Amgen 2009 Annual Report Download - page 147

AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In addition, in connection with the rationalization of our worldwide network of manufacturing facilities in
2007, we decided to accelerate the closure of one of our ENBREL commercial bulk manufacturing operations in
West Greenwich, Rhode Island. The decision to accelerate the closure of this manufacturing operation was
principally based on a thorough review of the supply plans for bulk ENBREL inventory across its worldwide
manufacturing network, including consideration of expected increases in manufacturing yields, and the determi-
nation that the related assets were not expected to have any alternative future uses in our operations. Because the
related estimated future cash flows for this manufacturing operation were sufficient to recover the respective
book values, we were required to accelerate depreciation of the related assets rather than immediately impairing
their carrying values. The amount included in “Cost of sales (excluding amortization of certain acquired in-
tangible assets)” in the table above, $147 million, represents the excess of the accelerated depreciation expense
recognized during the year ended December 31, 2007 over the depreciation that would otherwise have been re-
corded, $6 million, if there were no plans to accelerate the closure of this manufacturing operation.
Other restructuring charges incurred in 2009 primarily relate to integration costs associated with our cost
savings initiatives and loss accruals for certain leases that will not be used in our business. Integration costs to-
taled $32 million and are included in “Research and development” and “Selling, general and administrative”
expenses in the Consolidated Statement of Income. Loss accruals for leases were $4 million and are included in
“Other charges” in the Consolidated Statement of Income. In 2008, other restructuring charges of $70 million al-
so primarily included integration costs and loss accruals for certain leases that will not be used in our business of
$9 million and $59 million, respectively. All of the integration costs and $12 million of the lease loss accruals are
included in SG&A. The remaining loss accruals for leases of $47 million are included in “Other charges” in the
Consolidated Statement of Income. In addition, in 2008, we recorded a $10 million loss on the disposal of certain
less significant marketed products that is included in “Interest and other income, net” in the Consolidated State-
ment of Income. Other restructuring charges for 2007 of $5 million are primarily comprised of cost recoveries for
certain restructuring charges, principally accelerated depreciation, and loss accruals for leases for certain R&D
facilities that will not be used in our business. The cost recoveries totaled $114 million and were recognized in
connection with our co-promotion agreement with Pfizer. As such, they were recorded as a reduction of the Pfiz-
er profit share expense included in “Selling, general and administrative” expense in the Consolidated Statement
of Income. The loss accruals for certain leases primarily related to R&D facilities under construction that were
not occupied totaled $102 million and are included in “Other charges” in the Consolidated Statement of Income.
The following table summarizes the charges and spending relating to the above-noted actions (in millions):
Separation
costs Other Total
Restructuring reserves as of January 1, 2007 ................................. $ — $ — $ —
Expense .............................................................. 209 119 328
Payments ............................................................. (112) (17) (129)
Restructuring reserves as of December 31, 2007 .............................. 97 102 199
Expense .............................................................. 10 76 86
Payments ............................................................. (103) (16) (119)
Restructuring reserves as of December 31, 2008 .............................. 4 162 166
Expense .............................................................. 30 36 66
Payments ............................................................. (31) (68) (99)
Restructuring reserves as of December 31, 2009 .............................. $ 3 $130 $ 133
Substantially all other remaining liabilities represent payments for leases over a period of 14 years.
F-27