Amgen 2002 Annual Report Download - page 42

Page 40
AMGEN 2002 ANNUAL REPORT
•minimizing the diversion of management’s attention
from ongoing business concerns
•coordinating geographically separate organizations
In addition, even if we are able to integrate Immunex’s
operations successfully, this integration may not result in
the realization of the full benefits of the synergies, cost sav-
ings, or sales and growth opportunities that we expect or
that these benefits will be achieved within the anticipated
time frame. For example, the elimination of significant
duplicative costs may not be possible or may take longer
than anticipated and the benefits from the merger may be
offset by costs incurred in integrating the companies. We
cannot assure you that the integration of Immunex with us
will result in the realization of the full benefits anticipated
by us to result from the merger. Our failure to achieve these
benefits could have a material adverse effect on our results
of operations.
Quantitative and Qualitative Disclosures
About Market Risk
Interest income earned on the Company’s investment port-
folio is generally affected by changes in the general level
of U.S. interest rates. In 2001, the Company entered into
interest rate swap agreements on a portion of its available-
for-sale investment portfolio, effectively converting these
fixed income investments to variable income investments.
The Company’s short-term borrowings bear interest at
variable rates and therefore, changes in U.S. interest rates
affect interest expense incurred thereon. Changes in inter-
est rates do not affect interest expense incurred on the
Company’s medium and long-term notes and Convertible
Notes because they bear interest at fixed rates. The follow-
ing tables provide information about the Company’s finan-
cial instruments that are sensitive to changes in interest
rates. For the Company’s investment portfolio and debt
obligations, the tables present principal cash flows and
related weighted-average interest rates by expected matu-
rity dates. Additionally, the Company has assumed its avail-
able-for-sale debt securities, comprised primarily of corporate
debt instruments and treasury securities, are similar enough
to aggregate those securities for presentation purposes. For
the interest rate swaps, the tables present the notional
amount and weighted-average interest rates by contractual
maturity date. The notional amount is used to calculate the
contractual cash flows to be exchanged under the contract.
Guidelines and recommendations published
by various organizations can reduce the use of
our products.
Government agencies promulgate regulations and guide-
lines directly applicable to us and to our products. However,
professional societies, practice management groups, pri-
vate health/science foundations, and organizations involved
in various diseases from time to time may also publish
guidelines or recommendations to the health care and patient
communities. Recommendations of government agencies
or these other groups/organizations may relate to such
matters as usage, dosage, route of administration, and use
of concomitant therapies. Organizations like these have
in the past made recommendations about our products.
Recommendations or guidelines that are followed by patients
and health care providers could result in decreased use of
our products. In addition, the perception by the invest-
ment community or stockholders that recommendations
or guidelines will result in decreased use of our products
could adversely affect prevailing market prices for our
common stock.
We may not realize all of the anticipated benefits of
our merger with Immunex.
On July 15, 2002, we merged with Immunex Corporation.
The success of our merger with Immunex will depend, in
part, on our ability to realize the anticipated synergies, cost
savings, and growth opportunities from integrating the
businesses of Immunex with the businesses of Amgen. Our
success in realizing these benefits and the timing of this
realization depend upon the successful integration of the
operations of Immunex. The integration of two independent
companies is a complex, costly, and time-consuming process.
The difficulties of combining the operations of the companies
include, among others:
•consolidating research and development and
manufacturing operations
•retaining key employees
•consolidating corporate and administrative infrastructures
•coordinating sales and marketing functions
•preserving ours and Immunex’s research and
development, distribution, marketing, promotion,
and other important relationships