Amgen 2011 Annual Report Download - page 167

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Our derivative contracts that were in liability positions as of December 31, 2011, contain certain credit risk
related contingent provisions that would be triggered if (i) we were to undergo a change in control and (ii) our or
the surviving entity’s creditworthiness deteriorates, which is generally defined as having either a credit rating that
is below investment grade or a materially weaker creditworthiness after the change in control. If these events
were to occur, the counterparties would have the right, but not the obligation, to close the contracts under early-
termination provisions. In such circumstances, the counterparties could request immediate settlement of these
contracts for amounts that approximate the then current fair values of the contracts.
The cash flow effects of our derivatives contracts for the three years ended December 31, 2011, are included
within Net cash provided by operating activities in the Consolidated Statements of Cash Flows.
18. Contingencies and commitments
Contingencies
In the ordinary course of business, we are involved in various legal proceedings and other matters, including
those discussed in this Note, that are complex in nature and have outcomes that are difficult to predict.
We record accruals for loss contingencies to the extent that we conclude that it is probable that a liability
has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly
basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount
of the liability that has been accrued previously. As more fully described below, in the three months ended
September 30, 2011, excluding fees paid to our external counsel, the Company recorded a $780 million legal
settlement charge associated with the proposed settlement of the allegations arising out of the previously
disclosed federal civil and criminal investigations pending in the U.S. Attorney’s Offices for the Eastern District
of New York and the Western District of Washington. The charge is included in Other operating expenses in the
Consolidated Statements of Income.
Our legal proceedings range from cases brought by a single plaintiff to a class action with thousands of
putative class members. These legal proceedings, as well as other matters, involve various aspects of our
business and a variety of claims (including but not limited to patent infringement, marketing, pricing and trade
practices and securities law), some of which present novel factual allegations and/or unique legal theories.
Except for the proposed settlement of the litigation referenced above, in each of the matters described in this
filing, plaintiffs seek an award of a not-yet-quantified amount of damages or an amount that is not material. In
addition, a number of the matters pending against us are at very early stages of the legal process (which in
complex proceedings of the sort faced by us often extend for several years). As a result, some pending matters
have not yet progressed sufficiently through discovery and/or development of important factual information and
legal issues to enable us to estimate a range of possible loss, if any. While it is not possible to accurately predict
or determine the eventual outcomes of these items, an adverse determination in one or more of these items
currently pending, including further adverse determinations associated with the pending investigations described
above, could have a material adverse effect on our consolidated results of operations, financial position or cash
flows.
Certain of our legal proceedings and other matters are discussed below:
Roche U.S. International Trade Commission Complaint
On April 11, 2006, Amgen filed a complaint with the U.S. International Trade Commission (ITC) in
Washington D.C. requesting that the ITC institute an investigation of the importation of pegylated erythropoietin
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