UNITED STATES
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 June 30, 2003
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 000-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
| Delaware | 95-3540776 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| One Amgen Center Drive, Thousand Oaks, California | 91320-1799 | |
| (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 ¨
Indicate by check mark whether the registrant is an accelerated filer. x
As of July 18, 2003, the registrant had 1,290,780,772 shares of common stock, $0.0001 par value, outstanding.
INDEX
| Page No. | ||||||
| PART I |
FINANCIAL INFORMATION |
|||||
| Item 1. |
3 | |||||
| Condensed Consolidated Statements of Operations—Three and six months ended June 30, 2003 and 2002 |
4 | |||||
| Condensed Consolidated Balance Sheets—June 30, 2003 and December 31, 2002 |
5 | |||||
| Condensed Consolidated Statements of Cash Flows—Six months ended June 30, 2003 and 2002 |
6 | |||||
| 7 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
19 | ||||
| Item 4. |
39 | |||||
| PART II |
OTHER INFORMATION |
|||||
| Item 1. |
40 | |||||
| Item 4. |
41 | |||||
| Item 5. |
41 | |||||
| Item 6. |
41 | |||||
| 43 | ||||||
| 44 | ||||||
2
PART I—FINANCIAL INFORMATION
The information in this report for the three and six months ended June 30, 2003 and 2002 is unaudited but includes all adjustments (consisting only of normal recurring accruals, unless otherwise indicated) which Amgen Inc., including its subsidiaries, (“Amgen” or the “Company”) considers necessary for a fair presentation of the results of operations for those periods.
The condensed consolidated 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 year ended December 31, 2002.
Interim results are not necessarily indicative of results for future quarters or the full fiscal year.
3
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
|||||||||||||
| Revenues: |
||||||||||||||||
| Product sales |
$ | 1,916.5 | $ | 1,115.2 | $ | 3,552.4 | $ | 2,023.8 | ||||||||
| Royalty income |
91.9 | 80.0 | 183.3 | 148.4 | ||||||||||||
| Corporate partner revenues |
32.7 | 53.9 | 66.6 | 85.4 | ||||||||||||
| Total revenues |
2,041.1 | 1,249.1 | 3,802.3 | 2,257.6 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Cost of sales |
329.1 | 131.9 | 612.4 | 235.5 | ||||||||||||
| Research and development |
393.7 | 233.6 | 745.0 | 437.0 | ||||||||||||
| Selling, general and administrative |
453.5 | 320.5 | 843.6 | 566.3 | ||||||||||||
| Amortization of acquired intangible assets |
84.0 | — | 167.9 | — | ||||||||||||
| Earnings of affiliates, net |
(12.3 | ) | (1.7 | ) | (21.9 | ) | (3.4 | ) | ||||||||
| Other items, net |
(24.0 | ) | — | (24.0 | ) | — | ||||||||||
| Total operating expenses |
1,224.0 | 684.3 | 2,323.0 | 1,235.4 | ||||||||||||
| Operating income |
817.1 | 564.8 | 1,479.3 | 1,022.2 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest and other income, net |
40.4 | 45.5 | 73.2 | 89.2 | ||||||||||||
| Interest expense, net |
(8.8 | ) | (12.7 | ) | (15.7 | ) | (19.7 | ) | ||||||||
| Total other income |
31.6 | 32.8 | 57.5 | 69.5 | ||||||||||||
| Income before income taxes |
848.7 | 597.6 | 1,536.8 | 1,091.7 | ||||||||||||
| Provision for income taxes |
241.5 | 185.2 | 436.3 | 338.4 | ||||||||||||
| Net income |
$ | 607.2 | $ | 412.4 | $ | 1,100.5 | $ | 753.3 | ||||||||
| Earnings per share: |
||||||||||||||||
| Basic |
$ | 0.47 | $ | 0.40 | $ | 0.85 | $ | 0.72 | ||||||||
| Diluted |
$ | 0.45 | $ | 0.38 | $ | 0.82 | $ | 0.70 | ||||||||
| Shares used in calculation of earnings per share: |
||||||||||||||||
| Basic |
1,287.9 | 1,038.6 | 1,289.3 | 1,041.2 | ||||||||||||
| Diluted |
1,347.0 | 1,098.8 | 1,348.5 | 1,092.4 | ||||||||||||
See accompanying notes.
4
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
| June 30, 2003 |
December 31, 2002 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 1,070.5 | $ | 1,851.7 | ||||
| Marketable securities |
3,914.9 | 2,812.2 | ||||||
| Trade receivables, net |
960.7 | 752.4 | ||||||
| Inventories |
638.7 | 544.9 | ||||||
| Other current assets |
384.5 | 442.3 | ||||||
| Total current assets |
6,969.3 | 6,403.5 | ||||||
| Property, plant, and equipment at cost, net |
3,152.7 | 2,813.5 | ||||||
| Intangible assets, net |
4,628.8 | 4,801.9 | ||||||
| Goodwill |
9,871.8 | 9,871.1 | ||||||
| Other assets |
758.9 | 566.3 | ||||||
| $ | 25,381.5 | $ | 24,456.3 | |||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 270.0 | $ | 254.6 | ||||
| Accrued liabilities |
1,394.3 | 1,151.7 | ||||||
| Current portion of debt |
23.0 | 122.9 | ||||||
| Total current liabilities |
1,687.3 | 1,529.2 | ||||||
| Deferred tax liabilities |
1,685.8 | 1,593.4 | ||||||
| Long-term debt |
3,063.7 | 3,047.7 | ||||||
| Stockholders’ equity: |
||||||||
| Preferred stock; $0.0001 par value; 5.0 shares authorized; none issued or outstanding |
— | — | ||||||
| Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—1,288.7 shares in 2003 and 1,289.1 shares in 2002 |
19,785.2 | 19,344.3 | ||||||
| Accumulated deficit |
(924.6 | ) | (1,125.5 | ) | ||||
| Accumulated other comprehensive income |
84.1 | 67.2 | ||||||
| Total stockholders’ equity |
18,944.7 | 18,286.0 | ||||||
| $ | 25,381.5 | $ | 24,456.3 | |||||
See accompanying notes.
5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Six Months Ended June 30, |
||||||||
| 2003 |
2002 |
|||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 1,100.5 | $ | 753.3 | ||||
| Depreciation and amortization |
341.2 | 127.4 | ||||||
| Tax benefits related to employee stock options |
161.9 | 103.7 | ||||||
| Other non-cash items |
98.9 | 4.7 | ||||||
| Cash provided by (used in) changes in operating assets and liabilities, net of acquisitions: |
||||||||
| Trade receivables, net |
(208.3 | ) | (56.3 | ) | ||||
| Inventories |
(93.8 | ) | (31.6 | ) | ||||
| Other current assets |
55.0 | 29.6 | ||||||
| Accounts payable |
16.8 | (9.7 | ) | |||||
| Accrued liabilities |
248.3 | 203.5 | ||||||
| Net cash provided by operating activities |
1,720.5 | 1,124.6 | ||||||
| Cash flows from investing activities: |
||||||||
| Purchases of property, plant, and equipment |
(544.0 | ) | (192.6 | ) | ||||
| Proceeds from maturities of marketable securities |
281.1 | 375.9 | ||||||
| Proceeds from sales of marketable securities |
996.2 | 298.3 | ||||||
| Purchases of marketable securities |
(2,409.8 | ) | (858.8 | ) | ||||
| Purchase of certain rights from Roche |
— | (122.5 | ) | |||||
| Other |
(147.4 | ) | (12.3 | ) | ||||