Amgen 2006 Annual Report Download - page 35

Amgen 2006 Annual Report 33
(1) To exclude the non-cash expense associated with writing off the acquired in-process
research and development related to the acquisitions of Abgenix, Inc. (Abgenix) and
Avidia, Inc (Avidia) in 2006, Tularik Inc. (Tularik) in 2004 and Immunex Corporation
(Immunex) in 2002.
(2 ) To exclude the ongoing, non-cash amortization of acquired intangible assets, primarily
ENBREL, related to the Immunex acquisition.
(3 ) To exclude the impact of stock option expense recorded in accordance with Statement
of Financial Accounting Standards (SFAS) No. 123R. Effective January 1, 2006, Amgen
adopted SFAS No. 123R.
(4) To exclude the ongoing, non-cash amortization of the intangible asset, XenoMouse®
technology, acquired with the Abgenix acquisition.
(5 ) To exclude the impairment of a non-ENBREL related intangible asset previously acquired
in the Immunex acquisition.
(6) To exclude, for the applicable periods, merger related expenses incurred due to the
acquisitions of Abgenix, Avidia, Tularik and Immunex, primarily related to incremental
costs associated with retention, integration and/or recording inventory acquired at fair
value which is in excess of our standard cost.
(7) Pursuant to the if-converted method of calculating EPS, the numerator for “Adjusted”
EPS in 2002 reflects the avoidance of interest expense incurred, net of tax, related to
the assumed conversion of the convertible notes. The conversion of such debt and the
avoidance of interest expense is not assumed for calculating the GAAP EPS because
its impact is anti-dilutive due to the GAAP net loss in 2002.
(8) Due to the GAAP net loss in 2002, shares used in calculating the GAAP loss per share
exclude the impact of stock options and convertible notes because their impact was
anti-dilutive. Shares used in calculating the ”Adjusted” earnings per share for 2002 include
the impact of dilutive stock options (27 million shares) and convertible notes (29 million
shares) under the treasury stock and “if-converted” methods, respectively.
Results for the years ended December 31, 2006 2005 2004 2003 2002
GAAP earnings (loss) per share $ 2.48 $ 2.93 $ 1.81 $ 1.69 $ (1.21)
Adjustments to GAAP earnings (loss) per share:
Write-off of acquired in-process research and development 1.03(1) — 0.42(1) — 2.53(1)
Amortization of acquired intangible assets, product technology rights 0.17(2) 0.17(2) 0.16(2) 0.17(2) 0.12(2)
Stock option expense 0.14(3) ————
Amortization of acquired intangible assets, R&D technology rights 0.03(4) ————
Impairment of non-ENBREL related intangible asset 0.03(5) ————
Other merger-related expenses 0.02(6) 0.01(6) 0.02(6) 0.04(6) 0.06(6)
Write-off of manufacturing asset —0.04 — — —
Tax liability related to repatriation of certain foreign earnings —0.03 — — —
Legal settlements, awards and cost recoveries —0.02 (0.01) (0.02) (0.12)
Amgen Foundation contribution —— — 0.02 0.03
Termination of collaboration agreements —— — — (0.03)
3.90 3.20 2.40 1.90 1.38
Adjustment for interest expense on convertible notes —— — — 0.01(7)
“Adjusted” earnings per share $ 3.90 $ 3.20 $ 2.40 $ 1.90 $ 1.39(8)
Reconciliation of GAAP Earnings (Loss) Per Share
to “Adjusted” Earnings Per Share (Unaudited)
Results for the years ended December 31, 2006 2005 2004 2003 2002
GAAP research and development expense $ 3,366 $ 2,314 $ 2,028 $ 1,655 $ 1,117
Adjustments to GAAP research and development expense:
Stock option expense (104)(3) ————
Amortization of acquired intangible assets, R&D technology rights (48)(4) ————
Other merger-related expenses (23)(6) (12)(6) (32)(6) (34)(6) (18)(6)
“Adjusted” research and development expense $ 3,191 $ 2,302 $ 1,996 $ 1,621 $ 1,099
Reconciliation of GAAP Research and Development Expense
to “Adjusted” Research and Development Expense (Unaudited)
($ in millions)
Results for the years ended December 31, 2006 2005 2004 2003 2002
GAAP selling, general and administrative expense $ 3,366 $ 2,790 $ 2,556 $ 1,957 $ 1,450
Adjustments to GAAP selling, general and administrative expense:
Stock option expense (120)(3) ————
Other merger-related expenses (12)(6) — (19)(6) (17)(6) (23)(6)
Legal settlements, awards and cost recoveries —2 11 (47) —
“Adjusted” selling, general and administrative expense $ 3,234 $ 2,792 $ 2,548 $ 1,893 $ 1,427
Reconciliation of GAAP Selling, General and Administrative Expense
to “Adjusted” Selling, General and Administrative Expense (Unaudited)
($ in millions)