiatives, primarily severance, of $109 million.
In 2010, we recorded a $118 million asset impairment charge for our manufacturing operations located in Fremont, California,
associated with our efforts to optimize our network of manufacturing facilities and improve cost efficiencies.
See Note 18, Contingencies and commitments, to the Consolidated Financial Statements for further discussion of our 2011
legal settlement.
Non-operating expenses/income and provision for income taxes
Non-operating expenses/income and provisions for income taxes were as follows (dollar amounts in millions):
2012 2011 2010
Interest expense, net $ 1,053 $ 610 $ 604
Interest and other income, net $ 485 $ 448 $ 376
Provisions for income taxes $ 664 $ 467 $ 690
Effective tax rate 13.3% 11.3% 13.0%
Interest expense, net
Included in interest expense, net, for the years ended December 31, 2012, 2011 and 2010, is the impact of non-cash interest
expense of $140 million, $143 million and $266 million, respectively, on our convertible debt. The increase of interest expense
in 2012 was due primarily to a higher average debt balance.
Interest and other income, net
The increase in interest and other income, net, for 2012 was due primarily to higher interest income due to a higher average
balance of cash, cash equivalents and marketable securities offset partially by lower yields and lower net gains realized on
investments.
The increase in interest and other income, net, for 2011 was due primarily to higher net realized gains on sales of investments.
Income taxes
The increase in our effective tax rate for 2012 was due primarily to the unfavorable tax impact of changes in the jurisdictional
mix of income and expenses and the exclusion of the federal R&D tax credit in 2012, offset partially by the favorable resolution
of certain state tax matters related to prior years. Because the ATRA of 2012 was not enacted until 2013, certain provisions of the
Act which will retroactively benefit the Company's 2012 federal taxes, including the reinstatement of the R&D tax credit for 2012,
cannot be recognized in the Company's 2012 financial results and instead will be reflected in the company's 2013 financial results
for the first quarter. The tax benefit of the retroactive reinstatement of the 2012 R&D tax credit that will be recognized in the first
quarter of 2013 is approximately $65 million. Subsequent to December 31, 2012, we also settled the examination of our U.S. tax
returns with the Internal Revenue Service relating to years ended December 31, 2007, 2008, and 2009. We will recognize the tax