Amgen 2002 Annual Report Download - page 67

Page 65
AMGEN 2002 ANNUAL REPORT
were $1,233.4 million and $445.2 million, respectively,
for the year ended December 31, 2000.
At December 31, 2002 and 2001, amounts due from
these three large wholesalers each exceeded 10% of gross
trade receivables, and accounted for 58% and 64%, respec-
tively, of gross trade receivables on a combined basis.
Note 10. Fair values of financial
instruments
The carrying amounts of cash, cash equivalents, marketable
securities, and marketable equity investments approxi-
mated their fair values. Fair values of cash equivalents, mar-
ketable securities, and marketable equity investments are
based on quoted market prices.
The carrying amount of commercial paper approxi-
mated its fair value at December 31, 2002 and 2001. The
fair values of the medium and long-term notes at December
31, 2002 and 2001 were approximately $273.6 million
and $244.9 million, respectively. The fair value of the
Convertible Notes at December 31, 2002 was approxi-
mately $2,913.5 million. In May 2002, the Company reg-
istered the Convertible Notes with the Securities and
Exchange Commission allowing the notes to be traded on
the open market. The fair value of the notes was based on
the quoted market price at December 31, 2002. The fair
values for commercial paper, medium term notes, and long-
term notes were estimated based on quoted market rates for
instruments with similar terms and remaining maturities.
The carrying amounts of derivative instruments approx-
imated their fair values. At December 31, 2002 and 2001,
the fair values of derivative instruments were not material.
Note 11. Kinetix acquisition
On December 14, 2000, Amgen acquired all of the out-
standing shares of Kinetix Pharmaceuticals, Inc. (“Kinetix”),
a privately held company, in a tax-free exchange for 2.6
million shares of Amgen common stock. The acquisition
was accounted for under the purchase method of account-
ing, and accordingly, the operating results of Kinetix are
included in the accompanying consolidated financial state-
ments starting from December 15, 2000. The acquisition
was valued at $172.2 million, including $1.0 million of
related acquisition costs and $6.5 million of Amgen
restricted common stock issued in exchange for Kinetix
restricted common stock held by employees retained from
Kinetix. The $6.5 million is being recognized as compen-
sation expense over the vesting period of the restricted
common stock.
The purchase price was allocated among identifiable tan-
gible and intangible assets and liabilities of Kinetix based
upon their estimated fair values. A discounted, risk-adjusted
cash flow analysis was performed to value the technology
platform of Kinetix expected to generate future molecules
that may be developed into human therapeutics, as well as
in-process research projects. The analysis resulted in valu-
ing the acquired base technology at $36.6 million, which
was capitalized and will be amortized on a straight-line
basis over a 15 year period. Additionally, $30.1 million of
value was assigned to acquired IPR&D, and was expensed
on the acquisition date in accordance with GAAP. The
excess of the purchase price over the fair values of assets
and liabilities acquired of $103.3 million was allocated to
goodwill, which was amortized through December 31,
2001 using a 15 year useful life. Goodwill amortization
ceased beginning January 1, 2002 in accordance with
SFAS No. 142.
Note 12. Acquisition of certain rights
from Roche
In May 2002, the Company acquired certain rights related
to the commercialization of NEUPOGEN
®
and GRANU-
LOKINE
®
(Filgrastim) and pegfilgrastim in the European
Union (“EU”), Switzerland, and Norway from Roche. Amgen
paid $137.5 million for such rights. The purchase price of
the rights was capitalized and will be amortized on a straight-
line basis over the useful life of the rights acquired, estimated
to be 15 years. Prior to this acquisition, NEUPOGEN
®
and
GRANULOKINE
®
were commercialized in the EU under
a co-promotion agreement between Amgen and Roche.
Roche will continue as the licensee for Filgrastim and
pegfilgrastim in certain countries outside the United
States and the EU.