<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 000-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 95-3540776
- ------------------------------- -----------------------------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
One Amgen Center Drive, Thousand Oaks, California 91320-1789
- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 447-1000
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of June 30, 1998, the registrant had 253,927,244 shares of Common Stock,
$.0001 par value, outstanding.
<PAGE>
EXPLANATORY STATEMENT
This Amendment No. 1 to the Form 10-Q for the quarterly period ended June 30,
1998 for Amgen Inc. is being filed to amend and restate Item 1 due to a
financial printer error that resulted in a typographical error and an omission
in Note 4 of the "Notes to Condensed Consolidated Financial Statements."
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information in this report for the three and six months ended June 30,
1998 and 1997 is unaudited but includes all adjustments (consisting only of
normal recurring accruals) which Amgen Inc. ("Amgen" or the "Company") considers
necessary for a fair presentation of the results of operations for those
periods.
The condensed consolidated financial statements should be read in
conjunction with the Company's financial statements and the notes thereto
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
Interim results are not necessarily indicative of results for the full
fiscal year.
2
<PAGE>
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------ ------ -------- --------
<S> <C> <C> <C> <C>
Revenues:
Product sales....................................... $611.2 $566.7 $1,178.0 $1,102.7
Corporate partner revenues.......................... 29.9 40.0 52.5 67.4
Royalty income...................................... 15.8 13.8 31.8 25.9
------ ------ -------- --------
Total revenues.................................... 656.9 620.5 1,262.3 1,196.0
------ ------ -------- --------
Operating expenses:
Cost of sales....................................... 83.9 76.8 162.9 148.8
Research and development............................ 152.4 145.4 304.9 293.1
Marketing and selling............................... 74.3 81.8 141.1 149.9
General and administrative.......................... 47.7 43.7 94.0 88.1
Loss of affiliates, net............................. 10.2 12.1 16.4 20.6
------ ------ -------- --------
Total operating expenses.......................... 368.5 359.8 719.3 700.5
------ ------ -------- --------
Operating income..................................... 288.4 260.7 543.0 495.5
------ ------ -------- --------
Other income (expense):
Interest and other income........................... 23.9 18.0 39.1 33.9
Interest expense, net............................... (3.3) (0.4) (5.5) (0.7)
------ ------ -------- --------
Total other income
(expense)........................................ 20.6 17.6 33.6 33.2
------ ------ -------- --------
Income before income taxes........................... 309.0 278.3 576.6 528.7
Provision for income taxes........................... 92.7 77.8 173.0 147.9
------ ------ -------- --------
Net income........................................... $216.3 $200.5 $ 403.6 $ 380.8
====== ====== ======== ========
Earnings per share:
Basic............................................... $ 0.85 $ 0.76 $ 1.58 $ 1.44
Diluted............................................. $ 0.82 $ 0.72 $ 1.53 $ 1.37
Shares used in calculation
of earnings per share:
Basic............................................... 253.9 265.3 255.1 265.3
Diluted............................................. 262.5 277.5 263.2 277.8
</TABLE>
See accompanying notes.
3
<PAGE>
AMGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- --------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................ $ 158.0 $ 239.1
Marketable securities............................................ 863.3 787.4
Trade receivables, net........................................... 291.2 269.0
Inventories...................................................... 113.3 109.2
Other current assets............................................. 141.7 138.8
-------- --------
Total current assets........................................... 1,567.5 1,543.5
Property, plant and equipment at cost, net......................... 1,349.5 1,186.2
Investments in affiliated companies................................ 117.1 116.9
Other assets....................................................... 252.7 263.6
-------- --------
$3,286.8 $3,110.2
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 85.0 $ 103.9
Commercial paper................................................. 99.5 -
Accrued liabilities.............................................. 671.8 608.0
Current portion of long-term debt................................ 11.0 30.0
-------- --------
Total current liabilities...................................... 867.3 741.9
Long-term debt..................................................... 223.0 229.0
Contingencies
Stockholders' equity:
Preferred stock; $.0001 par value; 5 shares authorized;
none issued or outstanding..................................... - -
Common stock and additional paid-in capital; $.0001 par
value; 750 shares authorized; outstanding - 253.9
shares in 1998 and 258.3 shares in 1997........................ 1,306.7 1,196.1
Retained earnings................................................ 889.8 943.2
-------- --------
Total stockholders' equity................................... 2,196.5 2,139.3
-------- --------
$3,286.8 $3,110.2
======== ========
</TABLE>
See accompanying notes.
4
<PAGE>
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 403.6 $ 380.8
Depreciation and amortization..................................... 72.7 65.1
Loss of affiliates, net........................................... 16.4 20.6
Cash provided by (used in):
Trade receivables, net........................................... (22.2) (3.4)
Inventories...................................................... (4.1) (8.2)
Other current assets............................................. 3.7 16.6
Accounts payable................................................. (18.9) 7.6
Accrued liabilities.............................................. 63.8 (9.2)
------ ------
Net cash provided by operating activities...................... 515.0 469.9
------ ------
Cash flows from investing activities:
Purchases of property, plant and equipment........................ (236.0) (195.0)
Proceeds from maturities of marketable
securities...................................................... - 184.3
Proceeds from sales of marketable securities 272.1 312.4
Purchases of marketable securities................................ (348.5) (483.0)
Other............................................................. (6.2) 0.5
------ ------
Net cash used in investing activities.......................... (318.6) (180.8)
------ ------
</TABLE>
See accompanying notes.
(Continued on next page)
5
<PAGE>
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1998 1997
------ ------
<S> <C> <C>
Cash flows from financing activities:
Increase in commercial paper...................................... $ 99.5 $ -
Repayment of long-term debt...................................... (25.0) (78.2)
Proceeds from issuance of long-term debt......................... - 100.0
Net proceeds from issuance of common
stock upon the exercise of stock options....................... 91.8 59.0
Tax benefits related to stock options............................ 30.0 28.6
Repurchases of common stock...................................... (457.0) (210.9)
Other............................................................ (16.8) (25.9)
------ ------
Net cash used in financing activities......................... (277.5) (127.4)
------ ------
(Decrease) increase in cash and cash
equivalents..................................................... (81.1) 161.7
Cash and cash equivalents at beginning of
period.......................................................... 239.1 169.3
------ ------
Cash and cash equivalents at end of period........................ $158.0 $331.0
====== ======
</TABLE>
See accompanying notes.
6
<PAGE>
AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
1. Summary of significant accounting policies
Business
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology company
that discovers, develops, manufactures and markets human therapeutics based on
advances in 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.
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):
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
------ -------
<S> <C> <C>
Raw materials............. $ 17.6 $ 18.7
Work in process........... 49.6 53.6
Finished goods............ 46.1 36.9
------ ------
$113.3 $109.2
====== ======
</TABLE>
Product sales
Product sales consist of three products, EPOGEN(R) (Epoetin alfa),
NEUPOGEN(R) (Filgrastim) and INFERGEN(R) (Interferon alfacon-1).
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).
7
<PAGE>
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. Sales in Amgen's exclusive
market and adjustments thereto are derived from Company shipments and from
third-party data on shipments to end users and their usage (see Note 4,
"Contingencies - Johnson & Johnson arbitrations").
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 certain anticipated foreign currency
cash flows generally over the next 12 months, primarily resulting from its sales
in Europe. At June 30, 1998, the Company had option and forward contracts to
exchange foreign currencies for U.S. dollars of $39.9 million and $25.3 million,
respectively, all having maturities of seven months or less. The option
contracts, which have only nominal intrinsic value at the time of purchase, 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 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. Net gains on option
contracts (including option contracts for hedged transactions whose occurrence
are no longer probable) and changes in market values of forward contracts are
reflected in "Interest and other income". The deferred premiums on option
contracts and fair values of forward contracts are included in "Other current
assets".
The Company has additional foreign currency forward contracts to hedge
exposures to foreign currency fluctuations of certain receivables and payables
denominated in foreign currencies. At June 30, 1998, the Company had forward
contracts to exchange foreign currencies for U.S. dollars of $27.5 million, all
having maturities of two 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. The fair values of the
forward contracts are included in the corresponding captions of the hedged
assets and liabilities. Gains and losses on forward contracts, to the extent
they differ in amount from the hedged receivables and payables, are included in
"Interest and other income".
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is required to be adopted in fiscal
years beginning after June 15, 1999. Because of the Company's minimal use of
derivatives, management does not anticipate that the adoption of this new
8
<PAGE>
statement will have a significant effect on earnings or the financial position
of the Company.
Income taxes
Income taxes are accounted for in accordance SFAS No. 109 (see Note 3,
"Income taxes").
Stock option and purchase plans
The Company's stock option and purchase plans are accounted for under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees".
Earnings per share
Basic earnings per share is based upon the weighted-average number of
common shares outstanding. Diluted earnings per share is based upon the
weighted-average number of common shares and dilutive potential common shares
outstanding. Potential common shares are outstanding options under the
Company's stock option plans which are included under the treasury stock method.
The following table sets forth the computation for basic and diluted
earnings per share (in millions, except per share information):
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Numerator for basic and diluted
earnings per share - net income.................... $216.3 $200.5 $403.6 $380.8
====== ====== ====== ======
Denominator:
Denominator for basic earnings
per share - weighted-average
shares.............................................. 253.9 265.3 255.1 265.3
Effect of dilutive securities -
employee stock options.............................. 8.6 12.2 8.1 12.5
------ ------ ------ ------
Denominator for diluted earnings
per share - adjusted weighted-
average shares...................................... 262.5 277.5 263.2 277.8
====== ====== ====== ======
Basic earnings per share............................. $ 0.85 $ 0.76 $ 1.58 $ 1.44
====== ====== ====== ======
Diluted earnings per share........................... $ 0.82 $ 0.72 $ 1.53 $ 1.37
====== ====== ====== ======
</TABLE>
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
9
<PAGE>
financial statements and accompanying notes. Actual results may differ from
those estimates.
Basis of presentation
The financial information for the three and six months ended June 30, 1998
and 1997 is unaudited but includes all adjustments (consisting only of normal
recurring accruals) which the Company considers necessary for a fair
presentation of the results of operations for these periods. Interim results
are not necessarily indicative of results for the full fiscal year.
Reclassification
Certain prior year amounts have been reclassified to conform to the current
year presentation.
2. Debt
As of June 30, 1998, the Company had $234 million of unsecured debt
securities outstanding, of which $11 million matures within one year. The
Company has established a $500 million debt shelf registration statement under
which the Company has issued $100 million of debt securities (the "Notes") and
established a $400 million medium term note program. The Company may offer and
issue medium term notes from time to time with terms to be determined by market
conditions. The Notes bear interest at a fixed rate of 6.5% and mature in 10
years. The Company's other outstanding debt includes $100 million of debt
securities that bear interest at a fixed rate of 8.1% and mature in 2097 and $34
million of notes that bear interest at fixed rates averaging 6% and have
remaining maturities of less than six years.
The Company had a commercial paper program which provided for unsecured
short-term borrowings up to an aggregate of $200 million. In April 1998, the
Company replaced this program with a new commercial paper program which provides
for the same amount of aggregate short-term borrowings. As of June 30, 1998,
commercial paper with a face amount of $100 million was outstanding. These
borrowings had maturities of less than four months and had effective interest
rates averaging 5.6%.
In May 1998, the Company replaced its credit facility with a new unsecured
$150 million credit facility that has substantially the same terms as the
Company's prior credit facility and expires on May 28, 2003. As of June 30,
1998, $150 million was available under the Company's line of credit for
borrowing.
10
<PAGE>
3. Income taxes
The provision for income taxes consists of the following (in millions):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------ ------ ------ ------
<S> <C> <C> <C> <C>
Federal(including U.S.
possessions)......................... $86.6 $72.3 $161.5 $137.4
State................................. 6.1 5.5 11.5 10.5
----- ----- ------ ------
$92.7 $77.8 $173.0 $147.9
===== ===== ====== ======
</TABLE>
The increase in the effective tax rate in the current year is the result of
a provision in the federal tax law which caps tax benefits associated with the
Company's Puerto Rico operations at the 1995 income level.
4. Contingencies
Johnson & Johnson arbitrations
Epoetin alfa
In September 1985, the Company granted Johnson & Johnson's affiliate, Ortho
Pharmaceutical Corporation, 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 & Johnson as to their respective rights and obligations under
the various agreements between them, including the agreement granting the
license (the "License Agreement").
A dispute between Amgen and Johnson & Johnson that is the subject of a
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, sometimes referred
to as "spillover". Spillover occurs when, for example, a hospital or other
purchaser buys one brand for use in both dialysis and non-dialysis indications.
The Company has established and is employing an audit methodology to assign the
proceeds of sales of EPOGEN(R) and PROCRIT in the Company's and Johnson &
Johnson's respective exclusive markets. On September 12, 1997, the arbitrator
in this matter (the "Arbitrator") issued an opinion adopting the Company's audit
methodology. For the free standing dialysis center segment of the Epoetin alfa
market, which accounts for about two-thirds of the Company's EPOGEN sales, the
Arbitrator ruled that the Company's audit accurately determined that all Epoetin
alfa sales to free standing dialysis centers are made for dialysis. For the
other segments of the Epoetin alfa market, the Arbitrator ruled that the
detailed methodology used by Amgen accurately measured and allocated Epoetin
alfa sales for all but the Hospital and Home Health Care segments, for which he
ordered certain adjustments to the results of the audit for the 1991-94 time
period. The Arbitrator also ruled that no payments are due for the 1989-90
period. Subject to further guidance from the Arbitrator to clarify his opinion
and the issuance of the Arbitrator's final order, the Company estimated that the
effect of the opinion would be a net spillover payment to Johnson & Johnson
which, after benefit of income tax effects, was $78 million for the 1991-94
period and interest in the amount of $18 million after tax. As a result of the
opinion, the Company took a charge of $0.35 per share in the third quarter of
1997 for the spillover payment and interest.
A hearing before the Arbitrator was held on October 27, 1997 to clarify,
among other issues, the calculation for the amount of the spillover payment due
to Johnson & Johnson for the 1991-94 time
11
<PAGE>
period. As a result of that hearing, the Company will pay an additional amount
to Johnson & Johnson for the 1991-94 period which is covered by amounts
previously provided for by the Company. On April 14, 1998, the Arbitrator issued
his final order which confirmed that the Company was the successful party in the
arbitration and, as a result, Johnson & Johnson has been ordered to pay to the
Company all costs and expenses, including reasonable attorney's fees, that the
Company incurred in the arbitration as well as one-half of the audit costs. The
Company currently estimates that it will submit a bill for such costs incurred
over an eight year period of approximately $100 million; however, the actual
amount of the Company's recovery will be determined by the Arbitrator. The final
order also confirmed that for the period 1995 forward, the estimates of usage of
Epoetin alfa in the Hospital segment of the Company's audit methodology shall be
applied without adjustment, subject to the right of either party to challenge
the Hospital survey results for 1995 and certain subsequent years.
Both parties filed and presented arguments on motions seeking
reconsideration of certain aspects of the Arbitrator's final order. On July 29,
1998, the Arbitrator issued his opinion on both parties' motions for
reconsideration. The Arbitrator granted the Company's motion to reconsider one
aspect of the adjustment to the results of the audit for the Hospital and Home
Health Care Segment. The Arbitrator's ruling changes the calculation for that
segment and reduces the Company's liability to Johnson & Johnson for the 1991-94
period. The Arbitrator denied all other motions, including Johnson & Johnson's
motion seeking a reconsideration of the award to the Company of all costs and
expenses, including reasonable attorneys' fees and costs, that the Company
incurred in the arbitration. Due to remaining uncertainties the Company has not
recognized any benefit from the reduced liability for 1991-94 or for the
recovery of attorneys' fees and costs or audit costs. On August 12, 1998,
Johnson & Johnson gave notice of challenge to the results of the audit of the
Hospital segment for the 1995-97 period. If, as a result of this challenge,
adjustments to the results of the Company's audit are made, the Company may be
required to pay additional compensation to Johnson & Johnson for sales during
1995, 1996 and 1997. The Company does not expect that any such additional
compensation for the 1995-97 period would have a material adverse effect on the
annual financial statements of Amgen due to amounts previously provided for by
the Company.
12
<PAGE>
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. Johnson & Johnson disputes the Arbitrator's
jurisdiction to decide the Company's demand. The Company has requested a
hearing before the Arbitrator on the Company's termination demand. No trial
date on this matter has been set.
On October 2, 1995, Johnson & Johnson filed a demand for a separate
arbitration proceeding against the Company before the 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. On October 27, 1995, the Company filed a
complaint in the Circuit Court of Cook County, Illinois seeking an order
compelling Johnson & Johnson to arbitrate the Company's claim for termination
before the Arbitrator as well as all related counterclaims asserted in Johnson &
Johnson's October 2, 1995 AAA arbitration demand. The Company is unable to
predict at this time the outcome of the demand for termination or when it will
be resolved. The Company has filed a motion to stay the AAA arbitration pending
the outcome of the existing arbitration proceedings before the Arbitrator
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 counter claiming for certain unpaid
invoices.
NESP
On June 5, 1997, Johnson & Johnson filed a demand for arbitration against
Kirin-Amgen, Inc. ("Kirin-Amgen"), an affiliate of the Company, before the AAA.
The demand alleges that Amgen's novel erythropoiesis stimulating protein
("NESP") is covered by a license granted by Kirin-Amgen to Johnson & Johnson in
1985 for the development, manufacture and sale of Epoetin alfa in certain
territories outside the United States, Japan and China (the "K-A License"). In
1996 Kirin-Amgen acquired exclusive worldwide rights in NESP from Amgen. Kirin-
Amgen, in turn, transferred certain rights in NESP to Kirin and certain rights
to Amgen. Johnson & Johnson alleges that the K-A License effectively grants
Johnson & Johnson the same right to develop, manufacture and sell NESP as
granted under the K-A License with respect to Epoetin alfa. Kirin-Amgen filed
its answer to Johnson & Johnson's complaint on January 12, 1998, denying that
Johnson & Johnson has rights to NESP. Kirin-Amgen also asserted a counterclaim
for the recovery of certain royalty payments which Kirin-Amgen asserts were
improperly withheld. These same disputes
13
<PAGE>
exist between the Company and Johnson & Johnson under the License Agreement and
the parties have agreed that the resolution of these issues in this arbitration
will be binding upon them with respect to the License Agreement. The trial in
this matter has commenced.
While it is not possible to predict accurately or determine the eventual
outcome of the above described legal matters 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
annual financial statements.
5. Stockholders' equity
During the six months ended June 30, 1998, the Company repurchased 8.2
million shares of its common stock at a total cost of $457 million under its
common stock repurchase program. In October 1997, the Board of Directors
authorized the Company to repurchase up to an additional $1 billion of common
stock through December 31, 1998. At June 30, 1998, $255 million of this
authorization remained. Stock repurchased under the program is retired.
6. Comprehensive income
As of January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income". SFAS
No. 130 establishes new rules for the reporting and display of comprehensive
income and its components. SFAS No. 130 requires unrealized gains and losses on
the Company's available-for-sale securities and foreign currency translation
adjustments to be included in other comprehensive income. During the three and
six months ended June 30, 1998, total comprehensive income was $208.1 million
and $392.4 million, respectively. During the three and six months ended June
30, 1997, total comprehensive income was $197.6 million and $376 million,
respectively.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 8/18/98 By:/s/Kathryn E. Falberg
- ---------------- --------------------------------------
Kathryn E. Falberg
Vice President, Finance,
Chief Financial Officer and
Chief Accounting Officer
15
