Amgen 2012 Annual Report Download - page 75

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impact of this settlement in the first quarter of 2013. We expect the settlement to result in a tax benefit of approximately $185
million.
The decrease in our effective tax rate for 2011 was due primarily to the foreign tax credits associated with the Puerto Rico
excise tax described below offset partially by the effect of the non-deductible U.S. healthcare reform federal excise fee in 2011,
the non-deductible portion of the legal settlement reached in principle in 2011 and the favorable resolution in 2010 of certain prior
years' non-routine transfer pricing matters with tax authorities.
Commencing January 1, 2011, Puerto Rico imposes a temporary excise tax on the purchase of goods and services from a
related manufacturer in Puerto Rico. The excise tax is imposed on the gross intercompany purchase price of the goods and services
and is effective for a six-year period beginning in 2011, with the excise tax rate declining in each year (4% in 2011, 3.75% in
2012, 2.75% in 2013, 2.5% in 2014, 2.25% in 2015 and 1% in 2016). In February 2013, the Puerto Rico government proposed an
amendment to the excise tax legislation which, if approved, would increase the excise tax rate to 4% effective July 1, 2013 through
2017. We account for the excise tax as a manufacturing cost that is capitalized in inventory and expensed in cost of sales when
the related products are sold. For U.S. income tax purposes, the excise tax results in foreign tax credits that are generally recognized
in our provision for income taxes in the year in which the excise tax is incurred. The effective tax rates for 2012 and 2011 would
have been approximately 18.7% and 18.0%, respectively, without the impact of the tax credits associated with the Puerto Rico
excise tax.
As permitted under U.S. GAAP, we do not provide for U.S. income taxes on undistributed earnings of our foreign operations
that are intended to be invested indefinitely outside the United States.
See Summary of Critical Accounting Policies — Income taxes and Note 4, Income taxes, to the Consolidated Financial
Statements for further discussion.
Financial Condition, Liquidity and Capital Resources
Selected financial data was as follows as of December 31, 2012 and 2011 (in millions):
2012 2011
Cash, cash equivalents and marketable securities $ 24,061 $ 20,641
Total assets 54,298 48,871
Current portion of long-term debt 2,495 84
Long-term debt 24,034 21,344
Stockholders’ equity 19,060 19,029
The Company intends to continue to return capital to stockholders through share repurchases and the payment of cash
dividends, reflecting our confidence in the future cash flows of our business. The amount we spend, the number of shares repurchased
and the timing of such repurchases will vary based on a number of factors, including the stock price, the availability of financing
on acceptable terms, the amount and timing of dividend payments and blackout periods in which we are restricted from repurchasing
shares; and the manner of purchases may include private block purchases, tender offers, and market transactions. Whether and
when we declare dividends or repurchase stock, the size of any dividend and the amount of stock we repurchase could be affected
by a number of additional factors. (See Item 1A. Risk Factors — There can be no assurance that we will continue to declare cash
dividends or repurchase stock). During 2011, we repurchased a total of 144 million shares of our common stock at an aggregate
cost of $8.3 billion. In October 2011, we announced our intent to accelerate our repurchase program and that our Board of Directors
had authorized an increase in our stock repurchase program to $10 billion. Subsequent to this authorization through December
31, 2011, we repurchased 83 million shares of our common stock at an aggregate cost of $5.0 billion. During 2012, we repurchased
62 million shares of our common stock at an aggregate cost of $4.7 billion. This brings the total of shares repurchased under this
approved $10 billion authorization to 146 million at a total cost of $9.7 billion at an average cost of $66.37 per share. In December
2012, the Board of Directors approved an increase in the stock repurchase authorization by $2.0 billion, and as of December 31,
2012, $2.3 billion remained available under this stock repurchase program, which is expected to cover our share repurchase activity
into 2014.
In February 2013, our 0.375% 2013 Convertible Notes matured/converted, and accordingly, the $2.5 billion principal amount
was settled in cash. We also elected to pay the note holders who converted their notes $99 million of cash for the excess conversion
value, as allowed by the original terms of the notes, which was offset by the receipt of the same amount of cash from the counterparty
to the related convertible note hedge. See Note 14, Financing arrangements, to the Consolidated Financial Statements for a
discussion of these convertible notes.