Amgen 2002 Annual Report Download - page 26

Page 24
AMGEN 2002 ANNUAL REPORT
close of the Immunex acquisition. Also as a result of the
acquisition, the Company received:
•cash and investments acquired from Immunex of approx-
imately $940 million
•proceeds from the sale of the Leukine
®
business to Schering
AG Germany (“Schering”) of approximately $390 million
Capital expenditures totaled $658.5 million in 2002
compared with $441.8 million in 2001. The increase in
capital expenditures in 2002 resulted primarily from cap-
ital expenditures related to the Puerto Rico manufacturing
expansion, the Seattle inflammation research headquarters,
and the Rhode Island manufacturing facilities.
The Company receives cash from the exercise of
employee stock options and proceeds from the sale of stock
by Amgen pursuant to the employee stock purchase plan.
Employee stock option exercises and proceeds from the sale
of stock by Amgen pursuant to the employee stock purchase
plans provided $427.8 million and $277.7 million of cash
in 2002 and 2001, respectively. Proceeds from the exercise
of employee stock options will vary from period to period
based upon, among other factors, fluctuations in the mar-
ket value of the Company’s stock relative to the exercise price
of such options.
The Company has a stock repurchase program pri-
marily to reduce the dilutive effect of its employee stock
option and stock purchase plans. In 2002, the Company
repurchased 28.0 million shares of its common stock at a
total cost of $1,420.4 million. In 2001, the Company repur-
chased 12.7 million shares of its common stock at a total
cost of $737.5 million. Stock repurchased in 2002 includes
11.3 million shares of common stock repurchased simul-
taneously with the issuance of the 30-year, zero-coupon
senior convertible notes (the “Convertible Notes”, discussed
below) at a total cost of $650 million. In June 2002, the
Board of Directors authorized the Company to repurchase
up to an additional $2.0 billion of common stock through
June 30, 2004. At the time of the additional authori-
zation, the Company had approximately $257.1 mil-
lion remaining under the previous authorized stock
repurchase program. The amount the Company spends
on and the number of shares repurchased varies based
on a variety of factors, including the stock price and
blackout periods in which the Company is restricted
from repurchasing shares. As of December 31, 2002,
$1,842.1 million was available for stock repurchases
through June 30, 2004.
Debt financing
In March 2002, the Company issued $3.95 billion in aggre-
gate face amount at maturity of Convertible Notes with a
yield to maturity of 1.125%. The gross proceeds from the
offering were approximately $2.82 billion. The original
issue discount of $1.13 billion is being accreted to inter-
est expense over the life of the Convertible Notes using the
effective interest method. Debt issuance costs were approx-
imately $56.5 million and are
being amortized on a straight-
line basis over the life of the
notes. The holders of the
Convertible Notes may require
the Company to purchase all or
a portion of their notes on
March 1, 2005, March 1, 2007,
March 1, 2012, and March 1,
2017 at a price equal to the
original issuance price plus the
accrued original issue discount
to the purchase dates. In such
event, the Company may choose
to pay the purchase price in
cash and/or shares of common stock (see Note 8, “Debt —
Convertible notes” to the Consolidated Financial Statements).
To provide for financial flexibility and increased liq-
uidity, the Company has established several other sources
of debt financing. As of December 31, 2002, the Company
had $200 million of unsecured long-term debt securities out-
standing. These unsecured long-term debt securities con-
sisted of: 1) $100 million of debt securities that bear interest
at a fixed rate of 6.5% and mature in 2007 under a $500
million debt shelf registration (the “Shelf”), and 2) $100
million of debt securities that bear interest at a fixed rate
of 8.1% and mature in 2097. In addition, the Company has
$23 million of debt securities that bear interest at a fixed
rate of 6.2% and mature in 2003, which are classified as cur-
rent liabilities. The Company’s outstanding long-term debt
is rated A2 by Moody’s and A+ by Standard & Poor’s. Under
the Shelf, all of the remaining $400 million of debt secu-
rities available for issuance may be offered under the
Total Assets
($ in millions)
2002
2001
2000
1999
1998
98 99 00 01 02
$24,456.3
6,443.1
5,399.6
4,077.6
3,672.2