Amgen 2000 Annual Report Download - page 40

Note 10
Segment Information
Enterprise-wide disclosures about revenues by product, revenues
and long-lived assets by geographic area and revenues from
major customers are presented below.
Revenues
Revenues consisted of the following (in millions):
Years ended December 31, 2000 1999 1998
EPOGEN®$ 1,962.9 $ 1,759.1 $ 1,382.0
NEUPOGEN®1,223.7 1,256.6 1,116.6
Other product sales 15.6 27.1 15.8
Total product sales 3,202.2 3,042.8 2,514.4
Other revenues 427.2 297.3 203.8
Total revenues $ 3,629.4 $ 3,340.1 $ 2,718.2
Geographic Information
The Company sells NEUPOGEN®through its foreign affiliates in
countries of the European Union, Canada and Australia.
Information regarding revenues and long-lived assets (consisting
of property, plant and equipment) attributable to the United States
and to all foreign countries collectively is stated below. The
geographic classification of product sales was based upon the
location of the customer. The geographic classification of all other
revenues was based upon the domicile of the entity from which
the revenues were earned. Information is as follows (in millions):
Years ended December 31, 2000 1999 1998
Revenues:
United States and
possessions $ 3,343.0 $ 3,024.5 $ 2,441.6
Foreign countries 286.4 315.6 276.6
Total revenues $ 3,629.4 $ 3,340.1 $ 2,718.2
December 31, 2000 1999 1998
Long-lived assets:
United States and
possessions $ 1,706.5 $ 1,475.7 $ 1,360.8
Foreign countries 75.0 77.9 89.4
Total long-lived
assets $ 1,781.5 $ 1,553.6 $ 1,450.2
Major Customers
Amgen uses wholesale distributors of pharmaceutical products as
the principal means of distributing the Company’s products to
clinics, hospitals and pharmacies. The Company monitors the
financial condition of its larger distributors and limits its credit
exposure by setting appropriate credit limits and requiring col-
lateral from certain customers. Sales to two large wholesalers
accounted for more than 10% of the total revenues for the years
ended December 31, 2000, 1999 and 1998. Sales to one whole-
saler were $1,233.4 million, $1,078.0 million and $856.2 million for
the years ended December 31, 2000, 1999 and 1998, respec-
tively. Sales to another wholesaler were $445.2 million, $438.2
million and $366.5 million for the years ended December 31,
2000, 1999 and 1998, respectively. At December 31, 2000 and
1999, amounts due from four large wholesalers accounted for
51% and 59%, respectively, of gross trade receivables.
Note 11
Business Combination
On December 14, 2000, Amgen acquired Kinetix Pharmaceuticals,
Inc. (“Kinetix”), a privately held company with expertise in the dis-
covery of small molecules in the field of protein kinase inhibition.
Amgen acquired all the outstanding shares of Kinetix common
stock in a tax-free exchange for 2.6 million shares of Amgen com-
mon stock. The acquisition has been accounted for under the
purchase method of accounting, and accordingly, the operating
results of Kinetix are included in the accompanying consolidated
financial statements starting from December 14, 2000. The acqui-
sition was valued at $172.2 million, including $1.0 million of related
acquisition costs and $6.5 million of Amgen restricted common
stock issued in exchange for Kinetix restricted common stock held
by employees retained from Kinetix. The $6.5 million will be recog-
nized as compensation expense over the vesting period of the
restricted common stock. The preliminary assignment of the pur-
chase price among identifiable tangible and intangible assets and
liabilities of Kinetix was based upon an analysis of their fair values.
The excess of the purchase price over the fair values of assets and
liabilities acquired of $103.3 million was allocated to goodwill and
will be amortized on a straight-line basis over a 15 year period.
The assets acquired included in-process research and develop-
ment. The value assigned to this asset was determined by an
analysis of data concerning four substantive in-process research
projects. The values of these research projects were determined
based on analyses of cash flows to be generated by the products
that are expected to result from the in-process projects. These
cash flows were estimated by forecasting total revenues expect-
ed from these products and then deducting appropriate operating
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Notes to Consolidated Financial Statements