Amgen 2002 Annual Report Download - page 60

Page 58
AMGEN 2002 ANNUAL REPORT
The Company does not provide for U.S. income taxes
on undistributed earnings of its foreign operations that are
intended to be permanently reinvested. At December 31,
2002, these earnings amounted to approximately $368 mil-
lion. If these earnings were repatriated to the United States,
the Company would be required to accrue and pay approx-
imately $128 million of additional taxes based on the cur-
rent tax rates in effect. For the year ended December 31,
2002, the Company’s foreign profits before income taxes were
approximately $360 million. For the years ended December
31, 2001 and 2000, foreign profits before income taxes
were not material.
The Company’s income tax returns are routinely audited
by the Internal Revenue Service and various state tax author-
ities. While disputes may arise with these tax authorities,
some of which may be significant, the Company believes
that adequate tax liabilities have been established for all open
audit years.
Income taxes paid during the years ended December 31,
2002, 2001, and 2000, totaled $438.4 million, $516.2
million, and $141.3 million, respectively.
Note 6. Stockholders’ equity
Stockholder Rights Agreement
On February 18, 1997, the Board of Directors of the
Company redeemed the rights under the Company’s former
common stock rights plan and declared a dividend of one
preferred share purchase right (a “Right”) for each then
outstanding share of common stock of the Company and
authorized the distribution of one Right with respect to each
subsequently issued share of common stock. The Rights
were distributed to stockholders of record on March 21,
1997. On December 12, 2000, the Board of Directors of the
Company amended and restated the preferred stock rights
plan governing the Rights (the “Amended and Restated
Rights Plan”) to, among other things: (i) provide that, as
a result of two-for-one splits of the Company’s common
stock effected in February and November 1999 (the “Stock
Splits”), each Right shall represent the right to purchase one
four-thousandth of a share of Series A Junior Participating
Preferred Stock (“Series A Preferred Stock”) of the Company
(which one four-thousandth gives effect to the Stock Splits);
(ii) increase the exercise price of each Right to $350.00
from $56.25 (as adjusted for the Stock Splits); (iii) extend
the term of the rights agreement to December 12, 2010
from March 21, 2007, and (iv) amend the definition of
“Outside Director”.
The reconciliation between the Company’s effective tax rate and the federal statutory rate is as follows (amounts
in millions):
2002 Tax rate for the years ended December 31,
Amount 2002 2001 2000
Statutory rate applied to income before income taxes $(239.6) 35.0% 35.0% 35.0%
Acquired IPR&D 1,047.1 (153.0)% ——
Foreign earnings including permanently reinvested amounts (106.3) 15.5% ——
Benefit of Puerto Rico operations, net of Puerto Rico income taxes (17.2) 2.5% (1.7)% (2.0)%
State taxes 44.5 (6.5)% 1.4% 1.7%
Utilization of tax credits, primarily research and experimentation (33.5) 4.9% (1.3)% (1.4)%
Other, net 12.4 (1.7)% 0.2% (1.3)%
$707.4 (103.3)% 33.6% 32.0%