SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment to Current Report Filed Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
November 18, 1994
- - - -----------------
Date of Report (Date of earliest event reported)
Amgen Inc.
- - - ----------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-12477 95-3540776
- - - ----------------------------------------------------------------------
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
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
- - - ----------------------------------------------------------------------
- - - ----------------------------------------------------------------------
(Former name or former address, if changed since last report.)
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 18, 1994, Amgen Inc. ("Amgen") and Synergen, Inc.
("Synergen") announced that they entered into a definitive
agreement through which Amgen would acquire Synergen. Pursuant to this
agreement, Amgen's wholly-owned subsidiary, Amgen Acquisition
Subsidiary, Inc. ("Amgen Acquisition Subsidiary"), completed a cash
tender offer (the "Tender Offer") to purchase all of the outstanding
shares of Synergen common stock (including the associated preferred
stock purchase rights) for $9.25 per share. In the Tender Offer,
Amgen Acquisition Subsidiary acquired approximately 91 percent of the
outstanding shares of common stock of Synergen. Following completion
of the Tender Offer, Amgen Acquisition Subsidiary was merged into
Synergen (the "Merger"). Pursuant to the Merger, each share of
Synergen common stock (other than shares owned by Amgen, Synergen or
any of their respective subsidiaries) that remained outstanding
following completion of the Tender Offer was converted into the right
to receive $9.25 per share in cash. As a result of the Tender Offer
and Merger (hereinafter collectively referred to as the
"Acquisition"), Synergen is now a wholly-owned subsidiary of Amgen.
Funds from Amgen's working capital were used to purchase shares of
Synergen stock. In determining the amount to be offered for the
shares of Synergen stock, Amgen considered, among other things, the
financial condition and results of operations of Synergen and detailed
financial and valuation analyses presented to Amgen by Amgen's
financial advisors. It is anticipated that at least some of the
assets constituting plant, equipment and other physical property
generally used in Synergen's business will continue to be used by
Amgen for such purposes but Amgen has not yet determined how it
intends to use all of such assets. This Form 8-K/A amends the Form
8-K Current Report dated December 2, 1994.
2
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired
Page
Number
Audited Consolidated Financial Statements of Synergen, Inc.
and Subsidiaries
Independent Auditors' Report................................F-1
Consolidated Balance Sheet as of December 31, 1993..........F-2
Consolidated Statement of Operations for the year
ended December 31, 1993.....................................F-3
Consolidated Statement of Stockholders' Equity for the
year ended December 31, 1993................................F-4
Consolidated Statement of Cash Flows for the year ended
December 31, 1993...........................................F-5
Notes to Consolidated Financial Statements...........F-6 - F-17
Unaudited Consolidated Financial Statements of Synergen, Inc.
and Subsidiaries
Consolidated Balance Sheet as of September 30, 1994........F-18
Consolidated Statements of Operations for the nine
months ended September 30, 1994 and 1993...................F-19
Consolidated Statements of Cash Flows for the nine
months ended September 30, 1994 and 1993...................F-20
Notes to Unaudited Consolidated Financial
Statements..........................................F-21 - F-22
3
(b) Pro forma financial information
Page
Number
Introduction to Amgen Inc. Unaudited Pro Forma Condensed
Combining Financial Statements ...............................F-23
Amgen Inc. Unaudited Pro Forma Condensed Combining Balance
Sheet as of September 30, 1994 ...............................F-24
Amgen Inc. Unaudited Pro Forma Condensed Combining Statement
of Operations for the year ended December 31, 1993 ....F-25 - F-26
Amgen Inc. Unaudited Pro Forma Condensed Combining Statement
of Operations for the nine months ended September 30,
1994 ..................................................F-27 - F-28
Notes to Amgen Inc. Unaudited Pro Forma Condensed Combining
Financial Statements .........................................F-29
(c) Exhibits
Agreement and Plan of Merger among Amgen Inc., Amgen
Acquisition Subsidiary, Inc. and Synergen, Inc. (1)
Independent Auditors' Consent...................................F-30
(1) Filed as an exhibit to the Form 8-K Current Report dated
December 2, 1994 and incorporated by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its
behalf by the undersigned thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 2/02/95 By:/s/ Robert S. Attiyeh
- - - ------------------------ --------------------------------
Robert S. Attiyeh
Senior Vice President,
Finance and Corporate
Development, and Chief
Financial Officer
4
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Synergen, Inc.
Boulder, Colorado
We have audited the accompanying consolidated balance sheet of
Synergen, Inc. and subsidiaries as of December 31, 1993 and the
related consolidated statements of operations, stockholders' equity,
and cash flows for the year then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of Synergen,
Inc. and subsidiaries as of December 31, 1993 and the results of their
operations and their cash flows for the year ended December 31, 1993
in conformity with generally accepted accounting principles.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
February 4, 1994
F-1
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
December 31, 1993
Current assets: -----------------
Cash and cash equivalents $ 51,579,100
Short-term investments 104,637,200
Accounts receivable (no allowance for
doubtful accounts considered necessary) 14,561,000
Receivable from Synergen Clinical Partners 6,200,000
Accrued interest receivable 779,200
Prepaid expenses and other 2,975,400
------------
Total current assets 180,731,900
Property and equipment, net 86,856,100
Other assets 8,469,700
------------
Total assets $276,057,700
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities-
Accounts payable and accrued expenses $ 11,229,100
------------
Total current liabilities 11,229,100
Industrial Development Revenue Bonds 6,000,000
Commitments and contingencies (Notes 7 and 11)
Stockholders' equity:
Preferred stock, $.01 par value; authorized
10,000,000 shares; none issued -
Common stock, $.01 par value; authorized
120,000,000 shares; issued and
outstanding, 25,666,186 shares 256,700
Additional paid-in capital, net 408,369,500
Deficit (148,821,700)
Deferred compensation and receivable for
warrants, net (975,900)
------------
Total stockholders' equity 258,828,600
------------
Total liabilities and stockholders'
equity $276,057,700
============
See notes to consolidated financial statements
F-2
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended
December 31, 1993
-----------------
Revenues:
Research and development $ 13,180,200
Interest and other 10,306,200
------------
23,486,400
Expenses:
Research and development 88,248,500
General and administrative 16,986,100
Restructuring charge 2,000,000
Interest 447,500
------------
107,682,100
Loss before cumulative effect of change in
accounting principle (84,195,700)
------------
Cumulative effect of change in accounting
principle (2,417,800)
------------
Net loss $(86,613,500)
============
Net loss per share:
Loss before cumulative effect of change in
accounting principle $(3.33)
Cumulative effect of change in accounting
principle (.09)
------------
Net loss per share $(3.42)
============
Weighted average common share outstanding 25,308,800
Pro forma amounts assuming the new method of
accounting for patent costs is applied
retroactively:
Net loss (84,195,700)
Net loss per share $(3.33)
See notes to consolidated financial statements
F-3
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1993
Deferred
Additional Compensation
Common Stock Paid-in and Receivable
Shares Par Value Capital Deficit for Warrants
---------- ---------- ------------ ------------- --------------
Balance, January 1, 1993 25,083,146 $250,800 $405,244,900 $ (62,208,200) $(1,566,000)
Exercise of stock options
($3.33 to $33.83 per share)
net of treasury stock
acquired 468,319 4,700 2,230,900 - -
Synergen Clinical Partners
warrants exercised 4,001 100 62,600 - -
Grants under Stock Bonus Plan 10,720 100 228,600 - -
Contribution to Employee
Stock Ownership Plan 100,000 1,000 1,036,500 - (1,037,500)
Amortization of deferred
compensation - - - - 1,059,000
Amorization of receivable
for warrants - - - - 568,600
Foreign currency
translation adjustment - - (434,000) - -
Net loss - - - (86,613,500) -
---------- ---------- ------------ ------------- --------------
Balance, December 31, 1993 25,666,186 $256,700 $408,369,500 $(148,821,700) $ (975,900)
========== ========== ============ ============== ==============
See notes to consolidated financial statements
F-4
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended
December 31,
1993
------------
Cash flows from operating activities:
Net loss $(86,613,500)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization of assets 9,901,500
Amortization of deferred compensation and
receivable for warrants 1,627,600
Stock bonus awards 228,700
Change in operating assets and liabilities:
Accounts receivable 4,009,300
Accrued interest receivable 1,590,400
Prepaid expenses and other (120,600)
Accounts payable and accrued expenses 384,600
Unearned revenue (779,900)
------------
Total adjustments 16,841,600
------------
Net cash used in operating activities (69,771,900)
Cash flows from investing activities:
Capital expenditures (16,792,200)
Net redemption of short-term investments 131,129,700
Other, net 2,517,100
------------
Net cash provided by investing activities 116,854,600
Cash flows provided by financing activities-
Proceeds from issuance of common stock, net 1,864,300
Net increase in cash and cash equivalents 48,947,000
Cash and cash equivalents at beginning of period 2,632,100
------------
Cash and cash equivalents at end of period $ 51,579,100
============
Supplemental disclosures:
Interest paid $ 367,700
============
See notes to consolidated financial statements
F-5
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1993
1. Summary of Significant Accounting Policies
Business
Synergen, Inc. is a biopharmaceutical company engaged in the
discovery, development and manufacture of protein-based human
pharmaceuticals.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Synergen, Inc. and its wholly owned subsidiaries, Synergen
Biologicals, Inc. (one percent general partner of Synergen Development
Partners Limited--see Note 3), Synergen Production Corporation,
Synergen Development Corporation (one percent general partner of
Synergen Clinical Partners, L.P.--see Note 3) and Synergen Europe,
Inc. and its subsidiary Synergen B.V. (collectively, the Company).
All material intercompany balances have been eliminated in
consolidation.
Cash and Cash Equivalents
Cash and cash equivalents are composed of immediately accessible funds
held in bank checking accounts, money market accounts and highly
liquid debt instruments with maturities not exceeding three months at
purchase.
Short-term Investments
Short-term investments include obligations of corporations and
federal, state and local governments and agencies. They are available
for sale to fund operations and capital expenditures and are carried
at the lower of aggregate cost or market. These investments are
classified as non-current assets to the extent they collateralize
borrowings.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method over the assets' estimated useful
lives. Buildings and improvements are depreciated over 10 to 20 years
and equipment is depreciated over 5 to 10 years.
Deferred Compensation and Receivable for Warrants
Receivable for warrants was composed of amounts receivable related to
warrants issued in connection with the formation of Synergen Clinical
Partners, L.P. in February 1991 and has been amortized as revenues
were earned from Synergen Clinical Partners, L.P. As of March 31,
1993, the receivable for warrants was fully amortized. Deferred
compensation is related to both the Company's Employee Stock Ownership
F-6
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
Plan and compensatory stock grants and is amortized over vesting
periods ranging from one to five years.
Foreign Currency Translation
Pursuant to Financial Accounting Standard No. 52, the financial
position and results of the Company's European subsidiary are measured
using the local currency as the functional currency. The balance
sheet has been translated at the exchange rate in effect at December
31, 1993, while revenues and expenses have been translated at the
average exchange rate on a monthly basis. The aggregate effect of
translation is being deferred as a component of stockholders' equity.
At December 31, 1993, the translation effect is $434,000 and is
reported within additional paid in capital.
Research and Development
Revenues under research and development contracts are recognized as
the related research and development expenses are incurred or as
development milestones are reached and payment is irrevocably due
under the terms of the agreements.
Research and development costs are expensed as incurred. In-process
research and development acquired by issuance of common stock and
warrants is expensed at acquisition at the fair value of the securities
issued, plus out-of-pocket and other costs.
Income Taxes
The Company adopted Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes," effective January 1, 1993.
This statement supersedes SFAS No. 96, "Accounting for Income Taxes,"
that had been the Company's previous accounting method. There was no
cumulative effect of adopting SFAS No. 109 on the Company's financial
statements (see Note 8).
Per Share Amounts
Per share amounts are computed on the weighted average number of
common shares outstanding. The effect of stock options and warrants
is not included in loss per share because it is antidilutive.
F-7
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
2. Change in Accounting Principle
In December 1993, the Company changed its method of accounting for
external patent development costs from capitalizing the costs to
expensing the costs as incurred. The Company believes this change
will conform more closely to predominant industry practices. This
resulted in a one-time charge of $2,417,800, $.09 per share, at
January 1, 1993, for the cumulative effect on prior years of changing
this accounting principle. Current year patent costs of $670,800 have
been included in general and administrative expenses.
3. Research and Development Agreements
Synergen Clinical Partners, L.P.
On February 14, 1991, Synergen Clinical Partners, L.P. (Clinical
Partners) completed a private placement of limited partnership
interests, which resulted in net proceeds of approximately $46,400,000
in cash and notes receivable. In connection with the formation of
Clinical Partners, the Company granted to Clinical Partners an
exclusive royalty-free license and right to certain technology for
human pharmaceutical use within the United States, Canada and Europe.
Under the terms of a development and marketing agreement with Clinical
Partners, the Company is performing research and development
activities to obtain the approval from the FDA for the sale of ANTRIL,
the Company's interleukin-1 receptor antagonist. Revenues earned
under the agreement were $4,851,200 in 1993. Included in accounts
receivable at December 31, 1993 are $5,743,700 related to such
revenues. All sponsored research and development revenue attributable
to this collaboration was recognized in full by March 31, 1993. In
1991, the Company also received a non refundable fee of $2,500,000 in
connection with the agreement. This fee was recorded as deferred
revenue and was being amortized to research and development revenues
over the period of partnership funding. As of March 31, 1993, the fee
was fully amortized. Under certain circumstances, the Company may be
required to fund development of Clinical Partners' products in order
to retain its option, as described below, to purchase the limited
partners' interests. The Company is responsible for manufacturing and
marketing of Clinical Partners' products in the United States, Canada
and Europe, and is required to make payments to Clinical Partners
based on product revenues. Upon the first marketing approval of a
Clinical Partners' product by the FDA, the Company is obligated to
make a payment of between $8,400,000 and $8,800,000 to Clinical
Partners, payable in cash, common stock of the Company, or some
combination thereof.
F-8
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
The Company has been granted an option to purchase all of the limited
partners' interests in Clinical Partners exercisable between the
second and fourth year after the first commercial sale of Clinical
Partners' products depending upon the size of product revenues. If
the Company exercises this option, it will make to the limited
partners an advance payment of between $34,200,000 and $36,000,000 in
cash, common stock of the Company, or some combination thereof, plus
additional payments based on sales of Clinical Partners' products in
the United States, Canada and Europe for 11 years subsequent to the
purchase of their interests. In exchange for this option, the Company
issued warrants to the limited partners to purchase an aggregate of
3,950,625 shares of its common stock. The warrants are exercisable
through February 29, 1996, at a price of $15.69 per share, and from
March 1, 1996 through February 28, 1998, at a price of $17.69 per
share. In addition, the Company issued to the sales agents of the
private placement warrants to purchase 140,400 shares that are
exercisable through February 29, 1996 at a price of $16.31 per share.
The fair value of the warrants was recorded as additional paid in
capital, with an offsetting receivable recorded in stockholders'
equity. The receivable was amortized as a charge against the
Company's research and development revenues from Clinical Partners.
As of March 31, 1993, the receivable for warrants was fully amortized.
In January 1993, the Company filed a registration statement covering
shares issuable upon exercise of the warrants.
In order to fund organizational and offering costs, the Company loaned
Clinical Partners $6,200,000. The loan is with recourse to Clinical
Partners and is secured by notes receivable from the limited partners
to Clinical Partners aggregating approximately $11,883,100. The loan
bears interest at 9.75 percent, payable annually in arrears, and is
due in February 1994.
Syntex (U.S.A.) Inc.--Synergen Neuroscience Joint Venture
In February 1990, the Company entered into the Syntex-Synergen
Neuroscience Joint Venture (Joint Venture) with Syntex (U.S.A.) Inc.
to develop neurotrophic factors for the treatment of certain
neurological diseases. An affiliate of Syntex provided funding of
$15,000,000 to the Joint Venture for the first phase of product
development. In connection with formation of the Joint Venture, the
Company granted Syntex warrants to purchase 1,125,000 shares of common
stock at an exercise price of $12.67 per share. The warrants, which
expire in July 1997, became exercisable upon the affiliate's election
to provide aggregate funding of $50,000,000 (including the $15,000,000
previously funded) to the Joint Venture. The affiliate notified the
Joint Venture in January 1993 that it had made this election. For
conducting research for the Joint Venture, the Company earned revenue
of $8,188,000 in 1993 of which $7,254,700 was included in accounts
receivable at December 31, 1993.
F-9
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
Synergen Development Partners Limited
In November 1992, the Company acquired the assets of Synergen
Development Partners Limited (Development Partners) in exchange for
255,752 shares of common stock and warrants to purchase 209,252 shares
of common stock. The warrants have an exercise price of $67.77 and
will expire on June 30, 1997. The acquisition has been accounted for
principally as a noncash charge to operations totaling $18,100,000,
equal to the fair value of the common stock and warrants issued
($16,463,300), plus the out-of-pocket expenses and liabilities of
Development Partners assumed or forgiven by the Company. Assets
acquired consist principally of certain rights related to research and
development projects in process. As a result of the acquisition, the
Company owns exclusive rights to the products previously owned by
Development Partners and has no future obligation to the limited
partners of Development Partners.
Selectide Corporation
In December 1992, the Company entered into a collaborative research
agreement with Selectide Corporation to jointly develop small molecule
inhibitors of certain cytokines. Under the terms of the agreement,
the Company has made a $3,000,000 equity investment in Selectide which
is included in other non-current assets. The Company also agreed to
provide Selectide with research funding, benchmark payments on the
achievement of certain milestones, and royalty payments on the sale of
products that result from the collaboration. The amount of such
funding during 1993 and the estimated amount for 1994 are not material
and future obligations for research funding and benchmark payments are
contingent upon the occurrence of certain events. The agreement is
terminable at the Company's discretion upon the occurrence of certain
events.
F-10
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
4. Property and Equipment
Property and equipment, at cost, consists of the following:
December 31, 1993
------------------
Land and buildings $ 46,814,600
Laboratory and manufacturing equipment 50,556,700
Furniture and office equipment 10,556,100
Construction work in progress 1,483,700
------------
109,411,100
Less accumulated depreciation 22,555,000
------------
Net property and equipment $ 86,856,100
============
5. Industrial Development Revenue Bonds Payable
In December 1984, Boulder County, Colorado, issued $6,000,000 of
Industrial Development Revenue Bonds and loaned the proceeds to the
Company to finance acquisition and improvement of a building for
laboratory, production and office use. The bonds are due December
2009, subject to the bondholders' right to demand payment at par each
December. The bond interest rate is adjusted annually to a rate
comparable to the then-current yield for similar obligations. The
stated interest rate was 3.5% at December 31, 1993 and the effective
rate was 4.9% for 1993. The Company has a one-time opportunity on any
anniversary date of the bonds to fix the interest rate through
maturity. The bonds are collateralized by land and buildings with a
net carrying amount of $24,419,100 and restricted investments with a
carrying amount of $4,468,300 which are included in other assets at
December 31, 1993. The Company is required to deposit $90,000 per
quarter (through December 31, 2000) in a sinking fund. The Company
has a $6,000,000 letter of credit from a bank, which expires December
1994, which can be drawn to the extent bonds presented for payment
cannot be remarketed. No amounts have been drawn on this letter of
credit. The letter of credit agreement contains covenants relating
to, among other matters, minimum levels of net worth, working capital
and debt-to-equity ratios, restrictions on additional debt and
prohibits payment of common stock dividends.
F-11
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
6. Stockholders' Equity
The Company has an incentive and non-qualified stock option plan under
which options for up to 2,500,000 shares of common stock may be
granted to selected Company employees and consultants. The Company
also had an incentive and non-qualified stock option plan that expired
in October 1993 under which options for up to 3,000,000 shares of
common stock were granted to selected Company employees and
consultants. The exercise price for options is established by the
compensation committee of the Board of Directors and incentive options
cannot be granted at a price less than the fair market value of the
stock on the date of the grant. All options granted under the plans
will expire on dates up to ten years after the date of the grant. In
May 1993, the compensation committee of the Board of Directors
approved the repricing of certain outstanding options held by current
employees by granting replacement options to those employees. The
exercise price for these options is $10.63, the fair market value of
the stock on May 7, 1993, and the vesting period on all the
replacement options was extended from three to four years. At
December 31, 1993, options to purchase 2,743,076 shares at prices
ranging from $3.33 to $52.75 per share, with a weighted average price
of $9.95 per share, are outstanding under the plans, of which options
for 1,187,621 shares were exercisable; options for 1,357,733 shares
had been exercised; and options for 1,344,652 shares were available to
be granted under the plans.
The Company has a stock option plan under which options to purchase up
to 150,000 shares of common stock may be granted to non-employee
directors. The plan provides for the grant of stock options for
15,000 shares of the Company's common stock to each new non-employee
director upon election to the Board and for annual grants of options
for 3,000 shares on March 1 of each year to each non-employee
director. The options expire eight years after grant, vest over a
four-year period after grant and are priced at the fair market value
of the Company's common stock on the date of grant. At December 31,
1993, options for 39,000 shares were outstanding at prices ranging
from $15.50 to $50.25 per share; of which options for 20,250 shares
were exercisable; and options for 111,000 shares were available to be
granted under the plan.
In 1988, the Company established an Employee Stock Ownership Plan
(ESOP). All Company employees are eligible to participate in the
ESOP. The Company may, but is not required to, make an annual
contribution to the ESOP of either cash or Company common stock.
Company contributions are allocated to participants in proportion to
compensation, with certain limitations, and generally vest over a
five-year period. In 1993, the Company contributed 100,000 shares of
its common stock to the ESOP with a market value of $1,037,500.
F-12
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
The Company has a Stock Bonus Plan under which up to 150,000 shares of
common stock may be awarded to the Company's employees, directors, and
consultants. At December 31, 1993, 95,819 shares of common stock had
been awarded under the plan, and 54,181 shares were available for
future awards. Shares awarded generally vest immediately.
The Company has a stockholder rights plan that, in the event of
certain acquisitions or attempts to acquire 20 percent or more of the
Company's outstanding stock by an unrelated third party or group,
would allow the remaining stockholders to acquire Preferred Stock or
additional common stock at one-half of the then market value.
No cash dividends have been paid or declared by the Company.
The Company is authorized to issue 10,000,000 shares of Preferred
Stock, none of which is currently outstanding.
7. Commitments and Contingencies
The Company has employment contracts with its executive officers.
Such contracts provide for severance pay and automatic renewal in
certain instances and have non-competition clauses. Such contracts
are cancelable at the Company's option. The aggregate severance
provisions are approximately $2,500,000.
Certain of the Company's technologies under development are subject to
royalty agreements which provide for payments of royalties to
universities and others in the event commercial product sales result
from use of the technologies.
In January 1990, the Company reacquired rights to certain technology
from CIBA-GEIGY in connection with termination of a joint development
agreement between the parties. The Company has an obligation to pay
to CIBA-GEIGY a portion of future revenues, if any, up to a maximum of
$4,700,000 derived from the technology.
8. Income Taxes
Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax
purposes, and (b) operating loss and tax credit carry forwards. The
tax effects of significant items comprising the Company's deferred
taxes as of December 31, 1993 are as follows:
F-13
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
DEFERRED TAX ASSETS:
Operating loss carry forwards $ 49,080,900
Synergen Development Partners Limited
acquisition costs 6,751,300
Tax credit carry forwards 4,821,900
Other 1,768,300
------------
62,422,400
Valuation allowance (62,422,400)
------------
Net Deferred Tax Asset $ -
============
There were no material deferred tax liabilities as of December 31,
1993.
The total cumulative effect of adopting SFAS No. 109 at January 1,
1993 resulted in a deferred tax asset of $30,362,300. This amount was
entirely reserved for by a valuation allowance.
The valuation allowance increased by $32,060,100 during the year ended
December 31, 1993. This increase was a result of the increase in the
deferred tax asset primarily due to net operating losses during the
year.
At December 31, 1993, the Company had, for federal income tax
purposes, net operating loss carryforwards, research and development
tax credit carryforwards, and investment tax credit carryforwards of
approximately $131,584,100, $4,621,900 and $200,000, respectively,
which expire beginning in 1997 if not previously utilized.
9. Restructuring Charge
In April 1993, the Company implemented a restructuring in order to
more fully utilize Company resources and focus the projects of the
organization. As a result of the restructuring, the Company reduced
its work force by approximately 12 percent, or approximately 85
employees. The Company incurred a one-time charge of $2,000,000 in
the second quarter of 1993 due to the restructuring.
F-14
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
10. Information about Financial Instruments
The carrying values of financial instrument assets (liabilities) were
as follows:
December 31, 1993
-----------------
Short-term investments $104,637,200
Accounts receivable and current note receivable 20,761,000
Investments and notes receivable included in
other assets 4,468,300
Industrial Development Revenue Bonds (6,000,000)
The estimated fair value of these financial instruments approximated
the carrying value. The fair value of short-term and other
investments is based primarily on market quotes. The fair value of
receivables are considered to be equivalent to carrying value, based
on the nature and terms of such amounts. The face amount of the
industrial development revenue bonds is considered to be the fair
value, as the interest rate on the bonds is reset to a market rate
each December.
The Company does not invest in financial instruments that create off-
balance sheet risk. Both trade receivables and interest-bearing
investments could be subject to concentration of credit risk. Risk in
trade receivables is limited because they generally represent amounts
due from sponsors which could lose rights in sponsored technology due
to breach of contract if they failed to perform. Interest bearing
investments are generally obligations of the federal government or
investment grade corporate or municipal issuers. At December 31,
1993, non-federal obligations were limited to money market mutual
funds of major financial institutions and to other investments
individually less than 5% of total assets.
11. Litigation
Following a drop in the price of Synergen's stock on February 22,
1993, a number of class action complaints were filed against Synergen
and certain of its officers and directors in the U.S. District Court
for the District of Colorado on behalf of various classes of the
Company's investors. The complaints were consolidated by a
consolidated class action complaint which was filed on April 15, 1993.
In addition to Synergen, Kenneth J. Collins, executive vice president
of finance and administration, is named as defendant in the
consolidated complaint, together with Jon S. Saxe, the former
president and chief executive officer and a former director, and
Michael A. Catalano, the former vice president of clinical research.
The complaint alleges violations of federal securities laws and state
law. The Company believes the claims to be without merit and intends
to vigorously contest them.
F-15
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
On April 20, 1993, the United States Patent and Trademark Office (PTO)
declared an interference between Synergen's U.S. patent number
4,997,929, issued March 5, 1991, and a patent application assigned to
the Max Planck Institut fur Psychiatrie and Regeneron Pharmaceuticals,
Inc. The interference relates to nucleic acid molecules encoding
human ciliary neurotrophic factor (CNTF). When the PTO determines
that there is a dispute as to who actually made an invention first, an
interference proceeding can be declared, and the applicants are
required to prove who was the first inventor. In the United States,
the general rule is that a patent ultimately is awarded to the person
who is first to make an invention, rather than the person who is the
first to file a patent application. The Company believes it has a
reasonable patent position.
F-16
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
YEAR ENDED DECEMBER 31, 1993
12. Quarterly Financial Data (Unaudited)
First Quarter Second Quarter Third Quarter Fourth Quarter
------------- -------------- ------------- --------------
1993
- - - ----
Total revenues $ 9,399,700 $ 3,638,100 $ 4,703,000 $ 5,745,600
Total expenses 30,221,900 29,393,000 23,095,800 24,971,400
Loss before cumulative
effect of change in
accounting principle (20,822,200) (25,754,900) (18,392,800) (19,225,800)
Loss per share before
cumulative effect of
change in accounting
principle (0.83) (1.02) (0.73) (0.75)
Net loss (23,240,000) (25,754,900) (18,392,800) (19,225,800)
Net loss per share (0.92) (1.02) (0.73) (0.75)
Quarterly financial data in 1993 has been restated to reflect the Company's
change in its method of accounting for external patent development costs
(see Note 2).
13. Subsequent Events (unaudited)
On December 15, 1994, Synergen, the individual defendants, and the
plantiff class entered into a Stipulation of Settlement concerning
the class action. Plaintiffs agreed to dismiss all claims, known and
unknown, arising from the events described in their consolidated
amended complaint. In turn, defendants agreed to make a payment of
$28 million in cash. The Court gave preliminary approval of the
settlement in an order dated December 15, 1994. The Court's order
provided for the issuance of notice to the members of the class
and set a hearing for final approval of the settlement for
March 7, 1995.
F-17
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(unaudited)
Sept. 30,
1994
-------------
ASSETS
Current assets:
Cash and cash equivalents $ 6,271,300
Short-term investments 104,979,200
Accounts receivable 9,655,400
Accrued interest receivable 609,800
Restricted short-term investments 8,253,200
Prepaid expenses and other 1,735,700
------------
Total current assets 131,504,600
Property and equipment, net 53,899,700
Other assets:
Restricted short-term investments 200,000
Other 2,458,100
------------
Total other assets 2,658,100
Total assets $188,062,400
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued
expenses 11,539,700
Industrial Development Revenue Bonds 6,000,000
------------
Total current liabilities 17,539,700
Stockholders' equity:
Preferred stock, $.01 par value;
authorized, 10,000,000 shares;
none issued -
Common stock, $.01 par value;
authorized, 120,000,000 shares;
issued 25,921,880 shares 259,200
Additional paid-in capital, net 409,557,400
Deficit (239,503,100)
Deferred compensation, net 209,200
------------
Total stockholders' equity 170,522,700
Total liabilities and stockholders'
equity $188,062,400
============
See notes to unaudited consolidated financial statements
F-18
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1994 1993
------------ ------------
REVENUES:
Sponsored research and development $ 10,781,200 $ 10,112,200
Interest and other income 4,003,200 7,628,600
------------ ------------
TOTAL REVENUES 14,784,400 17,740,800
EXPENSES:
Research and development 53,192,100 66,602,200
General and administrative 13,062,100 13,751,700
Restructuring and asset impairment
charge 39,079,200 2,000,000
Interest 132,400 356,800
------------ ------------
TOTAL EXPENSES 105,465,800 82,710,700
Loss before cumulative effect of change
in accounting principle (90,681,400) (64,969,900)
Cumulative effect of change in
accounting principle (2,417,800)
------------ ------------
NET LOSS $(90,681,400) $(67,387,700)
============ ============
LOSS PER SHARE:
Loss before cumulative effect of change
in accounting principle $(3.52) $(2.58)
Cumulative effect of change in
accounting principle - (0.09)
------------ ------------
NET LOSS PER SHARE $(3.52) $(2.67)
============ ============
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 25,746,800 25,163,900
See notes to unaudited consolidated financial statements
F-19
SYNERGEN, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Nine Months
Ended Ended
September 30, September 30,
1994 1993
---------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(90,681,400) $(64,472,700)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization of
assets 8,006,400 6,944,300
Amortization of receivable for
warrants and deferred compensation 947,200 1,438,400
Impairment of assets and
restructuring 33,991,400 -
Change in operating assets and
liabilities:
Accounts receivable 3,621,800 5,533,400
Accrued interest receivable 169,400 874,200
Prepaid expenses and other (1,683,300) (382,600)
Accounts payable and accrued
expenses 310,700 (1,524,900)
Unearned revenue, net - (779,900)
------------ ------------
Total adjustments 45,363,600 12,102,900
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (45,317,800) (52,369,800)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,266,700) (15,561,400)
Net (purchase) redemption of short-
term investments (4,165,100) 126,268,300
Payment received on note receivable
from affiliate 5,905,700 -
Other assets (1,254,100) (465,700)
------------ ------------
NET CASH (USED IN) PROVIDED BY
INVESTING ACTIVITIES (780,200) 110,241,200
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common
stock and other, net 790,200 580,500
------------ ------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (45,307,800) 58,451,900
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 51,579,100 2,632,100
------------ ------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 6,271,300 $ 61,084,000
============ ============
See notes unaudited to consolidated financial statements
F-20
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Accounting Policies
The consolidated balance sheet as of September 30, 1994, the related
consolidated statements of operations for the nine-month periods ended
September 30, 1994 and 1993, and the consolidated statements of cash
flows for the nine-month periods ended September 30, 1994 and 1993 are
unaudited, but in management's opinion, include all adjustments,
consisting only of normal recurring adjustments except as otherwise
disclosed, necessary for a fair presentation of such financial
statements. Interim results are not necessarily indicative of results
for a full year.
The financial statements should be read in conjunction with the
consolidated financial statements for the year ended December 31,
1993. The accounting policies used in the preparation of these
financial statements are the same as those used in the Company's
annual financial statements except as modified for appropriate interim
accounting policies.
Certain reclassifications have been made to the Company's 1993
financial statements to conform them to 1994 classifications. The
consolidated statements of operations for the nine months ended
September 30, 1993, and consolidated statement of cash flows for the
nine-month period ending September 30, 1993, have been restated to
reflect the Company's change in its method of accounting for external
patent development costs.
Pursuant to Financial Accounting Standard No. 52, the financial
position and results of the Company's European and Japanese
subsidiaries are measured using the local currency as the functional
currency. The balance sheet has been translated at the exchange rate
in effect at September 30, 1994, while revenues and expenses have been
translated at the average exchange rate on a monthly basis. The
aggregate effect of translation is being deferred as a component of
stockholders' equity. At September 30, 1994, the translation effect
was $139,800 and is reported within additional paid-in capital.
2. Asset Impairment and Restructuring Charges
On July 15, 1994, Synergen learned that an interim analysis of the
follow-up Phase III clinical trial of interleukin-1 receptor
antagonist (IL-1ra) showed a lack of efficacy for severe sepsis. As a
result, certain assets were determined to be impaired and were written
down to estimated net realizable value. In August, Synergen announced
a restructuring which included a termination of 60 percent of the
Company's workforce (approximately 375 employees) and elimination of
some operations and development activities. Synergen recorded an asset
impairment charge of $5.8 million in the second quarter of 1994 for
assets used primarily for the production of IL-1ra and asset
impairment and restructuring charges of $33.3 million in the third
quarter of 1994 primarily related to the discontinuation of the sepsis
trial and the Company's decision to restructure its operations. The
third quarter charges of $33.3 million were comprised of restructuring
charges of $7.3 million and asset impairment charges of $26 million.
F-21
SYNERGEN, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Of the third quarter asset impairment charges, $22.6 million related
to the write-down of the LakeCentre manufacturing facility, $1.9
million was due to other assets impaired as a result of the
restructuring and the remaining $1.5 million was a charge against the
Company's equity investment in Selectide Corporation based on their
recent rights offering. The charge against the LakeCentre facility was
based on a preliminary independent appraisal of the property which
estimated the net realizable value of the property. The Company may
take additional charges against the LakeCentre facility in the future.
3. Litigation
Following a drop in the price of Synergen's stock on February 22,
1993, a number of class action complaints were filed against Synergen
and certain of its officers and directors in the U.S. District Court
for the District of Colorado on behalf of various classes of the
Company's investors. The complaints were consolidated by a
consolidated class action complaint which was filed on April 15, 1993.
In addition to Synergen, Kenneth J. Collins, executive vice president
of finance and administration, is named as defendant in the
consolidated complaint, together with Jon S. Saxe, the former
president and chief executive officer and a former director, and
Michael A. Catalano, the former vice president of clinical research.
The complaint alleges violations of federal securities laws and state
law. The Company believes the claims to be without merit and intends
to vigorously contest them.
On April 20, 1993, the United States Patent and Trademark Office (PTO)
declared an interference between Synergen's U.S. patent number
4,997,929, issued March 5, 1991, and a patent application assigned
to the Max Planck Institut fur Psychiatrie and Regeneron Pharmaceuticals,
Inc. The interference relates to nucleic acid molecules encoding
human ciliary neurotrophic factor (CNTF). When the PTO determines that
there is a dispute as to who actually made an invention first, an
interference proceeding can be declared, and the applicants are required
to prove who was the first inventor. In the United States, the general
rule is that a patent ultimately is awarded to the person who is first
to make an invention, rather than the person who is the first to file
a patent application. The Company believes it has a reasonable patent
position.
4. Subsequent Events
On December 15, 1994, Synergen, the individual defendants, and the
plantiff class entered into a Stipulation of Settlement concerning
the class action. Plaintiffs agreed to dismiss all claims, known
and unknown, arising from the events described in their consolidated
amended complaint. In turn, defendants agreed to make a payment of
$28 million in cash. The Court gave preliminary approval of the
settlement in an order dated December 15, 1994. The Court's order
provided for the issuance of notice to the members of the class
and set a hearing for final approval of the settlement for
March 7, 1995.
F-22
AMGEN INC. UNAUDITED PRO FORMA
CONDENSED COMBINING FINANCIAL STATEMENTS
The following unaudited pro forma condensed combining balance sheet
as of September 30, 1994 and the unaudited pro forma condensed
combining statements of operations of Amgen Inc. and its subsidiaries
for the year ended December 31, 1993 and the nine months ended
September 30, 1994 have been prepared to illustrate the effect of the
Acquisition, which is being accounted for as a purchase, as though
the Acquisition had occurred on September 30, 1994 in the pro forma
balance sheet and as of January 1, 1993 and January 1, 1994, in the
pro forma statements of operations. The pro forma information is
based upon the historical financial statements of Amgen Inc. and its
subsidiaries and Synergen, Inc. and its subsidiaries, giving effect
to the Acquisition under the purchase method of accounting and the
assumptions and adjustments in the accompanying Notes to Amgen Inc.
Unauditied Pro Forma Condensed Combining Financial Statements. The
pro forma adjustments and the assumptions on which they are based are
described in the accompanying Notes. Certain items in the historical
financial statements of Synergen, Inc. and its subsidiaries have been
reclassified to conform to the classifications of the Amgen Inc.
historical financial statements.
The Amgen Inc. unaudited pro forma condensed combining financial
statements are presented for illustrative purposes only and are not
necessarily indicative of the consolidated financial position or
consolidated results of operations of Amgen Inc. that would have been
reported had the Acquisition occurred on the dates indicated, nor do
they represent a forecast of the consolidated financial position of
Amgen Inc. at any future date or the consolidated results of
operations of Amgen Inc. at any future period. Furthermore, no
effect has been given in the Amgen Inc. unaudited pro forma condensed
combining statements of operations for operating and synergistic
benefits that may be realized through the combination of entities.
Amounts allocated to the Synergen, Inc. assets and liabilities are
based on estimated fair values derived from information currently
available. The Amgen Inc. unaudited pro forma condensed combining
financial statements, including Notes thereto, should be read in
conjunction with the historical consolidated financial statements of
Amgen Inc. and Synergen, Inc. covering those periods.
F-23
AMGEN INC.
UNAUDITED PRO FORMA CONDENSED COMBINING BALANCE SHEET
As of September 30,1994
(In thousands)
Pro Forma Pro Forma
Amgen Synergen Adjustments Combined
------------ -------- ----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 301,529 $ 6,271 $(254,493) (1) $ 53,307
Marketable securites, at cost
which approximates market 452,083 104,979 - 557,062
Trade receivables, net 186,220 - - 186,220
Inventories 87,191 - - 87,191
Deferred tax assets, net 55,859 - 13,682 (1) 69,541
Other current assets 37,067 20,255 (19,645) (1) 37,677
---------- -------- --------- ----------
Total current assets 1,119,949 131,505 (260,456) 990,998
Property, plant and equipment at
cost, net 625,515 53,899 (20,153) (1) 659,261
Deferred tax asset - noncurrent - - 40,466 (1) 40,466
Investments 92,119 - - 92,119
Other assets 54,892 2,658 - 57,550
Purchased research and development
costs - - 116,367 (1) -
- - (116,367) (2)
Other - - 5,818 (1) 5,818
---------- -------- --------- ----------
$1,892,475 $188,062 $(234,325) $1,846,212
========== ======== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilites $ 285,218 $ 11,540 $ 58,564 (3) $ 355,322
Commercial paper 99,602 - - 99,602
Current portion of long-term debt 182 6,000 (6,000) (1) 182
---------- --------- --------- ----------
Total current liabilites 385,002 17,540 52,564 455,106
Long-term debt 185,862 - - 185,862
Commitments and contingencies
Stockholders' equity:
Common stock 13 259 (259) (1) 13
Additional paid-in capital 696,883 409,557 (409,557) (1) 696,883
Retained earnings (deficit) 624,715 (239,294) 239,294 (1) 508,348
- - (116,367) (2)
---------- --------- --------- ----------
Total stockholders' equity 1,321,611 170,522 (286,889) 1,205,244
---------- --------- --------- ----------
$1,892,475 $ 188,062 $(234,325) $1,846,212
========== ========= ========= ==========
See notes to unaudited pro forma condensed combining financial statements
(1) Reflects the purchase of Synergen and the allocation of the purchase
price, based on estimated fair market values, to the historical Synergen
balance sheet, including $116,367 of purchased in-process research and
development.
(2) Reflects the one-time write-off of $116,367 of purchased in-process
research and development identified in the purchase allocation.
(3) Reflects the accrual of liabilities of $16,295 for severance and related
staff costs, $16,000 for legal settlements (net of insurance recoveries),
$11,201 for costs to complete committed but unneeded clinical trial
programs, $6,000 for restructuring corporate partner arrangements,
and $9,068 for other costs.
F-24
AMGEN INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1993
(In thousands, except per share data)
Pro Forma Pro Forma
Amgen Synergen Adjustments Combined
---------- -------- ----------- -----------
Revenues:
Product Sales $1,306,322 $ - $ - $1,306,322
Corporate partner revenue 48,631 13,180 - 61,811
Royalty income 18,889 - - 18,889
---------- -------- -------- ----------
Total revenues 1,373,842 13,180 - 1,387,022
---------- -------- -------- ----------
Operating expenses:
Cost of sales 220,046 - - 220,046
Research and development 255,321 88,249 (6,013) (1) 337,557
Marketing and selling 214,132 - - 214,132
General and administrative 114,295 16,986 (1,520) (1) 129,761
Loss of affiliates, net 12,589 - - 12,589
Restructuring charge - 2,000 - 2,000
Legal award (13,900) - - (13,900)
---------- -------- -------- ----------
Total operating expenses 802,483 107,235 (7,533) 902,185
---------- -------- -------- ----------
Operating income (loss) 571,359 (94,055) 7,533 484,837
---------- -------- -------- ----------
Other income/(expense):
Interest and other income 27,161 10,306 (12,794) (2) 24,673
Interest expense, net (6,150) (447) - (6,597)
---------- -------- -------- ----------
Total other income/(expense) 21,011 9,859 (12,794) 18,076
Income (loss) before income taxes
and cumulative effect of a change
in accounting principle 592,370 (84,196) (5,261) 502,913
Provision for income taxes 217,795 - (34,548) (3) 183,247
---------- -------- -------- ----------
Income before cumulative effect of
a change in accounting principle $ 374,575 $(84,196) $ 29,287 $ 319,666
========== ======== ======== ==========
See notes to unaudited pro forma condensed combining financial statements
(Continued next page)
(1)Reflects reduced depreciation expense based on the fair values at the date of
acquisition of Synergen's property, plant and equipment.
(2)Reflects reduced interest income due to the reduction in Amgen's investment
portfolio.
(3)Reflects the tax effects of the adjustments to depreciation expense,
interest income and for the losses incurred by Synergen during the
year ended December 31, 1993 for which no tax benefit was recorded.
F-25
AMGEN INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Year Ended December 31, 1993
(In thousands, except per share data)
Pro Forma Pro Forma
Amgen Synergen Adjustments Combined
---------- ---------- ----------- -----------
Income (loss) before cumulative effect
of a change in accounting principle
per share:
Primary $2.61 $(3.33) - $2.23
Fully diluted $2.60 N/A - $2.21
Shares used in calculation of:
Primary earnings (loss) per share 143,611 25,309 - 143,611
Fully diluted earnings per share 144,322 N/A - 144,322
See notes to unaudited pro forma condensed combining financial statements.
F-26
AMGEN INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1994
(In thousands, except per share data)
Pro Forma Pro Forma
Amgen Synergen Adjustments Combined
---------- -------- ----------- ----------
Revenues:
Product Sales $1,136,001 $ - - $1,136,001
Corporate partner revenue 49,727 10,781 - 60,508
Royalty income 19,310 - - 19,310
---------- -------- ---------- ----------
Total revenues 1,205,038 10,781 - 1,215,819
---------- -------- ---------- ----------
Operating expenses:
Cost of sales 176,803 - - 176,803
Research and development 235,552 53,192 (5,357) (1) 283,387
Marketing and selling 174,685 - - 174,685
General and administrative 90,397 13,062 (872) (1) 102,587
Loss of affiliates, net 25,678 - - 25,678
Restructuring and asset
impairment charge - 39,079 (24,082) (2) 14,997
---------- -------- ---------- ----------
Total operating expenses 703,115 105,333 (30,311) 778,137
---------- -------- ---------- ----------
Operating income (loss) 501,923 (94,552) 30,311 437,682
---------- -------- ---------- ----------
Other income/(expense):
Interest and other income 16,029 4,003 (9,781) (3) 10,251
Interest expense, net (8,774) (132) - (8,906)
---------- -------- ---------- ----------
Total other income/(expense) 7,255 3,871 (9,781) 1,345
Income (loss) before income taxes $ 509,178 $(90,681) $ 20,530 $ 439,027
Provision for taxes 194,298 - (27,092) (4) 167,206
---------- -------- ---------- ----------
Net income (loss) $ 314,880 $(90,681) $ 47,622 $ 271,821
========== ======== ========== ==========
See notes to unaudited pro forma condensed combining financial statements.
(Continued next page)
(1)Reflects reduced depreciation expense based on the fair values at the date of
acquisition of Synergen's property, plant and equipment.
(2)Reflects the reversal of asset impairment charges recorded by Synergen for:
1) its LakeCentre manufacturing facility for $22,582 and, 2) its equity
investment in Selectide Corporation for $1,500. Such charges are not
required since these assets are recorded at their fair values at the date of
acquisition. For a description of the charge recorded by Synergen, see Note 2
of the unaudited consolidated financial statements of Synergen, Inc. and
subsidiaries for the period ended September 30, 1994.
(3)Reflects reduced interest income due to the reduction in Amgen's investment
portfolio.
(4)Reflects the tax effects of the adjustments to depreciation expense,
interest income, the asset impairment charge and for the losses incurred
by Synergen during the nine months ended September 30, 1994 for which no
tax benefit was recorded.
F-27
AMGEN INC.
UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1994
(In thousands, except per share data)
Pro Forma Pro Forma
Amgen Synergen Adjustments Combined
---------- ---------- ----------- ---------
Earnings (loss) per share:
Primary $2.25 $(3.52) $1.94
Fully diluted $2.23 N/A $1.93
Shares used in calculation of:
Primary earnings (loss) per share 140,021 25,747 140,021
Fully diluted earnings per share 140,948 N/A 140,948
See notes to unaudited pro forma condensed combining financial statements
F-28
NOTES TO AMGEN INC. UNAUDITED PRO FORMA CONDENSED
COMBINING FINANCIAL STATEMENTS
1. Basis of presentation
The Amgen unaudited pro forma combining financial statements and
related notes give effect to the Acquisition as a purchase. The
Amgen unaudited pro forma combined balance sheet assumes that the
Acquisition was completed as of September 30, 1994 and the Amgen
unaudited pro forma condensed combining statements of operations
assume that the Acquisition was completed on January 1, 1993 for the
year ended December 31, 1993 and January 1, 1994 for the nine months
ended September 30, 1994.
All interim financial data used to develop the Amgen unaudited pro
forma condensed combining balance sheet and unaudited pro forma condensed
combining statements of operations is unaudited, but in the opinion of
Amgen management, reflects all adjustments necessary (consisting only
of normal recurring entries) for a fair presentation thereof. However,
it should be understood that accounting measurements at interim dates
may be less precise than at year end.
The Amgen unaudited pro forma condensed combining statements of
operations are not necessarily indicative of operating results which
would have been achieved had the Acquisition been consummated as of
January 1, 1993 or January 1, 1994 and should not be construed as
representative of future operations.
The preliminary allocation of the purchase price among
identifiable tangible and intangible assets, as reflected in the
accompanying pro forma financial statements, was based on an analysis
of the fair values of those assets. Specifically, purchased in-
process technology was evaluated through analysis of data concerning
each product candidate. Potential future cash flows from each
product candidate were discounted to present value taking into
account risks associated with the inherent difficulties and
uncertainties in developing product candidates into viable human
therapeutics. In addition, Amgen's post-acquisition business
strategies were considered as they relate to Synergen's current
product candidates. The above analysis resulted in approximately
$116,367,000 for purchased in-process technology, which, under
generally accepted accounting principles, was expensed upon
completion of the Acquisition.
For purposes of the pro forma financial statements, a purchase
price of $254,493,000 was allocated to Synergen's September 30, 1994
balance sheet. The purchase price assumes the acquisition of
26,175,452 shares of Synergen stock for $9.25 per share. In
addition, Amgen accrued $9,750,000 related to the payment of outstanding
stock options to purchase Synergen common stock and Amgen incurred
$2,620,000 in other acquisition related fees.
The unaudited pro forma condensed combining statements of
operations for the year ended December 31, 1993 and for the nine
months ended September 30, 1994 do not include the $116,367,000
writeoff of purchased in-process technology as it is a material non-
recurring charge. It will be included in the actual consolidated
statement of operations of Amgen in the quarter ended December 31,
1994.
F-29
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Form 8-K/A of Amgen Inc. dated January 31,
1995, of our report dated February 4, 1994 accompanying the
consolidated financial statements of Synergen, Inc. for the year
ended December 31, 1993 appearing elsewhere in this Form 8-K/A.
We also consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 33-5111) pertaining to the 1984 Stock Option
Plan, 1981 Incentive Stock Option Plan and Nonqualified Stock Option
Plan of Amgen Inc., in the Registration Statement (Form S-8 No. 33-24013)
pertaining to the 1988 Stock Option Plan of Amgen Inc., in the Registration
Statment (Form S-8 No. 33-39183)pertaining to the Amgen Employee Stock
Purchase Plan, in the Registration Statement (Form S-8 No. 33-39104)
pertaining to the Amgen Retirement and Savings Plan, in the Registration
Statement (Form S-8 No. 33-42501) pertaining to the Amgen Inc. 1987
Directors' Stock Option Plan, in the Registration Statement (Form S-8
No. 33-42072) pertaining to the Amgen Inc. 1991 Equity Incentive Plan,
in the Registration Statement (Form S-8 No. 33-47605) pertaining to the
Retirement and Savings Plan for Amgen Manufacturing, Inc. and in the
Registration Statements (Form S-3 No. 33-22544 and Form S-3 No. 33-44454)
of Amgen Inc. and in the related Prospectuses of our report dated
February 4, 1994 accompanying the consolidated financial statements
of Synergen, Inc. for the year ended December 31, 1993 appearing
in this Form 8-K/A of Amgen Inc. dated January 31, 1995.
/s/ DELOITTE & TOUCHE LLP
Denver, Colorado
January 31, 1995
F-30
