Amgen 2010 Annual Report Download - page 14

The following adjustments are presented net of their related per share tax impact of
$0.33, $0.29, $0.36, $0.44, and $0.26 for 2010, 2009, 2008, 2007, and 2006, respectively.
(a) To exclude the ongoing, non-cash amortization of acquired product technology rights,
primarily ENBREL, related to the Immunex Corporation (Immunex) acquisition in 2002.
(b) To exclude the incremental non-cash interest expense resulting from a change in the
accounting for our convertible notes effective January 1, 2009.
(c) To exclude the net tax benefi t recognized as the result of resolving certain transfer pricing
issues with tax authorities for prior periods.
(d) To exclude stock option expense.
(e) To exclude an asset impairment charge associated with the transaction announced in
January 2011 involving our manufacturing operation in Fremont, California.
(f) To exclude the ongoing, non-cash amortization of the R&D technology intangible assets
acquired with alternative future uses with the 2006 acquisitions of Abgenix, Inc. (Abgenix)
and Avidia, Inc. (Avidia).
(g) To exclude the tax benefi t related principally to certain prior-period charges excluded
from “Adjusted” earnings.
(h) To exclude restructuring and related cost savings initiative charges.
(i) To exclude loss accruals for legal settlements.
(j) To exclude the net tax benefi t resulting from adjustments to previously established
deferred taxes, related primarily to prior acquisitions and stock option expense, due
to changes in California tax law effective in 2011.
(k) To exclude the write-off of inventory resulting from, in 2008, a strategic decision to
change manufacturing processes and, in 2007, changing regulatory and reimbursement
environments.
(l) To exclude the non-cash expense associated with writing off the acquired in-process
R&D related to the acquisitions of Alantos Pharmaceutical Holding, Inc. (Alantos) and
Ilypsa, Inc. (Ilypsa) in 2007, and Abgenix and Avidia in 2006.
(m) To exclude merger-related expenses incurred due to the acquisitions of Alantos and
Ilypsa in 2007, Abgenix and Avidia in 2006, and Tularik Inc. in 2004. These expenses
related primarily to incremental costs associated with retention and integration.
(n) To exclude the write-off of the cost of a semi-completed manufacturing asset that will
not be used due to a change in manufacturing strategy.
(o) To exclude the impairment of a non-ENBREL-related intangible asset previously acquired
in the Immunex acquisition.
Results for the years ended December 31, 2010 2009 2008 2007 2006
GAAP R&D expense $2,894 $2,864 $3,030 $3,266 $3,366
Adjustments to GAAP R&D expense:
Amortization of acquired intangible assets, R&D technology rights (70)(f) (70)(f) (70)(f) (71)(f ) (48)(f)
Stock option expense (51)(d) (49)(d) (46)(d) (83)(d) (104)(d)
Restructuring and related costs
— (6)(h) (3)(h) (19)(h) —
Other merger-related expenses — — (1)(m) (29)(m) (23)(m)
“Adjusted” R&D expense $2,773 $2,739 $2,910 $3,064 $3,191
Reconciliation of GAAP R&D Expense to “Adjusted” R&D (Unaudited) ($ in millions)
Reconciliation of GAAP Earnings Per Share to “Adjusted” Earnings Per Share (Unaudited)
Results for the years ended December 31, 2010 2009 2008 2007 2006
GAAP earnings per share (diluted) $4.79 $4.51 $3.77 $2.74 $2.36
Adjustments to GAAP earnings per share*:
Amortization of acquired intangible assets,
product technology rights 0.19(a) 0.18(a) 0.17(a) 0.16(a) 0.17(a)
Incremental non-cash interest expense 0.17(b) 0.15(b) 0.13(b) 0.11(b) 0.12(b)
Tax settlement (0.15)(c) (0.09)(c)
— (0.08)(c) —
Stock option expense 0.09(d) 0.08(d) 0.07(d) 0.12(d) 0.14(d)
Asset impairment charge 0.08(e) — — — —
Amortization of acquired intangible assets,
research and development (R&D) technology rights 0.05(f) 0.04(f) 0.04(f) 0.04(f) 0.03(f)
Tax benefi t resulting from prior-period charges (0.01)(g) (0.02)(g) — — —
Restructuring and related costs — 0.05(h) 0.10(h) 0.51(h) —
Legal settlements — 0.03(i) 0.21(i) 0.02(i) —
California tax law change — (0.02)(j) — — —
Write-off of inventory — — 0.06(k) 0.08(k) —
Write-off of acquired in-process R&D — — — 0.53(l) 1.03(l)
Other merger-related expenses — — — 0.02(m) 0.02(m)
Write-off of manufacturing asset — — — 0.02(n) —
Impairment of non-ENBREL-related intangible asset — — — — 0.03(o)
Other — — — 0.02 —
“Adjusted” earnings per share (diluted) $5.21 $4.91 $4.55 $4.29 $3.90
Forward-looking statements: This Annual Report contains forward-looking statements that are based on Amgen management’s current expectations and beliefs and are subject to a number
of risks, uncertainties, and assumptions that could cause actual results to differ materially from those described. All statements, other than statements of historical fact, are statements that
could be deemed forward-looking statements, including: plans for the growth of our business and other fi nancial metrics; expected clinical or regulatory results or practices; development of
Amgen’s product candidates, including anticipated regulatory fi lings; and planned international expansion. Forward-looking statements involve signifi cant risks and uncertainties, including
those more fully described in the Risk Factors found in the Form 10-K contained within this Annual Report and the most recent periodic reports on Form 10-Q and Form 8-K fi led by Amgen
with the U.S. Securities and Exchange Commission, and actual results may vary materially. Except where otherwise indicated, Amgen is providing this information as of February 25, 2011, and
does not undertake any obligation to update any forward-looking statements contained in this Annual Report as a result of new information, future events, or otherwise.
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