Amgen 2002 Annual Report Download - page 68

Page 66
AMGEN 2002 ANNUAL REPORT
Note 13. Agreements with Wyeth
As part of the Immunex acquisition, the Company entered
into a co-promotion agreement and co-development agree-
ment with Wyeth. Under the terms of these agreements,
Amgen and Wyeth market and sell ENBREL
®
in the United
States and Canada and develop certain future indications of
ENBREL
®
for use in these geographic territories. In return
for such efforts, Wyeth is paid a share of the resulting
profits on sales of ENBREL
®
, after deducting the applicable
costs of sales, including royalties paid to third parties, and
expenses associated with R&D and sales and marketing.
Such amounts paid to Wyeth are included in “Selling,
general and administrative” expense in the accompanying
consolidated statements of operations.
Note 14. Accrued liabilities
Accrued liabilities consisted of the following (in millions):
December 31, 2002 2001
Employee compensation and benefits $ 370.4 $147.2
Sales incentives, royalties, and allowances 287.7 124.7
Due to affiliated companies and
corporate partners 152.1 100.0
Clinical development costs 112.9 56.0
Obligations from terminating
collaboration agreements
(see Note 4, “Other items, net”) 14.2 100.7
Income taxes —92.6
Other 214.4 145.1
$1,151.7 $766.3
Note 15. Commitments
The Company leases certain administrative and laboratory
facilities under non-cancelable operating leases that expire
through December 2010 (see Note 3, “Immunex acqui-
sition — Restructuring plans” for further discussion of
certain leased facilities acquired). The following table
summarizes the minimum future rental commitments
under non-cancelable operating leases at December 31,
2002 (in millions):
Lease
Year ended December 31, payments
2003 $ 34.7
2004 28.7
2005 20.9
2006 13.7
2007 10.2
Thereafter 27.5
Total minimum lease payments $135.7
Rental expense on operating leases for the years ended
December 31, 2002, 2001, and 2000 was $26.0 million,
$18.3 million, and $18.0 million, respectively.
As a result of the Immunex acquisition, the Company
is under supply agreements with various contract manu-
facturers for the production, vialing, and packaging of
ENBREL
®
. Under the terms of the various contracts, Amgen
is required to purchase certain minimum quantities of
ENBREL
®
each year through 2010. The following table
summarizes the minimum contractual inventory commit-
ments from third-party contract manufacturers at December
31, 2002 (in millions):
Inventory
Year ended December 31, commitments
2003 $302.1
2004 285.3
2005 244.8
2006 102.3
2007 102.2
Thereafter 306.7
Total contractual purchases $1,343.4
The amounts above primarily relate to the Company’s
long-term supply agreement with Boehringer Ingelheim
Pharma KG (“BI Pharma”) for the manufacture of com-
mercial quantities of ENBREL
®
. Amounts owed to BI Pharma
are based on firm commitments for the purchase of pro-
duction capacity for ENBREL
®
and reflect certain estimates
such as production run success rates and bulk drug yields
achieved. The Company’s obligation to pay certain of these
amounts may be reduced based on certain future events.