Amgen 2001 Annual Report Download - page 50

Note 13: Quarterly financial data (unaudited)
(in millions, except per share data):
2001 Quarter Ended Dec. 311Sept. 30 June 30 Mar. 31
Product sales $974.1 $879.6 $858.9 $798.4
Gross margin from product sales 821.6 776.9 760.5 709.0
Net income 163.0 329.9 321.9 304.9
Earnings per share:
Basic $ 0.16 $ 0.31 $ 0.31 $ 0.29
Diluted $ 0.15 $ 0.30 $ 0.30 $ 0.28
2000 Quarter Ended Dec. 312Sept. 303June 30 Mar. 314
Product sales $846.8 $851.0 $806.8 $697.6
Gross margin from product sales 735.3 741.5 705.1 611.9
Net income 210.8 358.9 302.6 266.2
Earnings per share:
Basic $ 0.20 $ 0.35 $ 0.29 $ 0.26
Diluted $ 0.19 $ 0.33 $ 0.28 $ 0.25
1During the fourth quarter of 2001, the Company recorded a charge of $203.1 million, primarily related to the costs of terminating collaboration agreements with various
third parties, including Praecis and certain academic institutions (see Note 4, “Other items, net – Termination of collaboration agreements”). In addition, Amgen recorded
a charge of $39.5 million, included in cost of sales, to write-off certain inventory deemed not recoverable (see Note 1, “Summary of significant accounting policies –
Inventories”). After applicable tax effects, the impact of these items on net income was $0.15 per share for the year ended December 31, 2001.
2During the fourth quarter of 2000, the Company recorded an after-tax charge of $30.1 million to write-off acquired in-process research and development related to the acqui-
sition of Kinetix (see Note 11, “Kinetix acquisition”). In addition, the Company made a contribution of $25 million to the Amgen Foundation (see Note 4, “Other items, net
– Amgen Foundation contribution”). After applicable tax effects, these amounts combined with the legal award discussed in item 3 below had no impact on net income for
the year ended December 31, 2000.
3During the third quarter of 2000, the Company recorded a net legal award of $73.9 million, which primarily represents an award for certain costs and expenses, including
attorney’s fees, associated with the spillover arbitration with Johnson & Johnson (see Note 4, “Other items, net – Legal award, net”).
4During the first quarter of 2000, sales were adversely impacted by Year 2000-related sales totaling $45 million. In addition, the Company believes sales were adversely
impacted by additional 1999 year-end stockpiling of EPOGEN®by dialysis providers and by wholesalers reducing their inventories of NEUPOGEN®.
AMGEN 2001 ANNUAL REPORT
48
Note 14: Subsequent event (unaudited)
On February 22, 2002, the Company announced that it
has agreed to issue $3.5 billion in aggregate face amount
of 30-year zero coupon senior notes (the “Convertible
Notes”) that are convertible into shares of the Company’s
common stock. The proceeds from the offering, net of
estimated issuance costs, are expected to be approxi-
mately $2.45 billion. The Company may raise up to an
additional $321 million upon exercise of an over-allot-
ment option that has been granted in connection with
the offering. The Company expects to use approximately
$650 million of the net proceeds to repurchase shares of
its common stock simultaneously with the issuance of
the Convertible Notes, with the remaining proceeds to
be used for general corporate purposes.
The terms of the Convertible Notes include a yield
to maturity of 1.125% and an initial conversion pre-
mium of 40%. Amgen may not call the Convertible
Notes for redemption until five years from the date of
issuance, after which they are redeemable by Amgen at
the accreted value. The holders of the Convertible Notes
will have the option to require the Company to purchase
their Convertible Notes at the accreted value on specific
dates in years three, five, ten, and fifteen. The Company
may choose to pay the redemption purchase price in cash
and/or shares of common stock. In addition, starting the
day after the fifth anniversary of issuance, the Company
will be obligated to make contingent interest payments
if the market price of the Convertible Notes exceeds
certain thresholds.
The issuance of the Convertible Notes is subject to
customary closing conditions and is expected to be com-
pleted by March 1, 2002.