Amgen 2002 Annual Report Download - page 49

AMGEN 2002 ANNUAL REPORT
Page 47
Notes to Consolidated Financial Statements
December 31, 2002
Note 1. Summary of significant
accounting policies
Business
Amgen Inc. (“Amgen” or the “Company”) is a global
biotechnology company that discovers, develops, manu-
factures, and markets human therapeutics based on advances
in cellular and molecular biology.
Principles of consolidation
The consolidated financial statements include the accounts
of the Company and its wholly-owned subsidiaries as well
as affiliated companies in which the Company has a con-
trolling financial interest and exercises control over their
operations (“majority controlled affiliates”). All material
intercompany transactions and balances have been eliminated
in consolidation. Investments in affiliated companies which
are 50% or less owned and where the Company exercises
significant influence over operations are accounted for us-
ing the equity method. All other equity investments are
accounted for under the cost method. The caption “(Earnings)
loss of affiliates, net” includes Amgen’s equity in the oper-
ating results of affiliated companies and the minority inter-
est others hold in the operating results of Amgen’s majority
controlled affiliates. On July 15, 2002, the Company com-
pleted its acquisition of Immunex Corporation (“Immunex”)
(see Note 3, “Immunex acquisition”). In accordance with
Statement of Financial Accounting Standards (“SFAS”) No.
141, “Business Combinations”, Amgen has included in its
results of operations for the year ended December 31, 2002,
the results of operations of Immunex from July 16, 2002.
Cash and cash equivalents
The Company considers cash equivalents to be only those
investments which are highly liquid, readily convertible
to cash, and which mature within three months from date
of purchase.
Available-for-sale securities
The Company considers its investment portfolio and mar-
ketable equity investments available-for-sale as defined
in SFAS No. 115, “Accounting for Certain Investments in
Debt and Equity Securities.” Accordingly, these invest-
ments are recorded at fair value (see Note 10, “Fair values
of financial instruments”). For the years ended December
31, 2002, 2001, and 2000, realized gains totaled $18.5
million, $13.3 million, and $32.4 million, respectively,
and realized losses totaled $14.4 million, $21.7 million, and
$2.5 million, respectively. The cost of securities sold is
based on the specific identification method. The fair val-
ues of available-for-sale investments by type of security,
contractual maturity, and classification in the balance sheets
are as follows (in millions):
Amortized Gross Gross Estimated
December 31, 2002 cost unrealized gains unrealized losses fair value
Type of security:
Corporate debt securities $1,708.7 $ 77.3 $(0.2) $1,785.8
U.S. Treasury securities and obligations of U.S. government agencies 924.8 17.7 —942.5
Other interest bearing securities 1,806.8 1.0 (1.4) 1,806.4
Total debt securities 4,440.3 96.0 (1.6) 4,534.7
Equity securities 68.9 60.6 (2.7) 126.8
$4,509.2 $156.6 $(4.3) $4,661.5
December 31, 2001
Type of security:
Corporate debt securities $1,207.7 $ 50.8 $(1.4) $1,257.1
U.S. Treasury securities and obligations of U.S. government agencies 601.3 12.1 (0.2) 613.2
Other interest bearing securities 697.6 1.1 (1.0) 697.7
Total debt securities 2,506.6 64.0 (2.6) 2,568.0
Equity securities 58.3 117.9 (0.3) 175.9
$2,564.9 $181.9 $(2.9) $2,743.9