Amgen 2002 Annual Report Download - page 57

Page 55
AMGEN 2002 ANNUAL REPORT
Pro forma results of operations
The following unaudited pro forma information presents a
summary of the Company’s consolidated results of opera-
tions as if the Immunex acquisition had taken place at the
beginning of each period presented (in millions, except per
share information):
Year ended December 31, 2002 2001
Product sales $5,538.5 $4,470.6
Total revenues 6,078.2 5,002.5
Net income 1,486.9 953.1
Pro forma earnings per share:
Basic $ 1.16 $ 0.74
Diluted $ 1.12 $ 0.71
The pro forma net income and earnings per share for
each period exclude the acquired IPR&D charge noted
above. The pro forma information is not necessarily indica-
tive of results that would have occurred had the acquisition
been in effect for the periods presented or indicative of
results that may be achieved in the future.
The impact of the Leukine
®
sale noted above is reflected
in the Company’s purchase price allocation as of July 15,
2002. However, for antitrust reasons, information regard-
ing the results of operations attributable to Leukine
®
is
not reviewable by Amgen, and therefore, has not been
excluded from the pro forma results of operations presented
above. Leukine
®
sales from January 1, 2002 through July
15, 2002 were approximately $60 million, and in 2001
were $108.4 million.
Restructuring plans
In connection with the Immunex acquisition, the Company
initiated an integration plan to consolidate and restructure
certain functions and operations of the pre-acquisition
Immunex primarily consisting of the termination and relo-
cation of certain Immunex personnel, termination of cer-
tain duplicative and non-strategic Immunex R&D programs,
and consolidation of certain Immunex leased facilities.
These costs have been recognized as liabilities assumed in
the purchase business combination in accordance with EITF
Issue No. 95-3 “Recognition of Liabilities in Connection
with Purchase Business Combinations” and reflected as an
increase to goodwill. The following table summarizes the
liabilities established as a result of the acquisition and pay-
ments made through December 31, 2002 (in millions):
Restructuring Balance at
liability Payments 12/31/02
Employee related benefits $65.1 $(41.0) $24.1
Facility consolidation 31.2 (0.4) 30.8
Total $96.3 $(41.4) $54.9
Note 4. Other items, net
Other items, net in the accompanying consolidated state-
ments of operations consists of the following expense/
(income) items (in millions):
Years ended December 31, 2002 2001 2000
Termination of collaboration
agreements $(40.1) $203.1 $ —
Legal award, net (151.2) —(73.9)
Amgen Foundation
contribution 50.0 — 25.0
$(141.3) $203.1 $(48.9)
Termination of collaboration agreements
In 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 PHARMACEUTICALS INCOR-
PORATED (“Praecis”) and certain academic institutions.
These agreements were terminated primarily because the
related collaboration activities and/or the underlying tech-
nology no longer met the Company’s long-term research and
development objectives. These costs include $102.4 mil-
lion primarily with respect to amounts previously capital-
ized related to these agreements, and $100.7 million with
respect to amounts to be paid to third parties in connection
with the termination of these relationships. The amounts
previously capitalized were comprised of the following:
inventory associated with a product candidate that we
expected to commercialize — approximately $40 million,
receivable from a collaboration partner — approximately
$20 million, and equity investments, fixed assets and other
assets — approximately $42 million.