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<div align="left" style="font-size: 10pt; margin-top: 10pt"><b>5. Cost savings initiatives</b>
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<div align="left" style="font-size: 10pt; margin-top: 6pt"><i>Manufacturing operations at Fremont, California</i>
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<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent:8%">As part of continuing efforts to optimize our network of manufacturing facilities and improve
cost efficiencies, on January 18, 2011, we entered into an agreement whereby Boehringer Ingelheim
(BI) agreed to acquire all of our rights in and substantially all assets at our manufacturing
operations located in Fremont, California. The transaction was approved by Amgen’s Board of
Directors in December 2010 and closed in March 2011. In connection with the closing of this
transaction, BI has or will assume our obligations under the facility’s operating lease agreements
and has entered into an agreement to manufacture certain quantities of our marketed product
Vectibix<sup style="font-size: 85%; vertical-align: text-top">®</sup>, for us at this facility through December 31, 2012 (the “supply agreement”).
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<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent:8%">Due to the lack of sufficient initial investment by BI in the acquisition of this facility and
our ongoing involvement with these operations, the transaction did not meet the accounting
requirements to be treated as a sale involving real estate. As a result, the related assets will
continue to be carried on our Condensed Consolidated Balance Sheet.
</div>
<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent:8%">We considered this transaction with BI to be a potential indicator of impairment and,
accordingly, we performed an impairment analysis of the carrying values of the related fixed assets
as of December 31, 2010. Based on this analysis, we determined that no future economic benefit
would be received from a manufacturing line at the facility that had not yet been completed. As a
result, we wrote off its entire carrying value, which aggregated $118 million for the three months
ended December 31, 2010.
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<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent:8%">The carrying values of the remaining fixed assets, aggregating approximately $133 million,
were determined to be fully recoverable. However, as a result of this transaction, we reduced the
estimated remaining useful lives of these fixed assets to coincide with the period covered by the
supply agreement. During the three months ended March 31, 2011, we recorded incremental
depreciation in excess of what otherwise would have been recorded of approximately $10 million.
This amount is included in Cost of sales (excludes amortization of certain acquired intangible
assets presented below) in the Condensed Consolidated Statement of Income. In addition, due to the
assignment to BI of the obligations under certain of the facility’s operating leases in March 2011,
we recorded a charge of approximately $11 million in the three months ended March 31, 2011 with
respect to the lease period beyond the end of the supply agreement. This amount is recorded in
Cost of sales (excludes amortization of certain acquired intangible assets presented below) in
the Condensed Consolidated Statement of Income.
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<div align="left" style="font-size: 10pt; margin-top: 10pt"><i>Other</i>
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<div align="justify" style="font-size: 10pt; margin-top: 10pt; text-indent:8%">As part of continuing efforts to improve cost efficiencies in our manufacturing operations,
we also recorded certain charges aggregating $16 million during the three months ended March 31,
2011, which are included in Other in the Condensed Consolidated Statement of Income.
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<!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescription of restructuring activities including exit and disposal activities, which should include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. This description does not include restructuring costs in connection with a business combination or discontinued operations and long-lived assets (disposal groups) sold or classified as held for sale. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 146
-Paragraph 20
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Staff Accounting Bulletin (SAB)
-Number Topic 5
-Section P
-Subsection 3, 4
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