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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3540776
------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 Dehavilland Drive, Thousand Oaks, California 91320-1789
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 447-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of September 30, 1994, the registrant had 132,909,959 shares
of Common Stock, $.0001 par value, outstanding.
AMGEN INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1.Financial Statements .......................3
Condensed Consolidated Statements of
Operations - three and nine months
ended September 30, 1994 and 1993 ...........4 - 5
Condensed Consolidated Balance Sheets -
September 30, 1994 and December 31, 1993 ........6
Condensed Consolidated Statements of
Cash Flows - nine months
ended September 30, 1994 and 1993 ...........7 - 8
Notes to Condensed Consolidated Financial
Statements ......................................9
Item 2.Management's Discussion and Analysis
of Financial Condition and Results of
Operations ................................13
PART II OTHER INFORMATION
Item 1.Legal Proceedings .........................20
Item 6.Exhibits and Reports on Form 8-K ..........22
Signatures........................................23
Index to Exhibits.................................24
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information in this report for the three and nine months
ended September 30, 1994 and 1993, is unaudited but includes all
adjustments (consisting only of normal recurring accruals) which
Amgen Inc. ("Amgen" or the "Company") considers necessary for a fair
presentation of the results of operations for those periods.
The condensed financial statements should be read in conjunction
with the Company's financial statements and the notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.
Interim results are not necessarily indicative of results for
the full fiscal year.
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- ---------- ----------
Revenues:
Product sales $401,695 $335,752 $1,136,001 $ 959,033
Corporate partner
revenues 16,898 13,757 49,727 36,072
Royalty income 7,762 5,343 19,310 13,110
-------- -------- ---------- ----------
Total revenues 426,355 354,852 1,205,038 1,008,215
-------- -------- ---------- ----------
Operating expenses:
Cost of sales 59,126 58,261 176,803 162,726
Research and development 81,597 63,276 235,552 183,766
Marketing and selling 61,921 51,678 174,685 151,461
General and
administrative 31,903 27,515 90,397 83,786
Loss of affiliates, net 9,794 4,706 25,678 10,178
Legal award - - - (13,900)
-------- -------- ---------- ----------
Total operating expenses 244,341 205,436 703,115 578,017
-------- -------- ---------- ----------
Operating income 182,014 149,416 501,923 430,198
-------- -------- ---------- ----------
Other income (expense):
Interest and other
income 6,794 3,121 16,029 18,388
Interest expense, net (3,387) (2,163) (8,774) (3,688)
Total other income -------- -------- ---------- ----------
(expense) 3,407 958 7,255 14,700
-------- -------- ---------- ----------
Income before income
taxes and cumulative
effect of a change in
accounting principle 185,421 150,374 509,178 444,898
Provision for income
taxes 71,465 47,682 194,298 161,422
-------- -------- ---------- ----------
Income before cumulative
effect of a change in
accounting principle 113,956 102,692 314,880 283,476
Cumulative effect of a
change in accounting
principle - - - 8,738
-------- -------- ---------- ----------
Net income $113,956 $102,692 $ 314,880 $ 292,214
======== ======== ========== ==========
See accompanying notes.
(Continued on next page)
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- --------- ---------
Earnings per share:
Primary:
Income before cumulative
effect of a change in
accounting principle $ .82 $ .72 $ 2.25 $ 1.97
Cumulative effect of a
change in accounting
principle - - - .06
-------- -------- -------- --------
Net income $ .82 $ .72 $ 2.25 $ 2.03
======== ======== ======== ========
Fully diluted:
Income before cumulative
effect of a change in
accounting principle $ .82 $ .72 $ 2.23 $ 1.97
Cumulative effect of a
change in accounting
principle - - - .06
-------- -------- -------- --------
Net income $ .82 $ .72 $ 2.23 $ 2.03
======== ======== ======== ========
Shares used in
calculation of:
Primary earnings per
share 139,246 142,419 140,021 144,067
Fully diluted earnings
per share 139,530 142,817 140,948 144,067
See accompanying notes.
AMGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
September 30, December 31,
1994 1993
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents $ 301,529 $ 128,505
Marketable securities, at cost which
approximates market 452,083 594,679
Trade receivables, net 186,220 164,337
Inventories 87,191 74,712
Deferred tax assets, net 55,859 58,937
Other current assets 37,067 33,340
---------- ----------
Total current assets 1,119,949 1,054,510
Property, plant and equipment at cost,
net 625,515 586,912
Investments 92,119 78,778
Other assets 54,892 45,323
---------- ----------
$1,892,475 $1,765,523
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,945 $ 23,056
Commercial paper 99,602 109,767
Other accrued liabilities 263,455 279,438
---------- ----------
Total current liabilities 385,002 412,261
Long-term debt 185,862 181,242
Commitments and contingencies
Stockholders' equity:
Common stock, $.0001 par value;
750,000 shares authorized;
outstanding - 132,910 shares in
1994 and 134,214 shares in 1993 13 13
Additional paid-in capital 696,883 636,217
Retained earnings 624,715 535,790
---------- ----------
Total stockholders' equity 1,321,611 1,172,020
---------- ----------
$1,892,475 $1,765,523
========== ==========
See accompanying notes.
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
1994 1993
-------- --------
Cash flows from operating activities:
Net income $314,880 $292,214
Depreciation and amortization 55,068 38,474
Cumulative effect of an accounting
change - (8,738)
Other non-cash expenses 2,737 4,676
Deferred income taxes 3,078 26,729
Loss of affiliates, net 25,678 10,178
Cash used in:
Trade receivables, net (21,883) (49,904)
Inventories (12,479) (17,023)
Other current assets (3,727) (1,591)
Accounts payable (1,111) (16,905)
Accrued liabilities (14,436) (33,096)
-------- --------
Net cash provided by
operating activities 347,805 245,014
-------- --------
Cash flows from investing activities:
Purchases of property, plant
and equipment (93,671) (165,615)
Decrease in marketable securities 142,596 49,494
Increase in investments (18,851) (17,096)
Increase in other assets (9,569) (25,029)
-------- --------
Net cash provided by (used in)
investing activities 20,505 (158,246)
-------- --------
See accompanying notes.
(Continued on next page)
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
1994 1993
-------- --------
Cash flows from financing activities:
Net (decrease) increase in
commercial paper $(10,165) $ 79,747
Proceeds from issuance of
long-term debt 12,499 53,054
Repayment of long-term debt (9,426) (1,478)
Net proceeds from issuance of
common stock 30,676 13,390
Tax benefit related to
stock options 14,487 18,200
Net proceeds from issuance
of warrants 15,330 1,665
Repurchases of common stock (225,955) (164,096)
Other (22,732) (16,269)
-------- --------
Net cash used in
financing activities (195,286) (15,787)
-------- --------
Increase in cash and cash equivalents 173,024 70,981
Cash and cash equivalents at
beginning of period 128,505 92,048
-------- --------
Cash and cash equivalents at
end of period $301,529 $163,029
======== ========
See accompanying notes.
AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1994
1. Summary of significant accounting policies
Business
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology
company that develops, manufactures and markets human therapeutics
based on advanced cellular and molecular biology.
Principles of consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries as well as affiliated
companies for which the Company has a controlling financial interest
and exercises control over their operations ("majority controlled
affiliates"). All material intercompany transactions and balances
have been eliminated in consolidation. Investments in affiliated
companies which are 50% owned and/or where the Company exercises
significant influence over operations are accounted for using the
equity method. All other investments are accounted for under the
cost method. Loss of affiliates, net includes Amgen's equity in the
operating results of affiliated companies and the minority interest
others hold in the operating results of Amgen's majority controlled
affiliates.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined in a manner which approximates the first-in, first-out
(FIFO) method. Inventories are shown net of applicable reserves and
allowances. Inventories consist of the following (in thousands):
September 30, December 31,
1994 1993
------- -------
Raw materials $13,271 $ 8,001
Work in process 51,500 47,138
Finished goods 22,420 19,573
------- -------
$87,191 $74,712
======= =======
Product sales
Product sales consist of two products, EPOGEN(R) (Epoetin alfa)
and NEUPOGEN(R) (Filgrastim).
As a result of arbitration proceedings involving an agreement
between Amgen and Ortho Pharmaceutical Corporation, a subsidiary of
Johnson & Johnson ("Johnson & Johnson") covering the U.S. market for
the Company's Epoetin alfa product, Amgen does not recognize product
sales it makes into the contractual market of Johnson & Johnson and
does recognize the product sales made by Johnson & Johnson into
Amgen's contractual market. These sales amounts, and adjustments
thereto, are derived from third-party data on shipments to end users
and their usage (see Note 4, "Commitments and contingencies - Johnson
& Johnson arbitration").
Foreign currency transactions
The Company hedges certain portions of its exposure to
anticipated foreign currency cash flows due to its business
operations in Switzerland, European Union countries ("EU" - formerly
known as the European Community), Japan, and to a much lesser extent,
Canada and Australia. In addition, the Company hedges receivables
and payables denominated in currencies of these countries. The
Company uses forward and option foreign exchange contracts which
involve the exchange of two currencies at a stated future date. All
of these contracts mature within one year, with approximately 90%
maturing within three months. At September 30, 1994, the Company had
forward and option foreign exchange contracts in the amount of $275
million and $14 million, respectively. These contracts are marked-
to-market to reflect changes in their market values. The foreign
currency gains and losses on these contracts were not material for
the nine months ended September 30, 1994.
Income taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 (Note 3).
Earnings per share
Earnings per share are computed in accordance with the treasury
stock method. Primary and fully diluted earnings per share are based
upon the weighted average number of common shares and dilutive common
stock equivalents during the period in which they were outstanding.
Common stock equivalents include outstanding options under the
Company's stock option plans and warrants to purchase shares of the
Company's common stock, which expired on June 30, 1994.
Basis of presentation
The financial information for the nine months ended September
30, 1994 and 1993, are unaudited but include all adjustments
(consisting only of normal recurring accruals) which the Company
considers necessary for a fair presentation of the results of
operations for these periods. Interim results are not necessarily
indicative of results for the full fiscal year.
Reclassification
Certain prior period amounts have been reclassified to conform
to the current period presentation.
2. Debt
As of September 30, 1994, $99.6 million of commercial paper was
outstanding. These borrowings had maturities of three months or less
and had effective interest rates averaging 4.9%.
During the nine months ended September 30, 1994, the Company's
unsecured credit facility (the "credit facility") was extended
through June 1995. As of September 30, 1994, $150 million was
available under the Company's line of credit pursuant to the credit
facility for borrowing and to support the Company's commercial paper
program.
Long-term debt consists of the following (in thousands):
September 30, December 31,
1994 1993
-------- --------
Medium Term Notes $113,000 $103,000
Promissory notes 68,200 68,200
Other long-term obligations 4,844 11,771
-------- --------
186,044 182,971
Less current portion (182) (1,729)
-------- --------
$185,862 $181,242
======== ========
The Company has registered $200 million of unsecured medium term
debt securities ("Medium Term Notes") of which $113 million were
outstanding at September 30, 1994. During the nine months ended
September 30, 1994, the Company issued an additional $10 million of
Medium Term Notes with five year maturities at a fixed rate of 5.5%.
3. Income taxes
The provision for income taxes consists of the following (in
thousands):
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
Federal $60,899 $39,031 $166,786 $133,136
State 10,566 8,651 27,512 28,286
------- ------- -------- --------
Total $71,465 $47,682 $194,298 $161,422
======= ======= ======== ========
4. Commitments and contingencies
Johnson & Johnson arbitration
In September 1985, the Company granted Johnson & Johnson an
exclusive license under certain patented technology and know how of
the Company to sell erythropoietin throughout the United States for
all human uses except dialysis and diagnostics.
In January 1989, Johnson & Johnson initiated arbitration
proceedings with respect to a number of disputes which had arisen
between Amgen and Johnson & Johnson as to the respective rights and
obligations of the parties under the various agreements between them.
Amgen filed a cross petition for arbitration raising additional
disputes for resolution by the arbitrator. The scope of the
arbitration covers erythropoietin, hepatitis B vaccine, and
interleukin-2.
In April 1990, the arbitrator ruled that Johnson & Johnson must
purchase from Amgen all of Johnson & Johnson's actual United States
sales requirements of recombinant human erythropoietin. In December
1990, the U.S. Food and Drug Administration approved Amgen's
application to name Johnson & Johnson a distributor of Epoetin alfa
under the trademark PROCRIT(R). In January 1991, Johnson & Johnson
began distributing Epoetin alfa.
In June 1991, the arbitrator issued an opinion awarding Johnson
& Johnson $164 million on its claims regarding erythropoietin. In
September 1992, the arbitrator found that Johnson & Johnson had
breached its obligations regarding hepatitis B vaccine and
interleukin-2, and in January 1993 awarded the Company approximately
$90 million in damages against Johnson & Johnson. In January 1993,
the Company paid Johnson & Johnson the sum of $82.4 million,
representing the difference between the damages awarded Johnson &
Johnson as a result of its erythropoietin claims, and the amounts
awarded Amgen against Johnson & Johnson as a result of its hepatitis
B vaccine and interleukin-2 claims, plus interest. Johnson & Johnson
returned to the Company the rights to develop and market hepatitis B
vaccine and interleukin-2 in March 1991.
The Company and Johnson & Johnson are required to compensate
each other for Epoetin alfa sales which either party makes into the
other party's contractual market. The Company has established and is
employing an accounting methodology to allocate the proceeds of sales
of EPOGEN(R) and PROCRIT(R) in Amgen's and Johnson & Johnson's
respective contractual markets. The Company has made payments to
Johnson & Johnson based upon the results of the Company's accounting
methodology. Johnson & Johnson has disputed the methodology employed
by the Company and is proposing an alternative methodology for
adoption by the arbitrator. If, as a result of the arbitration
proceeding, a methodology different from that currently employed by
the Company is instituted to allocate the proceeds of sales between
the parties, it may yield results that are different from the results
of the accounting methodology currently employed by the Company. As
a result of the arbitration, it is possible that the Company would
recognize a different level of EPOGEN(R) sales than are currently
being recognized. As a result of the arbitration, the Company may be
required to pay additional compensation to Johnson & Johnson for
sales during prior periods, or Johnson & Johnson may be required to
pay compensation to the Company for such prior period sales. Due to
the uncertainties of any arbitrated result, the Company has
established net liabilities that exceed the amounts paid to Johnson &
Johnson.
A trial date has been set for May 1, 1995 before the arbitrator
regarding the accounting methodologies and compensation for sales by
Johnson & Johnson into Amgen's contractual market and sales by Amgen
into Johnson & Johnson's contractual market. Discovery as to these
issues is in progress.
While it is not possible to predict accurately or determine the
eventual outcome of this matter, the Company believes that the
outcome of this legal proceeding will not have a material adverse
effect on the financial statements of the Company.
Other litigation
The Company is engaged in various other legal proceedings
including patent disputes. While it is not possible to predict
accurately or determine the eventual outcome of these matters, the
Company believes that the outcome of these legal proceedings will not
have a material adverse effect on the financial statements of the
Company.
5. Stockholders' equity
During the nine months ended September 30, 1994, the Company
acquired 5.1 million shares of its common stock at a total cost of
$226 million under its common stock repurchase program. At September
30, 1994, $105.7 million of the amount approved by the Board of
Directors remained available for repurchase through December 31,
1994. Stock repurchased under the program is retired and such
repurchases offset dilutive effects of the Company's employee benefit
stock option and stock purchase plans.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
The Company had cash, cash equivalents and marketable securities
of $753.6 million at September 30, 1994, compared with $723.2 million
at December 31, 1993. Cash provided by operating activities has been
and is expected to continue to be the Company's primary source of
funds. During the nine months ended September 30, 1994, operations
provided $347.8 million of cash compared with $245 million of cash
for the same period last year. The amount in the prior year period
reflects a payment of $82.4 million to Johnson & Johnson in
settlement of an obligation resulting from an arbitration proceeding
(see "Legal Matters - Johnson & Johnson arbitration") and an increase
in trade accounts receivable due to a temporary extension of payment
terms to EPOGEN(R) customers.
Capital expenditures totaled $93.7 million for the nine months
ended September 30, 1994, compared with $165.6 million for the same
period a year ago. The reduction in capital expenditures is due to
the completion of several facilities in 1993, including the Puerto
Rico fill and finish facility. Over the next few years, the Company
expects to spend approximately $100 million to $200 million per year
on capital projects. These expenditures will be used primarily to
expand the Company's operations.
The Company has an ongoing common stock repurchase program to
offset dilutive effects of its employee benefit stock option and
stock purchase plans. Since its inception in 1992 through September
30, 1994, the Company has repurchased 11.6 million shares of its
common stock at a total cost of $519.3 million, and is authorized to
purchase up to an additional $105.7 million through December 31,
1994. During the nine months ended September 30, 1994, the Company
repurchased 5.1 million shares of common stock at a cost of $226
million.
To provide for financial flexibility and increased liquidity,
the Company has established several sources of debt financing. The
Company has filed a shelf registration statement with the Securities
and Exchange Commission under which it could issue up to $200 million
of Medium Term Notes. At September 30, 1994, $113 million of Medium
Term Notes were outstanding which mature in two to nine years. The
Company has a commercial paper program which provides for short-term
borrowings up to an aggregate face amount of $200 million. At
September 30, 1994, $99.6 million of commercial paper was outstanding
with maturities of three months or less. As individual issuances
under this program mature, the Company may issue new debt either in
the form of commercial paper or Medium Term Notes depending on
interest rates and other market factors. The Company also has a $150
million revolving line of credit, principally to support the
Company's commercial paper program. No borrowings on this line of
credit were outstanding at September 30, 1994.
The Company hedges certain portions of its exposure to
anticipated foreign currency cash flows due to its business
operations in Switzerland, European Union countries, Japan, and to a
much lesser extent, Canada and Australia. In addition, the Company
hedges receivables and payables denominated in currencies of these
countries. The Company uses forward and option foreign exchange
contracts which involve the exchange of two currencies at a stated
future date. All of these contracts mature within one year, with
approximately 90% maturing within three months. At September 30,
1994, the Company had forward and option foreign exchange contracts
in the amount of $275 million and $14 million, respectively. These
contracts are marked-to-market to reflect changes in their market
values. The foreign currency gains and losses on these contracts
were not material for the nine months ended September 30, 1994.
Cash is invested in accordance with a policy that seeks to
ensure both liquidity and safety of principal. Investments are made
to achieve the highest rate of return to the Company, consistent with
safety of principle. The policy limits investments to certain types
of instruments issued by institutions with strong investment grade
credit ratings, and places restrictions on terms and concentration by
type and issuer. The Company's investments are subject to the risk
of market interest rate fluctuations and risks associated with the
ability of the issuers to perform their obligations under the
instruments.
The Company believes that existing funds, cash generated from
operations, and existing sources of debt financing should be adequate
to satisfy its working capital and capital expenditure requirements
and to support its common stock repurchase program for the
foreseeable future. However, the Company may take advantage of
favorable conditions in the capital markets to raise additional
capital from time to time.
Results of Operations
Product sales
Product sales increased 20% and 18% for the three and nine
months ended September 30, 1994, respectively, compared with the same
periods last year.
NEUPOGEN(R) (Filgrastim)
The Company's worldwide NEUPOGEN(R) sales were $214.7 million
and $608.5 million for the three and nine months ended September 30,
1994, respectively.
Domestic sales of NEUPOGEN(R) were $160.1 million and $450.5
million for the three and nine months ended September 30, 1994,
respectively. These amounts represent increases of $16.2 million and
$48.5 million, or 11% and 12% respectively, over the same periods
last year. These increases were primarily due to increased
penetration of the current market for colony-stimulating factors.
Sales of NEUPOGEN(R) outside the United States, primarily in
Europe, were $54.6 million and $157.9 million for the three and nine
months ended September 30, 1994, respectively. These amounts
represent increases of $12.3 million and $27.4 million over the same
periods last year, respectively. Without the effect of changes in
foreign currency exchange rates, sales volumes increased by
approximately 22% and 24% during the three and nine months ended
September 30, 1994, respectively, compared with the same periods last
year due to increased penetration of the current market for colony-
stimulating factors. When measured in U.S. dollars, reported sales
increases for the three and nine months ended September 30, 1994 were
29% and 21%, respectively.
During the first quarter of 1994, Rhone-Poulenc Rorer and Chugai
Pharmaceutical Co., Ltd. began jointly marketing a G-CSF product in
the European Union. Although there has been no significant effect on
the Company's worldwide NEUPOGEN(R) sales, it is not possible to
predict the ultimate impact this competitive product will have on
future EU NEUPOGEN(R) sales.
Quarterly NEUPOGEN(R) sales volumes in both the United States
and Europe are influenced by a number of factors including underlying
demand, seasonality of cancer chemotherapy administration, and
wholesaler inventory management practices. The Company's experience
has shown that reduced chemotherapy usage occurs in the third
calendar quarter in many European Union countries to varying degrees
resulting in corresponding decreases in reported sales. In the U.S.,
reduced chemotherapy usage occurs in the fourth quarter, but due to
the effect of wholesaler inventories, this depresses Amgen sales in
the first quarter.
The Company believes that NEUPOGEN(R) sales in 1994 will exceed
the 1993 level, but that the growth rate of NEUPOGEN(R) sales in the
future will be lower than the growth rate in 1993. NEUPOGEN(R) sales
increases are dependent upon further penetration of existing markets,
the timing and nature of additional indications for which the product
may be approved and the effects of competitive products. In
addition, international NEUPOGEN(R) sales revenues are subject to
changes in foreign currency exchange rates and increased competition
from other colony stimulating factor products.
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) sales were $187 million and $527.5 million for the
three and nine months ended September 30, 1994. These amounts
represent increases of $37.4 million and $101 million, or 25% and
24%, respectively, over the same periods last year. These increases
were primarily due to an increase in the U.S. dialysis patient
population, the administration of higher average doses of EPOGEN(R)
per patient, and increased penetration of the dialysis market. The
Company anticipates that increases in the U.S. dialysis patient
population and increases in average dose per patient will continue to
drive the growth of EPOGEN(R) sales in the current year. However,
the growth rate for the third quarter is higher than the expected
annual growth rate for 1994
The federal government enacted legislation effective January 1,
1994 to lower reimbursement provided to facilities that administer
EPOGEN(R) from $11 per thousand units administered to $10 per
thousand units administered. During the nine months ended September
30, 1994, the change in reimbursement did not have a material adverse
effect on EPOGEN(R) sales.
Cost of sales
Cost of sales as a percentage of product sales were 14.7% and
15.6% for the three and nine months ended September 30, 1994,
respectively, compared with 17.4% and 17.0% for the same periods last
year. The improvement over the prior year primarily reflects the
commencement of commercial production at the Puerto Rico fill and
finish facility and a new NEUPOGEN(R) manufacturing facility. Cost
of sales as a percentage of product sales is not expected to vary
significantly for the foreseeable future.
Research and development
During the three and nine months ended September 30, 1994,
research and development expenses increased $18.3 million and $51.8
million, or 29% and 28%, respectively, compared with the same periods
last year. These increases were primarily due to expansion of the
Company's research and development staffs and increased expenditures
on external research collaborations. Annual research and development
expenses for 1994 and 1995 may increase at a rate exceeding the
anticipated annual product sales growth rate due to planned increases
in internal efforts on new product discovery and development and
increases in external research collaboration costs, including
acquisitions of product and technology rights.
Marketing and selling
Marketing and selling expenses increased $10.2 million and $23.2
million, or 20% and 15%, respectively, during the three and nine
months ended September 30, 1994 compared with the same periods last
year. These increases were primarily due to: 1) domestic and
international marketing expenses to support continued NEUPOGEN(R)
market penetration and, 2) to support EPOGEN(R) marketing efforts
focused on educating users on the importance of maintaining patients
within the target hematocrit range. The future annual growth rate of
marketing and selling expenses is expected to approximate or be
slightly less than the anticipated annual product sales growth rate.
General and administrative
General and administrative expenses increased $4.4 million and
$6.6 million, or 16% and 8%, respectively, during the three and nine
months ended September 30, 1994 compared with the same periods last
year. The future annual growth rate of general and administrative
expenses is expected to be less than the anticipated annual product
sales growth rate.
Income taxes
The Company's effective tax rate for the three and nine months
ended September 30, 1994 was 38.5% and 38.2% compared with 31.7% and
36.3%, respectively, for the same periods last year. The increases
in tax rates were primarily due to changes in the federal tax laws in
the three months ended September 30, 1993 which reduced the tax
provision in that quarter by approximately $9.6 million. These
increases were partially offset by a slight reduction in state taxes
which resulted from changes in the apportionment of taxable income
among states.
In the future, the Company expects to receive tax benefits from
manufacturing products at its facility in Puerto Rico, which is
currently awaiting licensure by regulatory bodies. Realization of
these tax benefits is expected to result in an annualized effective
tax rate of 32%-34% once a substantial portion of domestic product is
supplied from this plant.
Legal Matters
Johnson & Johnson arbitration
In September 1985, the Company granted Johnson & Johnson an
exclusive license under certain patented technology and know how of
the Company to sell erythropoietin throughout the United States for
all human uses except dialysis and diagnostics.
In January 1989, Johnson & Johnson initiated arbitration
proceedings with respect to a number of disputes which had arisen
between Amgen and Johnson & Johnson as to the respective rights and
obligations of the parties under the various agreements between them.
Amgen filed a cross petition for arbitration raising additional
disputes for resolution by the arbitrator. The scope of the
arbitration covers erythropoietin, hepatitis B vaccine, and
interleukin-2.
In April 1990, the arbitrator ruled that Johnson & Johnson must
purchase from Amgen all of Johnson & Johnson's actual United States
sales requirements of recombinant human erythropoietin. In December
1990, the U.S. Food and Drug Administration approved Amgen's
application to name Johnson & Johnson a distributor of Epoetin alfa
under the trademark PROCRIT(R). In January 1991, Johnson & Johnson
began distributing Epoetin alfa.
In June 1991, the arbitrator issued an opinion awarding Johnson
& Johnson $164 million on its claims regarding erythropoietin. In
September 1992, the arbitrator found that Johnson & Johnson had
breached its obligations regarding hepatitis B vaccine and
interleukin-2, and in January 1993 awarded the Company approximately
$90 million in damages against Johnson & Johnson. In January 1993,
the Company paid Johnson & Johnson the sum of $82.4 million,
representing the difference between the damages awarded Johnson &
Johnson as a result of its erythropoietin claims, and the amounts
awarded Amgen against Johnson & Johnson as a result of its hepatitis
B vaccine and interleukin-2 claims, plus interest. Johnson & Johnson
returned to the Company the rights to develop and market hepatitis B
vaccine and interleukin-2 in March 1991.
The Company and Johnson & Johnson are required to compensate
each other for Epoetin alfa sales which either party makes into the
other party's contractual market. The Company has established and is
employing an accounting methodology to allocate the proceeds of sales
of EPOGEN(R) and PROCRIT(R) in Amgen's and Johnson & Johnson's
respective contractual markets. The Company has made payments to
Johnson & Johnson based upon the results of the Company's accounting
methodology. Johnson & Johnson has disputed the methodology employed
by the Company and is proposing an alternative methodology for
adoption by the arbitrator. If, as a result of the arbitration
proceeding, a methodology different from that currently employed by
the Company is instituted to allocate the proceeds of sales between
the parties, it may yield results that are different from the results
of the accounting methodology currently employed by the Company. As
a result of the arbitration, it is possible that the Company would
recognize a different level of EPOGEN(R) sales than are currently
being recognized. As a result of the arbitration, the Company may be
required to pay additional compensation to Johnson & Johnson for
sales during prior periods, or Johnson & Johnson may be required to
pay compensation to the Company for such prior period sales. Due to
the uncertainties of any arbitrated result, the Company has
established net liabilities that exceed the amounts paid to Johnson &
Johnson.
A trial date has been set for May 1, 1995 before the arbitrator
regarding the accounting methodologies and compensation for sales by
Johnson & Johnson into Amgen's contractual market and sales by Amgen
into Johnson & Johnson's contractual market. Discovery as to these
issues is in progress.
While it is not possible to predict accurately or determine the
eventual outcome of this matter, the Company believes that the
outcome of this legal proceeding will not have a material adverse
effect on the financial statements of the Company.
Other litigation
The Company is engaged in various other legal proceedings including
patent disputes. While it is not possible to predict accurately or
determine the eventual outcome of these matters, the Company believes
that the outcome of these legal proceedings will not have a material
adverse effect on the financial statements of the Company.
Outlook
During the third quarter, the Company submitted an
Investigational New Drug application to the U.S. Food and Drug
Administration ("FDA") as part of its collaboration with Regeneron
Pharmaceuticals, Inc. to initiate human clinical trials of
neurotrophin-3 (NT-3) in peripheral neuropathies.
The Company obtained approval on July 7, 1994 from the FDA for a
labeling change expanding the target hematocrit range for patients
with chronic renal failure receiving Epoetin alfa from the current
range of 30 to 33 percent to a range of 30 to 36 percent. The
Company also received approval from the FDA on June 21, 1994 for a
product license amendment to expand the approved uses of NEUPOGEN(R)
to include a reduction in the duration of neutropenia for patients
undergoing myeloablative therapy followed by bone marrow
transplantation.
Operating in rapidly changing health care policy arenas and
market environments presents many significant and unique challenges.
While the federal government continues to formulate policy for health
care reform, it is not possible to predict whether the Congress would
pass and the President would sign any substantial health care
legislation. It is probable that any such legislation would have an
adverse impact on Amgen. In addition, the Company is adapting to
market-driven forces in the United States and legislative mandates in
foreign markets. Market forces are changing the economics of health
care in the United States through voluntary limits on price increases
by the pharmaceutical industry, increases in the purchasing power of
large buying groups, and increased influence on medical care and
treatment decisions by managed care organizations.
The Company is adapting to this changing health care environment
through programs that work to optimize the use of its products in the
treatment of patients and clinical trials designed to evaluate cost
and quality-of-life parameters as well as clinical safety and
efficacy.
In addition, the Company is seeking to obtain through the
acquisition of businesses and/or licenses, product and technology
rights which complement internal research and development efforts.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is engaged in arbitration proceedings with Ortho
Pharmaceutical Corporation, a subsidiary of Johnson & Johnson. For a
complete discussion of this matter see Part I, Item 2, "Management's
Discussion and Analysis of Financial Condition and Results of
Operations - Legal Matters." Other legal proceedings are discussed
below.
Elanex Pharmaceuticals litigation
In October of 1993, the Company filed a complaint for patent
infringement against defendants Elanex Pharmaceuticals, Inc.
("Elanex"), Laboratorios Elanex De Costa Rica, S. A., Bio Sidus S.A.,
Merckle GmbH, Biosintetica S. A. and other unknown defendants. The
complaint, filed in the United States District Court for the Western
District of Washington at Seattle, seeks injunctive relief and
damages for Elanex's infringement of the Company's patent for DNA
sequences and host cells useful in producing recombinant
erythropoietin. The complaint also alleges that the foreign
defendants entered into agreements with Elanex relating to the
production or sale of recombinant erythropoietin and thereby have
induced Elanex's infringement.
In December 1993, Elanex responded to the complaint denying the
material allegations thereof, and filed a counterclaim seeking a
declaratory judgment that the Company's patent is invalid and that
Elanex's recombinant erythropoietin technology does not infringe any
valid claims of the Company's patent. The counterclaim also seeks an
award of reasonable attorneys' fees and other costs of defense.
While it is not possible to predict accurately or to determine the
eventual outcome of this matter, the Company believes that the
outcome of this legal proceeding will not have a material adverse
effect on the financial statements of the Company.
Erythropoietin patent litigation
Amgen has been engaged in litigation (the "Amgen suit") with
Genetics Institute, Inc. ("Genetics Institute") and its commercial
partner, Chugai Pharmaceutical Co., Ltd., regarding the infringement
of Amgen's patent on the DNA sequence used in the production of
erythropoietin (the "Amgen Patent") and the infringement by Amgen's
erythropoietin product of a patent held by Genetics Institute.
Genetics Institute and the Company announced on May 11, 1993
that they agreed to settle all outstanding patent disputes between
them regarding erythropoietin in the United States. As part of the
settlement, Genetics Institute paid the Company $13.9 million during
the quarter ended September 30, 1993. An additional $2 million may
be paid to the Company contingent upon the outcome of certain future
events. As a result of the settlement of the litigation, Amgen
expects to receive patents on the process for producing recombinant
erythropoietin and on the recombinant erythropoietin product.
In August 1991, Johnson & Johnson, together with eleven of
Johnson & Johnson's Cilag European subsidiaries, filed a suit in the
United States District Court for the District of Massachusetts in
Boston, the site of the Amgen suit against Genetics Institute (the
"Boston Court"), seeking damages from Genetics Institute for
infringement of the Amgen Patent (the "Johnson & Johnson suit") and
moved to consolidate the Johnson & Johnson suit with the original
suit filed by Amgen. The two suits were consolidated by the Boston
Court. Amgen was allowed to intervene in the Johnson & Johnson suit
for the limited purpose of seeking a summary judgment dismissing the
Johnson & Johnson suit. In December 1992, the Boston Court
determined that Johnson & Johnson had no standing to sue Genetics
Institute and entered judgment and dismissed the Johnson & Johnson
suit. Also, in December 1992, the Boston Court denied motions by
Johnson & Johnson to intervene in the Amgen suit for the limited
purpose of seeking a summary judgment limiting Amgen's damages
against Genetics Institute. Johnson & Johnson has appealed the
Boston Court's December 1992 rulings. The appeal by Johnson &
Johnson, together with eleven of its Cilag European subsidiaries, is
pending.
While it is not possible to predict accurately or determine the
eventual outcome of this matter, the Company believes that the
outcome of the appeal by Johnson & Johnson will not have a material
adverse effect on the financial statements of the Company.
Genetics Institute litigation
On June 21, 1994, Genetics Institute filed suit in the United
States District Court for the District of Delaware in Wilmington,
against Johnson & Johnson, a licensee of the Company, seeking damages
for the alleged infringement of a recently issued U.S. Patent
5,322,837 relating to Johnson & Johnson's manufacture, use, and sale
of erythropoietin.
On September 12, 1994, the Company filed suit in the United
States District court for the District of Massachusetts in Boston,
against Genetics Institute, seeking declaratory judgment of patent
non-infringement, invalidity and unenforceability against Genetics
Institute in respect to U.S. Patent 5,322,837 issued to Genetics
Institute, which relates to homogeneous erythropoietin.
While it is not possible to predict accurately or to determine
the eventual outcome of these matters, the Company believes that the
outcome of these legal proceedings will not have a material adverse
effect on the financial statements of the Company.
Consensus Interferon
On June 15, 1994, Biogen Inc. filed suit in the Tokyo District
Court in Japan, against Amgen K.K., a subsidiary of the Company,
seeking injunctive relief for the alleged infringement of two
Japanese patent applications relating to alpha-interferon.
While it is not possible to predict accurately or to determine
the eventual outcome of these matters, the Company believes that the
outcome of these legal proceedings will not have a material adverse
effect on the financial statements of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Reference is made to the Index to Exhibits included herein.
(b) No reports on Form 8-K were filed during the three months
ended September 30, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 11/09/94 By:/s/ Robert S. Attiyeh
------------------ -----------------------------------
Robert S. Attiyeh
Senior Vice President, Finance
and Corporate Development, and
Chief Financial Officer
Date: 11/09/94 By:/s/ Larry A. May
------------------ -----------------------------------
Larry A. May
Vice President, Corporate
Controller and Chief
Accounting Officer
AMGEN INC.
INDEX TO EXHIBITS
Exhibit No. Description
4.1 Warrant Agreement, dated September 1, 1990, between the
Company, Paine Webber R&D Partners, L.P. and American
Stock Transfer and Trust Company as Warrant Agent. (13)
4.2 Warrant Agreement, dated November 26, 1991, between the
Company and American Stock Transfer and Trust Company as
Warrant Agent. (15)
4.3 Indenture dated January 1, 1992 between the Company and
Citibank N.A., as trustee. (14)
4.4 Forms of Commercial Paper Master Note Certificates. (18)
10.1* Company's 1991 Equity Incentive Plan, as amended. (15)
10.2* Company's 1984 Stock Option Plan, as amended, and forms
of Incentive Stock Option Grant and Nonqualified Stock
Option Grant used in connection therewith. (15)
10.3 Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984, between the Company and Kirin Brewery Company,
Limited (with certain confidential information deleted
therefrom). (1)
10.4 Amendment Nos. 1, 2, and 3, dated March 19, 1985, July
29, 1985 and December 19, 1985, respectively, to the
Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984 (with certain confidential information deleted
therefrom). (3)
10.5 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated, September 30, 1985
between the Company and Ortho Pharmaceutical Corporation
(with certain confidential information deleted
therefrom). (2)
10.6 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated September 30, 1985
between Kirin-Amgen, Inc. and Ortho Pharmaceutical
Corporation (with certain confidential information
deleted therefrom). (3)
10.7* Company's Employee Stock Purchase Plan, amended April 1,
1992. (16)
10.8 Agreement, dated February 12, 1986, between the Company
and Sloan-Kettering Institute for Cancer Research (with
certain confidential information deleted therefrom). (4)
10.9 Amendment No. 2, dated November 13, 1990, to Agreement,
dated February 12, 1986, between the Company and Sloan-
Kettering Institute for Cancer Research (with certain
confidential information deleted therefrom). (13)
10.10 Research, Development Technology Disclosure and License
Agreement PPO, dated January 20, 1986, by and between
the Company and Kirin Brewery Co., Ltd. (4)
10.11 Research Collaboration Agreement, dated August 31, 1990,
between Amgen Inc. and Regeneron Pharmaceuticals, Inc.
(with certain confidential information deleted
therefrom). (13)
10.12 Amendment Nos. 4 and 5, dated October 16, 1986
(effective July 1, 1986) and December 6, 1986 (effective
July 1, 1986), respectively, to the Shareholders
Agreement of Kirin-Amgen, Inc. dated May 11, 1984 (with
certain confidential information deleted therefrom). (5)
10.13 Assignment and License Agreement, dated October 16,
1986, between the Company and Kirin-Amgen, Inc. (with
certain confidential information deleted therefrom). (5)
10.14 G-CSF European License Agreement, dated December 30,
1986, between Kirin-Amgen, Inc. and the Company (with
certain confidential information deleted therefrom). (5)
10.15 Research and Development Technology Disclosure and
License Agreement: GM-CSF, dated March 31, 1987, between
Kirin Brewery Company, Limited and the Company (with
certain confidential information deleted therefrom). (5)
10.16* Company's 1987 Directors' Stock Option Plan, as amended.
(13)
10.17 Cross License Agreement, dated June 1, 1987, between
Amgen Inc. and Amgen Clinical Partners, L.P. (6)
10.18 Development Agreement, dated June 1, 1987, between Amgen
Inc. and Amgen Clinical Partners, L.P. (6)
10.19 Joint Venture Agreement, dated June 1, 1987, between
Amgen Inc. and Amgen Clinical Partners, L.P. (6)
10.20 Partnership Purchase Option Agreement, dated June 1,
1987, between Amgen Inc. and Amgen Clinical Partners,
L.P. (6)
10.21* Company's 1988 Stock Option Plan, as amended. (15)
10.22* Company's Retirement and Savings Plan, amended and
restated as of January 1, 1993. (16)
10.23 Amendment, dated June 30, 1988, to Research,
Development, Technology Disclosure and License
Agreement: GM-CSF dated March 31, 1987, between Kirin
Brewery Company, Limited and the Company. (7)
10.24 Amending Agreement, dated June 30, 1988, to Development
Agreement, Partner Purchase Option Agreement, Cross
License Agreement and Joint Venture Agreement, dated
June 1, 1987, between the Company and Amgen Clinical
Partners, L.P. (7)
10.25 Agreement on G-CSF in the EC, dated September 26, 1988,
between Amgen Inc. and F. Hoffmann-La Roche & Co.
Limited Company (with certain confidential information
deleted therefrom). (9)
10.26 Supplementary Agreement to Agreement dated January 4,
1989 to Agreement on G-CSF in the EU, dated September
26, 1988, between the Company and F. Hoffmann-La Roche &
Co. Limited Company, (with certain confidential
information deleted therefrom). (9)
10.27 Agreement on G-CSF in Certain European Countries, dated
January 1, 1989, between Amgen Inc. and F. Hoffmann-La
Roche & Co. Limited Company (with certain confidential
information deleted therefrom). (9)
10.28 Rights Agreement, dated January 24, 1989, between Amgen
Inc. and American Stock Transfer and Trust Company,
Rights Agent. (8)
10.29 First Amendment to Rights Agreement, dated January 22,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (11)
10.30 Second Amendment to Rights Agreement, dated April 2,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (12)
10.31 Credit Agreement, dated as of November 15, 1991, among
Amgen Inc., The Borrowing Subsidiaries therein named,
the Banks therein named, Swiss Bank Corporation, as
issuing Bank and Swiss Bank Corporation and Citicorp
USA, Inc., as Co-Agents. (16)
10.32 Deed of Trust and Security Agreement, dated June 1,
1989, between the Company and UNUM Life Insurance
Company of America. (10)
10.33 Note, dated June 1, 1989, between the Company and UNUM
Life Insurance Company of America. (10)
10.34 Agency Agreement, dated November 21, 1991, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (16)
10.35 Agency Agreement, dated May 21, 1992, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (16)
10.36 Guaranty, dated July 29, 1992, by the Company in favor
of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. (16)
10.37 936 Promissory Note No. 01, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (16)
10.38 936 Promissory Note No. 02, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (16)
10.39 936 Promissory Note No. 001, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (16)
10.40 936 Promissory Note No. 002, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (16)
10.41 Guaranty, dated November 21, 1991, by the Company in
favor of Citicorp Financial Services Corporation. (16)
10.42 First Amendment, dated as of June 16, 1992, to the
Credit Agreement, dated as of November 15, 1991, among
Amgen Inc., The Borrowing Subsidiaries therein named,
the Banks therein named, Swiss Bank Corporation, as
issuing Bank and Swiss Bank Corporation and Citicorp
USA, Inc., as Co-Agents. (16)
10.43 Second Amendment, dated as of November 6, 1992, to the
Credit Agreement, dated as of November 15, 1991, among
Amgen Inc., The Borrowing Subsidiaries therein named,
the Banks therein named, Swiss Bank Corporation, as
issuing Bank and Swiss Bank Corporation and Citicorp
USA, Inc., as Co-Agents. (16)
10.44 Lease and Agreement relating to Lease, dated March 27,
1986 and April 1, 1986, respectively, for 2003 Oak
Terrace Lane between 2001 Hillcrest Partnership and the
Company. (19)
10.45 Partnership Purchase Agreement, dated March 12, 1993,
between the Company, Amgen Clinical Partners, L.P.,
Amgen Development Corporation, the Class A limited
partners and the Class B limited partner. (17)
10.46* Amgen Supplemental Retirement Plan dated June 1, 1993.
(20)
10.47 Promissory Note of Mr. Kevin W. Sharer, dated June 4,
1993. (20)
10.48 Amendment No. 3 dated June 25, 1993 to the Credit
Agreement, dated November 15, 1991, among the Company,
The Borrowing Subsidiaries therein named, the Banks
therein named, the Swiss Bank Corporation, as issuing
Bank and Swiss Bank Corporation and Citicorp USA, Inc.,
as Co-Agents. (20)
10.49 Promissory Note of Mr. Larry A. May, dated February 24,
1993. (21)
10.50* First Amendment dated October 26, 1993 to the Company's
Retirement and Savings Plan. (21)
10.51* Amgen Performance Based Management Incentive Plan. (21)
10.52 Fourth Amendment, dated as of June 24, 1994, to the
Credit Agreement, dated November 15, 1991, among the
Company, The Borrowing Subsidiaries therein named, the
Banks therein named, the Swiss Bank Corporation, as
issuing Bank and Swiss Bank Corporation and Citicorp
USA, Inc., as Co-Agents.
11 Computation of earnings per share.
-------------
* Management contract or compensatory plan or arrangement.
(1) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1984 on June 26, 1984 and incorporated
herein by reference.
(2) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1985 on November 14, 1985 and
incorporated herein by reference.
(3) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended December 31, 1985 on February 3, 1986 and
incorporated herein by reference.
(4) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration
Statement (Registration No. 33-3069) on March 11, 1986 and
incorporated herein by reference.
(5) Filed as an exhibit to the Form 10-K Annual Report for the year
ended March 31, 1987 on May 18, 1987 and incorporated herein by
reference.
(6) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1987 on August 12, 1987 and incorporated
herein by reference.
(7) Filed as an exhibit to Form 8 amending the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988 on August 25, 1988
and incorporated herein by reference.
(8) Filed as an exhibit to the Form 8-K Current Report dated January
24, 1989 and incorporated herein by reference.
(9) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1989 on June 28, 1989 and incorporated
herein by reference.
(10) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1989 on August 14, 1989 and incorporated
herein by reference.
(11) Filed as an exhibit to the Form 8-K Current Report dated January
22, 1991 and incorporated herein by reference.
(12) Filed as an exhibit to the Form 8-K Current Report dated April
12, 1991 and incorporated herein by reference.
(13) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1991 on July 1, 1991 and incorporated
herein by reference.
(14) Filed as an exhibit to Form S-3 Registration Statement dated
December 19, 1991 and incorporated herein by reference.
(15) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1991 on March 30, 1992 and incorporated
herein by reference.
(16) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1992 on March 30, 1993 and incorporated
herein by reference.
(17) Filed as an exhibit to the Form 8-A dated March 31, 1993 and
incorporated herein by reference.
(18) Filed as an exhibit to the Form 10-Q for the quarter ended March
31, 1993 on May 17, 1993 and incorporated herein by reference.
(19) Filed as an exhibit to the Form 10-Q for the quarter ended June
30, 1993 on August 16, 1993 and incorporated herein by
reference.
(20) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1993 on November 12, 1993 and incorporated herein
by reference.
(21) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1993 on March 25, 1994 and incorporated
herein by reference.
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
PRIMARY COMPUTATION
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
Income before cumulative
effect of a change in
accounting principle $113,956 $102,692 $314,880 $283,476
Cumulative effect of a
change in accounting
principle - - - 8,738
-------- -------- -------- --------
Net income $113,956 $102,692 $314,880 $292,214
======== ======== ======== ========
Applicable common and
common stock equivalent
shares:
Weighted average shares
of common stock
outstanding during
the period 132,894 134,952 133,312 135,701
Incremental number of
shares outstanding
during the period
resulting from the
assumed exercises of
stock options and
warrants 6,352 7,467 6,709 8,366
-------- -------- -------- --------
Weighted average shares
of common stock and
common stock equivalents
outstanding
during the period 139,246 142,419 140,021 144,067
======== ======== ======== ========
Earnings per common
share primary:
Income before cumulative
effect of a change
in accounting
principle $ .82 $ .72 $ 2.25 $ 1.97
Cumulative effect of a
change in accounting
principle - - - .06
-------- -------- -------- --------
Net income $ .82 $ .72 $ 2.25 $ 2.03
======== ======== ======== ========
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
FULLY DILUTED COMPUTATION
(In thousands except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1994 1993 1994 1993
-------- -------- -------- --------
Income before cumulative
effect of a change in
accounting principle $113,956 $102,692 $314,880 $283,476
Cumulative effect of a
change in accounting
principle - - - 8,738
-------- -------- -------- --------
Net income $113,956 $102,692 $314,880 $292,214
======== ======== ======== ========
Applicable common and
common stock equivalent
shares:
Weighted average shares
of common stock
outstanding during
the period 132,894 134,952 133,312 135,701
Incremental number of
shares outstanding
during the period
resulting from the
assumed exercises of
stock options and
warrants 6,636 7,865 7,636 8,366
-------- -------- -------- --------
Weighted average shares
of common stock and
common stock equivalents
outstanding
during the period 139,530 142,817 140,948 144,067
======== ======== ======== ========
Earnings per common
share fully diluted:
Income before cumulative
effect of a change
in accounting
principle $ .82 $ .72 $ 2.23 $ 1.97
Cumulative effect of a
change in accounting
principle - - - .06
-------- -------- -------- --------
Net income $ .82 $ .72 $ 2.23 $ 2.03
======== ======== ======== ========
AMGEN INC.
FOURTH AMENDMENT
TO CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Fourth
Amendment") is dated as of June 24, 1994 and entered into by and
among Amgen Inc., a Delaware corporation (the "Company"), the
subsidiaries of the Company signatory to the Credit Agreement
defined below (together with the Company, the "Borrowers"), Swiss
Bank Corporation, San Francisco Branch, Citicorp USA, Inc., and
each other lender whose name is set forth on the signature pages
of the Credit Agreement defined below (collectively, the
"Banks"), Swiss Bank Corporation, New York Branch as Issuing Bank
(the "Issuing Bank"), and Swiss Bank Corporation, New York Branch
and Citicorp USA, Inc. as Co-Agents for the Banks (the "Co-
Agents"). This Fourth Amendment amends that certain Credit
Agreement dated as of November 15, 1991, as amended by that
certain First Amendment to Credit Agreement dated as of June 16,
1992, that certain Second Amendment to Credit Agreement dated as
of November 6, 1992 and that certain Third Amendment to Credit
Agreement dated as of June 25, 1993 (as so amended, the "Credit
Agreement") by and among the Borrowers, the Banks, the Issuing
Bank and the Co-Agents. Capitalized terms used herein without
definition shall have the same meanings herein as set forth in
the Credit Agreement.
RECITALS
WHEREAS, the Borrowers, the Banks, the Issuing Bank and
the Co-Agents desire to amend the Credit Agreement as follows:
(i) to extend the maturity dates of the Tranche A-1 Commitment
and the Tranche A-2 Commitment, (ii) to reduce the commitment
fees payable with respect to the Tranche A-1 Commitment and the
Tranche A-2 Commitment, and (iii) to reduce the interest rate
spread applicable to Eurodollar Rate Advances.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements set forth herein, the parties
hereto agree as follows:
Section 1. AMENDMENTS TO SECTION 1 OF THE CREDIT AGREEMENT
(a) The table entitled "Rate Spread and LC Fees" set
forth in the definition of "Applicable Percentage" contained in
Section 1.1 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following table:
Rate Spread and LC Fees
Tier I Tier II Tier III
Eurodollar Rate .375% .50% .625%
Spread
LC Issuance Fee .15% .1875% .1875%
LC Reimbursement .50% .625% .75%
Fee
(b) The following definitions contained in Section 1.1
of the Credit Agreement are hereby deleted in their entirety and
replaced with the following:
"'Tranche A-1 Maturity Date' means June 23, 1995."
"'Tranche A-2 Maturity Date' means June 23, 1995."
Section 2. AMENDMENTS TO SECTION 3 OF THE CREDIT AGREEMENT
(a) Subsection 3.2(a)(1) of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:
"(1) its Pro Rata Share of the Tranche A-1
Commitment, commitment fees equal to 12.5/100 of one
percent (.125%) per annum times the average daily
Unused Portion of the Tranche A-1 Commitment during the
Fiscal Quarter then ending and".
(b) Subsection 3.2(a)(2) of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:
"(2) its Pro Rata Share of the Tranche A-2
Commitment, commitment fees equal to 12.5/100 of one
percent (.125%) per annum times the average daily
Unused Portion of the Tranche A-2 Commitment during the
Fiscal Quarter then ending".
Section 3. REPRESENTATIONS AND WARRANTIES
In order to induce the Issuing Bank, the Co-Agents and
the Banks to enter into this Fourth Amendment and to amend the
Credit Agreement in the manner provided herein, each Borrower
represents and warrants to each Bank that the following statements
are true, correct and complete:
A. Corporate Power and Authority. Such Borrower has
all requisite corporate power and authority to execute and deliver
this Fourth Amendment and to carry out the transactions contemplated
by, and perform its obligations under, the Credit Agreement as
amended by this Fourth Amendment (the "Amended Agreement").
B. Authorization of Agreements. The execution and
delivery of this Fourth Amendment and the performance of the Amended
Agreement have been duly authorized by all necessary corporate
action by such Borrower.
C. No Conflict. The execution, delivery and
performance of this Fourth Amendment and the Amended Agreement by
such Borrower do not (i) require any consent or approval not
heretofore obtained of any partner, director, stockholder, security
holder or creditor of such Borrower, (ii) violate or conflict with
any provisions of such Borrower's certificate of incorporation or
bylaws, (iii) result in or require the creation or imposition of any
Lien or Right of Others upon or with respect to any Property now
owned or leased or hereafter acquired by such Borrower, (iv)
violate, to the best knowledge of such Borrower, any Requirement of
Law applicable to such Borrower, or (v) result (or, with the giving
of notice or the passage of time or both, would result) in a breach
of or default under, or cause or permit the acceleration of any
obligation owed under, any indenture or loan or credit agreement or
any other Contractual Obligation to which such Borrower is a party
or by which such Borrower or any of its Property is bound or
affected. Except as set forth in Schedule 4.2 annexed to the
Amended Agreement, such Borrower is not in violation of, or default
under, any requirement of Law or Contractual Obligation, or any
indenture, loan or credit agreement described in Section 4.2(e) of
the Credit Agreement, in any respect that constitutes a Material
Adverse Effect.
D. Governmental Consents. No authorization, consent,
approval, order, license or permit from, or filing, registration or
qualification with, any Governmental Agency is required to authorize
or permit under applicable Laws the execution, delivery and
performance of the Amended Agreement by such Borrower.
E. Binding Obligation. This Fourth Amendment will,
when executed and delivered by such Borrower, constitute the legal,
valid and binding obligation of such Borrower enforceable against
such Borrower in accordance with its terms, except as enforcement
may be limited by Debtor Relief Laws or by equitable principles
relating to the granting of specific performance and equitable
remedies as a matter of judicial discretion.
F. Absence of Default. No event has occurred and is
continuing that is a Default or an Event of Default.
Section 4. CONDITIONS TO EFFECTIVENESS
This Fourth Amendment shall become effective as of the
date when the Administrative Agent, on behalf of the Banks, shall
have received all of the following, in form and substance
satisfactory to the Administrative Agent (the "Fourth Amendment
Effective Date"):
(a) Resolutions of the Board of Directors of each
Borrower authorizing and approving the execution, delivery and
performance of this Fourth Amendment, in each case certified as of
the Fourth Amendment Effective Date by the secretary or an assistant
secretary of such Borrower;
(b) A certificate of the secretary or an assistant
secretary of each Borrower, which shall certify as of the Fourth
Amendment Effective Date the names and offices of the officers of
each Borrower authorized to sign this Fourth Amendment together with
the true signatures of such officers; and
(c) A counterpart hereof executed by a duly authorized
officer of each party hereto and written or telephonic notification
of such execution and authorization of delivery thereof.
Section 5. MISCELLANEOUS
A. Reference to and Effect on the Credit Agreement
and the Other Loan Documents.
(i) On and after the Fourth Amendment Effective
Date, each reference in the Credit Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like
import referring to the Credit Agreement, and each reference
in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to
the Credit Agreement shall mean and be a reference to the
Credit Agreement as amended by this Fourth Amendment.
(ii) Except as specifically amended by this Fourth
Amendment, the Credit Agreement and the other Loan Documents
shall remain in full force and effect and are hereby
ratified and confirmed.
(iii) The execution, delivery and performance of
this Fourth Amendment shall not, except as expressly
provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of the Co-
Agents or any Bank under the Credit Agreement or any of the
other Loan Documents.
(iv) Until the Fourth Amendment Effective Date,
all terms and provisions of the Credit Agreement shall
remain in effect, and all fees shall be calculated as set
forth therein. On and after the Fourth Amendment Effective
Date, the commitment fees shall be calculated as described
in this Fourth Amendment.
B. Fees and Expenses. The Company acknowledges that
all costs, fees and expenses as described in subsection 13.3 of the
Credit Agreement incurred by the Co-Agents and its counsel with
respect to this Fourth Amendment and the documents and transactions
contemplated hereby shall be for the account of Company.
C. Execution in Counterparts. This Fourth Amendment
may be executed in any number of counterparts, and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such
counterparts taken together shall constitute but one and the same
instrument.
D. Applicable Law. This Fourth Amendment shall be
governed by, and shall be construed and enforced in accordance with,
the Laws of the state of California applicable to contracts made and
performed in such state.
E. Fourth Amendment Effective Date. The
Administrative Agent shall give prompt notice to each other party
hereto of the occurrence of the Fourth Amendment Effective Date.
IN WITNESS WHEREOF, the parties hereto have caused this
Fourth Amendment to be executed as of the date first above written
by their respective officers thereunto duly authorized.
THE COMPANY:
AMGEN INC.
By: /s/ Thomas A. Hardy
Name: Thomas A. Hardy
Title: President
BORROWING SUBSIDIARIES:
AMGEN MANUFACTURING, INC.
By: /s/Dennis Fenton
Name: Dennis Fenton
Title: Vice Presidnet
THE CO-AGENTS:
SWISS BANK CORPORATION,
NEW YORK BRANCH
By: /s/Jennifer L. Match
Name: Jennifer L. Match
Title: Associate Director
By: /s/Sean M. Harrigan
Name: Sean M. Harrigan
Title: Executive Director
CITICORP USA, INC.
By: /s/Barbara A. Cohen
Name: Barbara A. Cohen
Title: Vice President
THE ISSUING BANK:
SWISS BANK CORPORATION,
NEW YORK BRANCH
By: /s/Jennifer L. Match
Name: Jennifer L. Match
Title: Associate Director
By: /s/Sean M. Harrigan
Name: Sean M. Harrigan
Title: Executive Director
THE BANKS:
SWISS BANK CORPORATION,
SAN FRANCISCO BRANCH
By: /s/David L. Parrot
Name: David L. Parrot
Title: Associate Director
By: /s/Colin T. Taylor
Name: Colin T. Taylor
Title: Director
CITICORP USA, INC.
By: /s/Barbara A. Cohen
Name: Barbara A. Cohen
Title: Vice President
ABN AMRO BANK, N.V., Los
Angeles Agency
By: /s/Ellen M. Coleman
Name: Ellen M. Coleman
Title: Assistant Vice President
BANK OF MONTREAL (formerly
Harris Trust and Savings Bank)
By: /s/J. Donald Higgins
Name: J. Donald Higgins
Title: Managing Director
THE SANWA BANK, LIMITED
LOS ANGELES BRANCH
By: /s/Gill S. Realon
Name: Gill S. Realon
Title: Vice President