Amgen 2002 Annual Report Download - page 64

Page 62
AMGEN 2002 ANNUAL REPORT
of the Company’s common stock of 50%, 50%, and 45%,
and 4) an expected life of the options of 3.9 years, 3.7 years,
and 3.4 years. These assumptions resulted in weighted-
average fair values of $16.66, $26.74, and $25.87 per share
for employee stock options granted in 2002, 2001, and
2000, respectively.
The Black-Scholes option valuation model was devel-
oped for use in estimating the fair value of traded options.
The Company’s employee stock options have characteristics
significantly different from those of traded options such as
extremely limited transferability and, in most cases, vest-
ing restrictions. In addition, the assumptions used in option
valuation models (see above) are highly subjective, partic-
ularly the expected stock price volatility of the underlying
stock. Because changes in these subjective input assump-
tions can materially affect the fair value estimate, in man-
agement’s opinion, existing valuation models do not provide
a reliable, single measure of the fair value of its employee
stock options. For purposes of pro forma disclosures, the esti-
mated fair values of the options are amortized over the
options’ vesting periods. See Note 1, “Summary of signif-
icant accounting policies — Employee stock option and
stock purchase plans” for a detailed computation of pro
forma net income and earnings per share.
Employee stock purchase plan
The Company has an employee stock purchase plan whereby,
in accordance with Section 423 of the Internal Revenue
Code, eligible employees may authorize payroll deductions
of up to 10% of their salary to purchase shares of the
Company’s common stock at the lower of 85% of the fair
market value of common stock on the first or last day of the
offering period. During the years ended December 31,
2002, 2001, and 2000, employees purchased 0.7 million,
0.6 million, and 1.3 million shares at prices of $41.09,
$47.97, and $30.33 per share, respectively. In addition,
during 2002, former Immunex employees purchased
approximately 46,200 shares at a price of $39.58 under an
Immunex stock purchase plan assumed by Amgen as a
result of the acquisition. The Immunex stock purchase plan
was terminated in October 2002. At December 31, 2002,
the Company had 15.3 million shares available for future
issuance under this plan.
Defined contribution plans
The Company has defined contribution plans covering sub-
stantially all employees in the United States and its pos-
sessions. Under these plans, the Company makes certain
amounts of matching contributions for those employees
who elect to contribute to the plans and makes additional
contributions based upon the compensation of eligible
employees regardless of whether or not the employees con-
tribute to the plans. As a result of the Immunex acquisi-
tion, the Company assumed Immunex’s defined contribution
plan. Commencing on July 16, 2002, the Company made
certain amounts of matching contributions for those employ-
ees who elected to contribute to the former Immunex plan.
In addition, the Company has other defined contribution
plans covering certain employees of the Company and
employees of its foreign affiliates. The Company’s expense
for its defined contribution plans totaled $55.6 million,
$45.2 million, and $42.6 million for the years ended
December 31, 2002, 2001, and 2000, respectively.
Note 8. Debt
Commercial paper program and line of credit
The Company has a commercial paper program which pro-
vides for unsecured, short-term borrowings up to an aggre-
gate of $200 million. At 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%. Commercial
paper with a face amount of $100 million and with effec-
tive interest rates averaging 1.9% was outstanding at
December 31, 2001.
The Company has an unsecured committed credit facil-
ity (the “credit facility”) with five participating banking
institutions that includes a commitment expiring on May
28, 2003 for up to $150 million of borrowings under a
revolving line of credit (the “revolving line commitment”).
This credit facility supports the Company’s commercial
paper program. As of December 31, 2002, $150 million was
available under the revolving line commitment for bor-
rowing. Borrowings under the revolving line commitment
bear interest at various rates which are a function of, at the
Company’s option, either the prime rate of a major bank,