Amgen 2000 Annual Report Download - page 29

Note 1
Summary of Significant Accounting Policies
Business
Amgen Inc. (“Amgen” or the “Company”) is a global biotech-
nology company that discovers, develops, manufactures and
markets human therapeutics based on advances in cellular and
molecular biology.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries as well as affil-
iated companies in which the Company has a controlling financial
interest and exercises control over their operations (“majority
controlled affiliates”). All material intercompany transactions and
balances have been eliminated in consolidation. Investments in
affiliated companies which are 50% or less owned and where the
Company exercises significant influence over operations are
accounted for using the equity method. All other equity invest-
ments are accounted for under the cost method. The caption
“Loss of affiliates, net” includes Amgen’s equity in the operating
results of affiliated companies and the minority interest others hold
in the operating results of Amgen’s majority controlled affiliates.
Cash and Cash Equivalents
The Company considers cash equivalents to be only those invest-
ments which are highly liquid, readily convertible to cash and which
mature within three months from date of purchase. Under the
Company’s cash management system, the bank notifies the
Company daily of checks presented for payment against its primary
disbursement accounts. The Company transfers funds from short-
term investments to cover the checks presented for payment. This
system results in a book cash overdraft in the primary disbursement
accounts as a result of checks outstanding. The book overdraft,
which was reclassified to accounts payable, was $101.2 million and
$43.9 million at December 31, 2000 and 1999, respectively.
Available-for-Sale Securities
The Company considers its investment portfolio and marketable
equity investments available-for-sale as defined in Statement of
Financial Accounting Standards (“SFAS”) No. 115 and, accord-
ingly, these investments are recorded at fair value (see Note 9,
“Fair Values of Financial Instruments”). Realized gains totaled
$32.4 million, $2.8 million and $17.3 million for the years ended
December 31, 2000, 1999 and 1998, respectively. Realized loss-
es totaled $2.5 million, $6.6 million and $33.1 million for the years
ended December 31, 2000, 1999 and 1998, respectively. The
cost of securities sold is based on the specific identification
method. The fair value of available-for-sale investments by type of
security, contractual maturity and classification in the balance
sheets are as follows (in millions):
32
Notes to Consolidated Financial Statements
December 31, 2000
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
December 31, 2000
Type of security:
Corporate debt securities $ 1,054.7 $ 11.3 $ (1.4) $ 1,064.6
U.S. Treasury securities and obligations of
U.S. government agencies 663.6 5.9 — 669.5
Other interest bearing securities 215.8 0.4 (0.1) 216.1
Total debt securities 1,934.1 17.6 (1.5) 1,950.2
Equity securities 73.1 179.2 (7.0) 245.3
$ 2,007.2 $ 196.8 $ (8.5) $ 2,195.5
December 31, 1999
Type of security:
Corporate debt securities $ 963.8 $ 0.4 $ (10.8) $ 953.4
U.S. Treasury securities and obligations of
U.S. government agencies 209.9 — (1.6) 208.3
Other interest bearing securities 132.4 — (0.5) 131.9
Total debt securities 1,306.1 0.4 (12.9) 1,293.6
Equity securities 66.8 46.7 (8.9) 104.6
$ 1,372.9 $ 47.1 $ (21.8) $ 1,398.2