Abraxis BioScience (ABII)

Provision for Income Taxes

At December 31, 2009, we were in a net deferred tax liability position. Management believes it is likely that a portion of the deferred tax assets will not be realized. Therefore, we recorded a valuation allowance of $131.4 million against ending deferred assets. For 2009, we reported an income tax benefit of $2.6 million on a pre-tax loss from continuing operations of $107.3 million.

At December 31, 2008, we were in a net deferred tax asset position. Management believes it is likely that a portion of the deferred tax assets will not be realized. Therefore, we recorded a valuation allowance of $103.6 million against ending deferred assets. For 2008, we reported an income tax benefit of $1.9 million on a pre-tax loss from continuing operations of $278.7 million.

At December 31, 2007, we were in a net deferred tax asset position. In the judgment of management, it is not likely that a portion of these assets will be realized. Therefore, we recorded a valuation allowance of $2.3 million against our deferred tax assets at December 31, 2007.

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Provision for Income Taxes

Our effective tax rate for the three months ended March 31, 2009 was approximately 0.3%. The rate is computed based on special state tax rules that were used to compute our taxable base on our gross receipts in certain states. The effective tax rate for the three months ended March 31, 2009 is different from the statutory rate primarily as a result of the application of a valuation allowance against the net income tax benefit for the year.

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Provision for Income Taxes

At December 31, 2008, we were in a net deferred tax asset position. Management believes it is likely that a portion of the deferred tax assets will not be realized. Therefore, we recorded a valuation allowance of $103.6 million against ending deferred assets. For 2008, we reported an income tax benefit of $1.9 million on a pre-tax loss from continuing operations of $278.7 million.

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At December 31, 2007, we were in a net deferred tax asset position. In the judgment of management, it is not likely that a portion of these assets will be realized. Therefore, we recorded a valuation allowance of $2.3 million against our deferred tax assets at December 31, 2007.

Prior to the second quarter of 2006, we maintained a valuation allowance against our net deferred tax assets, including net operating loss carryforwards, as it was not likely that they would be realized. In the second quarter of 2006, deferred income tax liabilities attributable to us resulted from the step up of certain assets in the 2006 Merger. These liabilities will reverse and create sources of taxable income in the future. Therefore, we eliminated the valuation allowance at the time of the 2006 Merger. The elimination of the valuation allowance had no effect on our combined statements of operations.

Provision for Income Taxes

Our effective tax rate for the nine months ended September 30, 2008 was approximately 0.2%. The rate is computed based on special state tax rules that were used to compute our taxable base on our gross receipts. We also took into consideration minimum tax requirements as part of our state tax expense computation. The effective tax rate for the nine months ended September 30, 2008 is different from the statutory rate primarily as a result of the application of a valuation allowance against the net income tax benefit for the year.

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Provision for Income Taxes

Our effective tax rate for the six months ended June 30, 2008 was approximately 0.07%. The rate is computed based on special state tax rules that were used to compute our taxable base on our gross receipts. We also took into consideration minimum tax requirements as part of our state tax expense computation. The effective tax rate for the six months ended June 30, 2008 is different from the statutory rate primarily as a result of the application of a valuation allowance against the net income tax benefit for the year.

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Provision for Income Taxes

Our effective tax rate for the three months ended March 31, 2008 was approximately 0.02%. The rate is computed based on special state tax rules that were used to computed our taxable base on our gross receipts. We also took into consideration minimum tax requirements as part of our state tax expense computation. The effective tax rate for the three months ended March 31, 2008 is different from the statutory rate primarily as a result of the application of a valuation allowance against the net income tax benefit for the year.

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Provision for Income Taxes

At December 31, 2007, we were in a net deferred tax asset position. In the judgment of management, it is not likely that a portion of these assets will be realized. Therefore, we recorded a valuation allowance of $2.3 million against our deferred tax assets at December 31, 2007. As we generated taxable income in 2006, a portion of the net operating losses incurred in 2007 could be carried back to offset that taxable income. Accordingly, we recorded an income tax benefit of $8.0 million for the year ended December 31, 2007.

Prior to the second quarter of 2006, we maintained a valuation allowance against our net deferred tax assets, including net operating loss carryforwards, as it was not likely that they would be realized. In the second quarter of 2006, deferred income tax liabilities attributable to us resulted from the step up of certain assets in the 2006 Merger. These liabilities will reverse and create sources of taxable income in the future. Therefore, we eliminated the valuation allowance at the time of the 2006 Merger. The elimination of the valuation allowance had no effect on our combined statements of operations.

Provision for Income Taxes

Provision for Income Taxes

Prior to the second quarter of 2006, we maintained a valuation allowance against our net deferred tax assets, including net operating loss carryforwards, as it was more likely than not that they would not be realized. In the second quarter of 2006, deferred income tax liabilities attributable to us resulted from the step up of certain assets in the 2006 Merger. These liabilities will reverse and create sources of taxable income in the future. Therefore, we eliminated the valuation allowance at the time of the 2006 Merger. The elimination of the valuation allowance had no effect on our combined statements of operations.

At September 30, 2007, we were once again in a net deferred tax asset position. In the judgment of management, it is more likely than not that a portion of these assets will not be realized. Therefore, we recorded a valuation allowance of $8.1 million against our deferred tax assets at September 30, 2007. As we generated taxable income in 2006, the net operating losses incurred in 2007 could be carried back to offset that taxable income. Accordingly, we recorded an income tax benefit of 24.3% in the nine-month period ended September 30, 2007; without the valuation allowance, the benefit would have been 41.2%.

Provision for Income Taxes

At December 31, 2005, we maintained a valuation allowance against our net deferred tax assets, including net operating loss carryforwards, as it was more likely than not that they would not be realized. Therefore, no income tax benefit was claimed for the book loss that was incurred in the year ending on that date. We incurred Alternative Minimum Tax in that year, resulting in an effective tax rate of (3.8)%.

In 2006, deferred income tax liabilities resulted from the step up of certain assets in the 2006 Merger. A portion of these deferred income tax liabilities were attributed to us. Therefore, we reversed the valuation allowance at the time of the 2006 Merger. The reversal of the valuation allowance had no effect on our 2006 combined statements of operations. We recorded an income tax benefit of $26.0 million, or 17.3% of our net loss before income taxes, resulting primarily from nondeductible amortization in that year relating to the $200 million upfront payment we received in June 2006.

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