Table
of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F- 49
Employee Stock Purchase Plan (ESPP)
In June 2015 our shareholders approved the 2015 ESPP. The 2015 ESPP, which became effective on July 1,
2015, replaced the Biogen Idec Inc. 1995 ESPP (1995 ESPP), which expired on June 30, 2015. The maximum
aggregate number of shares of our common stock that may be purchased under the 2015 ESPP is 6.2 million.
The following table summarizes our ESPP activity:
For the Years Ended December 31,
(In millions, except share amounts)
2017
2016
2015
Shares issued under the 2015 ESPP
167,000
190,000
78,000
Shares issued under the 1995 ESPP
—
—
98,000
Cash received under the 2015 ESPP
$
39.8
$
41.5 $
19.3
Cash received under the 1995 ESPP
$
—
$
— $
30.0
17. Income Taxes
Income Tax
Expense
Income before income tax provision and the income tax expense consist of the following:
For the Years Ended December 31,
(In millions)
2017
2016
2015
Income before income taxes (benefit):
Domestic
$
3,540.4
$
3,655.4 $
3,386.7
Foreign
1,588.4
1,277.6
1,380.6
Total
$
5,128.8
$
4,933.0 $
4,767.3
Income tax expense (benefit):
Current:
Federal
$
2,201.4
$
1,304.3 $
1,214.1
State
57.0
55.1
38.6
Foreign
108.6
52.9
54.5
Total
2,367.0
1,412.3
1,307.2
Deferred:
Federal
$
241.0
$
(125.6) $
(129.6)
State
9.9
(3.8)
(1.9)
Foreign
(159.2)
(45.6)
(14.1)
Total
91.7
(175.0)
(145.6)
Total income tax expense
$
2,458.7
$
1,237.3 $
1,161.6
Tax Reform
The 2017 Tax Act, which was signed into law on December 22, 2017, has resulted in significant changes to the
U.S. corporate income tax system. These changes include a federal statutory rate reduction from 35% to 21%, the
elimination or reduction of certain domestic deductions and credits and limitations on the deductibility of interest
expense and executive compensation. The 2017 Tax Act also transitions international taxation from a worldwide
system to a modified territorial system and includes base erosion prevention measures on non-U.S.
earnings, which
has the effect of subjecting certain earnings of our foreign subsidiaries to U.S. taxation as global intangible low-
taxed income (GILTI). These changes are effective beginning in 2018.
The 2017 Tax Act also includes a one-time mandatory deemed repatriation tax on accumulated foreign
subsidiaries' previously untaxed foreign earnings (the Transition Toll Tax).
Changes in tax rates and tax laws are accounted for in the period of enactment. Therefore, during the year
ended December 31, 2017, we recorded a charge totaling $1,173.6 million related to
our current estimate of the
provisions of the 2017 Tax Act.
Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F- 50
Transition Toll Tax
The 2017 Tax Act eliminates the deferral of U.S. income tax on the historical unrepatriated earnings by
imposing the Transition Toll Tax, which is a one-time mandatory deemed repatriation
tax on undistributed foreign
earnings. The Transition Toll Tax is assessed on the U.S. shareholder's share of the foreign corporation's
accumulated foreign earnings that have not previously been taxed. Earnings in the form of cash and cash
equivalents will be taxed at a rate of 15.5% and all other earnings will be taxed at a rate of 8.0%.
As of December 31, 2017, we have accrued income tax liabilities of $989.6 million under the Transition Toll Tax,
of which $78.3 million is expected to be paid within one year. The Transition Toll Tax will be paid over an eight-year
period, starting in 2018, and will not accrue interest.
At December 31, 2017, we considered none of our earnings to be permanently reinvested outside the U.S. and
have therefore recorded tax liabilities associated with an estimate of the total withholding taxes that may be a result
of our repatriation of earnings.
Effect on Deferred Tax Assets and Liabilities
and other Adjustments
Our deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these
temporary differences are expected to be realized or settled.
As our deferred tax assets exceed the balance of our deferred tax liabilities at the date of enactment, we have
recorded a tax expense of $184.0 million, reflecting the decrease in the U.S. corporate income tax rate and other
changes to U.S. tax law. It is our current policy to not recognize deferred taxes for basis differences expected to
reverse as GILTI is incurred and instead to account for any taxes assessed as period costs.
Status
of our Assessment
Our preliminary estimate of the Transition Toll Tax and the remeasurement of our deferred tax assets and
liabilities is subject to the finalization of management’s analysis related to certain matters, such as developing
interpretations of the provisions of the 2017 Tax Act, changes to certain estimates and amounts related to the
earnings and profits of certain subsidiaries and the filing of our tax returns. U.S.
Treasury regulations, administrative
interpretations or court decisions interpreting the 2017 Tax Act may require further adjustments and changes in our
estimates.
The final determination of the Transition Toll Tax and the remeasurement of our deferred assets and liabilities
will be completed as additional information becomes available, but no later than one year from the enactment of the
2017 Tax Act.
Article 20
Procedure of ZINBRYTA
As a result of the Article 20 Procedure of ZINBRYTA, we have recognized a net impairment charge on certain tax
assets reflected within income tax expense of $48.8 million. This charge reflects the write off of $142.6 million
related to prepaid taxes, which was partially offset by the recognition of an unrecorded deferred tax benefit of $93.8
million. For additional information on the Article 20 Procedure of ZINBRYTA and resulting
impairment of ZINBRYTA
related assets, please read Note 20, Collaborative and Other Relationships, to these consolidated financial
statements.