INCOME TAXES

6 Months Ended

Jun. 30, 2012

INCOME TAXES

INCOME TAXES

4.INCOME TAXES

For the three and six months ended June 30, 2012, the effective tax rate was 25.9% and 26.7%, respectively, compared with 29.6% and 29.2% for the same periods in 2011. The decrease in the effective tax rate was primarily attributable to a change in the geographic earnings mix and to higher manufacturing incentives.

The Company’s gross reserve for uncertain tax positions related to foreign and domestic matters, including penalties and interest, as of June 30, 2012 and December 31, 2011, was $61.8 million and $37.9 million, respectively. The increase in the gross reserve for uncertain tax positions is due to a reassessment of the Company’s global tax positions, recorded in Other Liabilities, and is equally offset by an increase in other tax receivables, recorded in Other Assets.

Pursuant to the Amended and Restated Tax Matters Agreement dated December 18, 2009, Bristol-Myers Squibb Company (BMS), the Company’s former parent, maintains responsibility for all uncertain tax positions which may exist in the pre-initial public offering period or which may exist as a result of the initial public offering transaction. The Company has recorded a receivable from BMS for uncertain tax positions, including penalties and interest, of $8.0 million as of June 30, 2012. The Company believes that it has adequately provided for all uncertain tax positions. It is reasonably possible that new issues may be raised by tax authorities and that these issues may require increases in the balance of uncertain tax positions.