SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
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
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.0001 par value, Common shares purchase rights,
Contractual contingent payment rights
(Title of class)
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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
The approximate aggregate market value of voting stock held by non-
affiliates of the registrant was $15,624,694,000 as of February 29,
1996 (A)
261,501,157 (B)
(Number of shares of common stock outstanding as of February 29, 1996)
Documents incorporated by reference:
Document Form 10-K Parts
Definitive Proxy Statement, to be filed within 120 days of
December 31, 1995 (specified portions) III
(A) Excludes 4,508,450 shares of common stock held by directors and
officers, and stockholders whose ownership exceeds five percent of
the shares outstanding, at February 29, 1996. Exclusion of shares
held by any person should not be construed to indicate that such
person possesses the power, directly or indirectly, to direct or
cause the direction of the management or policies of the registrant,
or that such person is controlled by or under common control with the
registrant.
(B) All share numbers have been retroactively adjusted to reflect a
two-for-one split of the common stock effected in the form of a 100%
stock dividend.
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PART I
Item 1. BUSINESS
Overview
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.
The Company manufactures and markets two human therapeutic
products, NEUPOGEN(R) (Filgrastim) and EPOGEN(R) (Epoetin alfa).
NEUPOGEN(R) selectively stimulates the production of neutrophils, one
type of white blood cell. The Company markets NEUPOGEN(R) in the
United States, countries of the European Union ("EU"), Canada and
Australia for use in decreasing the incidence of infection in
patients undergoing myelosuppressive chemotherapy. In addition,
NEUPOGEN(R) is marketed in most of these countries for use in
reducing the duration of neutropenia for patients undergoing
myeloablative therapy followed by bone marrow transplantation, for
treating patients with severe chronic neutropenia, and to support
peripheral blood progenitor cell ("PBPC") transplantations.
EPOGEN(R) stimulates the production of red blood cells and is
marketed by Amgen in the United States for the treatment of anemia
associated with chronic renal failure in patients on dialysis.
The Company focuses its research on biological cell/tissue
events and its development efforts on human therapeutics in the areas
of hematopoiesis, neurobiology, inflammation, endocrinology, and soft
tissue repair and regeneration. The Company has research facilities
in the United States and Canada and has clinical development staff in
the United States, the EU, Canada, Australia, Japan and Hong Kong.
To augment internal research and development efforts the Company has
established external research collaborations and has acquired certain
product and technology rights.
Amgen operates commercial manufacturing facilities located in
the United States and Puerto Rico. A sales and marketing force is
maintained in the United States, the EU, Canada, and Australia. In
addition, Amgen has entered into licensing and co-promotion
agreements to market NEUPOGEN(R) and EPOGEN(R) in certain geographic
areas.
The Company was incorporated in California in 1980 and was
merged into a Delaware corporation in 1987. Amgen's principal
executive offices are located at 1840 Dehavilland Drive, Thousand
Oaks, California 91320-1789.
Products
Recombinant human granulocyte colony-stimulating factor
NEUPOGEN(R) (proper name - Filgrastim) is Amgen's trademark for
its recombinant human granulocyte colony-stimulating factor ("G-
CSF"), a protein that selectively stimulates production of certain
white blood cells known as neutrophils. Neutrophils are the body's
first defense against infection. Treatments for various diseases and
diseases themselves can result in extremely low numbers of
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neutrophils, or neutropenia. Myelosuppressive chemotherapy, one
treatment option for individuals with cancer, targets cell types
which grow rapidly, such as tumor cells, neutrophils and other blood
cells. Providing NEUPOGEN(R) as an adjunct to myelosuppressive
chemotherapy can reduce the duration of neutropenia and thereby
reduce the potential for infection.
Congenital neutropenia is an example of disease-related
neutropenia. In congenital neutropenia, the body fails to
manufacture sufficient neutrophils. Chronic administration of
NEUPOGEN(R) has been shown to reduce the incidence and duration of
neutropenia-related consequences such as fever and infections in
patients with congenital neutropenia.
Patients undergoing bone marrow transplantation are treated with
NEUPOGEN(R) to accelerate recovery of neutrophils following
chemotherapy and bone marrow infusion. NEUPOGEN(R) also has been
shown to induce immature blood cells (progenitor cells) to migrate
(mobilize) from the bone marrow into the blood circulatory system.
When these progenitor cells are collected from the blood, stored and
re-infused after chemotherapy (transplanted), recovery of platelets,
red blood cells and neutrophils is accelerated. PBPC transplantation
is becoming an alternative to autologous bone marrow transplantation
in some patients.
The Company began selling NEUPOGEN(R) in the United States in
February 1991 (see "Joint Venture and Business Relationships - Kirin
Brewery Company, Limited"). NEUPOGEN(R) was initially indicated to
decrease the incidence of infection as manifested by febrile
neutropenia for patients with non-myeloid malignancies undergoing
myelosuppressive chemotherapy. The U.S. Food and Drug Administration
("FDA") subsequently cleared supplements to the Filgrastim product
license which include claims to reduce the duration of neutropenia
for patients with non-myeloid malignancies undergoing myeloablative
therapy followed by bone marrow transplantation and to reduce the
incidence and duration of neutropenia-related consequences in
symptomatic patients with congenital neutropenia, cyclic neutropenia
or idiopathic neutropenia. In December 1995, NEUPOGEN(R) received
FDA clearance for use in mobilization of PBPC for stem cell
transplantation.
In the EU, Canada and Australia, NEUPOGEN(R) is marketed as an
adjunct to chemotherapy and a treatment for patients with severe
chronic neutropenia. In the EU and Australia, NEUPOGEN(R) is also
marketed for use in reducing the duration of neutropenia for patients
undergoing myeloablative therapy followed by bone marrow
transplantation and to support PBPC transplantations. In March 1996,
NEUPOGEN(R) was approved for use in the United Kingdom as a
supportive therapy to treat neutropenia in people with advanced HIV
infection.
In Japan, Taiwan and Korea, Kirin Brewery Company, Limited
("Kirin"), was granted rights to market G-CSF under licensing
agreements with Kirin-Amgen, Inc. ("Kirin-Amgen"). Kirin-Amgen is a
joint venture between the Company and Kirin (see "Joint Ventures and
Business Relationships - Kirin Brewery Company, Limited"). Kirin
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markets its G-CSF product in these countries under the trademark
GRAN(R).
The Company is conducting numerous clinical trials with
NEUPOGEN(R). Later stage trials are examining NEUPOGEN(R) as an
adjunct to dose-intensified chemotherapy in patients with various
tumor types and for the treatment of neutropenia in HIV-infected
patients. In 1995, the Company completed a Phase 3 clinical trial in
patients with severe community-acquired pneumonia. Although the
primary endpoint was not met, NEUPOGEN(R) was found to have
statistically significant clinical benefits relating to two serious
complications of pneumonia: reducing the incidence of end organ
failures and reducing the incidence of adult respiratory distress
syndrome. The Company is continuing the clinical development of
NEUPOGEN(R) for severe pneumonia. The Company also completed
clinical trials examining NEUPOGEN(R) as an adjunct to chemotherapy
in patients with acute myelogenous leukemia. A licensing application
for approval of this supplemental indication will be submitted to the
U.S., European, Canadian and Australian regulatory authorities.
For the years ended December 31, 1995, 1994 and 1993, sales of
NEUPOGEN(R) accounted for approximately 48%, 50% and 52%,
respectively, of total revenues.
Recombinant human erythropoietin
EPOGEN(R) (proper name - Epoetin alfa) is Amgen's trademark for
its recombinant human erythropoietin product, a protein that
stimulates red blood cell production. EPOGEN(R) is effective in the
treatment of anemia associated with chronic renal failure for
patients on dialysis and is indicated to elevate or maintain the red
blood cell level (as manifested by hematocrit or hemoglobin
determinations) and to decrease the need for blood transfusions in
these patients.
In the United States, Amgen was granted rights to market
recombinant human erythropoietin under a licensing agreement with
Kirin-Amgen (see "Joint Ventures and Business Relationships - Kirin
Brewery Company, Limited"). The Company began selling EPOGEN(R) in
1989 when the FDA gave clearance for its use in the treatment of
anemia associated with chronic renal failure. The FDA designated
EPOGEN(R) as an orphan drug, and such designation will expire in
1996. In July 1994, the FDA cleared a supplement to the Epoetin alfa
product license which included an expanded target hematocrit range
for patients with chronic renal failure. The target hematocrit, or
percentage of red blood cells, was expanded to a range of 30 to 36
percent from the previously indicated range of 30 to 33 percent.
Ongoing clinical trials are investigating whether there are
additional benefits for dialysis patients in maintaining a higher,
even more normal, hematocrit range. The Company markets EPOGEN(R) in
the United States for dialysis patients, a market to which Amgen
has maintained exclusive rights.
Amgen has granted Ortho Pharmaceutical Corporation, a subsidiary
of Johnson & Johnson, hereafter referred to as "Johnson & Johnson", a
license to pursue commercialization of recombinant human
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erythropoietin as a human therapeutic in the United States in all
markets other than dialysis and diagnostics. See Note 1 to the
Consolidated Financial Statements - "Product sales" and Note 5 to
the Consolidated Financial Statements - "Johnson & Johnson arbitrations".
In August 1995, the U.S. Patent and Trademark Office issued to
the Company a patent on the process for the manufacture of
recombinant human erythropoietin. The patent provides protection
against the making, importation, use or sale of recombinant human
erythropoietin in the United States.
In Japan, Kirin was granted rights to market recombinant human
erythropoietin under a licensing agreement with Kirin-Amgen (see
"Joint Ventures and Business Relationships - Kirin Brewery Company,
Limited"). Kirin markets its recombinant human erythropoietin
product under the trademark ESPO(R).
In countries other than the United States, the People's Republic
of China and Japan, Johnson & Johnson was granted rights to pursue
the commercialization of erythropoietin as a human therapeutic under
a licensing agreement with Kirin-Amgen. Affiliates of Johnson &
Johnson market erythropoietin for treatment of anemia associated with
chronic renal failure under the trademark EPREX(R) in several
countries.
For the years ended December 31, 1995, 1994 and 1993, sales of
EPOGEN(R) accounted for approximately 45%, 44% and 42%, respectively,
of total revenues.
Product Candidates
Consensus interferon
Interferons are a class of naturally occurring proteins with
anti-viral and anti-tumor activity that also modulate the immune
system. INFERGEN(R), Amgen's consensus interferon, is a non-
naturally occurring protein that combines structural features of many
interferon sub-types. A Phase 3 clinical trial for treatment of
chronic hepatitis C with INFERGEN(R), completed in 1995, indicated
that INFERGEN(R) is safe and effective in treating this disease.
Hepatitis C viral infection is a potentially deadly disease that, if
not treated, may lead to cirrhosis and liver cancer. The Company is
preparing a biologics license application for submission to the FDA.
Amgen is exploring out-licensing opportunities for INFERGEN(R) with
several companies as a potential alternative to marketing this
product candidate through the Company's sales force. A decision will
be made in 1996.
Hematopoietic growth factors
Hematopoietic growth factors are proteins which influence
growth, migration, and maturation of certain types of blood cells.
Stem cell factor ("SCF"), one of the Company's hematopoietic growth
factors in development, may influence the production, mobilization,
and maturation of progenitor cells. Human clinical trials are
underway to investigate the utility of SCF in combination with
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NEUPOGEN(R) for improved mobilization of progenitor cells prior to
PBPC transplantation. A Phase 3 study of SCF in this indication is
underway.
The Company's novel platelet growth factor, MGDF, another
hematopoietic growth factor, has been shown in pre-clinical and early
clinical research to be a promising agent for ameliorating the
thrombocytopenia caused by intensive chemotherapy or irradiation.
Thrombocytopenia, or severely depressed platelet numbers, can result
in severe internal bleeding. The Company is collaborating in the
development of MGDF with Kirin (see "Joint Ventures and Business
Relationships - Kirin Brewery Company, Limited"), and human clinical
testing is underway. In 1995, Amgen, Kirin, and Kirin-Amgen signed
agreements with Novo Nordisk A/S and certain of its subsidiaries
(including ZymoGenetics, Inc.) for rights to thrombopoietin, a
protein hormone that stimulates the production of platelets in the
blood. The acquisition of these rights complements the development
of MGDF.
Cell therapy
Cell selection technology complements the Company's research and
development efforts in hematopoiesis. Amgen's hematopoietic growth
factors, together with selected hematopoietic cells, enable the
Company to pursue the investigation of new and potentially more
effective cancer therapy protocols. In 1994, Amgen acquired an
equity interest in AmCell Inc. ("AmCell"), a U.S. company which will
develop and manufacture cell selection and characterization devices
based on the technology of Miltenyi Biotec GmbH. Amgen and AmCell
entered into an agreement whereby AmCell will manufacture certain
cell selection devices for Amgen, and Amgen will clinically develop
and commercialize these devices (see "Joint Ventures and Business
Relationships - AmCell Inc."). Amgen has initiated clinical trials
in cell selection.
Neurobiology
The Company has extensive discovery programs in neurological and
neuroendocrine disorders. Neurotrophic factors are proteins which
play a role in nerve cell protection and regeneration and which may
therefore be useful in treating a variety of neurological disorders,
including neurodegenerative diseases of the central and peripheral
nervous systems, and also nerve injury or trauma. Human clinical
testing of two neurotrophic factors, brain-derived neurotrophic
factor ("BDNF") and neurotrophin-3 ("NT-3"), is currently being
conducted in collaboration with Regeneron Pharmaceuticals, Inc.
("Regeneron") (see "Joint Ventures and Business Relationships -
Regeneron Pharmaceuticals, Inc."). BDNF is being investigated to
treat amyotrophic lateral sclerosis ("ALS" or Lou Gehrig's disease),
a fatal disorder which causes rapid degeneration of motor neurons
that innervate skeletal muscles. In 1995, Phase 1/2 trials with BDNF
were completed showing that BDNF appears to be safe and well
tolerated in treating people with ALS, and a Phase 3 trial was
initiated to confirm the therapeutic benefits and safety of BDNF in
slowing the progression of ALS. NT-3 is being investigated in
treating peripheral neuropathies.
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Glial cell line derived neurotrophic factor ("GDNF") was added
to the Company's neurobiology research program through the
acquisition of Synergen, Inc. ("Synergen") (see Note 2 to the
Consolidated Financial Statements). GDNF is in preclinical studies
for possible use in the treatment of Parkinson's disease and other
motor neuron diseases.
Inflammation
The inflammatory response is essential for defense against
harmful micro-organisms and for the repair of damaged tissues. The
failure of the body's control mechanisms regulating inflammatory
response occurs in conditions such as rheumatoid arthritis, acute
respiratory distress syndrome and asthma. Tumor necrosis factor
binding protein ("TNFbp") and interleukin-1 receptor antagonist ("IL-
1ra") are two product candidates added to the Company's inflammation
research program through the acquisition of Synergen. TNFbp is
currently in preclinical studies for possible use in the treatment of
rheumatoid arthritis, inflammatory bowel disease, pancreatitis and
multiple sclerosis. IL-1ra is in clinical studies for rheumatoid
arthritis. The Company is also conducting research to discover and
develop other molecules for the treatment of inflammatory diseases.
Endocrinology
Leptin is the protein produced by the obesity gene which is made
in fat cells and is believed to help regulate the amount of fat
stored by the body. This protein has been shown in some early pre-
clinical animal models to produce a reduction in body weight and body
fat. In 1995, The Rockefeller University granted to the Company an
exclusive license which allows the Company to develop products based
on the obesity gene (see "Joint Venture and Business Relationships -
Other business relationships"). The Company anticipates beginning
human clinical trials of Leptin in 1996.
Primary hyperparathyroidism ("HPT") is a disorder that causes
excessive secretion of parathyroid hormone from the parathyroid
gland, leading to elevated serum calcium, called hypercalcemia.
Symptoms may include bone loss, gastrointestinal distress, muscle
weakness, depression and forgetfulness. This disorder currently
lacks effective treatment other than surgery. Secondary HPT is
commonly seen as a result of kidney failure, affecting as many as 80
percent of dialysis patients. The Company has entered into an
agreement with NPS Pharmaceuticals, Inc. ("NPS") for Amgen to develop
and commercialize NPS's NORCALCIN(TM) and other compounds based on
NPS's proprietary calcium receptor technology for the treatment of
HPT and certain other indications (see "Joint Venture and Business
Relationships - Other business relationships"). NORCALCIN(TM) is
being investigated as a treatment for primary and secondary HPT.
Soft tissue repair and regeneration
Soft tissue growth factors are believed to play a role in
accelerating or improving tissue regeneration and wound healing. In
some cases, these agents may also protect tissues from injuries such
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as irradiation, chemotherapy, and hyperoxia. These growth factors
likely regulate a broad range of cellular activities. Amgen
currently is conducting research on certain tissue growth factors
including keratinocyte growth factor ("KGF"). Human clinical trials
have been initiated for KGF.
Joint Ventures and Business Relationships
The Company intends to self-market its products where possible.
From time to time it may supplement this effort by using joint
ventures and other business relationships to provide additional
marketing and product development capabilities. The Company also
supplements its internal research and development efforts with
acquisitions of product and technology rights and external research
collaborations. Amgen has established the relationships described
below and may establish others in the future.
F. Hoffmann-La Roche Ltd.
Amgen and F. Hoffmann - La Roche Ltd. ("Roche") entered into a
co-promotion agreement in September 1988 for the sale of NEUPOGEN(R)
(Filgrastim) in the EU. Under this agreement, Amgen and Roche share
the clinical development, regulatory and commercialization
responsibilities for the product. Amgen manufactures NEUPOGEN(R),
and the two companies share in the profits from sales of NEUPOGEN(R)
in the EU. This agreement allows Amgen the option to regain complete
control for marketing the product in the future.
In 1989, Amgen and Roche entered into another agreement to
commercialize NEUPOGEN(R) in certain European countries not located
within the EU. Under this agreement, Roche markets NEUPOGEN(R) in
these countries and pays a royalty to Amgen on these sales.
Johnson & Johnson
Amgen granted Johnson & Johnson a license to pursue
commercialization of recombinant human erythropoietin as a human
therapeutic in the United States in all markets other than dialysis and
diagnostics. The Company is engaged in arbitration proceedings
regarding this agreement. For a complete discussion of this matter,
see Note 5 to the Consolidated Financial Statements - "Johnson & Johnson
arbitrations".
Kirin Brewery Company, Limited
The Company has a 50-50 joint venture (Kirin-Amgen) with Kirin.
Kirin-Amgen was formed in 1984 to develop and commercialize certain
of the Company's technologies. Amgen and Kirin have been exclusively
licensed by Kirin-Amgen to manufacture and market recombinant human
erythropoietin in the United States and Japan, respectively. Kirin-
Amgen has also granted Amgen an exclusive license to manufacture and
market G-CSF in the United States, Europe, Canada, Australia and New
Zealand. Kirin has been licensed by Kirin-Amgen with similar rights
for G-CSF in Japan, Taiwan and Korea. Kirin markets recombinant
human erythropoietin in the Peoples Republic of China under a
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separate agreement. In 1994, Kirin-Amgen licensed to Amgen and Kirin
the rights to develop and market MGDF.
Pursuant to the terms of agreements entered into with Kirin-
Amgen, the Company conducts certain research and development
activities on behalf of Kirin-Amgen and is paid for such services at
a negotiated rate. Included in revenues from corporate partners in
the Company's Consolidated Financial Statements for the years ended
December 31, 1995, 1994 and 1993, are $72.6 million, $58.6 million
and $41.2 million, respectively, related to these agreements.
In connection with its various agreements with Kirin-Amgen, the
Company has been granted sole and exclusive licenses for the
manufacture and sale of certain products in specified geographic
areas of the world. In return for such licenses, the Company paid
Kirin-Amgen stated amounts upon the receipt of the licenses and/or
pays Kirin-Amgen royalties based on sales. During the years ended
December 31, 1995, 1994 and 1993, Kirin-Amgen earned royalties from
Amgen of $74.2 million, $67.5 million and $53.1 million,
respectively, under such agreements.
Regeneron Pharmaceuticals, Inc.
In 1990, the Company entered into a collaboration agreement with
Regeneron to co-develop and commercialize BDNF and NT-3 in the United
States. In addition, Regeneron licensed these potential products to
Amgen for development in certain other countries. To facilitate this
collaboration, the Company and Regeneron formed Amgen-Regeneron
Partners, a 50-50 partnership. Amgen-Regeneron Partners commenced
operations with respect to BDNF in June 1993. Operations with
respect to NT-3 began in January 1994.
AmCell Inc.
During 1994, Amgen acquired an equity interest in AmCell Inc., a
company which will manufacture cell selection and characterization
devices based on the technology of Miltenyi Biotec GmbH ("Miltenyi").
Amgen has an exclusive license to clinically develop and
commercialize selected products of AmCell incorporating Miltenyi
technology in exchange for development funding and milestone
payments.
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Synergen Clinical Partners
Synergen Clinical Partners, L.P. ("SCP"), a limited partnership,
was formed to fund development and commercialization of IL-1ra in
certain geographic areas. The general partner of SCP was a wholly-
owned subsidiary of Synergen and is now a wholly-owned subsidiary of
the Company. This wholly-owned subsidiary would be obligated to pay
SCP royalties on sales of such products and a milestone payment upon
receiving the first FDA marketing approval of an IL-1ra product. In
connection with the formation of SCP, Synergen was granted options to
purchase all of the limited partners' interests in SCP upon the
occurrence of certain future events for a specified amount of
consideration.
Other business relationships
In 1995, the Company obtained an exclusive license from The
Rockefeller University which allows the Company to develop products
based on the obesity gene. Amgen made a $20 million payment upon
signing the agreement and will make payments for milestones and
royalties on sales of any resulting products. The Company also
entered into an agreement with NPS Pharmaceuticals, Inc. for Amgen to
develop and commercialize NORCALCIN(TM) and other compounds based on
NPS's proprietary technology. Under this agreement, Amgen made a $10
million signing payment and will make milestone payments and royalty
payments on sales of any resulting products. In addition to these
agreements, the Company has an extensive number of other corporate
and academic research collaborations.
Marketing
In the United States, the Company's sales force markets its
products to physicians and pharmacists primarily in hospitals and
clinics. The Company has chosen to use major wholesale distributors
of pharmaceutical products as the principal means of distributing
EPOGEN(R) (Epoetin alfa) and NEUPOGEN(R) (Filgrastim) to clinics,
hospitals and pharmacies. Sales to Bergen Brunswig Corporation and
Cardinal Distribution, two major distributors of these products,
accounted for 21% and 15%, and 22% and 16%, respectively, of total
revenues for the years ended December 31, 1995 and 1994,
respectively. Sales to Bergen Brunswig Corporation and McKesson Drug
Company accounted for 23% and 10% of total revenues for the year
ended December 31, 1993.
NEUPOGEN(R) is reimbursed by both public and private payors, and
changes in coverage and reimbursement policies of these payors could
have a material effect on sales of NEUPOGEN(R). EPOGEN(R) is
primarily reimbursed by the Federal Government through the End Stage
Renal Disease Program ("ESRD") of Medicare. The ESRD Program
reimburses approved providers for 80% of allowed dialysis costs; the
remainder is paid by other sources, including Medicaid, state kidney
patient programs and private insurance. The reimbursement rate is
established by Congress and is monitored by the Health Care Financing
Administration. The reimbursement rate for EPOGEN(R) is subject to
yearly review. Changes in coverage and reimbursement policies could
have a material effect on the sales of EPOGEN(R).
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Except for purchases by Veterans Administration hospitals, the
Company does not receive any payments directly from the Federal
Government, nor does it have any significant supply contracts with
the Federal Government. However, the use of NEUPOGEN(R) and
EPOGEN(R) by hospitals, clinics, and physicians may be impacted by
the amount and methods of reimbursement that they receive from the
Federal Government.
In the EU, Amgen and Roche share clinical development,
regulatory and commercialization responsibilities for NEUPOGEN(R)
under a co-promotion agreement. In addition, Amgen manufactures
NEUPOGEN(R) for sale in the EU, and the two companies share in the
profits from sales of the product. NEUPOGEN(R) is distributed to
wholesalers and/or hospitals in all EU countries depending upon the
distribution practice of hospital products in each country. Patients
receiving NEUPOGEN(R) for approved indications are covered by
government health care programs. The consumption of NEUPOGEN(R) is
affected by budgetary constraints imposed by certain EU countries.
NEUPOGEN(R) sales volumes in both the United States and Europe
are influenced by a number of factors including underlying demand,
government financial constraints, private sector financial
constraints, seasonal changes in cancer chemotherapy administration,
and wholesaler management practices.
In Canada and Australia, NEUPOGEN(R) is marketed by the Company
directly to hospitals, pharmacies and medical practitioners.
Distribution is handled by third party contractors.
Competition
Competition is intense among companies that develop and market
products based on advanced cellular and molecular biology. Amgen has
a number of competitors, including Chiron Corp., Chugai
Pharmaceutical Co., Ltd., Genetics Institute and Immunex Corp.
(subsidiaries of American Home Products Corp.), Genentech, Inc.,
Rhone-Poulenc Rorer Inc., Sandoz Ltd. and Schering-Plough Corp. For
products which the Company manufactures and markets, it faces
significant competition from these and other biotechnology and
pharmaceutical firms in the United States, Europe and elsewhere, some
of whom have greater resources than the Company. Certain specialized
biotechnology firms have also entered into cooperative arrangements
with major companies for development and commercialization of
products, creating an additional source of competition.
Any products or technologies that successfully address anemias
could negatively impact the market for recombinant human
erythropoietin. Similarly, any products or technologies that
successfully address the causes or incidence of low levels of
neutrophils could negatively impact the market for G-CSF. These
include products that could receive approval for indications similar
to those for which NEUPOGEN(R) (Filgrastim) has been approved,
development of chemotherapy treatments that are less myelosuppressive
than existing treatments and the development of anti-cancer
modalities that reduce the need for myelosuppressive chemotherapy.
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NEUPOGEN(R) currently faces market competition from a competing
CSF product, granulocyte macrophage colony-stimulating factor ("GM-
CSF") and from the chemoprotectant, amifostine (WR-2721). Potential
future sources of competition include other GM-CSF products, PIXY
321, PGG-glucan, FLT-3 ligand and IL-11, among others.
Chugai Pharmaceuticals Co., Ltd. ("Chugai") markets a G-CSF
product in Japan as an adjunct to chemotherapy and as a treatment for
bone marrow transplant patients. In June 1993, Chugai and Rhone-
Poulenc Rorer Inc. received a favorable opinion from the Committee
for Proprietary Medicinal Products for this G-CSF product as an
adjunct to chemotherapy and as a treatment in bone marrow transplant
settings and began market launches in certain EU countries in early
1994. Chugai, through its licensee, AMRAD, markets this G-CSF
product in Australia as an adjunct to chemotherapy and as a treatment
for patients receiving bone marrow transplants. Under an agreement
with Amgen, Chugai is precluded from selling its G-CSF product in the
United States, Canada and Mexico.
Immunex Corp. markets GM-CSF in the United States for bone
marrow transplant and PBPC transplant patients and as an adjunct to
chemotherapy treatments for acute non-lymphocytic leukemia ("ANLL").
Immunex Corp. is also pursuing other indications for its GM-CSF
product including use in treating HIV-infected patients, other
infectious diseases and as an adjunct to chemotherapy outside the
limited setting of ANLL. Behringwerke AG markets this GM-CSF product
in Europe in similar settings. Sandoz Ltd. markets another GM-CSF
product for use in bone marrow transplant patients, as an adjunct to
chemotherapy and as an adjunct to gancyclovir treatment of HIV-
infected patients in the EU and certain other countries. This GM-CSF
product is currently being developed for similar indications in the
United States and Canada.
In 1995, amifostine received clearance from the FDA as a
cytoprotective agent for the combination regimen cyclophosphamide and
cisplatinum in patients with advanced ovarian carcinoma. It is used
to limit renal toxicity associated with this treatment. Amifostine
is also being pursued as a treatment to reduce fever, infection and
neutropenia during chemotherapy. U.S. Bioscience, in collaboration
with Alza Corp., markets amifostine in the United States. Schering
Plough markets amifostine in the EU.
Immunex Corp. is developing PIXY 321 in the United States as an
adjunct to chemotherapy and for treating patients receiving bone
marrow transplants. PIXY 321 is being developed for use outside
North America by American Home Products Corp. Alpha Beta
Technologies is developing PGG-glucan for the treatment of certain
infectious diseases, as an adjunct to chemotherapy and for use in
PBPC transplantation.
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Other products which address potential markets for G-CSF may be
identified and developed by competitors in the future. Such products
could also present competition in potential markets for SCF.
Research and development of other hematopoietic growth factors,
including those that may compete with MGDF, is being conducted by
several companies including Genentech, Inc., Immunex Corp., Sandoz
Ltd. and Genetics Institute, Inc.
INFERGEN(R) would face competition from interferons and other
related products, several of which are in development or on the
market. Schering-Plough Corp. and Roche are major suppliers of
interferons.
Several companies are developing neurotrophic factors including
Cephalon Inc., Genentech, Inc. and Regeneron. Many companies are
believed to be conducting research in the area of inflammation
including Celltech, Ltd., ICOS Corporation, Rhone-Poulenc Rorer Inc.
and AutoImmune.
Many companies have obesity research programs and are believed
to be developing obesity treatments including Millennium
Pharmaceuticals, Inc. (in collaboration with Roche), Progenitor Inc.
(a subsidiary of Interneuron Pharmaceuticals Inc.), Neurogen Inc. (in
collaboration with Pfizer), Bristol Myers Squibb, CIBA Geigy, Eli
Lilly and Merck. NORCALCIN(TM) would face competition from a product
currently marketed by Abbott Laboratories which treats secondary HPT.
In addition, other products to treat primary and secondary HPT are
currently being developed by Abbott Laboratories, Lunar and Chugai.
The Company faces competition from several companies in the
development and utilization of cell selection and characterization
devices. Companies involved in the development of these devices and
ex-vivo cell expansion with growth factors are Baxter, Cellpro, Rhone
Poulenc Rorer Inc. in collaboration with Applied Immune Sciences and
Systemix in collaboration with Sandoz Ltd.
Companies believed to be developing certain tissue growth
factors include Creative Biomolecules, Inc., Chiron Corp. (in
collaboration with Johnson & Johnson), Genentech, Inc., Immunex
Corp., Scios Nova Inc. and ZymoGenetics, Inc.
Research and Development
The Company's two primary sources of new product candidates are
internal research and development and acquisition and licensing from
third parties. Research and development expense, which includes
technology license fees paid to third parties, for the years ended
December 31, 1995, 1994 and 1993 were $451.7 million, $323.6 million
and $255.3 million, respectively. The amount for the year ended
December 31, 1994 excludes a $116.4 million write-off of in-process
technology purchased in connection with the acquisition of Synergen
(see Note 2 to the Consolidated Financial Statements).
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Government Regulation
Regulation by governmental authorities in the United States and
other countries is a significant factor in the production and
marketing of the Company's products and its ongoing research and
development activities. In order to clinically test, manufacture and
market products for therapeutic use, Amgen must satisfy mandatory
procedures and safety standards established by various regulatory
bodies.
In the United States, the Company's products and product
candidates are regulated primarily on a product by product basis
under federal law and are subject to rigorous FDA approval
procedures. After purification, laboratory analysis and testing in
animals, an investigational new drug application is filed with the
FDA to begin human testing. A three-phase human clinical testing
program must then be undertaken. In Phase 1, studies are conducted
to determine the safety and optimal dosage for administration of the
product. In Phase 2, studies are conducted to gain preliminary
evidence of the efficacy of the product. In Phase 3, studies are
conducted to provide sufficient data for the statistical proof of
safety and efficacy. The time and expense required to perform this
clinical testing can far exceed the time and expense of the research
and development initially required to create the product. No action
can be taken to market any therapeutic product in the United States
until an appropriate license application has been cleared by the FDA.
Even after initial FDA clearance has been obtained, further studies
are required to provide additional data on safety and would be
required to gain clearance for the use of a product as a treatment
for clinical indications other than those initially approved. In
addition, use of products during testing and after initial marketing
could reveal side effects that could delay, impede or prevent
marketing approval, limit uses or expose the Company to product
liability claims.
In addition to human clinical testing, the FDA inspects
equipment and facilities prior to providing clearance to market a
product. If, after receiving clearance from the FDA, a material
change is made in manufacturing equipment, location or process,
additional regulatory review may be needed.
In the EU countries, Canada and Australia, regulatory
requirements and approval processes are similar in principle to those
in the United States.
Amgen's research and manufacturing activities are conducted in
voluntary compliance with the National Institutes of Health
Guidelines for Recombinant DNA Research. The Company's present and
future business has been and will continue to be subject to various
other laws and regulations, including environmental laws and
regulations.
Patents and Trademarks
Patents are very important to the Company in establishing
proprietary rights to the products it has developed. The Company has
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filed applications for a number of patents and it has been granted
patents relating to recombinant human erythropoietin, G-CSF,
consensus interferon and various potential products. The Company has
obtained licenses from and pays royalties to third parties. Other
companies have filed patent applications or have been granted patents
in areas of interest to the Company. There can be no assurance any
licenses required under such patents would be available for license
on reasonable terms or at all. The Company is engaged in arbitration
proceedings with Johnson & Johnson and various patent litigation.
For a discussion of these matters see Note 5 to the Consolidated
Financial Statements - "Johnson & Johnson arbitrations" and Item 3,
"Legal Proceedings".
The Company has obtained U.S. registration of its EPOGEN(R),
NEUPOGEN(R) and INFERGEN(R) trademarks. In addition, these
trademarks have been registered in several other countries.
Human Resources
As of December 31, 1995, the Company had 4,046 employees of
which 1,965 were engaged in research and development, 629 were
engaged in manufacturing and associated support, 824 were engaged in
sales and marketing and 628 were engaged in finance and general
administration. There can be no assurance that the Company will be
able to continue attracting and retaining qualified personnel in
sufficient numbers to meet its needs. None of the Company's
employees are covered by a collective bargaining agreement, and the
Company has experienced no work stoppages. The Company considers its
employee relations to be excellent.
Geographic Area Financial Information
For financial information concerning the geographic areas in
which the Company operates see Note 12 to the Consolidated Financial
Statements.
Item 2. PROPERTIES
Amgen's principal executive offices and a majority of its
administrative, manufacturing and research and development facilities
are located in 34 buildings in Thousand Oaks, California. Twenty-
nine of the buildings are owned and five are leased. Adjacent to
these facilities are four buildings that are under construction and
other property acquired in anticipation of future expansion. The
Thousand Oaks, California facilities include manufacturing plants
licensed by various regulatory bodies that produce commercial
quantities of Epoetin alfa and NEUPOGEN(R) (Filgrastim).
Elsewhere in North America, Amgen owns nine buildings in
Boulder, Colorado housing research facilities and a pilot plant. The
Company has purchased land in Longmont, Colorado on which it plans to
build a new EPOGEN(R) manufacturing plant, and it owns a distribution
center in Louisville, Kentucky. The Company leases a research
facility and administrative offices in Toronto, Canada, an
administrative office in Washington, D.C. and five regional sales offices.
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Outside North America, the Company has a formulation, fill and
finish facility in Juncos, Puerto Rico which has been licensed by
various regulatory bodies. The Company leases facilities in thirteen
European countries, Australia, Japan, Hong Kong and the People's
Republic of China for administration, marketing and research and
development. In addition, the Company has started construction of a
European distribution center in the Netherlands.
Amgen believes that its current facilities plus anticipated
additions are sufficient to meet its needs for the next several
years.
Item 3. LEGAL PROCEEDINGS
The Company is engaged in arbitration proceedings with one of
its licensees. For a complete discussion of this matter see Note 5
to the Consolidated Financial Statements - "Johnson & Johnson
arbitrations". Other legal proceedings are discussed below. While
it is impossible to predict accurately or to determine the eventual
outcome of these matters, the Company believes that the outcome of
these proceedings will not have a material adverse effect on the
financial statements of the Company.
Synergen ANTRIL (TM) litigation
Lawsuits have been filed against Synergen (now Amgen Boulder
Inc.) alleging misrepresentations in connection with its research and
development of ANTRIL(TM) for the treatment of sepsis.
In Johnson v. Amgen Boulder Inc., et al., suits filed on
February 14, 1995 in the Superior Court for the State of Washington,
King County and in the United States District Court for the Western
District of Washington, plaintiff seeks rescission of certain
payments made to one of the defendants (or unspecified compensatory
damages not less than $50.0 million) and treble damages. The
Superior Court action has been removed to federal court and
consolidated with the suit filed in the United States District Court
for the Western District of Washington. Plaintiff, a limited partner
of defendant Synergen Clinical Partners, L.P., represents a class of
other limited partners. The complaints allege violations of federal
and state securities laws, violations of other federal and state
statutes, fraud, misrepresentation and breach of fiduciary duty. The
defendants include Synergen, Synergen Clinical Partners, L.P.,
Synergen Development Corporation and former officers and directors of
Synergen. The Company has answered the complaint, denying
plaintiffs' claims and asserting various affirmative defenses.
Susquehanna Investment Group, et al. v. Amgen Boulder, Inc., et
al., was filed in the United States District Court in Denver,
Colorado against Synergen and certain of its former officers and
directors. The suit, filed on May 19, 1995, is brought by broker-
dealers who acted as market makers in Synergen options. The
plaintiffs claim in excess of $3.2 million in trading losses on
option positions as the result of alleged misrepresentations.
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Elanex Pharmaceuticals litigation
In October 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 in 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 but
does not seek damages against the Company. The case is currently in
discovery.
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 and distributor 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. Genetics
Institute answered the complaint and filed a counterclaim against the
Company alleging infringement of the same patent. On February 14,
1995, the United States District Court for the District of
Massachusetts granted Amgen's motion for a summary judgment enforcing
a prior judgment against Genetics Institute and barring Genetics
Institute from asserting its U.S. Patent 5,322,837 against Amgen's
recombinant erythropoietin. On March 13, 1995, Genetics Institute
filed notice of appeal with the United States Court of Appeals for
the Federal Circuit. On December 6, 1995, the Federal Circuit Court
heard oral argument on the appeal and reserved decision.
Biogen litigation
On June 15, 1994, Biogen, Inc. ("Biogen") filed suit in the
Tokyo District Court in Japan, against Amgen K.K., a subsidiary of
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the Company, seeking injunctive relief for the alleged infringement
of two Japanese patents relating to alpha-interferon.
On March 10, 1995, Biogen filed suit in the United States
District Court for the District of Massachusetts alleging
infringement by the Company of certain claims of U.S. Patent
4,874,702 relating to vectors for expressing cloned genes. Biogen
alleges that Amgen has infringed its patent by manufacturing and
selling NEUPOGEN(R). On March 28, 1995, Biogen filed an amended
complaint further alleging that the Company is also infringing the
claims of two additional patents allegedly assigned to Biogen, U.S.
Patent 5,401,642 and U.S. Patent No. 5,401,658, relating to vectors,
methods for making vectors and expressing closed genes. The amended
complaint seeks injunctive relief, unspecified compensatory damages
and treble damages. On April 24, 1995, the Company answered Biogen's
amended complaint, denying its material allegations and pleading
counterclaims for declaratory judgment of non-infringement, patent
invalidity and unenforceability.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's security
holders during the last quarter of its fiscal year ended
December 31, 1995.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Price Range of Common Stock
The Company's common stock trades on The Nasdaq Stock Market
under the symbol AMGN. As of March 5, 1996, there were approximately
13,000 holders of record of the Company's common stock. No cash
dividends have been paid on the common stock to date, and the Company
currently intends to retain any earnings for development of the
Company's business and for repurchases of its common stock.
The following table sets forth, for the fiscal periods
indicated, the range of high and low closing sales prices of the
common stock as quoted on The Nasdaq Stock Market for the years 1995
and 1994 (as adjusted retroactively for the August 1995 stock split
effected in the form of a dividend of one share of common stock for
each share of outstanding common stock):
High Low
1995 ------- -------
4th Quarter................... $59-3/8 $43-1/2
3rd Quarter................... 52 39-1/4
2nd Quarter................... 40-7/32 33-1/16
1st Quarter................... 35-3/8 28-1/4
1994
4th Quarter................... $29-11/16 $25-7/16
3rd Quarter................... 28-7/16 21-5/8
2nd Quarter................... 23-19/32 17-11/16
1st Quarter................... 25-7/8 18-7/8
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Item 6. SELECTED FINANCIAL DATA (in millions)
Years Ended December 31,
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Consolidated Statement of
Operations Data:
Revenues:
Product sales............... $645.3 $1,050.7 $1,306.3 $1,549.6 $1,818.6
Other revenues.............. 36.7 42.3 67.5 98.3 121.3
Total revenues............... 682.0 1,093.0 1,373.8 1,647.9 1,939.9
Research and development
expenses................... 120.9 182.3 255.3 323.6 451.7
Write-off of in-process
technology purchased....... - - - 116.4 -
Marketing and selling
expenses................... 122.2 184.5 214.1 236.9 272.9
General and administrative
expenses................... 80.4 107.7 114.3 122.9 145.5
Legal assessment (award)..... 129.1 (77.1) (13.9) - -
Net income(1)................ 97.9 357.6 383.3 319.7 537.7
Primary earnings per
share(1)................... .34 1.21 1.33 1.14 1.92
Cash dividends declared per
share...................... - - - - -
At December 31,
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Consolidated Balance Sheet
Data:
Total assets................. $865.5 $1,374.3 $1,765.5 $1,994.1 $2,432.8
Long-term debt............... 39.7 129.9 181.2 183.4 177.2
Stockholders' equity......... 531.1 933.7 1,172.0 1,274.3 1,671.8
(1) Includes an increase to net income of $8.7 million, or $.03 per
share, to reflect the cumulative effect of a change in
accounting principle to adopt Statement of Financial Accounting
Standard No. 109 in 1993 (see Note 1 to Consolidated Financial
Statements). Also includes the write-off of in-process
technology purchased of $116.4 million, or $.42 per share,
associated with the acquisition of Synergen in 1994 (see Note 2
to Consolidated Financial Statements).
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
Cash provided by operating activities has been and is expected
to continue to be the Company's primary source of funds. In 1995,
operations provided $773.2 million of cash compared with
$531.9 million in 1994. The Company had cash, cash equivalents, and
marketable securities of $1,050.3 million at December 31, 1995,
compared with $696.7 million at December 31, 1994.
Capital expenditures totaled $162.7 million in 1995 compared
with $130.8 million in 1994. Over the next few years, the Company
expects to spend approximately $250 million to $350 million per year
on capital projects and equipment to expand the Company's global
operations.
The Company receives cash from the exercise of employee stock
options. In 1995, stock options and their related tax benefits
provided $145.4 million of cash compared with $67.5 million in 1994.
Proceeds from the exercise of stock options and their related tax
benefits will vary from period to period based upon, among other
factors, fluctuations in the market value of the Company's stock
relative to the exercise price of such options. In 1994, the
exercise of warrants associated with Amgen Clinical Partners, L.P.
provided $15.3 million of cash. The right to exercise these
warrants expired on June 30, 1994.
The Company has a stock repurchase program (see Note 7 to the
Consolidated Financial Statements) to offset the dilutive effect of
its employee benefit stock option and stock purchase plans. During
the year ended December 31, 1995, the Company purchased 7.3 million
shares of common stock at a cost of $285.7 million compared with
12.9 million shares purchased at a cost of $300.5 million in 1994.
The Company expects to repurchase $350 million to $450 million under
the program in 1996.
To provide for financial flexibility and increased liquidity,
the Company has established several sources of debt financing. The
Company has a shelf registration under which it can issue up to
$200 million of Medium Term Notes. At December 31, 1995,
$109.0 million of Medium Term Notes were outstanding which mature in
approximately two to eight years. The Company also has a commercial
paper program which provides for short-term borrowings up to an
aggregate face amount of $200 million. At December 31, 1995,
$69.7 million of commercial paper was outstanding, with maturities of
less than three months. The Company also has a $150 million
revolving line of credit, which primarily supports the Company's
commercial paper program. No borrowings on this line of credit were
outstanding at December 31, 1995.
The Company invests its cash in accordance with a policy that
seeks to maximize returns while ensuring both liquidity and minimal
risk of principal loss. The policy limits investments to certain
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types of instruments issued by institutions with investment grade
credit ratings, and places restrictions on maturities and
concentration by type and issuer. The majority of the Company's
portfolio is composed of fixed income investments which are subject
to the risk of market interest rate fluctuations, and all of the
Company's investments are subject to risks associated with the
ability of the issuers to perform their obligations under the
instruments.
The Company has a program to manage certain portions of its
exposure to fluctuations in foreign currency exchange rates. These
exposures primarily result from European sales. The Company
generally hedges the related receivables with foreign currency
forward contracts, which typically mature within six months. The
Company uses foreign currency option and forward contracts which
generally expire within 12 months to hedge certain anticipated future
sales. At December 31, 1995, outstanding foreign currency option and
forward contracts totaled $13.2 million and $70.1 million,
respectively.
The Company believes that existing funds, cash generated from
operations, and existing sources of debt financing are adequate to
satisfy its working capital and capital expenditure requirements and
to support its stock repurchase program for the foreseeable future.
However, the Company may raise additional capital from time to time
to take advantage of favorable conditions in the markets or in
connection with the Company's corporate development activities.
Results of Operations
Product sales
In 1995 product sales increased $269.0 million or 17% over the
prior year. In 1994, product sales increased $243.3 million or 19%
over the prior year.
NEUPOGEN(R) (Filgrastim)
The Company's worldwide NEUPOGEN(R) sales were $936.0 million in
1995, an increase of $107.0 million or 13% over the prior year. In
1994, sales were $829.0 million, an increase of $109.6 million or 15%
over the prior year.
Domestic sales of NEUPOGEN(R) were $661.8 million in 1995, an
increase of $44.6 million or 7% over the prior year due primarily to
increased usage of NEUPOGEN(R) and price increases. In 1994,
domestic sales were $617.2 million, an increase of $71.7 million or
13% over the prior year due primarily to the increased usage of
NEUPOGEN(R). These results reflect the ongoing and intensifying cost
containment pressures in the health care marketplace, including use
of guidelines in patient care. This pressure has contributed to the
slowing of growth in domestic NEUPOGEN(R) usage over the past several
years and is expected to continue to influence such growth for the
foreseeable future. During 1995, NEUPOGEN(R) was approved in the
United States to support peripheral blood progenitor cell
transplants, the product's fourth indication.
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International sales of NEUPOGEN(R), primarily in Europe, were
$274.2 million in 1995, an increase of $62.4 million or 29% over the
prior year. Three factors, each contributing approximately one
third, account for this increase: (1) strong unit demand growth, (2)
the inclusion of sales from three additional countries as the result
of Austria, Sweden, and Finland joining the European Union ("EU") on
January 1, 1995 and (3) the favorable effects of strengthened foreign
currencies. Prior to the entry of the three additional countries
into the EU, F. Hoffmann La Roche paid the Company royalties on sales
in these countries under a license agreement. In 1994, international
sales were $211.8 million, an increase of $37.9 million or 22% over
the prior year. This increase was primarily due to increased demand.
The Company's overall share of the colony stimulating factor market
in the EU has decreased since the introduction in 1994 of competing
colony stimulating factor products.
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonal changes in cancer chemotherapy administration, and
wholesaler inventory management practices. Wholesaler inventory
reductions tend to reduce domestic NEUPOGEN(R) sales in the first
quarter each year. In prior years, NEUPOGEN(R) sales in the EU have
experienced a seasonal decline to varying degrees in the third
quarter.
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) sales were $882.6 million in 1995, an increase of
$162.0 million or 22% over the prior year. In 1994, EPOGEN(R) sales
were $720.6 million, an increase of $133.7 million or 23% over the
prior year. These increases were primarily due to an increase in the
U.S. dialysis patient population, the administration of higher doses,
and to a lesser extent, increased penetration of the dialysis market.
Cost of sales
Cost of sales as a percentage of product sales was 15.0%, 15.4%
and 16.8% for the years ended December 31, 1995, 1994 and 1993,
respectively. In 1996, cost of sales as a percentage of product
sales is expected to range from 14% to 15%.
Research and development
In 1995 and 1994, research and development expenses increased
$128.1 million or 40% and $68.3 million or 27%, respectively,
compared with the prior years primarily due to expansion of the
Company's internal research and development staff and increases in
external research collaborations. The current year amount includes a
charge for a $20 million signing payment to The Rockefeller
University and a $10 million charge related to a license fee to NPS
Pharmaceuticals for exclusive licenses to certain technologies.
Annual research and development expenses are expected to increase at
a rate exceeding the anticipated annual product sales growth rate due
to planned increases in internal efforts on new product discovery and
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development and increases in external research collaboration costs,
including acquisitions of product and technology rights.
Write-off of in-process technology purchased
In December 1994, the Company acquired Synergen, a biotechnology
company engaged in the discovery and development of protein-based
pharmaceuticals. Synergen was acquired for $254.5 million in cash,
including related acquisition costs. The purchase price was assigned
to the acquired tangible and intangible assets based on their
estimated fair values at the date of acquisition. The value assigned
to in-process technology of $116.4 million was expensed during the
quarter ended December 31, 1994.
Marketing and selling
In 1995 and 1994, marketing and selling expenses increased
$36.0 million or 15% and $22.8 million or 11%, respectively, compared
with the prior years. These increases primarily reflect marketing
efforts to increase the number of patients receiving NEUPOGEN(R) and
to bring more patients receiving EPOGEN(R) within the target
hematocrit range. In 1996, marketing and selling expenses combined
with general and administrative expenses are expected to have an
aggregate annual growth rate lower than the anticipated 1996 annual
growth in product sales.
General and administrative
In 1995 and 1994, general and administrative expenses increased
$22.6 million or 18% and $8.6 million or 8%, respectively, compared
with the prior years. These increases are primarily due to staff-
related expenses. In 1996, general and administrative expenses
combined with marketing and selling expenses are expected to have an
aggregate annual growth rate lower than the anticipated 1996 annual
growth in product sales.
Interest and other income
Interest and other income increased $44.6 million or 207% in
1995 compared with the prior year. This increase is primarily due
to: (1) capital gains realized in the Company's investment portfolio
during 1995 while capital losses were incurred in 1994, (2) higher
interest rates earned by the Company's investment portfolio during
1995 and (3) higher current year cash balances. Interest and other
income decreased $5.7 million or 21% in 1994 compared with the prior
year. Due to significant increases in interest rates during 1994,
the Company elected to reposition its fixed income investment
portfolio which resulted in capital losses of $16.1 million for the
year. In 1993, there were no significant capital gains or losses in
the investment portfolio. Interest and other income is expected to
fluctuate from period to period primarily due to changes in interest
rates and cash balances.
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Income taxes
In 1995, the Company's effective tax rate was 32.3%. This tax
rate reflects tax benefits from the sale of products manufactured in
the Puerto Rico fill-and-finish facility which began in the first
quarter of 1995. In 1994, the Company's effective tax rate was
45.7%, which is higher than the Company's statutory rate. This is
primarily due to the write-off of in-process technology purchased in
connection with the Synergen acquisition, which is not deductible for
income tax purposes. In 1993, the Company's effective tax rate was
36.8%. The Company expects to maintain tax benefits from its Puerto
Rico operations in 1996.
Financial Outlook
Worldwide NEUPOGEN(R) sales for 1996 are expected to grow at a
rate lower than the 1995 growth rate. Future NEUPOGEN(R) sales
increases are dependent primarily 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. NEUPOGEN(R) usage is expected to continue to be affected
by cost containment pressures on health care providers worldwide. In
addition, international NEUPOGEN(R) sales will continue to be subject
to changes in foreign currency exchange rates and increased
competition.
EPOGEN(R) sales for 1996 are expected to grow at a rate lower
than the 1995 growth rate. The Company anticipates that increases in
both the U.S. dialysis patient population and dosing will continue to
drive EPOGEN(R) sales. The Company believes that as more dialysis
patients' hematocrits reach target levels, the contribution of dosing
to sales increases will diminish. Patients receiving treatment for
end stage renal disease are covered primarily under medical programs
provided by the federal government. Therefore, EPOGEN(R) sales may
also be affected by future changes in reimbursement rates or the
basis for reimbursement by the federal government.
The Company anticipates that total product sales and earnings
will grow at double digit rates in 1996, but these growth rates are
expected to be lower than 1995 growth rates. Estimates of future
product sales and earnings, however, are necessarily speculative in
nature and are difficult to predict with accuracy.
Except for the historical information contained herein, the
matters discussed in this Annual Report on Form 10-K are by their
nature forward-looking. For the reasons stated in this Annual Report
or in the Company's other Securities and Exchange Commission filings,
or for various unanticipated reasons, actual results may differ
materially.
Legal Matters
The Company is engaged in arbitration proceedings with one of
its licensees and various legal proceedings relating to Synergen.
For a complete discussion of these matters see Note 5 to the
Consolidated Financial Statements.
PAGE 25
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by
reference to the financial statements listed in Item 14(a) of Part IV
of this Form 10-K Annual Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information concerning the directors of the Company is
incorporated by reference to the section entitled "Election of
Directors" in the Company's definitive Proxy Statement with respect
to the Company's 1996 Annual Meeting to be filed with the Securities
and Exchange Commission within 120 days of December 31, 1995 (the
"Proxy Statement").
The executive officers of the Company, their ages as of
February 29, 1996 and positions are as follows:
Mr. Gordon M. Binder, age 60, has served as a director of the
Company since October 1988. He joined the Company in 1982 as Vice
President-Finance and was named Senior Vice President-Finance in
February 1986. In October 1988, Mr. Binder was elected Chief
Executive Officer. In July 1990, Mr. Binder became Chairman of the
Board.
Dr. N. Kirby Alton, age 45, became Senior Vice President,
Development, in August 1993, having served as Senior Vice President,
Therapeutic Product Development, since August 1992. Dr. Alton
previously served as Vice President, Therapeutic Product Development,
Responsible Head, from October 1988 to August 1992, and as Director,
Therapeutic Product Development, from February 1986 to October 1988.
Mr. Robert S. Attiyeh, age 61, has served as Senior Vice
President, Finance and Corporate Development, since joining the
Company in July 1994. Prior to joining the Company, Mr. Attiyeh
served as a director of McKinsey & Company, a consulting firm, in its
Los Angeles, Japan and Scandinavian offices from 1967 to 1994.
Mr. Stanley M. Benson. age 44, has served as Senior Vice
President, Sales and Marketing, since joining the Company in June
1995. Prior to joining the Company, Mr. Benson held a number of
executive management positions at Pfizer Inc., a pharmaceutical
company, from 1987 to 1995.
PAGE 26
<PAGE>
Dr. Dennis M. Fenton, age 44, became Senior Vice President,
Operations, in January 1995, having served as Senior Vice President,
Sales and Marketing, since August 1992, and having served as Vice
President, Process Development, Facilities and Manufacturing
Services, from July 1991 to August 1992. Dr. Fenton previously had
served as Vice President, Pilot Plant Operations and Clinical
Manufacturing, from October 1988 to July 1991, and as Director, Pilot
Plant Operations, from 1985 to October 1988.
Mr. Daryl D. Hill, age 50, became Senior Vice President, Asia
Pacific, in January 1994, having served as Vice President, Quality
Assurance, from October 1988 to January 1994, and as Director of
Quality Assurance from January 1984 to October 1988.
Mr. Larry A. May, age 46, became Vice President, Corporate
Controller and Chief Accounting Officer in October 1991, having
served as Corporate Controller and Chief Accounting Officer from
October 1988 to October 1991, and as Controller from January 1983 to
October 1988.
Mr. Kevin W. Sharer, age 47, has served as a director of the
Company since November 1992. He has served as President and Chief
Operating Officer since October 1992. Prior to joining the Company,
Mr. Sharer served as President of the Business Markets Division of
MCI Communications Corporation, a telecommunications company, from
April 1989 to October 1992, and served in numerous executive
capacities at General Electric Company from February 1984 to March
1989. Mr. Sharer also serves as a director of Geotek Communications,
Inc.
Mr. George A. Vandeman, age 56, has served as Senior Vice
President, General Counsel and Secretary since joining the Company in
July 1995. Prior to joining the Company, Mr. Vandeman was a partner
of Latham & Watkins, an international law firm, from June 1966 to
July 1995.
Dr. Daniel Vapnek, age 57, became Senior Vice President,
Research, in October 1988, having served as Vice President, Research,
since January 1986.
Dr. Linda R. Wudl, age 50, became Vice President, Quality
Assurance, in January 1994, having served as Director of Quality
Control from April 1991 to January 1994, and as Manager of Quality
Control from April 1987 to April 1991.
Item 11. EXECUTIVE COMPENSATION
The section labeled "Executive Compensation" appearing in the
Company's Proxy Statement is incorporated herein by reference, except
for such information as need not be incorporated by reference under
rules promulgated by the Securities Exchange Commission.
PAGE 27
<PAGE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The section labeled "Security Ownership of Directors and
Executive Officers and Certain Beneficial Owners" appearing in the
Company's Proxy Statement is incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The section labeled "Certain Transactions" appearing in the
Company's Proxy Statement is incorporated herein by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM
8-K
(a) 1. Index to Financial Statements
The following Financial Statements are included herein:
Page
Number
Report of Ernst & Young LLP, Independent Auditors .................F-1
Consolidated Statements of Operations for each of the three
years in the period ended December 31, 1995...............F-2 - F-3
Consolidated Balance Sheets at December 31, 1995 and 1994 .........F-4
Consolidated Statements of Stockholders' Equity for each of
the three years in the period ended December 31, 1995.....F-5 - F-6
Consolidated Statements of Cash Flows for each of the three
years in the period ended December 31, 1995...............F-7 - F-8
Notes to Consolidated Financial Statements .................F-9 - F-25
(a) 2. Index to Financial Statement Schedules
The following Schedules are filed as part of this Form 10-K
Annual Report:
Page
Number
II Valuation Accounts ......................................F-26
All other schedules are omitted because they are not applicable,
or not required, or because the required information is included in
the consolidated statements or notes thereto.
(a) 3. Exhibits
Exhibit No. Description
3.1 Restated Certificate of Incorporation. (6)
3.2 Certificate of Amendment to Restated Certificate of
Incorporation, effective as of July 24, 1991. (11)
PAGE 28
<PAGE>
3.3 Bylaws, as amended to date. (16)
4.1 Indenture dated January 1, 1992 between the Company and
Citibank N.A., as trustee. (12)
4.2 Forms of Commercial Paper Master Note Certificates. (15)
10.1* Company's Amended and Restated 1991 Equity Incentive
Plan. (22)
10.2* Company's Amended and Restated 1984 Stock Option Plan.
(22)
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 Amended and Restated Employee Stock Purchase
Plan.
10.8 Research, Development Technology Disclosure and License
Agreement PPO, dated January 20, 1986, by and between
the Company and Kirin Brewery Co., Ltd. (4)
10.9 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)
10.10 Assignment and License Agreement, dated October 16,
1986, between the Company and Kirin-Amgen, Inc. (with
certain confidential information deleted therefrom). (5)
10.11 G-CSF European License Agreement, dated December 30,
1986, between Kirin-Amgen, Inc. and the Company (with
certain confidential information deleted therefrom). (5)
10.12 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)
10.13* Company's Amended and Restated 1987 Directors' Stock
Option Plan. (22)
10.14* Company's Amended and Restated 1988 Stock Option Plan.
(22)
10.15* Company's Retirement and Savings Plan, amended and
restated as of January 1, 1993. (13)
10.16 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. (6)
PAGE 29
<PAGE>
10.17 Agreement on G-CSF in the EU, dated September 26, 1988,
between Amgen Inc. and F. Hoffmann-La Roche & Co.
Limited Company (with certain confidential information
deleted therefrom). (8)
10.18 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). (8)
10.19 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). (8)
10.20 Rights Agreement, dated January 24, 1989, between Amgen
Inc. and American Stock Transfer and Trust Company,
Rights Agent. (7)
10.21 First Amendment to Rights Agreement, dated January 22,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (9)
10.22 Second Amendment to Rights Agreement, dated April 2,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (10)
10.23 Agency Agreement, dated November 21, 1991, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (13)
10.24 Agency Agreement, dated May 21, 1992, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (13)
10.25 Guaranty, dated July 29, 1992, by the Company in favor
of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. (14)
10.26 936 Promissory Note No. 01, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (13)
10.27 936 Promissory Note No. 02, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (13)
10.28 936 Promissory Note No. 001, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (13)
10.29 936 Promissory Note No. 002, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (13)
10.30 Guaranty, dated November 21, 1991, by the Company in
favor of Citicorp Financial Services Corporation. (13)
10.31 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. (14)
10.32* Amgen Supplemental Retirement Plan dated June 1, 1993.
(17)
10.33 Promissory Note of Mr. Kevin W. Sharer, dated June 4,
1993. (17)
10.34 Promissory Note of Mr. Larry A. May, dated February 24,
1993. (18)
10.35* First Amendment dated October 26, 1993 to the Company's
Retirement and Savings Plan. (18)
10.36* Amgen Performance Based Management Incentive Plan. (18)
10.37 Agreement and Plan of Merger, dated as of November 17,
1994, among Amgen Inc., Amgen Acquisition Subsidiary,
Inc. and Synergen, Inc. (19)
PAGE 30
<PAGE>
10.38 Third Amendment to Rights Agreement, dated as of
February 21, 1995, between Amgen Inc. and American Stock
Transfer Trust and Trust Company (20)
10.39 Credit Agreement, dated as of June 23, 1995, among Amgen
Inc., the Borrowing Subsidiaries named therein, the
Banks named therein, Swiss Bank Corporation and ABN AMRO
Bank N.V., as Issuing Banks, and Swiss Bank Corporation,
as Administrative Agent.(21)
10.40* Conforming Amendments to the Amgen Retirement and
Savings Plan.
10.41* Second Amendment to the Amgen Retirement and Savings
Plan.
10.42* Third Amendment to the Amgen Retirement and Savings
Plan.
10.43* Fourth Amendment to the Amgen Retirement and Savings
Plan.
10.44 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995.
10.45 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995.
10.46 Promissory Note of Mr. Stan Benson, dated March 19,
1996.
11 Computation of per share earnings.
21 Subsidiaries of the Company.
23 Consent of Ernst & Young LLP, independent auditors. The
consent set forth on page 35 is incorporated herein by
reference.
24 Power of Attorney. The Power of Attorney set forth on
page 34 is incorporated herein by reference.
27 Financial Data Schedule.
- ----------------
* 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 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.
(7) Filed as an exhibit to the Form 8-K Current Report dated January
24, 1989 and incorporated herein by reference.
(8) 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.
PAGE 31
<PAGE>
(9) Filed as an exhibit to the Form 8-K Current Report dated January
22, 1991 and incorporated herein by reference.
(10) Filed as an exhibit to the Form 8-K Current Report dated April
12, 1991 and incorporated herein by reference.
(11) Filed as an exhibit to the Form 8-K Current Report dated July
24, 1991 and incorporated herein by reference.
(12) Filed as an exhibit to Form S-3 Registration Statement dated
December 19, 1991 and incorporated herein by reference.
(13) 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.
(14) Filed as an exhibit to the Form 8-A dated March 31, 1993 and
incorporated herein by reference.
(15) 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.
(16) 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.
(17) 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.
(18) 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.
(19) Filed as an exhibit to the Form 8-K Current Report dated
November 18, 1994 on December 2, 1994 and incorporated herein by
reference.
(20) Filed as an exhibit to the Form 8-K Current Report dated
February 21, 1995 on March 7, 1995 and incorporated herein by
reference.
(21) Filed as an exhibit to the Form 10-Q for the quarter ended
June 30, 1995 on August 11, 1995 and incorporated herein by
reference.
(22) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1995 on November 13, 1995 and incorporated herein
by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
three months ended December 31, 1995.
PAGE 32
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Annual Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 3/27/96 By: /s/ ROBERT S. ATTIYEH
------------------------
Robert S. Attiyeh
Senior Vice President,
Finance and Corporate
Development, and
Chief Financial Officer
PAGE 33
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert S. Attiyeh and Larry A.
May, or either of them, his attorney-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any
amendments to this Report, and to file the same, with exhibits
thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming
all that each of said attorneys-in-fact, or his substitute or
substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated:
/s/GORDON M. BINDER 3/27/96 /s/WILLIAM K. BOWES, JR. 3/27/96
Gordon M. Binder William K. Bowes, Jr.
Chairman of the Board Director
Chief Executive Officer and
Director
(Principal Executive /s/FRANKLIN P. JOHNSON, 3/27/96
Officer) JR.
Franklin P. Johnson, Jr.
Director
/s/KEVIN W. SHARER 3/27/96
Kevin W. Sharer
President, Chief Operating /s/STEVEN LAZARUS 3/27/96
Officer and Director Steven Lazarus
Director
/s/ROBERT S. ATTIYEH 3/27/96
Robert S. Attiyeh /s/EDWARD J. LEDDER 3/27/96
Senior Vice President, Edward J. Ledder
Finance and Corporate Director
Development, and
Chief Financial Officer
/s/GILBERT S. OMENN 3/27/96
Gilbert S. Omenn
/s/LARRY A. MAY 3/27/96 Director
Larry A. May
Vice President,
Corporate Controller and /s/JUDITH C. PELHAM 3/27/96
Chief Accounting Officer Judith C. Pelham
Director
/s/RAYMOND F. BADDOUR 3/27/96
Raymond F. Baddour /s/BERNARD H. SEMLER 3/27/96
Director Bernard H. Semler
Director
PAGE 34
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We 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 Amended and Restated 1988 Stock Option Plan
of Amgen Inc., in the Registration Statement (Form S-8 No. 33-39183)
pertaining to the Amended and Restated 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 Amended and Restated 1987
Directors' Stock Option Plan, in the Registration Statement (Form S-8
No. 33-42072) pertaining to the Amgen Inc. Amended and Restated 1991
Equity Incentive Plan, in the Registration Statement (Form S-8 No.
33-47605) pertaining to the Retirement and Savings Plan for Amgen
Puerto Rico, 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 January 29, 1996 with respect to the
consolidated financial statements and financial statement schedule
of Amgen Inc. included in this Annual Report (Form 10-K) for the year
ended December 31, 1995.
/s/ ERNST & YOUNG LLP
Los Angeles, California
March 22, 1996
PAGE 35
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
The Board of Directors and Stockholders of
Amgen Inc.
We have audited the accompanying consolidated balance sheets of Amgen
Inc. as of December 31, 1995 and 1994, and the related consolidated
statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1995. Our
audits also included the financial statement schedule listed in the
Index at Item 14(a). These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements and schedule based
on our audits.
We conducted our audits 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 audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Amgen Inc. at December 31, 1995 and 1994, and
the consolidated results of its operations and its cash flows for
each of the three years in the period ended December 31, 1995, in
conformity with generally accepted accounting principles. Also, in
our opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as a
whole, presents fairly in all material respects the information set
forth therein.
/s/ ERNST & YOUNG LLP
Los Angeles, California
January 29, 1996
F-1
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended December 31, 1995, 1994 and 1993
(In millions, except per share data)
1995 1994 1993
-------- -------- --------
Revenues:
Product sales.................... $1,818.6 $1,549.6 $1,306.3
Corporate partner revenues....... 85.2 70.4 48.6
Royalty income................... 36.1 27.9 18.9
-------- -------- --------
Total revenues................ 1,939.9 1,647.9 1,373.8
-------- -------- --------
Operating expenses:
Cost of sales.................... 272.9 238.1 220.0
Research and development......... 451.7 323.6 255.3
Write-off of in-process
technology purchased.......... - 116.4 -
Marketing and selling............ 272.9 236.9 214.1
General and administrative....... 145.5 122.9 114.3
Loss of affiliates, net.......... 53.3 31.2 12.6
Legal award...................... - - (13.9)
-------- -------- --------
Total operating expenses...... 1,196.3 1,069.1 802.4
-------- -------- --------
Operating income.................. 743.6 578.8 571.4
Other income (expense):
Interest and other income........ 66.1 21.5 27.2
Interest expense, net............ (15.3) (12.0) (6.2)
-------- -------- --------
Total other income (expense).. 50.8 9.5 21.0
-------- -------- --------
Income before income taxes and
cumulative effect of a change
in accounting principle.......... 794.4 588.3 592.4
Provision for income taxes........ 256.7 268.6 217.8
-------- -------- --------
Income before cumulative effect
of a change in accounting
principle........................ 537.7 319.7 374.6
Cumulative effect of a change
in accounting principle.......... - - 8.7
-------- -------- --------
Net income........................ $ 537.7 $ 319.7 $ 383.3
======== ======== ========
See accompanying notes.
(Continued on next page)
F-2
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Continued)
Years ended December 31, 1995, 1994 and 1993
(In millions, except per share data)
1995 1994 1993
----- ----- -----
Earnings per share:
Primary:
Income before cumulative
effect of a change in
accounting principle........ $1.92 $1.14 $1.30
Cumulative effect of a
change in accounting
principle................... - - .03
----- ----- -----
Net income.................... $1.92 $1.14 $1.33
===== ===== =====
Fully diluted:
Income before cumulative
effect of a change in
accounting principle........ $1.88 $1.13 $1.30
Cumulative effect of a
change in accounting
principle................... - - .03
----- ----- -----
Net income.................... $1.88 $1.13 $1.33
===== ===== =====
Shares used in calculation of:
Primary earnings per share....... 280.7 279.6 287.2
Fully diluted earnings per
share......................... 285.3 282.2 288.6
See accompanying notes.
F-3
<PAGE>
AMGEN INC.
CONSOLIDATED BALANCE SHEETS
December 31, 1995 and 1994
(In millions, except per share data)
1995 1994
-------- --------
ASSETS
Current assets:
Cash and cash equivalents............ $ 66.7 $ 211.3
Marketable securities................ 983.6 485.4
Trade receivables, net of allowance
for doubtful accounts
of $13.8 in 1995 and $13.3 in
1994............................... 199.3 194.7
Inventories.......................... 88.8 98.0
Deferred tax assets, net............. 51.7 70.2
Other current assets................. 64.0 56.0
-------- --------
Total current assets 1,454.1 1,115.6
Property, plant and equipment at cost,
net.................................. 743.8 665.3
Investments in affiliated companies..... 95.7 82.3
Other assets............................ 139.2 130.9
-------- --------
$2,432.8 $1,994.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................... $ 54.4 $ 30.5
Commercial paper..................... 69.7 99.7
Accrued liabilities.................. 459.7 406.2
-------- --------
Total current liabilities.......... 583.8 536.4
Long-term debt.......................... 177.2 183.4
Contingencies
Stockholders' equity:
Common stock and additional
paid-in capital; $.0001 par
value; 750.0 shares authorized;
outstanding - 265.7 shares in
1995 and 264.7 shares in 1994..... 864.8 719.3
Retained earnings................... 807.0 555.0
-------- --------
Total stockholders' equity........ 1,671.8 1,274.3
-------- --------
$2,432.8 $1,994.1
======== ========
See accompanying notes.
F-4
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1995, 1994 and 1993
(In millions)
Common
stock
and
Number additional
of paid-in Retained
shares capital earnings
------ --------- --------
Balance at December 31, 1992........ 272.6 $573.8 $359.9
Issuance of common stock upon the
exercise of stock options and in
connection with an employee stock
purchase plan..................... 4.6 21.7 -
Issuance of common stock upon the
exercise of warrants.............. 1.3 5.9 -
Tax benefits related to stock
options........................... - 34.8 -
Repurchases of common stock......... (10.1) - (207.4)
Net income.......................... - - 383.3
------ ------ ------
Balance at December 31, 1993........ 268.4 636.2 535.8
Issuance of common stock upon the
exercise of stock options and in
connection with an employee stock
purchase plan..................... 5.7 44.8 -
Issuance of common stock upon the
exercise of warrants.............. 3.5 15.3 -
Tax benefits related to stock
options........................... - 23.0 -
Repurchases of common stock......... (12.9) - (300.5)
Net income.......................... - - 319.7
------ ------ ------
Balance at December 31, 1994........ 264.7 $719.3 $555.0
See accompanying notes.
(Continued next page)
F-5
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
Years ended December 31, 1995, 1994 and 1993
(In millions)
Common
stock
and
Number additional
of paid-in Retained
shares capital earnings
------ --------- --------
Balance at December 31, 1994........ 264.7 $719.3 $555.0
Issuance of common stock upon the
exercise of stock options and in
connection with an employee stock
purchase plan..................... 8.3 102.7 -
Tax benefits related to stock
options........................... - 42.8 -
Repurchases of common stock......... (7.3) - (285.7)
Net income.......................... - - 537.7
----- ------ ------
Balance at December 31, 1995........ 265.7 $864.8 $807.0
===== ====== ======
See accompanying notes.
F-6
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1995, 1994 and 1993
(In millions)
1995 1994 1993
-------- -------- --------
Cash flows from operating activities:
Net income........................ $ 537.7 $ 319.7 $ 383.3
Write-off of in-process
technology purchased ........... - 116.4 -
Depreciation and amortization..... 84.2 74.5 50.7
Other non-cash expenses........... 0.1 2.8 7.9
Deferred income taxes............. 23.9 2.4 17.4
Loss of affiliates, net........... 53.3 31.2 12.6
Cash provided by (used in):
Trade receivables, net.......... (4.6) (30.4) (8.3)
Inventories..................... 9.2 (23.3) (17.9)
Other current assets............ (8.0) 1.8 (4.8)
Accounts payable................ 23.9 4.6 (14.9)
Accrued liabilities............. 53.5 32.2 7.0
------- ------- -------
Net cash provided by
operating activities....... 773.2 531.9 433.0
------- ------- -------
Cash flows from investing activities:
Purchases of property, plant and
equipment....................... (162.7) (130.8) (209.9)
Increase in marketable securities. - - (131.3)
Proceeds from maturities of
marketable securities........... 129.6 87.7 -
Proceeds from sales of marketable
securities...................... 1,018.8 1,505.8 -
Purchases of marketable
securities...................... (1,646.6) (1,395.1) -
Cost to acquire company, net of
cash acquired................... - (240.8) -
Increase in investments in
affiliated companies............ (19.5) (21.8) (21.7)
(Increase) decrease in other
assets.......................... (13.7) 4.0 (27.0)
-------- -------- --------
Net cash used in investing
activities................. $ (694.1) $ (191.0) $ (389.9)
-------- -------- --------
See accompanying notes.
(Continued on next page)
F-7
<PAGE>
AMGEN INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Years ended December 31, 1995, 1994 and 1993
(In millions)
1995 1994 1993
-------- -------- --------
Cash flows from financing activities:
(Decrease) increase in commercial
paper........................... $(30.0) $(10.1) $109.8
Repayment of long-term debt....... (6.2) (12.0) (2.0)
Proceeds from issuance of long-
term debt....................... - 12.5 53.0
Net proceeds from issuance of
common stock upon the exercise
of stock options and in
connection with an employee
stock purchase plan............. 102.6 44.5 21.5
Tax benefit related to stock
options......................... 42.8 23.0 34.8
Net proceeds from issuance of
common stock upon the exercise
of warrants..................... - 15.3 5.9
Repurchases of common stock....... (285.7) (300.5) (207.4)
Other............................. (47.2) (30.8) (22.2)
-------- -------- --------
Net cash used in financing
activities................. (223.7) (258.1) (6.6)
-------- -------- --------
(Decrease) increase in cash and cash
equivalents....................... (144.6) 82.8 36.5
Cash and cash equivalents at
beginning of period............... 211.3 128.5 92.0
-------- -------- --------
Cash and cash equivalents at end of
period............................ $ 66.7 $211.3 $128.5
======== ======== ========
See accompanying notes.
F-8
<PAGE>
AMGEN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
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% or less owned and where the Company exercises
significant influence over operations are accounted for using the
equity method. All other equity investments are accounted for under
the cost method. The caption "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.
Cash equivalents and marketable securities
The Company considers cash equivalents to be only those
investments which are highly liquid, readily convertible to cash and
which mature within three months from date of purchase.
The Company considers its investment portfolio available-for-
sale as defined in Statement of Financial Accounting Standards
("SFAS") No. 115. There were no material unrealized gains or losses
nor any material differences between the estimated fair values and
costs of securities in the investment portfolio at December 31, 1995
and 1994. For the year ended December 31, 1995, realized gains and
losses totaled $8.0 million and $3.1 million, respectively. For the
year ended December 31, 1994, realized gains and losses totaled
$5.0 million and $21.1 million, respectively. The cost of securities
sold is based on the specific identification method. The cost of the
investment portfolio by type of security, contractual maturity and
its classification in the balance sheet is as follows (in millions):
F-9
<PAGE>
December 31,
1995 1994
-------- --------
Type of security:
Corporate debt securities.................. $ 486.8 $365.0
U.S. Treasury securities and obligations of
U.S. government agencies................ 459.3 170.9
Other interest bearing securities.......... 81.3 151.6
-------- ------
$1,027.4 $687.5
======== ======
Contractual maturity:
Maturing in one year or less............... $ 219.4 $411.0
Maturing after one year through three years 569.4 132.8
Maturing after three years................. 238.6 143.7
-------- ------
$1,027.4 $687.5
======== ======
Classification in balance sheet:
Cash and cash equivalents.................. $ 66.7 $211.3
Marketable securities...................... 983.6 485.4
-------- ------
1,050.3 696.7
Less cash.................................. (22.9) (9.2)
-------- ------
$1,027.4 $687.5
======== ======
The Company invests its cash in accordance with a policy that
seeks to maximize returns while ensuring both liquidity and minimal
risk of principal loss. The policy limits investments to certain
types of instruments issued by institutions with investment grade
credit ratings, and places restrictions on maturities and
concentration by type and issuer. The majority of the Company's
portfolio is composed of fixed income investments which are subject
to the risk of market interest rate fluctuations, and all the
Company's investments are subject to risks associated with the
ability of the issuers to perform their obligations under the
instruments.
F-10
<PAGE>
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 millions):
December 31,
1995 1994
----- -----
Raw materials...................... $11.8 $11.0
Work in process.................... 45.9 54.0
Finished goods..................... 31.1 33.0
----- -----
$88.8 $98.0
===== =====
Depreciation and amortization
Depreciation of buildings and equipment is provided over their
estimated useful lives on a straight-line basis. Leasehold
improvements are amortized on a straight-line basis over the shorter
of their estimated useful lives or lease terms, including periods
covered by options which are expected to be exercised.
Product sales
Product sales consist of two products, EPOGEN(R) (Epoetin alfa)
and NEUPOGEN(R) (Filgrastim).
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonal changes in cancer chemotherapy administration, and
wholesaler inventory management practices. Wholesaler inventory
reductions tend to reduce domestic NEUPOGEN(R) sales in the first
quarter each year. In prior years, NEUPOGEN(R) sales in the European
Union ("EU") have experienced a seasonal decline to varying degrees
in the third quarter.
The Company has the exclusive right to sell Epoetin alfa for
dialysis, diagnostics and all non-human uses in the United States.
The Company sells Epoetin alfa under the brand name EPOGEN(R). Amgen
has granted to Ortho Pharmaceutical Corporation, a subsidiary of
Johnson & Johnson ("Johnson & Johnson"), a license relating to
Epoetin alfa for sales in the United States for all human uses except
dialysis and diagnostics. Pursuant to this license, Amgen does not
recognize product sales it makes into the exclusive market of Johnson
& Johnson and does recognize the product sales made by Johnson &
Johnson into Amgen's exclusive market. These sales amounts, and
adjustments thereto, are derived from third-party data on shipments
to end users and their usage (see Note 5, "Contingencies - Johnson &
Johnson arbitrations").
Research and development costs
Research and development costs are expensed as incurred.
Payments related to the acquisition of technology rights, for which
F-11
<PAGE>
development work is in-process, are expensed and considered a
component of research and development costs (Note 2).
Foreign currency transactions
The Company has a program to manage foreign currency risk. As
part of this program, it has purchased foreign currency option and
forward contracts to hedge against possible reductions in values of
anticipated foreign currency cash flows over the next 12 months,
primarily resulting from its sales in Europe. At December 31, 1995,
the Company had net option and forward contracts to exchange foreign
currencies for U.S. dollars of $13.2 million and $16.2 million,
respectively, all having maturities of one year or less. The option
contracts are designated and effective as hedges of anticipated
foreign currency transactions for financial reporting purposes, and
accordingly, the net gains on such contracts are deferred and will be
recognized in the same period as the hedged transactions. The
forward contracts do not qualify as hedges for financial reporting
purposes, and accordingly, are marked-to-market with changes in
market values reflected directly in income.
The Company has additional foreign currency forward contracts to
hedge certain exposures to foreign currency fluctuations of certain
receivables and payables denominated in foreign currencies. At
December 31, 1995, the Company had forward contracts to exchange
foreign currencies, primarily Swiss francs, for U.S. dollars of
$53.9 million, all having maturities of six months or less. These
contracts are designated and effective as hedges, and accordingly,
gains and losses on these forward contracts are recognized in the
same period the offsetting gains and losses of hedged assets and
liabilities are realized and recognized.
Interest rate swaps
The Company has two interest rate swap agreements that change
the nature of the fixed rate interest paid on $50.0 million of its
medium term debt securities ("Medium Term Notes") outstanding (Note
4). Under the first agreement, the Company pays a variable rate
(LIBOR) of interest in exchange for the receipt of fixed rate
interest payments of approximately 6.1%. Under the second agreement,
the Company makes fixed rate interest payments of approximately 4.7%
and receives variable rate (LIBOR) interest payments at the same time
payments are exchanged under the first agreement. These agreements
both have notional amounts of $50.0 million, terminate in 1997, and
involve the same counterparty. The differential in the fixed rate
interest payments is recognized as a reduction of interest expense
related to the debt. The related amounts payable to and receivable
from the counterparty are recorded in accrued liabilities. The fair
values of the swap agreements are not recognized in the financial
statements.
Interest
Interest costs are expensed as incurred except to the extent
such interest is related to construction in progress, in which case
interest is capitalized. Interest costs capitalized for the years
ended December 31, 1995, 1994 and 1993, were $4.7 million,
$3.7 million and $4.0 million, respectively.
F-12
<PAGE>
Income taxes
Effective January 1, 1993, the Company adopted SFAS No. 109,
"Accounting for Income Taxes," which supersedes SFAS No. 96. As
permitted under this new accounting standard, prior years' financial
statements have not been restated. Net income for the year ended
December 31, 1993, was increased by $8.7 million, or $.03 per share
on a primary and fully diluted basis, to reflect the cumulative
effect of a change in accounting principle to adopt SFAS No. 109
(Note 6).
Stock option and purchase plans
The Company's stock options and purchase plans are accounted for
under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (Note 8).
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 outstanding warrants to purchase
shares of the Company's common stock.
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results may
differ from those estimates.
Reclassification
Certain prior year amounts have been reclassified to conform to
the current year presentation.
2. Business combination
In December 1994, the Company acquired the outstanding stock of
Synergen, Inc. ("Synergen"), a publicly held biotechnology company
engaged in the discovery and development of protein-based
pharmaceuticals. Synergen was acquired for $254.5 million, including
related acquisition costs. The assignment of the purchase price
among identifiable tangible and intangible assets 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 of Synergen's product candidates. The fair values of
the identifiable tangible and intangible assets acquired, net of
liabilities assumed, exceeded the purchase price, and accordingly,
the values of the noncurrent assets (including in-process technology)
F-13
<PAGE>
were reduced pro rata. The value assigned to in-process technology
of $116.4 million was expensed on the acquisition date.
This business combination has been accounted for using the
purchase method. Therefore, the operating results of Synergen are
included in the accompanying consolidated financial statements
beginning in December 1994.
3. Related party transactions
The Company owns a 50% interest in Kirin-Amgen, Inc. ("Kirin-
Amgen"), a corporation formed in 1984 for the development and
commercialization of certain products based on advanced
biotechnology. Pursuant to the terms of agreements entered into with
Kirin-Amgen, the Company conducts certain research and development
activities on behalf of Kirin-Amgen and is paid for such services at
negotiated rates. Included in revenues from corporate partners for
the years ended December 31, 1995, 1994 and 1993, are $72.6 million,
$58.6 million and $41.2 million, respectively, related to these
agreements.
In connection with its various agreements with Kirin-Amgen, the
Company has been granted sole and exclusive licenses for the
manufacture and sale of certain products in specified geographic
areas of the world. In return for such licenses, the Company paid
Kirin-Amgen stated amounts upon the receipt of the licenses and/or
pays Kirin-Amgen royalties based on sales. During the years ended
December 31, 1995, 1994 and 1993, Kirin-Amgen earned royalties from
Amgen of $74.2 million, $67.5 million and $53.1 million,
respectively, under such agreements, which are included in cost of
sales in the accompanying consolidated statements of operations.
At December 31, 1995, Amgen's share of Kirin-Amgen's
undistributed retained earnings was approximately $50.4 million.
4. Debt
The Company has a commercial paper program which provides for
unsecured short-term borrowings up to an aggregate of $200 million.
Commercial paper issued under this program is supported by the
Company's credit facility (discussed below). At December 31, 1995,
$69.7 million of commercial paper was outstanding at effective
interest rates averaging 5.8% and maturities of less than three months.
At December 31, 1994, $99.7 million of commercial paper was
outstanding at effective interest rates averaging 6.0% and maturities
of less than four months.
Long-term debt consisted of the following (in millions):
December 31,
1995 1994
------- -------
Medium Term Notes.................. $109.0 $113.0
Promissory notes................... 68.2 68.2
Other long-term obligations........ - 2.2
------ ------
$177.2 $183.4
====== ======
F-14
<PAGE>
The Company has registered $200 million of unsecured Medium Term
Notes of which $109.0 million were outstanding at December 31, 1995.
These Medium Term Notes mature in approximately two to eight years
and bear interest at fixed rates averaging 5.8%. The Company may
offer and issue these securities from time to time with terms
determined by market conditions. Under the terms of these
securities, the Company is required to meet certain debt to tangible
net worth ratios. In addition, these securities place limitations on
liens and sale/leaseback transactions.
The Company's promissory notes, which mature in 1997, were
issued to assist in financing the acquisition and related
construction of a manufacturing facility in Puerto Rico. These notes
bear interest, which is payable quarterly, at a floating rate equal
to 81% of a Eurodollar base rate, not to exceed 12%. At
December 31, 1995, the effective interest rate on these notes was
approximately 4.7%.
In June 1995, the Company replaced its existing unsecured credit
facility with a new unsecured credit facility (the ``credit
facility''). The credit facility includes a commitment expiring on
June 23, 2000 for up to $150 million of borrowings under a revolving
line of credit (the "revolving line commitment") and a commitment
expiring on December 5, 1997 for up to an additional $73 million of
letters of credit. As of December 31, 1995, $150 million was
available under the revolving line commitment for borrowing and to
support the Company's commercial paper program. Also, as of
December 31, 1995, letters of credit totaling $72.4 million were
issued and outstanding to secure the Company's promissory notes and
accrued interest thereon. Borrowings under the revolving line
commitment bear interest at various rates which are a function of, at
the Company's option, either the prime rate of a major bank, the
federal funds rate or a Eurodollar base rate. Under the terms of the
credit facility, the Company is required to meet a minimum interest
coverage ratio and maintain a minimum level of tangible net worth.
In addition, the credit facility contains limitations on investments,
liens and sale/leaseback transactions.
The aggregate stated maturities of all long-term obligations due
subsequent to December 31, 1995, are as follows: none - 1996;
$118.2 million - 1997; $30.0 million - 1998; $6.0 million - 1999;
none - 2000 and $23.0 million thereafter.
5. Contingencies
Johnson & Johnson arbitrations
In September 1985, the Company granted Johnson & Johnson a
license relating to certain patented technology and know-how of the
Company to sell a genetically engineered form of recombinant human
erythropoietin, called Epoetin alfa, throughout the United States for
all human uses except dialysis and diagnostics. Johnson & Johnson
sells Epoetin alfa under the brand name PROCRIT(R).
A number of disputes have arisen between Amgen and Johnson &
F-15
<PAGE>
Johnson as to their respective rights and obligations under the
various agreements between them, including the agreement granting the
license (the "License Agreement"). These disputes have been the
subject of arbitration proceedings before Judicial Arbitration and
Mediation Services, Inc. in Chicago, Illinois commencing in January
1989. A dispute that has not yet been resolved and is the subject of
the current arbitration proceeding relates to the audit methodology
currently employed by the Company for Epoetin alfa sales. The
Company and Johnson & Johnson are required to compensate each other
for Epoetin alfa sales which either party makes into the other
party's exclusive market. The Company has established and is
employing an audit methodology to assign the proceeds of sales of
EPOGEN(R) and PROCRIT(R) in Amgen's and Johnson & Johnson's
respective exclusive markets. Based upon this audit methodology, the
Company is seeking payment of approximately $10 million from Johnson
& Johnson for the period 1989 through 1994. Johnson & Johnson has
disputed this methodology and is proposing an alternative methodology
for adoption by the arbitrator pursuant to which it is seeking
payment of approximately $419 million for the period 1989 through
1994. If, as a result of the arbitration proceeding, a methodology
different from that currently employed by the Company is instituted
to assign the proceeds of sales between the parties, it may yield
results that are different from the results of the audit 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. While it is impossible to predict
accurately or determine the outcome of these proceedings, based
primarily upon the merits of its claims and based upon certain
liabilities established due to the inherent uncertainty of any
arbitrated result, the Company believes that the outcome of these
proceedings will not have a material adverse effect on its financial
statements.
The trial is scheduled to commence in March 1996 regarding the
audit methodologies and compensation for sales by Johnson & Johnson
into Amgen's exclusive market and sales by Amgen into Johnson &
Johnson's exclusive market. Discovery as to these issues is in
progress.
The Company has filed a demand in the arbitration to terminate
Johnson & Johnson's rights under the License Agreement and to recover
damages for breach of the License Agreement. A hearing on this
demand will be scheduled following the adjudication of the audit
methodologies for Epoetin alfa sales. On October 27, 1995, the
Company filed a complaint in the Circuit Court of Cook County,
Illinois, which is now pending in the United States District Court
for the Northern District of Illinois, seeking an order compelling
Johnson & Johnson to arbitrate the Company's claim for termination
before the arbitrator. The Company is unable to predict at this time
the outcome of the demand for termination or when it will be
resolved.
On October 2, 1995, Johnson & Johnson filed a demand for a
separate arbitration proceeding against the Company before the
F-16
<PAGE>
American Arbitration Association ("AAA") in Chicago, Illinois.
Johnson & Johnson alleges in this demand that the Company has
breached the License Agreement. The demand also includes allegations
of various antitrust violations. In this demand, Johnson & Johnson
seeks an injunction, declaratory relief, unspecified compensatory
damages, punitive damages and costs. The Company has filed a motion
to stay the arbitration pending the outcome of the existing
arbitration proceedings before Judicial Arbitration and Mediation
Services, Inc. discussed above. The Company has also filed an answer
and counterclaim denying that AAA has jurisdiction to hear or decide
the claims stated in the demand, denying the allegations in the
demand and counterclaiming for certain unpaid invoices.
Synergen ANTRIL(TM) litigation
Several lawsuits have been filed against the Company's wholly
owned subsidiary, Amgen Boulder Inc. (formerly Synergen, Inc.),
alleging misrepresentations in connection with Synergen's research
and development of ANTRIL(TM) for the treatment of sepsis. One suit
brought by three Synergen stockholders alleges violations of state
securities laws, fraud and misrepresentation and seeks an unspecified
amount of compensatory damages and punitive damages. Another suit,
proposed as a class action, filed by a limited partner of a
partnership with which Synergen is affiliated, seeks rescission of
certain payments made to one of the defendants (or unspecified
damages not less than $50 million) and treble damages based on a
variety of allegations. Broker-dealers who acted as market makers in
Synergen options have also filed a suit claiming in excess of
$3.2 million in trading losses.
While it is not possible to predict accurately or determine the
eventual outcome of the Johnson & Johnson arbitration proceedings,
the Synergen litigation or various other legal proceedings (including
patent disputes) involving Amgen, the Company believes that the
outcome of these proceedings will not have a material adverse effect
on its financial statements.
F-17
<PAGE>
6. Income taxes
The provision for income taxes includes the following (in
millions):
Years ended December 31,
1995 1994 1993
-------- -------- --------
Current provision:
Federal (including U.S.
possessions).............. $211.5 $231.3 $165.8
State....................... 21.3 34.9 25.9
------ ------ ------
Total current provision... 232.8 266.2 191.7
------ ------ ------
Deferred provision (benefit):
Federal (including U.S.
possessions).............. 25.1 0.5 19.7
State....................... (1.2) 1.9 6.4
------ ------ ------
Total deferred provision.. 23.9 2.4 26.1
------ ------ ------
$256.7 $268.6 $217.8
====== ====== ======
Deferred income taxes reflect the net tax effects of net
operating loss carryforwards and temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets and liabilities are
as follows (in millions):
December 31,
1995 1994
-------- --------
Deferred tax assets:
Net operating loss carryforwards..... $ 81.1 $ 89.5
Expense accruals..................... 61.0 78.5
Fixed assets......................... 23.2 17.0
Research collaboration expenses...... 17.4 8.0
Royalty obligation buyouts........... 11.2 11.8
Other................................ 12.4 16.7
------ ------
Total deferred tax assets......... 206.3 221.5
Valuation allowance.................... (86.2) (79.5)
------ ------
Net deferred tax assets........... 120.1 142.0
------ ------
Deferred tax liabilities:
Purchase of technology rights........ (29.7) (25.7)
Other................................ (3.7) (5.7)
------ ------
Total deferred tax liabilities.... (33.4) (31.4)
------ ------
$86.7 $110.6
====== ======
F-18
<PAGE>
The net change in the valuation allowance for deferred tax
assets during the year ended December 31, 1995 was $6.7 million.
At December 31, 1995, the Company had operating loss
carryforwards available to reduce future federal taxable income which
expire as follows (in millions):
1997 - 2002.......... $ 0.9
2003 - 2006.......... 19.9
2007................. 26.7
2008................. 81.2
2009................. 81.9
------
$210.6
======
These operating loss carryforwards relate to the acquisition of
Synergen (Note 2). Utilization of these operating loss carryforwards
is limited to approximately $16.0 million per year.
The provision for income taxes varies from income taxes provided
based on the federal statutory rate of 35% as follows (in millions):
Years ended December 31,
1995 1994 1993
-------- -------- --------
Statutory rate applied to income
before income taxes.............. $278.0 $205.9 $207.3
State income taxes, net of federal
income tax benefit............... 13.1 23.9 21.0
Benefit of Puerto Rico operations,
net of Puerto Rico income taxes.. (27.8) - -
Write-off of purchased in-process
technology not deductible........ - 40.7 -
Retroactive effects of enacted tax
law changes...................... - - (9.6)
Other, net......................... (6.6) (1.9) (.9)
------ ------ ------
$256.7 $268.6 $217.8
====== ====== ======
The tax provision for the year ended December 31, 1993 was
reduced by $9.6 million due to changes in federal tax laws enacted in
August 1993. This amount principally relates to the retroactive
reinstatement of research and experimentation and orphan drug tax
credits to July 1, 1992.
Income taxes paid during the years ended December 31, 1995, 1994
and 1993, totaled $100.8 million, $234.2 million and $146.3 million,
respectively.
F-19
<PAGE>
7. Stockholders' equity
On January 24, 1989, the Company's Board of Directors declared a
dividend of one common share purchase right ("Right") for each
outstanding share of common stock. The Rights will become
exercisable 10 days after a person acquires 10% or more of the common
stock, or 10 days after a person announces a tender offer which would
result in such person acquiring 10% or more of the common stock.
Subject to certain conditions, the Rights may be redeemed by the
Board of Directors. The current redemption price is $.0008 per
Right, subject to adjustment. The Rights will expire on
January 24, 1999.
Under certain circumstances, if an acquirer purchases 10% or
more of the Company's outstanding common stock, each Rightholder
(other than the acquirer) is entitled for a specified period to buy
shares of common stock of the Company at 50% of the then current
market price. The number of shares which a holder may purchase upon
exercise will be determined by a formula which includes a current
exercise price of $80 per share, subject to adjustment. If an
acquirer purchases at least 10% of the Company's common stock, but
has not achieved a 50% stake, the Board may exchange the Rights
(other than the acquirer's Rights) for one share of common stock per
Right. In addition, under certain circumstances, if the Company is
involved in a merger or other business combination where it is not
the surviving corporation, a Rightholder may buy shares of common
stock of the acquiring company at 50% of the then current market
value.
In connection with the sale of limited partnership interests in
Amgen Clinical Partners, L.P. (the "Limited Partnership"), Amgen
issued warrants to the limited partners to purchase 36.3 million
shares of its common stock in exchange for the options to purchase
the limited partners' interests in the Limited Partnership.
Substantially all warrants were exercised prior to their expiration
on June 30, 1994.
In addition to common stock, the Company's authorized capital
also includes 5.0 million shares of preferred stock, $.0001 par
value. At December 31, 1995, no shares of preferred stock were
issued or outstanding.
At December 31, 1995, the Company had reserved 394.4 million
shares of its common stock which may be issued through its stock
option and stock purchase plans and in connection with the
stockholder Rights agreement.
The Company has a stock repurchase program to offset the
dilutive effect of its employee benefit stock option and stock
purchase plans. Stock repurchased under the program is retired. As
of December 31, 1995, the Company was authorized to repurchase up to
$450 million of its stock during 1996.
In July 1995, the Board of Directors approved a two-for-one
split of the Company's common stock effected in the form of a 100
percent stock dividend. The dividend was distributed on
August 15, 1995, to stockholders of record on August 1, 1995.
Accordingly, all share information in the accompanying consolidated
F-20
<PAGE>
financial statements and notes thereto have been retroactively adjusted
to give recognition to this stock split.
8. Stock option and purchase plans
The Company's stock option plans provide for option grants
designated as either nonqualified or incentive stock options. The
options generally vest over a three to five year period and generally
expire seven years from the date of grant. In general, stock option
grants are set at the closing price of the Company's common stock on
the date of grant. As of December 31, 1995, the Company had
26.3 million shares of common stock available for future grant under
its stock option plans.
Most U.S. employees and certain employees outside the U.S. are
eligible to receive a grant of stock options periodically with the
number of shares generally determined by the employee's salary grade,
performance level and the stock price. In addition, certain
management and professional level employees normally receive a stock
option grant upon hire. Non-employee directors of the Company
receive a grant of stock options annually.
Stock option information with respect to all of the Company's
stock option plans follows (in millions, except price information):
Exercise Price
------------------------
Weighted
Shares Low High Average
------ --- ---- --------
Balance December 31, 1992,
unexercised............... 30.2 $ 1.76 $38.88 $11.09
Granted................ 8.0 $16.06 $35.31 $18.93
Exercised.............. (4.5) $ 1.76 $30.50 $ 4.62
Cancelled.............. (0.6) $ 2.25 $38.38 $15.21
----
Balance December 31, 1993,
unexercised............... 33.1 $ 1.76 $38.88 $13.72
Granted................ 8.5 $17.68 $29.50 $22.07
Exercised.............. (5.6) $ 1.93 $28.00 $ 6.95
Cancelled.............. (1.0) $ 3.69 $37.38 $21.92
----
Balance December 31, 1994,
unexercised............... 35.0 $ 1.76 $38.88 $16.58
Granted................ 7.1 $28.94 $58.88 $39.62
Exercised.............. (8.1) $ 1.93 $38.88 $12.87
Cancelled.............. (1.0) $ 2.25 $39.88 $19.86
----
Balance December 31, 1995,
unexercised............... 33.0 $ 1.76 $58.88 $22.35
====
At December 31, 1995, stock options to purchase 15.7 million
shares were exercisable.
F-21
<PAGE>
The Company has an employee stock purchase plan whereby, in
accordance with Section 423 of the Internal Revenue Code, eligible
employees may authorize payroll deductions of up to 10% of their
salary to purchase shares of the Company's common stock at the lower
of 85% of the fair market value of common stock on the first or last
day of the offering period. During each of the years ended
December 31, 1995, 1994 and 1993, approximately 0.2 million shares
were purchased by employees at prices of approximately $24.76, $20.88
and $21.04 per share, respectively. At December 31, 1995, the
Company had 5.1 million shares available for future issuance under
this plan.
9. Balance sheet accounts
Property, plant and equipment consist of the following (in millions):
December 31,
1995 1994
-------- --------
Land................................. $ 59.1 $ 58.4
Buildings............................ 404.5 330.2
Manufacturing equipment.............. 59.2 53.2
Laboratory equipment................. 148.9 123.6
Furniture and office equipment....... 200.4 137.6
Leasehold improvements............... 55.7 53.7
Construction in progress............. 105.6 116.7
-------- ------
1,033.4 873.4
Less accumulated depreciation and
amortization...................... (289.6) (208.1)
-------- ------
$ 743.8 $665.3
======== ======
Other accrued liabilities consist of the following (in millions):
December 31,
1995 1994
-------- --------
Income taxes......................... $124.4 $ 35.0
Employee compensation and benefits... 70.8 63.4
Sales incentives, royalties and
allowances......................... 65.5 60.0
Due to affiliated companies and
corporate partners................ 54.9 51.8
Legal costs.......................... 33.4 60.7
Clinical costs....................... 18.3 29.9
Other................................ 92.4 105.4
------ ------
$459.7 $406.2
====== ======
F-22
<PAGE>
10. Fair values of financial instruments
The following is information concerning the fair values of each
class of financial instruments at December 31, 1995:
Cash, cash equivalents and marketable securities
The carrying amounts of cash, cash equivalents and marketable
securities approximate their fair values. Fair values of cash
equivalents and marketable securities are based on quoted market
prices.
Debt
The carrying value of commercial paper approximates its fair
value due to the short maturity of these liabilities. The fair value
of Medium Term Notes was approximately $110 million. This amount was
estimated based on quoted market rates for instruments with similar
terms and remaining maturities. The carrying value of the promissory
notes approximates its fair value since the interest rate on the
notes is reset quarterly.
Interest rate swap agreements
The fair values of interest rate swap agreements were not
significant based on estimated amounts that the counterparty would
receive or pay to terminate the swap agreements taking into account
current interest rates.
Foreign currency contracts
The fair values of the foreign currency forward contracts and
purchased foreign currency option contracts were not significant
based on quoted market rates.
11. Major customers
Amgen has chosen to use major wholesale distributors of
pharmaceutical products as the principal means of distributing the
Company's products to clinics, hospitals and pharmacies. The Company
performs periodic credit evaluations of its large customers'
financial condition and generally requires no collateral. For the
years ended December 31, 1995, 1994 and 1993, sales to two large
wholesale distributors as a percentage of total revenues were 21% and
15%, 22% and 16%, and 23% and 10%, respectively.
F-23
<PAGE>
12. Geographic information
Information about the Company's operations in the United States
and its possessions, Europe, and other international markets, which
include Canada, Australia and Japan is as follows (in millions):
Years ended December 31,
1995 1994 1993
---------- ---------- ----------
Sales to unaffiliated customers:
United States and possessions... $1,546.1 $1,333.8 $1,130.0
Europe.......................... 254.7 193.0 165.7
Other........................... 17.8 22.8 10.6
Transfers between geographic areas:
United States and possessions... 12.6 15.7 5.4
Other revenue................... 121.3 98.3 67.5
Adjustments and eliminations.... (12.6) (15.7) (5.4)
-------- -------- --------
$1,939.9 $1,647.9 $1,373.8
======== ======== ========
Years ended December 31,
1995 1994 1993
-------- -------- --------
Operating profit (loss):
United States and possessions... $801.7 $624.0 $592.9
Europe.......................... 75.7 50.3 35.8
Other........................... (33.1) (25.6) (14.9)
Adjustments and eliminations...... (1.7) (2.8) 1.0
------ ------ ------
Total operating profit............ 842.6 645.9 614.8
Interest and other income......... 50.8 9.5 21.0
Loss of affiliates, net........... (53.3) (31.2) (12.6)
General corporate expenses........ (45.7) (35.9) (30.8)
------ ------ ------
Income before income taxes and
cumulative effect of a change
in accounting principle......... $794.4 $588.3 $592.4
====== ====== ======
Operating profit (loss) represents revenue less operating
expenses directly related to each geographic area. Operating profit
(loss) excludes interest and other income, loss of affiliates, net
and other expenses attributable to general corporate operations.
Included in the operating profit for the United States and its
possessions is a write-off of in-process technology purchased of
$116.4 million for the year ended December 31, 1994 and a legal award
of $13.9 million for the year ended December 31, 1993. Loss of
affiliates, net includes the minority interest in earnings of
majority controlled European affiliates of $50.7 million,
$30.9 million and $22.2 million for the years ended
December 31, 1995, 1994 and 1993, respectively.
F-24
<PAGE>
Information about the Company's identifiable assets in each
geographic area is as follows (in millions):
December 31,
1995 1994
---------- ----------
Identifiable assets:
United States and possessions...... $ 964.0 $ 906.4
Europe............................. 70.5 50.7
Other.............................. 16.3 22.3
Adjustments and eliminations.......... 1.7 (2.8)
-------- --------
Total identifiable assets............. 1,052.5 976.6
Corporate assets including equity
method investments................. 1,380.3 1,017.5
-------- --------
Total assets.......................... $2,432.8 $1,994.1
======== ========
Identifiable assets are those assets of the Company that are
identified with the operations in each geographic area. Europe's
identifiable assets include accounts receivable of approximately
$54.7 million and $34.4 million as of December 31, 1995 and 1994,
respectively, denominated in foreign currencies. Corporate assets,
which are excluded from identifiable assets, are principally
comprised of cash, cash equivalents and marketable securities. At
December 31, 1995 and 1994, total international assets approximated
$124.6 million and $93.8 million, respectively, and total
international liabilities approximated $22.2 million and $16.6
million, respectively.
13. Quarterly financial data (unaudited, in millions, except per
share data):
1995 Quarter Ended Dec. 31 Sept. 30 June 30 Mar. 31
- ------------------ ------- ------- ------- -------
Product sales...... $484.2 $460.6 $462.6 $411.2
Gross margin from
product sales.... 418.4 396.5 386.2 344.6
Net income......... 145.6 145.8 137.7 108.6
Earnings per
share:
Primary.......... .52 .52 .49 .39
Fully diluted.... .51 .51 .49 .39
1994 Quarter Ended Dec. 31 Sept. 30 June 30 Mar. 31
- ------------------ ------- ------- ------- -------
Product sales...... $413.6 $401.7 $388.6 $345.7
Gross margin from
product sales.... 352.3 342.6 324.2 292.4
Net income......... 4.8 (1) 114.0 107.4 93.5
Earnings per
share:
Primary.......... .02 .41 .38 .33
Fully diluted.... .02 .41 .38 .33
(1) During the fourth quarter of 1994, net income was reduced
by $116.4 million due to the write-off of in-process technology
purchased in connection with the acquisition of Synergen (Note 2).
F-25
<PAGE>
SCHEDULE II
AMGEN INC.
VALUATION ACCOUNTS
Years ended December 31, 1995, 1994 and 1993
(In millions)
Additions
Balance Charged Balance
at to Costs at End
Beginning and of
of Period Expenses Deductions Period
-------- -------- ---------- -------
Allowance for doubtful
accounts.................... $13.3 $5.4 $4.9 $13.8
Allowance for doubtful
accounts.................... $12.2 $1.5 $0.4 $13.3
Allowance for doubtful
accounts.................... $11.8 $0.9 $0.5 $12.2
F-26
<PAGE>
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
PRIMARY COMPUTATION
Years ended December 31, 1995, 1994 and 1993
(In millions, except per share data)
1995 1994 1993
------- ------- -------
Income before cumulative effect of a
change in accounting principle........ $537.7 $319.7 $374.6
Cumulative effect of a change in
accounting principle.................. - - 8.7
------ ------ ------
Net income............................... $537.7 $319.7 $383.3
====== ====== ======
Applicable common and common stock
equivalent shares:
Weighted average shares of common
stock outstanding during the period. 265.0 266.3 270.5
Incremental number of shares
outstanding during the period
resulting from the assumed
exercises of stock options and
warrants............................ 15.7 13.3 16.7
------ ------ ------
Weighted average shares of common stock
and common stock equivalents
outstanding during the period......... 280.7 279.6 287.2
====== ====== ======
Earnings per common share primary:
Income before cumulative effect of a
change in accounting principle...... $ 1.92 $ 1.14 $ 1.30
Cumulative effect of a change in
accounting principle................ - - .03
------ ------ ------
Net income............................... $ 1.92 $ 1.14 $ 1.33
====== ====== ======
<PAGE>
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
FULLY DILUTED COMPUTATION
Years ended December 31, 1995, 1994 and 1993
(In millions, except per share data)
1995 1994 1993
------- ------- -------
Income before cumulative effect of a
change in accounting principle........ $537.7 $319.7 $374.6
Cumulative effect of a change in
accounting principle.................. - - 8.7
------ ------ ------
Net income............................... $537.7 $319.7 $383.3
====== ====== ======
Applicable common and common stock
equivalent shares:
Weighted average shares of common
stock outstanding during the period. 265.0 266.3 270.5
Incremental number of shares
outstanding during the period
resulting from the assumed
exercises of stock options and
warrants............................ 20.3 15.9 18.1
------ ------ ------
Weighted average shares of common stock
and common stock equivalents
outstanding during the period........ 285.3 282.2 288.6
====== ====== ======
Earnings per common share primary:
Income before cumulative effect of a
change in accounting principle..... $ 1.88 $ 1.13 $ 1.30
Cumulative effect of a change in
accounting principle............... - - .03
------ ------ ------
Net income.............................. $ 1.88 $ 1.13 $ 1.33
====== ====== ======
<PAGE>
AMGEN INC.
Exhibit 21
SUBSIDIARY STATE OF INCORPORATION
(Name under which OR
subsidiary does business) ORGANIZATION
Amgen Australia Pty Limited Australia
Amgen AB Sweden
Amgen-Biofarmaceutica, Lda. Portugal
Amgen Boulder Development
Corporation Colorado
Amgen Boulder Inc. Delaware
Amgen Boulder Production
Corporation Colorado
Amgen B.V. The Netherlands
Amgen Canada Inc. Canada
Amgen Development Corporation Delaware
Amgen (Europe) AG Switzerland
Amgen GmbH Austria
Amgen GmbH Germany
Amgen Greater China, Ltd. Hong Kong
Amgen Holding, Inc. California
Amgen International Inc. Delaware
Amgen Kabushiki Kaisha Japan
Amgen Limited United Kingdom
Amgen Puerto Rico, Inc. Delaware
Amgen N.V. Belgium
Amgen Sales Corporation Barbados
Amgen S.A. France
<PAGE>
SUBSIDIARY STATE OF INCORPORATION
(Name under which OR
subsidiary does business) ORGANIZATION
Amgen S.A. Spain
Amgen S.p.A. Italy
Kirin-Amgen, Inc. Delaware
Synergen B.V. The Netherlands
Synergen Europe, Inc. Colorado
EXHIBIT
AMGEN INC.
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
1. PURPOSE.
(a) The purpose of the Amgen Inc. Employee Stock Purchase
Plan (the "Plan") is to provide a means by which employees of Amgen
Inc., a Delaware corporation (the "Company"), and its Affiliates, as
defined in subparagraph 1(b), which are designated as provided in
subparagraph 2(b), may be given an opportunity to purchase stock of
the Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of its employees, to secure and retain the services of new
employees, and to provide incentives for such persons to exert maximum
efforts for the success of the Company.
<PAGE>
(d) The Company intends that the rights to purchase stock
of the Company granted under the Plan be considered options issued
under an "employee stock purchase plan" as that term is defined in
Section 423(b) of the Code.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board of
Directors (the "Board") of the Company unless and until the Board
delegates administration to a Committee, as provided in subparagraph
2(c). Whether or not the Board has delegated administration, the
Board shall have the final power to determine all questions of policy
and expediency that may arise in the administration of the Plan.
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(i) To determine when and how rights to purchase
stock of the Company shall be granted and the provisions of each
offering of such rights (which need not be identical).
(ii) To designate from time to time which Affiliates
of the Company shall be eligible to participate in the Plan.
<PAGE>
(iii) To construe and interpret the Plan and rights
granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of
this power, may correct any defect, omission or inconsistency in the
Plan, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(iv) To amend the Plan as provided in paragraph 13.
(v) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to promote
the best interests of the Company.
(c) The Board may delegate administration of the Plan to a
Committee composed of not fewer than three (3) members of the Board
(the "Committee"). If administration is delegated to a Committee, the
Committee shall have, in connection with the administration of the
Plan, the powers theretofore possessed by the Board, subject, however,
to such resolutions, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board the
administration of the Plan.
<PAGE>
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 12 relating to
adjustments upon changes in stock, the stock that may be sold pursuant
to rights granted under the Plan shall not exceed in the aggregate six
million (6,000,000)(1) shares of the Company's $.0001 par value common
stock (the "Common Stock"). If any right granted under the Plan shall
for any reason terminate without having been exercised, the Common
Stock not purchased under such right shall again become available for
the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. GRANT OF RIGHTS; OFFERING.
The Board or the Committee may from time to time grant or
provide for the grant of rights to
- --------------------
(1) As adjusted for the two-for-one split of the Company's Common
Stock effected in the form of a 100% stock dividend, payable on August
15, 1995 to stockholders of record on August 1, 1995.
<PAGE>
purchase Common Stock of the Company under the Plan to eligible
employees (an "Offering") on a date or dates
(the "Offering Date(s)") selected by the Board or the
Committee. Each Offering shall be in such form and shall contain such
terms and conditions as the Board or the Committee shall deem
appropriate. If an employee has more than one right outstanding under
the Plan, unless he or she otherwise indicates in agreements or
notices delivered hereunder: (1) each agreement or notice delivered
by that employee will be deemed to apply to all of his or her rights
under the Plan, and (2) a right with a lower exercise price (or an
earlier-granted right, if two rights have identical exercise prices),
will be exercised to the fullest possible extent before a right with a
higher exercise price (or a later-granted right, if two rights have
identical exercise prices) will be exercised. The provisions of
separate Offerings need not be identical, but each Offering shall
include (through incorporation of the provisions of this Plan by
reference in the Offering or otherwise) the substance of the
provisions contained in paragraphs 5 through 8, inclusive.
<PAGE>
5. ELIGIBILITY.
(a) Rights may be granted only to employees of the Company
or, as the
Board or the Committee may designate as provided in subparagraph
2(b), to employees of any Affiliate of the Company. Except as
provided in subparagraph 5(b), an employee of the Company or any
Affiliate shall not be eligible to be granted rights under the Plan,
unless, on the Offering Date, such employee has been in the employ of
the Company or any Affiliate for such continuous period preceding such
grant as the Board or the Committee may require, but in no event shall
the required period of continuous employment be equal to or greater
than two (2) years. In addition, unless otherwise determined by the
Board or the Committee and set forth in the terms of the applicable
Offering, no employee of the Company or any Affiliate shall be
eligible to be granted rights under the Plan, unless, on the Offering
Date, such employee's customary employment with the Company or such
Affiliate is at least twenty (20) hours per week and at least five (5)
months per calendar year.
<PAGE>
(b) The Board or the Committee may provide that, each
person who, during the course of an Offering, first becomes an
eligible employee of the Company or designated Affiliate will, on a
date or dates specified in the Offering which coincides with the day
on which such person becomes an eligible employee or occurs
thereafter, receive a right under that Offering, which right shall
thereafter be deemed to be a part of that Offering. Such right shall
have the same characteristics as any rights originally granted under
that Offering, as described herein, except that:
(i) the date on which such right is granted shall be
the "Offering Date" of such right for all purposes, including
determination of the exercise price of such right, provided, however,
that if the fair market value of the Common Stock on the date on which
such right is granted is less than the fair market value of the Common
Stock on the first day of the Offering, then, solely for the purpose
of determining the exercise price of such right, the first day of the
Offering shall be the "Offering Date" for such right;
(ii) the Purchase Period (as defined below) for such
right shall begin on its Offering Date and end coincident with the end
of such Offering; and
<PAGE>
(iii) the Board or the Committee may provide that if
such person first becomes an eligible employee within a specified
period of time before the end of the Purchase Period (as defined
below) for such Offering, he or she will not receive any right under
that Offering.
(c) No employee shall be eligible for the grant of any
rights under the Plan if, immediately after any such rights are
granted, such employee owns stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of
the Company or of any Affiliate. For purposes of this subparagraph
5(c), the rules of Section 424(d) of the Code shall apply in
determining the stock ownership of any employee, and stock which such
employee may purchase under all outstanding rights and options shall
be treated as stock owned by such employee.
(d) An eligible employee may be granted rights under the
Plan only if such rights, together with any other rights granted under
"employee stock purchase plans" of the Company and any Affiliates, as
specified by Section 423(b)(8) of the Code, do not permit such
employee's rights to purchase stock of the Company or
<PAGE>
any Affiliate to accrue at a rate which exceeds twenty-five thousand
dollars ($25,000) of fair market value of such stock (determined at
the time such rights are granted) for each calendar year in which such
rights are outstanding at any time.
(e) Officers of the Company shall be eligible to
participate in Offerings under the Plan, provided, however, that the
Board may provide in an Offering that certain employees who are highly
compensated employees within the meaning of Section 423(b)(4)(D) of
the Code shall not be eligible to participate.
6. RIGHTS; PURCHASE PRICE.
(a) On each Offering Date, each eligible employee, pursuant
to an Offering made under the Plan, shall be granted the right to
purchase up to the number of shares of Common Stock of the Company
purchasable with a percentage designated by the Board or the Committee
not exceeding fifteen percent (15%) of such employee's Earnings (as
defined in Section 7(a)) during the period which begins on the
Offering Date (or such later date as the Board or the Committee
determines for a particular Offering) and ends on the date stated in
the Offering, which date shall be no more than twenty-seven (27)
months after the Offering Date (the "Purchase
<PAGE>
Period"). In connection with each Offering made under this Plan, the
Board or the Committee shall specify a maximum number of shares which
may be purchased by any employee as well as a maximum aggregate number
of shares which may be purchased by all eligible employees pursuant to
such Offering. In addition, in connection with each Offering which
contains more than one Exercise Date (as defined in the Offering), the
Board or the Committee may specify a maximum aggregate number of
shares which may be purchased by all eligible employees on any given
Exercise Date under the Offering. If the aggregate purchase of shares
upon exercise of rights granted under the Offering would exceed any
such maximum aggregate number, the Board or the Committee shall make a
pro rata allocation of the shares available in as nearly a uniform
manner as shall be practicable and as it shall deem to be equitable.
(b) The purchase price of stock acquired pursuant to rights
granted under the Plan shall be not less than the lesser of:
(i) an amount equal to eighty-five percent (85%) of
the fair market value of the stock on the Offering Date; or
<PAGE>
(ii) an amount equal to eighty-five percent (85%) of
the fair market value of the stock on the Exercise Date.
(c) Each eligible employee shall have the same rights and
privileges under the Plan, except as allowed under Section 423(b)(5)
of the Code.
7. PARTICIPATION; WITHDRAWAL; TERMINATION.
(a) An eligible employee may become a participant in an
Offering by delivering a participation agreement to the Company within
the time specified in the Offering, in such form as the Company
provides. Each such agreement shall authorize payroll deductions of
up to the maximum percentage specified by the Board or the Committee
of such employee's Earnings during the Purchase Period. "Earnings" is
defined as the total compensation paid to an employee, including all
salary, wages (including amounts elected to be deferred by the
employee, that would otherwise have been paid, under any cash or
deferred arrangement established by the Company), overtime pay,
commissions, bonuses, and other remuneration paid directly to the
employee, but excluding profit sharing, the cost of employee benefits
paid for by the Company, education or tuition reimbursements, imputed
income arising under any Company
<PAGE>
group insurance or benefit program, traveling expenses, business and
moving expense reimbursements, income received in connection with
stock options, contributions made by the Company under any employee
benefit plan, and similar items of compensation. The payroll
deductions made for each participant shall be credited to an account
for such participant under the Plan and shall be deposited with the
general funds of the Company. A participant may reduce (including to
zero), increase or begin such payroll deductions after the beginning
of any Purchase Period only as provided for in the Offering. A
participant may make additional payments into his or her account only
if specifically provided for in the Offering and only if the
participant has not had the maximum amount withheld during the
Purchase Period.
(b) At any time during a Purchase Period a participant may
terminate his or her payroll deductions under the Plan and withdraw
from the Offering by delivering to the Company a notice of withdrawal
in such form as the Company provides. Such withdrawal may be elected
at any time prior to the end of the Purchase Period except as provided
by the Board or the Committee in the Offering. Upon such withdrawal
from the Offering by a participant, the Company shall distribute to
such participant all of his or her accumulated payroll
<PAGE>
deductions (reduced to the extent, if any, such deductions have been
used to acquire stock for the participant) under the Offering, without
interest, and such participant's interest in that Offering shall be
automatically terminated. A participant's withdrawal from an Offering
will have no effect upon such participant's eligibility to participate
in any other Offerings under the Plan but such participant will be
required to deliver a new participation agreement in order to
participate in subsequent Offerings under the Plan.
(c) Rights granted pursuant to any Offering under the Plan
shall terminate immediately upon cessation of any participating
employee's employment with the Company or an Affiliate, for any
reason, and the Company shall distribute to such terminated employee
all of his or her accumulated payroll deductions (reduced to the
extent, if any, such deductions have been used to acquire stock for
the terminated employee), under the Offering, without interest.
(d) Rights granted under the Plan shall not be
transferable, and shall be exercisable only by the person to whom such
rights are granted.
<PAGE>
8. EXERCISE.
(a) On each exercise date, as defined in the relevant
Offering (an "Exercise Date"), each participant's accumulated payroll
deductions and other additional payments specifically provided for in
the Offering (without any increase for interest) will be applied to
the purchase of whole shares of stock of the Company, up to the
maximum number of shares permitted pursuant to the terms of the Plan
and the applicable Offering, at the purchase price specified in the
Offering. No fractional shares shall be issued upon the exercise of
rights granted under the Plan. The amount, if any, of accumulated
payroll deductions remaining in each participant's account after the
purchase of shares which is less than the amount required to purchase
one share of stock on the final Exercise Date of an Offering shall be
held in each such participant's account for the purchase of shares
under the next Offering under the Plan, unless such participant
withdraws from such next Offering, as provided in subparagraph 7(b),
or is no longer eligible to be granted rights under the Plan, as
provided in paragraph 5, in which case such amount shall be
distributed to the participant after said final Exercise Date, without
interest. The amount, if any, of accumulated payroll deductions
remaining in any
<PAGE>
participant's account after the purchase of shares which is equal to
the amount required to purchase whole shares of stock on the final
Exercise Date of an Offering shall be distributed in full to the
participant after such Exercise Date, without interest.
(b) No rights granted under the Plan may be exercised to
any extent unless the Plan (including rights granted thereunder) is
covered by an effective registration statement pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). If on an
Exercise Date of any Offering hereunder the Plan is not so registered,
no rights granted under the Plan or any Offering shall be exercised on
said Exercise Date and the Exercise Date shall be delayed until the
Plan is subject to such an effective registration statement, except
that the Exercise Date shall not be delayed more than two (2) months
and the Exercise Date shall in no event be more than twenty-seven (27)
months from the Offering Date. If on the Exercise Date of any
Offering hereunder, as delayed to the maximum extent permissible, the
Plan is not registered, no rights granted under the Plan or any
Offering shall be exercised and all payroll deductions accumulated
during the purchase period (reduced to the extent, if any, such
deductions have been used to acquire stock) shall be distributed to
the participants, without interest.
<PAGE>
9. COVENANTS OF THE COMPANY.
(a) During the terms of the rights granted under the Plan,
the Company shall keep available at all times the number of shares of
stock required to satisfy such rights.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority
as may be required to issue and sell shares of stock upon exercise of
the rights granted under the Plan. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for
the lawful issuance and sale of stock under the Plan, the Company
shall be relieved from any liability for failure to issue and sell
stock upon exercise of such rights unless and until such authority is
obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to rights granted
under the Plan shall constitute general funds of the Company.
<PAGE>
11. RIGHTS AS A STOCKHOLDER.
A participant shall not be deemed to be the holder of, or
have any of the rights of a holder with respect to, any shares subject
to rights granted under the Plan unless and until certificates
representing such shares have been issued or such shares have been
credited to an account held by a bank, broker or other nominee of the
participant.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan,
or subject to any rights granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend,
dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in
corporate structure or otherwise), the Plan and outstanding rights
will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding rights.
(b) In the event of: (1) a dissolution or liquidation of
the Company; (2) a merger or consolidation in which the Company is not
the surviving
<PAGE>
corporation; (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Common Stock
outstanding immediately preceding the merger are converted by virtue
of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) any other capital reorganization in which
more than fifty percent (50%) of the shares of the Company entitled to
vote are exchanged, then, as determined by the Board in its sole
discretion (i) any surviving corporation may assume outstanding rights
or substitute similar rights for those under the Plan, (ii) such
rights may continue in full force and effect, or (iii) participants'
accumulated payroll deductions may be used to purchase Common Stock
immediately prior to the transaction described above and the
participants' rights under the ongoing Offering terminated.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in paragraph 12 relating to
adjustments upon changes in stock, no amendment shall be effective
unless approved by the stockholders of the Company within twelve (12)
months before or after the adoption of the amendment, where the
amendment will:
<PAGE>
(i) Increase the number of shares reserved for
rights under the Plan;
(ii) Modify the provisions as to eligibility for
participation in the Plan (to the extent such modification requires
stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply
with the requirements of Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3")); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to
obtain employee stock purchase plan treatment under Section 423 of the
Code or to comply with the requirements of Rule 16b-3.
It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide eligible
employees with the maximum benefits provided or to be provided under
the provisions of the Code and the regulations promulgated thereunder
relating to employee stock purchase plans and/or to bring the Plan
and/or rights granted under it into compliance therewith.
<PAGE>
(b) Rights and obligations under any rights granted before
amendment of the Plan shall not be altered or impaired by any
amendment of the Plan, except with the consent of the person to whom
such rights were granted or except as necessary to comply with any
laws or governmental regulation.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any
time. Unless sooner terminated, the Plan shall terminate ten (10)
years from the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No rights may
be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any rights granted while
the Plan is in effect shall not be altered or impaired by suspension
or termination of the Plan, except with the consent of the person to
whom such rights were granted or except as necessary to comply with
any laws or governmental regulation.
<PAGE>
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board,
but no rights granted under the Plan shall be exercised unless and
until the Plan has been approved by the stockholders of the Company.
EXHIBIT
CONFORMING AMENDMENTS TO THE
AMGEN RETIREMENT AND SAVINGS PLAN
(Amended and Restated as of January 1, 1990)
The Amgen Retirement and Savings Plan (Amended and Restated as of
January 1, 1990) ("1990 Plan") is hereby amended in the following
respects effective January 1, 1990, except as otherwise specified:
1. Effective with respect to Plan Years after December 31,
1986, Section 2.2 of the Plan is hereby amended to read in its
entirety as follows:
"2.2 'Actual Contribution Percentage' means the arithmetic
average of the Contribution Rates (calculated separately for each
Eligible Employee) of the Eligible Employees grouping all
Eligible Employees who are Highly Compensated Employees and
separately grouping all Eligible Employees who are Non-Highly
Compensated Employees."
2. Effective with respect to Plan Years after December 31,
1986, Section 2.3 of the 1990 Plan is hereby amended to read in its
entirely as follows:
"2.3 'Actual Deferral Percentage' means the arithmetic
average of the Deferral Rates (calculated separately for each
Eligible Employee) of the Eligible Employees grouping all
Eligible Employees who are Highly Compensated Employees and
separately grouping all Eligible Employees who are Non-Highly
Compensated Employees."
3. Section 2.38 of the 1990 Plan is hereby amended by replacing
the term "Employer" with the term "Employer or Affiliate" wherever it
occurs and by adding to the end such Section the following new
paragraph:
"The Company shall determine the number of Hours of Service,
if any, to be credited to an Employee under the foregoing rules,
and the computation period to which Hours of Service are to be
credited, in a uniform and nondiscriminatory manner and in
accordance with applicable federal laws and regulations,
including, without
<PAGE>
limitation, Department of Labor Regulations sections 2530.200b-
2(b) and 2530.200b-2(c)."
4. Effective with respect to calendar years after December 31,
1988, Section 2.56 of the 1990 Plan shall be amended to read in its
entirely as follows:
"2.56 'Required Beginning Date' means:
(a) In the case of a Participant who attained age 70 1/2
before January 1, 1988 and who is not a 'five percent owner'
(within the meaning of section 416 of the Code) at any time
during the five-Plan-Year period ending with the calendar year in
which he attains age 70 1/2 or thereafter, April 1 of the
calendar following the later of (i) the calendar year in which
the Participant attains age 70 1/2 or (ii) the calendar year in
which the Participant retires;
(b) In the case of a Participant who attained age 70 1/2
before January 1, 1988 and who is a 'five percent owner' (within
the meaning of section 416 of the Code) at any time during the
five-Plan-Year period ending with the calendar year in which the
Participant attains age 70 1/2 or thereafter, April 1 of the
calendar year following the later of (i) the calendar year in
which the Participant attains age 70 1/2, whether or not he is
still an Employee, or (ii) the calendar year following the year
in which he became a 'five percent owner';
(c) In the case of a Participant who attains age 70 1/2 in
1988, who is not a 'five percent owner' (within the meaning of
section 416 of the Code) during the five-Plan-Year period ending
with the calendar year in which he attains age 70 1/2, or
thereafter, and who has not terminated employment before January
1, 1989, April 1, 1990; and
(d) Except as otherwise provided in Subsection (c), in the
case of a Participant who attains age 70 1/2 on or after January
1, 1988, April 1 of the calendar year next following the calendar
year in which he attains age 70 1/2."
5. Section 4.1(b) of the 1990 Plan is hereby deleted, Section
4.1(c) of the 1990 Plan is hereby renumbered Section 4.1(d) and the
following new Sections 4.1(b) and 4.1(c) are added:
<PAGE>
"(b) The total of the Participant Elected Contributions
under this Plan and any other elective deferrals (as defined in
section 402(g)(3) of the Code) under all other plans, contracts
or arrangements of the Company or any Affiliate during any
calendar year commencing after December 31, 1986 for any
Participant shall not exceed $7,000 or such other amount in
effect for such calendar year under section 402(g)(1) of the
Code, as adjusted for increases in the cost of living. To the
extent necessary to satisfy this limitation for the calendar
year, Participant Elected Contributions may be prospectively
restricted, and, after any prospective restriction, Excess
Elective Deferrals (and allocable interest, but reduced by any
amounts previously distributed as Excess Contributions for the
Plan Year beginning with or within such calendar year) shall be
paid to the Participant on or before the April 15 next following
the calendar year in which such contributions were made."
(c) To the extent the total of the Participant Elected
Contributions under this Plan and any other elective deferrals
(as defined in section 402(g)(3) of the Code) under all other
plans, contracts or arrangements of the Employer or any Affiliate
and any other employers during any calendar year for any
Participant exceed $7,000 or such other amount in effect for such
calendar year under section 402(g)(1) of the Code, as adjusted
for increases in the cost of living, the Participant may, not
later than March 1st following the close of the Participant's
taxable year, notify the Company, in writing, that he has
accumulated an Excess Elective Deferral for such taxable year,
and may allocate to the Plan all or a portion of such Excess
Elective Deferral and may request that the Company distribute
such amount to him. In such event, the Company shall distribute,
no later than the following Aril 15th, such amount of the Excess
Elective Deferral specified by the Participant as allocable to
this Plan, plus any income and minus any loss allocable thereto,
as determined in accordance with applicable regulations or
rulings."
6. Section 4.9(b) is amended by adding the following language
to the end thereof:
"(8) The amount of Excess Contributions to be distributed to
a Participant for a Plan Year pursuant to Section 4.9(a) shall be
reduced by the amount of any Excess Elective Deferrals previously
<PAGE>
distributed to such Participant for the calendar year ending with
or within such Plan Year."
7. Effective with respect to Plan Years beginning after
December 31, 1986, Paragraph (2) of Section 4.9(c) of the 1990 Plan,
through such Paragraph (2)'s Clause (1), is hereby amended to read as
follows:
"(2) The least of (i) two hundred percent (200%) of the
Actual Contribution Percentage for all other Eligible Employees,
(ii) such percentage for all other Eligible Employees plus two
(2) percentage points or (iii) such lesser amount as the Company
determines is necessary to prevent the multiple use of this
alternative limitation with respect to Highly Compensated
Employees in the manner prescribed by the Secretary of the
Treasury or the Commissioner of the Internal Revenue Service.
In the event that for any Plan Year the Actual
Contribution Percentage for eligible Highly Compensated Employees
otherwise would not meet either of the tests set forth above, as
required by section 401(m)(2) of the Code, then the Company shall
elect one of the following methods (or any combination thereof)
of meeting one of those tests:
(1) Excess Aggregate Contributions for Participants who
are Highly Compensated Employees (and any income allocable
thereto) may be paid to affected Highly Compensated Employees
within the first twelve (12) months after the close of the
applicable Plan Year, but only to the extent the Highly
Compensated Employee has a nonforfeitable interest in the Excess
Aggregate Contributions."
8. Effective with respect to Plan Years beginning after
December 31, 1986, such portion of Section 8.8 of the 1990 Plan as
precedes Subsection (a) thereof is hereby amended to read as follows:
"8.8 Applicable Lifetime Annuities. This Section shall
apply to any Participant who elects a Lifetime Annuity. The
benefit of a Participant who elects to receive a Lifetime
Annuity, as provided in Section 8.7(a)(5) above, shall be
distributed to the Participant in the applicable form of annuity
described in Subsection (1) below, unless, prior to the Annuity
Starting Date (as defined in Subsection (d) below) with respect
to such Lifetime Annuity distribution, the Participant elects to
waive such
<PAGE>
Lifetime Annuity, in which case he may elect any other form of
distribution provided under Section 8.7. A married Participant
may waive the Qualified Joint and Survivor Annuity once he elects
a Lifetime Annuity only as provided in Subsection (b) below. If
the Participant dies before his Annuity Starting Date the
provisions of Section 8.9 shall apply."
9. Effective with respect to Plan Years beginning after
December 31, 1986, the first sentence of Section 16.2(d)(i) of the
1990 Plan is hereby amended in its entirety to read as follows:
"An officer of the Employer having an annual Compensation greater
than fifty percent (50%) of the amount in effect under Section
415(b)(1)(A) of the Code for any such Plan Year."
10. Effective with respect to Plan Years after December 31,
1986, Sections 16.4 and 16.5 of the 1990 Plan are hereby renumbered
Sections 16.5 and 16.6, respectively, and the following new Sections
16.3 and 16.4 are inserted to replace the current Section 16.3:
"16.3 Top-Heavy Accrual Rules. For any Plan Year during
which the Plan is a Top-Heavy Plan, the Profit Sharing
Contributions and Qualified Nonelective Contributions allocated
to each Eligible Employee who is a Non-Key Employee and who is an
Employee on the last day of such Plan Year (regardless of whether
such Non-Key Employee has less than 1,000 Hours of Service or
declined to make any contribution to the Plan for such Plan Year)
shall not be less than the lesser of (i) three percent of his
Compensation or (ii) the greatest allocation, expressed as a
percentage of Compensation, made to any Eligible Employee who is
a Key Employee. The determination in clause (ii) shall be made
taking into account Participant Elected Contributions, Profit
Sharing Contributions, Matching Contributions, Qualified
Nonelective Contributions and Qualified Matching Contributions
allocated to such Key Employee. In no event, however, shall any
Non-Key Employee receive an allocation under this Plan or a
benefit under the aggregate plans of the Employer and all
Affiliates that is greater than the minimum required to be
credited under all such plans and this Plan pursuant to section
416 of the Code.
<PAGE>
16.4 Top-Heavy Vesting Rules.
(a) The vested interest in the Profit Sharing Account
of each Participant with one or more Hours of Service in a Plan
Year in which the Plan is a Top-Heavy Plan shall be determined in
accordance with the following schedule except to the extent
Section 7.3 provides more rapid vesting:
Year of Service Vested Percentage
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) If the Plan ceases to be a Top-Heavy Plan, the vesting
rules described in Section 7.3 shall again apply to all Years of
Service with respect to the Participant's Profit Sharing Account;
however, any Participant described in Subsection (a) who has at
least three (3) Years of Service to his credit at the time the
Plan ceases to be a Top-Heavy Plan shall continue to have his
vested percentage computed under the Plan in accordance with
Subsection (a)."
To record this Conforming Amendment to the 1990 Plan as set forth
herein, the Company has caused its authorized officer to execute this
document this 29th day of
April, 1994.
AMGEN INC.
By:/s/ William F. Puchlevic
__________________________
Title: Vice President,
Human Resources
______________________
EXHIBIT
SECOND AMENDMENT TO THE
AMGEN RETIREMENT AND SAVING PLAN
(Amended and Restated as of January 1, 1993)
The Amgen Retirement and Savings Plan (Amended and Restated as of
January 1, 1993) (the "Plan") is hereby amended in the following
respects effective as of the dates specified:
1. Effective with respect to Plan Years after December 31, 1993,
Section 2.13(d) of the Plan is hereby amended to read in its entirety as
follows:
"(d) Effective January 1, 1994, with respect to any Plan Year,
and for any purpose under the Plan other than determining
Highly Compensated Employees and determinations under section
16.2(d), only the first $150,000 (as adjusted by the
Commissioner of Internal Revenue for increases in the cost of
living in accordance with section 401(a) (17) (B) of the Code)
shall be treated as compensation for the Plan Year. This
$150,000 limit shall be reduced for a short Plan Year to the
product of the actual dollar amount of the annual limit times
the number of months in the short Plan Year, divided by 12.
In determining Compensation for purposes of this limitation,
the rules of section 414(q) (6) of the Code shall apply,
except that "family members" shall include only the spouse of
the Employee and any lineal descendants who have not attained
age 19 before the close of the Plan Year."
2. Effective as of January 1, 1995, Section 2.18 of the Plan is
hereby amended to read in its entirety as follows:
"2.18 'Disability' means that the Participant is
determined, under Title II or XVI of the Social Security Act,
to have been disabled at the time of his or her termination of
employment. In order for a Participant's Accounts to become
fully vested on account of Disability pursuant to Sections 7.2
and 7.3 of
<PAGE>
the Plan, the Participant must submit evidence of the Social
Security Administration's determination of disability to the
Company prior to the distribution (or deemed distribution) of
the Participant's Accounts."
3. Effective as of January 1, 1995, Section 2.60 of the Plan is
hereby amended to read in its entirety as follows:
"2.60 'Valuation Date' means the date on which the assets
of the Plan are valued, determined in accordance with the
Funding Agreement."
4. Effective as of January 1, 1995, Article 6 of the Plan is
hereby amended to read in its entirety as follows:
"6.1 Investment Funds. All contributions to the Plan made
pursuant to Article 4 shall be paid to the Fund established
under the Plan. All such contributions shall be invested as
provided under the terms of the Funding Agreement, which may
include provision for the separation of assets into separate
Investment Funds.
"6.2 Investment of Contributions. Contributions shall be
apportioned among one or more of the Investment Funds as the
Participant may specify according to the procedures prescribed
by the Company. In the event that a Participant fails to make
an investment election, contributions allocated to his Account
shall be invested in accordance with procedures prescribed by
the Company. A Participant may elect to change the investment
instructions with respect to future contributions according to
the procedures prescribed by the Company.
"6.3 Limitation on Investment in Company Stock Fund. A
Participant may direct the investment of his Accounts in the
Company Stock Fund only to the extent of Plan contributions
made to his Accounts on and after April 1, 1991, and only to a
maximum of fifty percent (50%) of contributions directed to
all of such Participant's Accounts thereafter.
<PAGE>
"6.4 Transfers Among Investment Accounts. A Participant may
elect to reapportion the values of his Accounts allocated
among the various Investment Funds by properly following
procedures prescribed by the Company; provided, however, that
a Participant may not transfer amounts to the Company Stock
fund and that a Participant who wishes to transfer any amount
from the Company Stock fund to one or more other Investment
Fund(s) must transfer 100 percent (100%) of the amount in his
Company Stock fund to such other Investment Fund(s). For
purposes of carrying out Investment Fund transfers, the value
of the Participant's Accounts and amounts invested in each
Investment Fund shall be determined immediately preceding the
effectuation of the Participant's transfer election."
To record this Second Amendment to the Amgen Retirement and Savings Plan
as set forth herein, the Company has caused its authorized officer to
execute this document this 27th day of October, 1994.
AMGEN INC.
By: /s/ Thomas E. Workman, Jr.
__________________________
Title: Vice President, Secretary
and General Counsel
________________________
EXHIBIT
THIRD AMENDMENT TO THE
AMGEN RETIREMENT AND SAVINGS PLAN
(Amended and Restated as of January 1, 1993)
The Amgen Retirement and Savings Plan (Amended and Restated as of
January 1, 1993) (the "Plan") is hereby amended in the following
respects:
1. Section 2.9 of the Plan is hereby amended to read in its entirety
as follows:
"2. 'Break in Service' means any Plan Year during which the
Participant completes less than 501 Hours of Service. In
addition to Hours of Service as credited under Section 2.38, but
solely for the purpose of determining whether a Break in Service
has occurred, an Employee who is absent from work by virtue of
(a) the Employee's pregnancy, (b) the birth of the Employee's
child, (c) the placement of a child with the employee by
adoption, (d) the caring for any such child for a period of up to
one year immediately following such birth or placement, (e)
Disability or (f) service in the armed forces of the United
States during a period (including a post-discharge period) that
entitles the Employee to reemployment rights guaranteed by law,
shall be credited with up to 501 additional Hours of Service.
Such additional Hours of Service in such period of absence shall
be based on his or her regular work schedule immediately prior to
such period; provided, however, that such additional Hours of
Service shall be credited during the Plan Year in which the
absence from work begins only if they would prevent a Break in
Service from occurring for that year. In all other cases, the
additional Hours of Service shall be credited during the
immediately following Plan Year."
2. Effective with respect to Plan Years after
December 31, 1993, Section 2.13(d) of the Plan is hereby amended to
read in its entirety as follows:
"(d) Effective January 1, 1994, with respect to any Plan
Year, and for any purpose under the Plan other than determining
Highly Compensated Employees and determinations under section
16.2(d),
<PAGE>
only $150,000 (as adjusted by the Commissioner of Internal
Revenue for increases in the cost of living in accordance with
section 401(a)(17)(B) of the Code) shall be treated as
compensation for the Plan Year. This limit shall be reduced for
a short Plan Year to the product of the actual dollar amount of
the annual limit times the number of months in the short Plan
Year, divided by 12. In determining Compensation for purposes of
this limitation, the rules of section 414(q)(6) of the Code shall
apply, except that "family members" shall include only the spouse
of the Employee and any lineal descendants who have not attained
age 19 before the close of the Plan Year."
3. Section 2.38 of the Plan is hereby amended to read in its
entirety as follows:
"2.38 'Hour of Service' means:
(a) Each hour for which an Employee is directly or
indirectly paid, or entitled to payment, by an Employer or
Affiliate for the performance of services,
(b) Each hour for which an Employee is directly of
indirectly paid, or entitled to payment, by an Employer or
Affiliate on account of a period of time during which no services
are performed (without regard to whether the employment
relationship between the Employee and the Employer or Affiliate
has terminated) due to vacation, holiday, illness, incapacity,
disability, layoff, jury duty, military duty or leave of absence
with pay, and
(c) Each hour for which an Employee is directly or
indirectly paid, or entitled to payment of an amount as back pay
(without regard to mitigation of damages) either awarded or
agreed to by an Employer or Affiliate.
The foregoing notwithstanding:
(1) No more than 501 Hours of Service shall be
credited to an Employee under Subsection (b) or (c) above on
account of any single continuous period of time during which
no services are performed.
(2) An hour for which an Employee is directly or
indirectly paid or entitled to payment by an Employer or an
Affiliate on
<PAGE>
account of a period during which no services
are performed shall not constitute an Hour of Service
hereunder if such payment is made or due under a plan
maintained solely for the purpose of complying with
applicable workers' compensation, unemployment compensation
or disability insurance laws.
(3) Hours of Service shall not be credited for
payments that solely reimburse an Employee for medical or
medically related expenses.
(4) The same Hour of Service shall not be
credited to an Employee both under Subsection (a) or (b) and
under Subsection (c).
(5) The computation period to which Hours of
Service determined under Subsection (b) or (c) are to be
credited shall be determined under applicable federal law
and regulations, including, without limitation, Department
of Labor Regulations section 2530.200b-2(b),(c) and (d).
For the purposes of applying the foregoing rules, salaried Employees
are paid or entitled to payment for eight-hour workdays. The Company
shall determine the number of Hours of Service, if any, to be credited
to an Employee under the foregoing rules in a uniform and
nondiscriminatory manner and in accordance with applicable federal
laws and regulations, including, without limitation, Department of
Labor Regulations section 2530.200-2(b), (c) and (d)."
4. Section 2.61 of the Plan is hereby amended to read in its
entirety as follows:
"2.61 'Year of Service' means:
(a) For purposes of vesting, (1) prior to the Effective
Date, each calendar year during which an Employee is credited
with 1,000 Hours of Service and (2) on and after the Effective
Date, each Plan Year or portion thereof during which an Employee
is credited with at least 1,000 Hours of Service; provided,
however, that an Employee shall be credited with a Year of
Service for the Plan Year from April 1, 1988 through December 31,
1988 if he or she is credited with at least 1,000 Hours of
Service during the 12-consecutive-month period from
<PAGE>
April 1, 1988 through March 31, 1989 and also shall be credited
with a Year of Service for the Plan Year beginning January 1,
1989 if he or she is credited with at least 1,000 Hours of
Service during such Plan Year.
(b) For purposes of determining eligibility, the first
'computation' in which the Employee completes of at least 1,000
Hours of Service. A computation period is the 12-consecutive-
month period following the Employee's Employment Commencement
Date (or Reemployment Commencement Date) and each 12-consecutive-
month period following the anniversary of such Employment
Commencement Date (or Reemployment Commencement Date.)"
To record this Third Amendment to the Amgen Retirement and Savings
Plan as set forth herein, the Company has caused its authorized
officer to execute this document this 13th day of December 1994.
AMGEN INC.
By: Thomas E. Workman, Jr.
______________________
Title: Vice President, Secretary
and General Counsel
_________________________
EXHIBIT
FOURTH AMENDMENT TO THE
AMGEN RETIREMENT AND SAVINGS PLAN
(Amended and Restated as of January 1, 1993)
The Amgen Retirement and Savings Plan (Amended and Restated as of
January 1, 1993) (the "Plan") is hereby amended, effective as of
January 1, 1994, in the following respects:
1. Sections 3.1 and 3.2 of the Plan are amended to read in their
entirety as follows:
"3.1 Eligible Employee. The term "Eligible Employee" means
any Employee who is described in (a) or (b) and is not excluded
under (c). An individual's status as an Eligible Employee shall
be determined by the Company and such determination shall be
conclusive and binding on all persons.
(a) Regular Full-Time Employee. Unless excluded under (c)
below, an individual classified by an Employer as a "regular
full-time employee" is an Eligible Employee.
(b) Regular Part-Time Employee. Unless excluded under (c)
below, an individual classified by an Employer as a "regular
part-time employee," including a temporary employee or intern
shall become an Eligible Employee upon completion of a Year of
Service.
(c) Excluded Employees. An Employee shall not be an
Eligible Employee if he is:
(i) Covered by a collective bargaining agreement to
which an Employer is a party, if such agreement does not provide
for the Employee's participation in the Plan;
(ii) Employed by a non-U.S. subsidiary of the Company;
or
(iii) A leased employee, as defined in section 414(n)
or section 414(o) of the Code.
(d) Eligibility After Break in Service. An Eligible
Employee shall continue as an Eligible Employee so long as he
remains employed by an Employer as a "regular employee" and has
not had a
<PAGE>
Break in Service. If an Eligible Employee has a Break in
Service, he shall again become an Eligible Employee upon
satisfaction of the eligibility conditions described in this
Section."
2. Section 3.2 is amended to read in its entirety as follows:
"3.2 Plan Entry. Each Employee who satisfies the
requirements of Section 3.1 shall be entitled to become a
Participant effective as of his date of employment as an Eligible
Employee or on any subsequent Entry Date."
3. Section 4.8 is amended to read in its entirety as follows:
"4.8 Rollover Contributions. With the Company's prior
approval, an Eligible Employee may make one or more Rollover
Contributions to the Plan. A Rollover Contribution shall be
permitted only if it meets both of the following conditions:
(a) The contribution must be made entirely in the form of
U.S. dollars; and
(b) The Eligible Employee must demonstrate to the Company's
satisfaction that the contribution qualifies as a timely rollover
contribution under section 402(c)(4), 403(a)(4) or 408(d)(3) or a
similar provision of the Code.
A Rollover Contribution shall be paid to the Company in a lump sum in
cash and shall be credited to the Participant's Rollover Account. The
Participant may direct the investment of his Rollover Account by
filing the specified investment election for in accordance with such
rules as may be established by the Company; provided, however, that
the Participant may not direct the investment of any portion of his
Rollover Account in the Company Stock Fund."
4. Paragraphs (4) and (5) of Section 8.7(a) shall be amended to read
in their entirety as follows:
"(4) Cash installments paid at least annually over a period
certain not exceeding the life expectancy of the Participant or
the joint life expectancy of the Participant and his designated
Beneficiary. All life expectancies shall be determined not later
than the date when payments commence and shall not be
redetermined thereafter.
<PAGE>
The amount of each installment payment shall be determined by
dividing the remaining years in the period certain by the value
of the Participant's Account.
(5) Subject to the provisions of Section 8.8, a
nontransferable annuity contract that provides for annuity
payments at least annually over the lifetime of the Participant
or the joint lifetimes of the Participant and his designated
Beneficiary, and that may provide for a "period certain" feature
(a "Lifetime Annuity")."
5. The Plan is amended by the addition at the end thereof of
Supplement A in substantially the form attached hereto.
To record this Fourth Amendment to the Amgen Retirement and Savings
Plan as set forth herein, the Company has caused its authorized
officer to execute this document this 30th day of December, 1994.
AMGEN INC.
By: /s/ Thomas E. Workman, Jr.
__________________________
Title: Vice President, Secretary
and General Counsel
_________________________
<PAGE>
SUPPLEMENT A
TO THE AMGEN INC. RETIREMENT AND SAVINGS PLAN
ARTICLE 1: PURPOSE
Supplement A was established effective January 1, 1995, to
provide for special eligibility, vesting and plan merger provisions
applicable to Synergen Transferees. Supplement A is part of the Plan
and shall be administered in accordance with the provisions thereof,
except as expressly provide herein. Capitalized terms used in this
Supplement A (other than those terms specifically defined herein)
shall have the same meanings given to such terms in the Plan.
ARTICLE 2: PARTICIPATION
For purposes of Article 3 of the Plan, any Synergen Transferee
(a) who was participating or eligible to participate in the Synergen
401(k) Plan as of
December 31, 1994, or (b) who was in the waiting period for
participation under the Synergen 401(k) Plan and is classified by
Synergen, Inc. as a regular full-time employee as of December 31,
1994, shall be eligible to become a Participant as of January 1, 1995,
provided that he or she then is an Eligible Employee. Any other
Synergen Transferee shall become a Participant in accordance with
Article 3 of the Plan, taking into account the past-service credit
provisions of this Supplement A.
ARTICLE 3: PAST SERVICE CREDIT
For purposes of determining eligibility and vesting service
credit under Section 2.61 of the Plan, the Years of Service of a
Synergen Transferee shall include the periods counted for such
purposes under the terms of the Synergen 401(k) Plan, which measured
service according to the elapsed-time method. In order to convert
such past-service periods to equivalent Hours of Service, as is
required by Treasury regulations section 1.410(a)-7(f)(2), each such
Synergen Transferee will be credited with 190 Hours of Service for
each month in which such Synergen Transferee would be required to be
credited with one Hour of Service.
ARTICLE 4: MERGER OF SYNERGEN 401(k) PLAN
As soon as reasonably feasible after
January 1, 1995, and the effectuation of the transfer of Plan
investments to Fidelity investments, the Synergen 401(k) Plan shall be
merged with the Plan and, following
<PAGE>
the merger, the terms of the Plan shall apply to the merged accounts.
The foregoing notwithstanding, matching contribution accounts
transferred from the Synergen 401(k) Plan on account of the merger
shall continue to be 100% vested and shall be maintained as separate
accounts from a Synergen Transferee's Matching Contributions Account
to the extent deemed necessary or appropriate by the Plan
Administrator.
ARTICLE 5: ROLLOVERS FROM SYNERGEN PROFIT SHARING PLAN
Following the termination of the Synergen Profit Sharing Plan, a
participant in such plan who is then an Eligible Employee may elect,
in accordance with
Section 4.8 of the Plan, to make a Rollover Contribution to the Plan
of all or a portion of his distribution from the Synergen Profit
Sharing Plan.
ARTICLE 6: DEFINITIONS
"Synergen Transferee" means an individual who is an employee of
Synergen, Inc. on December 21, 1994 and who, on December 22, 1994,
first becomes an Employee of the corporation (also known as Synergen,
Inc.) formed as a consequence of the tender of the stock of Synergen,
Inc. to Amgen Acquisition Subsidiary, Inc. and the merger of those two
corporations.
"Synergen 401(k) Plan" means the Synergen, Inc. Deferred Savings
Plan, as in effect on and after December 31, 1994.
"Synergen Profit Sharing Plan" means the Profit Sharing Plan of
Synergen, Inc. (formerly the
Synergen, Inc. Employee Stock Ownership Plan), as in effect on and
after December 31, 1994.
EXHIBIT
PROMISSORY NOTE
$1,000,000.00
1. Promise to Pay.
For value received, I, George A. Vandeman ("Staff Member"), a
married man, and I, Winifred M. Vandeman, wife of Staff Member,
promise to pay to the order of Amgen Inc., a Delaware corporation
("Payee"), at its office at Amgen Center, Thousand Oaks, CA
91320-1789, the sum of One Million Dollars ($1,000,000.00) (the
"Principal"), payable in full on the earlier of five (5) years
from date of execution of this Note or thirty (30) days from the
date on which Staff Member ceases to be an employee of Payee,
whichever first occurs, together with interest on the Principal
from the date of this Note until such date as the Note is paid in
full.
Interest shall be payable annually commencing December 31, 1996;
and each successive year thereafter until the Principal is
repaid. Interest on this Note shall be computed as set forth
below. The interest rate for the period from the date of this
Note through December 31, 1995 (the "initial rate") is 4.9% per
annum on the unpaid Principal. After December 31, 1995 the
interest rate on this Note shall change as set forth below.
2. Adjustable Interest Rate.
The interest rate shall be adjusted annually on January 1 of each
year (the "Change Date") so as to equal the average interest rate
designated as the "Introduction Rates" on adjustable rate loans
as publicly offered by the 32 largest banks and savings and loans
in California as published by the Los Angeles Times in its
Saturday edition. The rate shall be set using the rates
published in the Los Angeles Times on the Saturday immediately
preceding the Change Date. In the event that the "Introduction
Rates" list is not published in the Los Angeles Times for any
reason, then, in such event, the Payee shall establish the
interest rate based on a survey by it of the introductory
interest rates on adjustable loans offered by no fewer than five
banking institutions located in Southern California that the
Payee, in its sole discretion, deems representative of banking
institutions in the Ventura and Los Angeles County areas. Payee
shall
<PAGE>
give Staff Member notice if the interest rate shall be determined
using this alternative method.
Notwithstanding the foregoing, the interest rate shall never be
increased or decreased on any single Change Date by more than one
percentage point from the interest rate for the preceding 12
months. At no time during the term of this Note shall the annual
interest rate exceed 7.9% per annum.
Payee shall deliver or mail to Staff Member a notice of any
changes in the adjustable interest rate on this Note and the
amount of the Staff Member's semi-monthly payroll deductions
before the effective date of any change. The notice shall
include information required by law to be given to Staff Member
and also the title and telephone number of a person who shall
answer any questions Staff Member may have regarding the notice.
3. Option to Convert.
At the end of the term of this Note, Staff Member shall have the
option to seek to convert this loan to a loan amortized over an
additional five-year period by executing a new Promissory Note at
terms to be mutually agreed upon by Staff Member and Payee. In
the event that Staff Member and Payee are unable to reach
agreement on such terms, this Note shall become immediately due
and payable.
4. Prepayment.
Staff Member may prepay without penalty this Note in whole or in
part at any time. Any and all payments or prepayments under this
Note may be made by Staff Member to Payee at the following
address (or such other address as it designates in writing to
Staff Member):
AMGEN INC.
Amgen Center
Thousand Oaks, California 91320-1789
Attention: Accounting Manager
5. Attorneys' Fees.
Staff Member agrees to pay all costs and expenses, including,
without limitation, collection agency fees and expenses,
reasonable attorneys' fees, costs of suit and costs of appeal,
which Payee may incur
<PAGE>
in the exercise, preservation or enforcement of its right, powers
and remedies hereunder, or under any documents or instruments
securing this Note, or under law.
6. Modification of Terms.
Payee may, with or without notice to Staff Member, cause
additional parties to be added to this Note, or release any party
to this Note, or revise, extend, or renew the Note, or extend the
time for making any installment provided for by this Note, or
accept any installment in advance, all without affecting the
liability of Staff Member. Staff Member may not assign or
transfer in any manner whatsoever this Note or any of Staff
Member's obligations under this Note.
7. Security Interest.
The purpose of this loan is to purchase a personal residence.
Staff Member shall secure this loan by executing and causing to
be filed, immediately upon close of escrow, a trust deed on this
residence, commonly known as 28943 Old North Shore Road, Lake
Arrowhead, California 92352 whose property description is as
follows:
Book 8668, Page 740, Official Records of San Bernardino County,
California, and describing land therein as: Parcel No. 2 of
Parcel Map 1374, as per plat recorded in Book 11, page 52,
records of Parcel Maps.
8. Acceleration.
A) In the event Staff Member fails to pay when due any sums under
this Note, then:
(1) the entire unpaid balance of this Note shall, at the option
of the Payee hereof, immediately become due and payable in full
and unpaid Principal thereafter shall bear interest at the
lesser of the maximum rate permitted by law or at the rate of
7.9% per annum; and
(2) Staff Member authorizes Payee to deduct any sums due to
Payee under this Note from any monies, including any wages due,
otherwise owing to Staff Member.
<PAGE>
B) If Staff Member sells the residence which is purchased with
the funds herein provided, this Note shall immediately become due
and payable upon the sale of such residence.
9. Waiver of Rights by Staff Member.
Staff Member waives (1) presentment, demand, protest, notice of
dishonor and/or protest and notice of non-payment; (2) the right,
if any, to the benefit of, or to direct the application of, any
security hypothecated to Payee until all indebtedness of Staff
Member to Payee, however arising, has been paid; and (3) the
right to require the Payee to proceed against any party to this
Note, or to pursue any other remedy in Payee's power. Payee may
proceed against Staff Member directly and independently of any
other party to this Note, and the cessation of the liability of
any other party for any reason other than full payment, or any
revision, renewal, extension, forbearance, change of rate of
interest, or acceptance, release or substitution of security, or
any impairment or suspension of Payee's remedies or rights
against any other party, shall not in any way affect the
liability of Staff Member.
10. Obligations of Persons Under this Note.
If more than one person signs this Note, each person is fully and
personally obligated to keep all of the promises made in this
Note, including the promise to pay the full amount owed. Any
person who is a guarantor, surety, or endorser of this Note is
also obligated to do these things. Any person who takes over
these obligations, including the obligations of a guarantor,
surety or endorser of this Note, is also obligated to keep all of
the promises made in this Note. Payee may enforce its rights
under this Note against each person individually or against all
of the signatories to this Note. This means that any one of the
signatories to this Note may be required to pay all of the
amounts owed under this Note.
11. Governing Law.
This Note and the obligations under this Note of Staff Member or
any other signatory to this Note shall be governed by and
interpreted and determined in accordance with the laws of the
State of California as applied to contracts between
<PAGE>
California residents entered into and to be performed entirely
within said State.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Note as of the 15th day of December, 1995.
/s/ George A. Vandeman
______________________
GEORGE A. VANDEMAN
/s/ Winifred M. Vandeman
________________________
WINIFRED M. VANDEMAN
EXHIBIT
PROMISSORY NOTE
$700,000.00
1. Promise to Pay.
For value received, I, George A. Vandeman ("Staff Member"), a
married man, and I, Winifred M. Vandeman, wife of Staff Member,
promise to pay to the order of Amgen Inc., a Delaware corporation
("Payee"), at its office at Amgen Center, Thousand Oaks, CA
91320-1789, the sum of Seven Hundred Thousand Dollars
($700,000.00) (the "Principal"), payable in full on the earlier
of five (5) years from date of execution of this Note or thirty
(30) days from the date on which Staff Member ceases to be an
employee of Payee, whichever first occurs, together with interest
on the Principal from the date of this Note until such date as
the Note is paid in full.
Interest shall be payable annually commencing December 31, 1996;
and each successive year thereafter until the Principal is
repaid. Interest on this Note shall be computed as set forth
below. The interest rate for the period from the date of this
Note through December 31, 1995 (the "initial rate") is 4.9% per
annum on the unpaid Principal. After December 31, 1995 the
interest rate on this Note shall change as set forth below.
2. Adjustable Interest Rate.
The interest rate shall be adjusted annually on January 1 of each
year (the "Change Date") so as to equal the average interest rate
designated as the "Introduction Rates" on adjustable rate loans
as publicly offered by the 32 largest banks and savings and loans
in California as published by the Los Angeles Times in its
Saturday edition. The rate shall be set using the rates
published in the Los Angeles Times on the Saturday immediately
preceding the Change Date. In the event that the "Introduction
Rates" list is not published in the Los Angeles Times for any
reason, then, in such event, the Payee shall establish the
interest rate based on a survey by it of the introductory
interest rates on adjustable loans offered by no fewer than five
banking institutions located in Southern California that the
Payee, in its sole discretion, deems representative of banking
institutions in the
<PAGE>
Ventura and Los Angeles County areas. Payee shall give Staff
Member notice if the interest rate shall be determined using this
alternative method. Notwithstanding the foregoing, the interest
rate shall never be increased or decreased on any single Change
Date by more than one percentage point from the interest rate for
the preceding 12 months. At no time during the term of this Note
shall the annual interest rate exceed 7.9% per annum.
Payee shall deliver or mail to Staff Member a notice of any
changes in the adjustable interest rate on this Note and the
amount of the Staff Member's semi-monthly payroll deductions
before the effective date of any change. The notice shall
include information required by law to be given to Staff Member
and also the title and telephone number of a person who shall
answer any questions Staff Member may have regarding the notice.
3. Option to Convert.
At the end of the term of this Note, Staff Member shall have the
option to seek to convert this loan to a loan amortized over an
additional five-year period by executing a new Promissory Note at
terms to be mutually agreed upon by Staff Member and Payee. In
the event that Staff Member and Payee are unable to reach
agreement on such terms, this Note shall become immediately due
and payable.
4. Prepayment.
Staff Member may prepay without penalty this Note in whole or in
part at any time. Any and all payments or prepayments under this
Note may be made by Staff Member to Payee at the following
address (or such other address as it designates in writing to
Staff Member):
AMGEN INC.
Amgen Center
Thousand Oaks, California 91320-1789
Attention: Accounting Manager
5. Attorneys' Fees.
Staff Member agrees to pay all costs and expenses, including,
without limitation, collection agency fees and expenses,
reasonable attorneys' fees, costs of suit and costs of appeal,
which Payee may incur
<PAGE>
in the exercise, preservation or enforcement of its right, powers
and remedies hereunder, or under any documents or instruments
securing this Note, or under law.
6. Modification of Terms.
Payee may, with or without notice to Staff Member, cause
additional parties to be added to this Note, or release any party
to this Note, or revise, extend, or renew the Note, or extend the
time for making any installment provided for by this Note, or
accept any installment in advance, all without affecting the
liability of Staff Member. Staff Member may not assign or
transfer in any manner whatsoever this Note or any of Staff
Member's obligations under this Note.
7. Security Interest.
The purpose of this loan is to purchase a personal residence.
Staff Member shall secure this loan by executing and causing to
be filed, immediately upon close of escrow, a trust deed on this
residence, commonly known as 1652 Aldercreek Place, Westlake
Village, California 91361 whose property description is as
follows:
Lot 20 of Tract No. 3917, in the City of Thousand Oaks, County of
Ventura, State of California, as per Map recorded in Book 102,
Pages 54 to 59, inclusive, of Maps, in the office of the County
Recorder of said County.
8. Acceleration.
A) In the event Staff Member fails to pay when due any sums under
this Note, then:
(1) the entire unpaid balance of this Note shall, at the option
of the Payee hereof, immediately become due and payable in full
and unpaid Principal thereafter shall bear interest at the
lesser of the maximum rate permitted by law or at the rate of
7.9% per annum; and
(2) Staff Member authorizes Payee to deduct any sums due to
Payee under this Note from any monies, including any wages due,
otherwise owing to Staff Member.
<PAGE>
B) If Staff Member sells the residence which is purchased with
the funds herein provided, this Note shall immediately become due
and payable upon the sale of such residence.
9. Waiver of Rights by Staff Member.
Staff Member waives (1) presentment, demand, protest, notice of
dishonor and/or protest and notice of non-payment; (2) the right,
if any, to the benefit of, or to direct the application of, any
security hypothecated to Payee until all indebtedness of Staff
Member to Payee, however arising, has been paid; and (3) the
right to require the Payee to proceed against any party to this
Note, or to pursue any other remedy in Payee's power. Payee may
proceed against Staff Member directly and independently of any
other party to this Note, and the cessation of the liability of
any other party for any reason other than full payment, or any
revision, renewal, extension, forbearance, change of rate of
interest, or acceptance, release or substitution of security, or
any impairment or suspension of Payee's remedies or rights
against any other party, shall not in any way affect the
liability of Staff Member.
10. Obligations of Persons Under this Note.
If more than one person signs this Note, each person is fully and
personally obligated to keep all of the promises made in this
Note, including the promise to pay the full amount owed. Any
person who is a guarantor, surety, or endorser of this Note is
also obligated to do these things. Any person who takes over
these obligations, including the obligations of a guarantor,
surety or endorser of this Note, is also obligated to keep all of
the promises made in this Note. Payee may enforce its rights
under this Note against each person individually or against all
of the signatories to this Note. This means that any one of the
signatories to this Note may be required to pay all of the
amounts owed under this Note.
11. Governing Law.
This Note and the obligations under this Note of Staff Member or
any other signatory to this Note shall be governed by and
interpreted and determined in accordance with the laws of the
State of California as applied to contracts between
<PAGE>
California residents entered into and to be performed entirely
within said State.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Note as of the 15th day of
December, 1995.
/s/ George A. Vandeman
_______________________
GEORGE A. VANDEMAN
/s/ Winifred M. Vandeman
_________________________
WINIFRED M. VANDEMAN
EXHIBIT
PROMISSORY NOTE
$400,000.00
1. Promise to Pay.
For value received, I, Stan Benson ("Staff Member"), a married
man, and I, Joann M. Benson, wife of Staff Member, promise to pay
to the order of Amgen Inc., a Delaware corporation ("Payee"), at
its office at Amgen Center, Thousand Oaks, CA 91320-1789, the
sum of Four Hundred Thousand Dollars ($400,000.00) (the
"Principal"), payable in full on the earlier of five (5) years
from date of execution of this Note or thirty (30) days from the
date on which Staff Member ceases to be an employee of Payee,
whichever first occurs, together with interest on the Principal
from the date of this Note until such date as the Note is paid in
full. Interest on this Note shall be computed as set forth
below. The interest rate for the period from the date of this
Note through December 31, 1996 (the "initial rate") is 4.1% per
annum on the unpaid Principal. After December 31, 1996 the
interest rate on this Note shall change as set forth below.
2. Adjustable Interest Rate.
The interest rate shall be adjusted annually on January 1 of each
year (the "Change Date") so as to equal the average interest rate
designated as the "Introduction Rates" on adjustable rate loans
as publicly offered by the banks and savings and loans in
California as published by the Los Angeles Times in its Sunday
edition. The rate shall be set using the rates published in the
Los Angeles Times on the Sunday immediately preceding the Change
Date. In the event that the "Introduction Rates" list is not
published in the Los Angeles Times for any reason, then, in such
event, the Payee shall establish the interest rate based on a
survey by it of the introductory interest rates on adjustable
loans offered by no fewer than five banking institutions located
in Southern California that the Payee, in its sole discretion,
deems representative of banking institutions in the Ventura and
Los Angeles County areas. Payee shall give Staff Member notice
if the interest rate shall be determined using this alternative
method. Notwithstanding the foregoing, the interest rate shall
never be increased or decreased on any single Change Date by more
than one
<PAGE>
percentage point from the interest rate for the preceding 12
months. At no time during the term of this Note shall the annual
interest rate exceed 7.1% per annum.
Payee shall deliver or mail to Staff Member a notice of any
changes in the adjustable interest rate on this Note and the
amount of the Staff Member's semi-monthly payroll deductions
before the effective date of any change. The notice shall
include information required by law to be given to Staff Member
and also the title and telephone number of a person who shall
answer any questions Staff Member may have regarding the notice.
3. Salary Deduction.
The interest on this Note shall be payable by semi-monthly
deductions from Staff Member's salary. The amount of such
deductions shall initially be Six Hundred Eighty-Three and 33/100
Dollars ($683.33) per installment; provided, however, that the
manner of payment of this Note shall not be limited to deductions
from Staff Member's salary. The amount of such deductions shall
be adjusted annually concurrently with any adjustment in the
interest rate on this Note to ensure that interest to be incurred
during the ensuing calendar year shall be paid in twenty-four
(24) equal payments. The first such installment shall be on
March 31, 1996; the second installment shall be on April 15,
1996; and each successive installment shall be on the fifteenth
and last days of each successive month until the Principal is
repaid. Payee shall give Staff Member at least seven (7) days
advance notice of any adjustment in the amount of said payroll
deductions. Staff Member acknowledges and agrees that by
executing this Note, Staff Member agrees to the payroll
deductions described in this Note.
4. Option to Convert.
-----------------
At the end of the term of this Note, Staff Member shall have the
option to seek to convert this loan to a loan amortized over an
additional five-year period by executing a new Promissory Note at
terms to be mutually agreed upon by Staff Member and Payee. In
the event that Staff Member and Payee are unable to reach
agreement on such terms, this Note shall become immediately due
and payable.
<PAGE>
5. Prepayment.
Staff Member may prepay without penalty this Note in whole or in
part at any time. Any and all payments or prepayments under this
Note may be made by Staff Member to Payee at the following
address (or such other address as it designates in writing to
Staff Member):
AMGEN INC.
Amgen Center
Thousand Oaks, California 91320-1789
Attention: Accounting Manager
6. Attorneys' Fees.
Staff Member agrees to pay all costs and expenses, including,
without limitation, collection agency fees and expenses,
reasonable attorneys' fees, costs of suit and costs of appeal,
which Payee may incur in the exercise, preservation or
enforcement of its right, powers and remedies hereunder, or under
any documents or instruments securing this Note, or under law.
7. Modification of Terms.
Payee may, with or without notice to Staff Member, cause
additional parties to be added to this Note, or release any party
to this Note, or revise, extend, or renew the Note, or extend the
time for making any installment provided for by this Note, or
accept any installment in advance, all without affecting the
liability of Staff Member. Staff Member may not assign or
transfer in any manner whatsoever this Note or any of Staff
Member's obligations under this Note.
8. Security Interest.
The purpose of this loan is to purchase a personal residence.
Staff Member shall secure this loan by executing and causing to
be filed, immediately upon close of escrow, a trust deed on this
residence, commonly known as 5603 Greyfeather Court, Westlake
Village, California 91362 whose property description is as
follows:
Lot 293 of Tract No. 3507-4, in the City of Thousand Oaks, as per
map recorded in Book 97, Page 18 of Maps, in the office of the
County Recorder of Ventura County, California.
<PAGE>
9. Acceleration.
A) In the event Staff Member fails to pay when due any sums under
this Note, then:
(1) the entire unpaid balance of this Note shall, at the option
of the Payee hereof, immediately become due and payable in full
and unpaid Principal thereafter shall bear interest at the
lesser of the maximum rate permitted by law or at the rate of
7.1% per annum; and
(2) Staff Member authorizes Payee to deduct any sums due to
Payee under this Note from any monies, including any wages due,
otherwise owing to Staff Member.
B) If Staff Member sells the residence which is purchased with
the funds herein provided, this Note shall immediately become due
and payable upon the sale of such residence.
10. Waiver of Rights by Staff Member.
Staff Member waives (1) presentment, demand, protest, notice of
dishonor and/or protest and notice of non-payment; (2) the right,
if any, to the benefit of, or to direct the application of, any
security hypothecated to Payee until all indebtedness of Staff
Member to Payee, however arising, has been paid; and (3) the
right to require the Payee to proceed against any party to this
Note, or to pursue any other remedy in Payee's power. Payee may
proceed against Staff Member directly and independently of any
other party to this Note, and the cessation of the liability of
any other party for any reason other than full payment, or any
revision, renewal, extension, forbearance, change of rate of
interest, or acceptance, release or substitution of security, or
any impairment or suspension of Payee's remedies or rights
against any other party, shall not in any way affect the
liability of Staff Member.
11. Obligations of Persons Under this Note.
If more than one person signs this Note, each person is fully and
personally obligated to keep all of the promises made in this
Note, including the promise to pay the full amount owed. Any
person who is a guarantor, surety, or endorser of this Note is
also obligated to do these things. Any person who takes
<PAGE>
over these obligations, including the obligations of a guarantor,
surety or endorser of this Note, is also obligated to keep all of
the promises made in this Note. Payee may enforce its rights
under this Note against each person individually or against all
of the signatories to this Note. This means that any one of the
signatories to this Note may be required to pay all of the
amounts owed under this Note.
12. Governing Law.
This Note and the obligations under this Note of Staff Member or
any other signatory to this Note shall be governed by and
interpreted and determined in accordance with the laws of the
State of California as applied to contracts between California
residents entered into and to be performed entirely within said
State.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Note as of the 19th day of March, 1996.
/s/ Stan Benson
____________________
STAN BENSON
/s/ Joann M. Benson
____________________
JOANN M. BENSON
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<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 67
<SECURITIES> 984
<RECEIVABLES> 213
<ALLOWANCES> 14
<INVENTORY> 89
<CURRENT-ASSETS> 1454
<PP&E> 744
<DEPRECIATION> 84
<TOTAL-ASSETS> 2433
<CURRENT-LIABILITIES> 584
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 1672
<TOTAL-LIABILITY-AND-EQUITY> 2433
<SALES> 1819
<TOTAL-REVENUES> 1940
<CGS> 273
<TOTAL-COSTS> 1196
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 15
<INCOME-PRETAX> 794
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<INCOME-CONTINUING> 538
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 538
<EPS-PRIMARY> 1.92
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</TABLE>
