Amgen 2009 Annual Report Download - page 141

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
the years ended December 31, 2009, 2008 and 2007, our total foreign income before income taxes was approx-
imately $3.1 billion, $2.6 billion and $2.4 billion, respectively. These earnings include income from
manufacturing operations in Puerto Rico under tax incentive grants that expire in 2020.
One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state
jurisdictions and certain foreign jurisdictions. Our income tax returns are routinely audited by the tax authorities
in those jurisdictions. Significant disputes may arise with these tax authorities involving issues of the timing and
amount of deductions, the use of tax credits and allocations of income among various tax jurisdictions because of
differing interpretations of tax laws and regulations. We are no longer subject to U.S. federal income tax
examinations for tax years ending on or before December 31, 2004 or to California state income tax examina-
tions for tax years ending on or before December 31, 2003.
Income taxes paid during the years ended December 31, 2009, 2008 and 2007, totaled $497 million, $673
million and $895 million, respectively.
6. Earnings per share
Basic earnings per share (“EPS”) is based upon the weighted-average number of our common shares out-
standing. Diluted EPS is based upon the weighted-average number of our common shares and dilutive potential
common shares outstanding. Potential common shares outstanding principally include stock options, restricted
stock units and other equity awards under our employee compensation plans and potential issuance of stock upon
the assumed conversion of our 2011 Convertible Notes, 2013 Convertible Notes and 2032 Modified Convertible
Notes, as discussed below, and upon the assumed exercise of our warrants using the treasury stock method
(collectively “dilutive securities”). The convertible note hedges purchased in connection with the issuance of our
2011 Convertible Notes and 2013 Convertible Notes are excluded from the calculation of diluted EPS as their
impact is always anti-dilutive. For further information regarding our convertible notes and warrants, see Note 16,
“Financing arrangements.”
Upon conversion of our 2011 Convertible Notes, 2013 Convertible Notes and 2032 Modified Convertible
Notes, the principal amount or accreted value would be settled in cash and the excess of the conversion value, as
defined, over the principal amount or accreted value may be settled in cash and/or shares of our common stock.
Therefore, only the shares of our common stock potentially issuable with respect to the excess of the notes’ con-
version value over their principal amount or accreted value, if any, are considered as dilutive potential common
shares for purposes of calculating diluted EPS. For the years ended December 31, 2009, 2008 and 2007, the con-
version values for our convertible notes were less than the related principal amounts or accreted value and,
accordingly, no shares were assumed to be issued for purposes of computing diluted EPS. For further information
regarding our convertible notes, see Note 16, “Financing arrangements.”
The following table sets forth the computation for basic and diluted EPS (in millions, except per share
information):
Years ended December 31,
2009 2008 2007
Income (Numerator):
Net income for basic and diluted EPS .................................... $4,605 $4,052 $3,078
Shares (Denominator):
Weighted-average shares for basic EPS ................................... 1,016 1,070 1,117
Effect of dilutive securities ............................................556
Weighted-average shares for diluted EPS ................................. 1,021 1,075 1,123
Basic EPS ............................................................ $ 4.53 $ 3.79 $ 2.76
Diluted EPS .......................................................... $ 4.51 $ 3.77 $ 2.74
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