SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
20549
FORM 10-Q
| (Mark one) | |
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| |
| x |
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2002
OR
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____________ to ______________.
Commission File No. 0-19312
MEDAREX, INC.
(Exact Name of Registrant as Specified in Its Charter.)
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| New Jersey |
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22-2822175 |
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| 707 State Road, Princeton, New Jersey |
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08540 |
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| Registrant’s Telephone Number, Including Area Code: (609) 430-2880 | ||
Indicate by check x whether 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 |
o |
Indicate by check x whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
| Yes |
x |
No |
o |
The number of shares of common stock, $.01 par value, outstanding as of November 1, 2002 was 76,381,480 shares.
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
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December 31, |
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September 30, |
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(Unaudited) |
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| ASSETS |
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| Current assets: |
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Cash and cash equivalents |
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$ |
31,269 |
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$ |
69,077 |
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Marketable securities |
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435,683 |
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|
300,601 |
| |
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|
Prepaid expenses and other current assets |
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|
24,860 |
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|
21,400 |
| |
|
|
|
|
|
|
|
|
|
| |
|
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Total current assets |
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491,812 |
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391,078 |
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| Property, buildings and equipment: |
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Land |
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6,788 |
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6,788 |
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Buildings and leasehold improvements |
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56,080 |
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|
66,951 |
| |
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|
Machinery and equipment |
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16,188 |
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|
26,747 |
| |
|
|
Furniture and fixtures |
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2,819 |
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|
3,615 |
| |
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Construction in progress |
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7,767 |
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1,921 |
| |
|
|
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|
|
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|
|
|
| |
|
|
|
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89,642 |
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|
106,022 |
| ||
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Less accumulated depreciation and amortization |
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(9,782 |
) |
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(15,833 |
) | |
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79,860 |
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90,189 |
| ||
| Investments in Genmab |
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|
65,501 |
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29,994 |
| ||
| Investments in IDM |
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|
48,199 |
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48,199 |
| ||
| Investments in, and advances to, other affiliates and partners |
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|
14,384 |
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14,384 |
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| Segregated cash |
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1,300 |
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1,900 |
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| Other assets |
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19,371 |
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9,447 |
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Total assets |
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$ |
720,427 |
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$ |
585,191 |
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| LIABILITIES AND SHAREHOLDERS’ EQUITY |
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| Current liabilities: |
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Trade accounts payable |
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$ |
3,139 |
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$ |
3,247 |
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Accrued liabilities |
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21,485 |
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15,511 |
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Deferred contract revenue - current |
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19,862 |
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3,438 |
| |
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Total current liabilities |
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44,486 |
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22,196 |
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| Deferred contract revenue - long-term |
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1,597 |
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|
1,316 |
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| Deferred income taxes and other long-term obligations |
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|
16,782 |
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|
— |
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| Convertible subordinated notes |
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175,000 |
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175,000 |
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| Commitments and contingencies |
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— |
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— |
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| Shareholders’ equity: |
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Preferred stock, $1.00 par value, 2,000,000 shares authorized; none issued and outstanding |
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— |
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— |
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Common stock, $.01 par value; 200,000,000 shares authorized; 74,005,466 shares issued and 72,876,240 outstanding at December 31, 2001 and 76,220,501 shares issued and 75,349,640 shares outstanding at September 30, 2002 |
|
|
740 |
|
|
762 |
| |
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Capital in excess of par value |
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608,685 |
|
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625,271 |
| |
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Treasury stock, at cost 1,129,226 shares in 2001 and 870,861 shares in 2002 |
|
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(2,840 |
) |
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(2,190 |
) | |
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Deferred compensation |
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2,188 |
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|
1,326 |
| |
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Accumulated other comprehensive income (loss) |
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(149) |
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5,497 |
| |
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Accumulated deficit |
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(126,062 |
) |
|
(243,987 |
) | |
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|
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|
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| |
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Total shareholders’ equity |
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|
482,562 |
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|
386,679 |
| |
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Total liabilities and shareholders’ equity |
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$ |
720,427 |
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$ |
585,191 |
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See notes to these unaudited consolidated financial statements.
Page 2 of 45
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In
thousands, except per share data)
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Nine Months Ended |
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Three Months Ended |
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2001 |
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2002 |
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2001 |
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2002 |
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| Sales |
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$ |
879 |
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$ |
176 |
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$ |
623 |
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$ |
— |
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| Contract and license revenues |
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24,797 |
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22,020 |
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9,170 |
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7,640 |
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| Sales, contract and license revenues from Genmab (includes sales of $9,363 and $6,555 to Genmab in 2002) |
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2,913 |
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11,288 |
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1,663 |
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6,989 |
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Total revenues |
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28,589 |
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33,484 |
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11,456 |
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14,629 |
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| Costs and expenses: |
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Cost of sales ($5,678 and $3,923 from sales to Genmab in 2002) |
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|
495 |
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5,729 |
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361 |
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3,923 |
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Research and development |
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23,714 |
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56,517 |
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11,158 |
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20,902 |
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General and administrative |
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11,801 |
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17,022 |
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4,690 |
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5,826 |
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Write-off of facility costs |
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— |
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11,294 |
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— |
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28 |
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Acquisition of in-process technology |
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— |
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16,312 |
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— |
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— |
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Total costs and expenses |
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36,010 |
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106,874 |
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16,209 |
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30,679 |
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Operating loss |
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(7,421 |
) |
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(73,390 |
) |
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(4,753 |
) |
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(16,050 |
) | |||
| Equity in net loss of affiliate |
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(3,714 |
) |
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(11,318 |
) |
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(1,955 |
) |
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(4,053 |
) | ||||
| Interest and dividend income |
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18,885 |
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14,290 |
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6,423 |
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4,593 |
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| Impairment loss on investment in Genmab |
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— |
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(30,971 |
) |
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— |
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(30,971 |
) | ||||
| Impairment loss on investments in other corporate partners |
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— |
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(7,971 |
) |
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— |
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(3,880 |
) | ||||
| Additional payments related to asset acquisition |
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— |
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(1,700 |
) |
|
— |
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(1,419 |
) | ||||
| Interest expense |
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(2,376 |
) |
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(6,790 |
) |
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(2,249 |
) |
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(2,263 |
) | ||||
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Income (loss) before provision for income taxes |
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5,374 |
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(117,850 |
) |
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(2,534 |
) |
|
(54,043 |
) | |||
| Provision for income taxes |
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|
450 |
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|
75 |
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|
150 |
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|
75 |
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Net income (loss) |
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$ |
4,924 |
|
$ |
(117,925 |
) |
$ |
(2,684 |
) |
$ |
(54,118 |
) | |||
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| Basic net income (loss) per share |
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$ |
0.07 |
|
$ |
(1.58 |
) |
$ |
(0.04 |
) |
$ |
(0.72 |
) | ||||
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| Diluted net income (loss) per share |
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$ |
0.07 |
|
$ |
(1.58 |
) |
$ |
(0.04 |
) |
$ |
(0.72 |
) | ||||
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| Weighted average number of common shares outstanding |
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- basic |
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73,915 |
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|
74,612 |
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|
73,947 |
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75,491 |
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- diluted |
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75,425 |
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74,612 |
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|
73,947 |
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|
75,491 |
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|
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|
|
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|
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See notes to these unaudited consolidated financial statements.
Page 3 of 45
MEDAREX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
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For the Nine Months Ended |
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2001 |
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2002 |
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| Operating activities: |
|
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|
|
|
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Net income (loss) |
|
$ |
4,924 |
|
$ |
(117,925 |
) | ||
|
|
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
|
|
|
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|
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Depreciation |
|
|
2,470 |
|
|
5,299 |
| ||
|
|
Amortization |
|
|
1,113 |
|
|
2,062 |
| ||
|
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Stock options and awards to employees |
|
|
205 |
|
|
456 |
| ||
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Stock options and warrants to non-employees |
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|
15 |
|
|
(8 |
) | ||
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Non cash revenue - IDM |
|
|
(15,175 |
) |
|
(14,332 |
) | ||
|
|
Non cash revenue - Genmab |
|
|
(1,333 |
) |
|
— |
| ||
|
|
Write-off of facility costs |
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