Amgen 2002 Annual Report Download - page 27

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Page 25
AMGEN 2002 ANNUAL REPORT
Company’s medium-term note program with terms to be
determined by market conditions.
The Company’s sources of debt financing also include
a commercial paper program which provides for unsecured
short-term borrowings up to an aggregate face amount of
$200 million. As of December 31, 2002, commercial paper
with a face amount of $100 million was outstanding. These
borrowings had maturities of less than one month and had
effective interest rates averaging 1.4%. In addition, the
Company has an unsecured $150 million committed credit
facility with five participating banking institutions that
expires on May 28, 2003. This credit facility supports the
Company’s commercial paper program. As of December 31,
2002, no amounts were outstanding under this line of credit.
Contractual obligations
Contractual obligations represent future cash commitments
and liabilities under agreements with third parties, and
exclude contingent liabilities which the Company cannot
reasonably predict future payment. The following chart
represents the Company’s contractual obligations, aggregated
by type (in millions):
Payments due by period
Less than 2-3 4-5 More than
Contractual obligations Total 1 year Years Years 5 years
Medium and long-term notes and commercial paper $ 323.0 $123.0 $ — $100.0 $100.0
Convertible Notes
(1)
2,917.8 — 2,917.8 — —
Operating lease obligations 135.7 34.7 49.6 23.9 27.5
Unconditional purchase obligations
(2)
1,343.4 302.1 530.1 204.5 306.7
Total contractual obligations $4,719.9 $459.8 $3,497.5 $328.4 $434.2
(1)
Holders of the Convertible Notes may require the Company to purchase all or a portion of the notes on specific dates as early as March 1, 2005 at the original issuance price
plus accrued original issue discount (“accreted value”) through the purchase date. The amount above represents the accreted value on March 1, 2005. The accreted value
based on the 30-year contractual maturity is $3,950.0 million. In the event the Company is required to repurchase the notes, it may choose to pay the purchase price in
cash and/or shares of common stock.
(2)
Unconditional purchase obligations primarily relate to the Company’s long-term supply agreement with Boehringer Ingelheim Pharma KG (“BI Pharma”) for the manu-
facture of commercial quantities of ENBREL
®
. Amounts owed to BI Pharma are based on firm commitments for the purchase of production capacity for ENBREL
®
and
reflect certain estimates such as production run success rates and bulk drug yields achieved. The Company’s obligation to pay certain of these amounts may be reduced
based on certain future events.
The Company believes that existing funds, cash gen-
erated from operations, and existing sources of debt financ-
ing are adequate to satisfy its working capital and capital
expenditure requirements for the foreseeable future, as well
as to support its stock repurchase program (see “Financial
Outlook — Liquidity and capital resources”). However, the
Company may raise additional capital from time to time.