Amgen 2000 Annual Report Download - page 32

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The following table sets forth the computation for basic and dilut-
ed earnings per share (in millions, except per share information):
Years ended December 31, 2000 1999 1998
Numerator for basic
and diluted earnings
per share–
net income $ 1,138.5 $ 1,096.4 $ 863.2
Denominator:
Denominator for
basic earnings per
share– weighted –
average shares 1,029.6 1,021.7 1,020.2
Effect of dilutive
securities–employee
stock options, restricted
stock and potential
stock issuances under
the employee stock
purchase plan 55.1 56.6 37.1
Denominator for diluted
earnings per share–
adjusted weighted–
average shares 1,084.7 1,078.3 1,057.3
Basic earnings per share $ 1.11 $ 1.07 $ 0.85
Diluted earnings per share $ 1.05 $ 1.02 $ 0.82
Options to purchase 10.6 million, 1.6 million and 3.0 million shares
with exercise prices greater than the average market prices of
common stock were outstanding at December 31, 2000, 1999
and 1998, respectively. These options were excluded from the
respective computations of diluted earnings per share because
their effect would be anti-dilutive.
Use of Estimates
The preparation of financial statements in conformity with gen-
erally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts report-
ed in the financial statements and accompanying notes. Actual
results may differ from those estimates.
Reclassification
Certain prior year amounts have been reclassified to conform to
the current year presentation.
Note 2
Related Party Transactions
The Company owns a 50% interest in Kirin-Amgen, Inc. (“Kirin-
Amgen”), a corporation formed in 1984 for the development and
commercialization of certain products based on advanced
biotechnology. Pursuant to the terms of agreements entered into
with Kirin-Amgen, the Company conducts certain research and
development activities on behalf of Kirin-Amgen and is paid for
such services at negotiated rates. During the years ended
December 31, 2000, 1999 and 1998, Amgen earned revenues
from Kirin-Amgen of $221.0 million, $138.5 million and $121.0
million, respectively, under such agreements, which are included
in “Corporate partner revenues” in the accompanying consolidat-
ed statements of operations.
In connection with its various agreements with Kirin-Amgen, the
Company has been granted sole and exclusive licenses for the
manufacture and sale of certain products in specified geographic
areas of the world. In return for such licenses, the Company pays
Kirin-Amgen royalties based on sales. During the years ended
December 31, 2000, 1999 and 1998, Kirin-Amgen earned royalties
from Amgen of $140.8 million, $128.1 million and $105.0 million,
respectively, under such agreements, which are included in “Cost of
sales” in the accompanying consolidated statements of operations.
At December 31, 2000, Amgen’s share of Kirin-Amgen’s undis-
tributed retained earnings was approximately $75.9 million.
Note 3
Debt
The Company has a commercial paper program which provides
for unsecured short-term borrowings up to an aggregate of $200
million. As of December 31, 2000, commercial paper with a face
amount of $100 million was outstanding. These borrowings had
maturities of less than two months and had effective interest rates
averaging 6.7%. Commercial paper with a face amount of $100
million and with effective interest rates averaging 6.0% was out-
standing at December 31, 1999.
Notes to Consolidated Financial Statements