UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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.)
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 March 31, 1998, the registrant had 254,070,280 shares of Common
Stock, $.0001 par value, outstanding.
AMGEN INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements........................3
Condensed Consolidated Statements of
Operations - three months
ended March 31, 1998 and 1997....................4
Condensed Consolidated Balance Sheets -
March 31, 1998 and December 31, 1997.............5
Condensed Consolidated Statements of
Cash Flows - three months
ended March 31, 1998 and 1997................6 - 7
Notes to Condensed Consolidated Financial
Statements.......................................8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations.................................15
PART II OTHER INFORMATION
Item 1. Legal Proceedings..........................23
Item 5. Other Information..........................24
Item 6. Exhibits and Reports on Form 8-K...........24
Signatures ........................................25
Index to Exhibits .................................26
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information in this report for the three months ended March
31, 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.
3
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended
March 31,
1998 1997
------- -------
Revenues:
Product sales ........................ $566.8 $536.0
Corporate partner revenues ........... 22.6 27.4
Royalty income ....................... 16.0 12.1
------ ------
Total revenues ................... 605.4 575.5
------ ------
Operating expenses:
Cost of sales ........................ 79.0 72.0
Research and development ............. 152.5 147.7
Marketing and selling ................ 66.8 68.1
General and administrative ........... 46.3 44.4
Loss of affiliates, net .............. 6.2 8.5
------ ------
Total operating expenses ......... 350.8 340.7
------ ------
Operating income ...................... 254.6 234.8
------ ------
Other income (expense):
Interest and other income ............ 15.2 15.9
Interest expense, net ................ (2.2) (0.3)
------ ------
Total other income (expense) ..... 13.0 15.6
------ ------
Income before income taxes ............ 267.6 250.4
Provision for income taxes ............ 80.3 70.1
------ ------
Net income ............................ $187.3 $180.3
====== ======
Earnings per share:
Basic ................................ $0.73 $0.68
Diluted .............................. $0.71 $0.65
Shares used in calculation of earnings
per share:
Basic ................................ 256.2 265.2
Diluted .............................. 264.1 278.1
See accompanying notes.
4
AMGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
March 31, December 31,
1998 1997
-------- --------
ASSETS
Current assets:
Cash and cash equivalents ............... $ 104.6 $ 239.1
Marketable securities ................... 775.5 787.4
Trade receivables, net .................. 289.2 269.0
Inventories ............................. 118.1 109.2
Other current assets .................... 124.3 138.8
-------- --------
Total current assets .................. 1,411.7 1,543.5
Property, plant and equipment at cost, net 1,277.5 1,186.2
Investments in affiliated companies....... 119.6 116.9
Other assets.............................. 272.7 263.6
-------- --------
$3,081.5 $3,110.2
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................ $ 114.8 $ 103.9
Accrued liabilities ..................... 674.1 608.0
Current portion of long-term debt ....... 36.0 30.0
-------- --------
Total current liabilities ............. 824.9 741.9
Long-term debt............................ 223.0 229.0
Put warrants.............................. 3.7 -
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 - 254.1 shares
in 1998 and 258.3 shares in 1997 ...... 1,240.9 1,196.1
Retained earnings ....................... 789.0 943.2
-------- --------
Total stockholders' equity .......... 2,029.9 2,139.3
-------- --------
$3,081.5 $3,110.2
======== ========
See accompanying notes.
5
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Three Months Ended
March 31,
1998 1997
------- -------
Cash flows from operating activities:
Net income ............................... $187.3 $180.3
Depreciation and amortization ............ 36.1 36.4
Loss of affiliates, net .................. 6.2 8.5
Cash provided by (used in):
Trade receivables, net .................. (20.2) 18.9
Inventories ............................. (8.9) (3.0)
Other current assets .................... 15.3 16.8
Accounts payable ........................ 10.9 1.6
Accrued liabilities ..................... 66.1 (27.4)
------ ------
Net cash provided by operating
activities .......................... 292.8 232.1
------ ------
Cash flows from investing activities:
Purchases of property, plant and
equipment .............................. (127.4) (102.5)
Proceeds from maturities of marketable
securities ............................. - 149.3
Proceeds from sales of marketable
securities ............................. 180.1 184.6
Purchases of marketable securities ....... (169.0) (205.7)
Increase in investments in affiliated
companies .............................. (0.4) -
Increase in other assets ................. (12.3) (3.4)
------ ------
Net cash (used in) provided by
investing activities ............... (129.0) 22.3
------ ------
See accompanying notes.
(Continued on next page)
6
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
Three Months Ended
March 31,
1998 1997
------- -------
Cash flows from financing activities:
Repayment of long-term debt .............. $ - $(78.2)
Net proceeds from issuance of common
stock upon the exercise of stock
options ................................ 34.4 24.3
Tax benefits related to stock options .... 13.4 8.6
Repurchases of common stock .............. (337.8) (101.7)
Other .................................... (8.3) (11.9)
------ ------
Net cash used in financing activities .. (298.3) (158.9)
------ ------
(Decrease) increase in cash and cash
equivalents ............................. (134.5) 95.5
Cash and cash equivalents at beginning of
period .................................. 239.1 169.3
------ ------
Cash and cash equivalents at end of period $104.6 $264.8
====== ======
See accompanying notes.
7
AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 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):
March 31, December 31,
1998 1997
------ -------
Raw materials ...... $ 17.5 $ 18.7
Work in process .... 56.3 53.6
Finished goods ..... 44.3 36.9
------ ------
$118.1 $109.2
====== ======
8
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). 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
March 31, 1998, the Company had option and forward contracts to
exchange foreign currencies for U.S. dollars of $49.9 million and
$18.2 million, respectively, all having maturities of nine 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 March
31, 1998, the Company had forward contracts to exchange foreign
currencies, primarily Swiss francs, for U.S. dollars of $22.4
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
9
contracts, to the extent they differ in amount from the hedged
receivables and payables, are included in "Interest and other
income".
Income taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 (Note 3).
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".
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):
Three Months Ended
March 31,
1998 1997
------ ------
Numerator for basic and diluted
earnings per share - net income . $187.3 $180.3
====== ======
Denominator:
Denominator for basic earnings
per share - weighted-average
shares ........................ 256.2 265.2
Effect of dilutive securities -
employee stock options ........ 7.9 12.9
------ ------
Denominator for diluted earnings
per share - adjusted weighted-
average shares ................ 264.1 278.1
====== ======
Basic earnings per share .......... $0.73 $0.68
====== ======
Diluted earnings per share ........ $0.71 $0.65
====== ======
Use of estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
10
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results may
differ from those estimates.
Basis of presentation
The financial information for the three months ended March 31,
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 March 31, 1998, the Company had $259 million of unsecured
debt securities outstanding. Long-term debt consists of the following
(in millions):
March 31, December 31,
1998 1997
-------- --------
Debt securities ........... $259.0 $259.0
Less current portion ...... (36.0) (30.0)
------ ------
$223.0 $229.0
====== ======
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 $59 million of notes that
bear interest at fixed rates averaging 5.8% and have remaining
maturities of less than six years.
The Company also has a commercial paper program which provides
for unsecured short-term borrowings up to an aggregate of $200
million. No commercial paper was outstanding under this program at
March 31, 1998. 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 and issued commercial paper
with a face amount of $100 million. These borrowings had maturities
11
of less than three months and had effective interest rates averaging
5.6%.
As of March 31, 1998, $150 million was available under the
Company's line of credit for borrowing.
3. Income taxes
The provision for income taxes consists of the following (in
millions):
Three Months Ended
March 31,
1998 1997
------ ------
Federal(including U.S. possessions) . $74.9 $65.1
State ............................... 5.4 5.0
----- -----
$80.3 $70.1
===== =====
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
12
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, 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
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. An
additional hearing relating to the Company's entitlement to
attorneys' fees and costs and audit costs as well as the calculation
of spillover payments, if any, that may be due to the Company or
Johnson & Johnson for 1995, 1996 and 1997 was held on January 7, 1998.
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 Order
also confirms 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. The Company does not expect that any such
challenges, if made, would result in any payments to Johnson & Johnson
which would be material to the Company.
Both parties have filed motions seeking reconsideration of
certain aspects of the Arbitrator's final order. Due to remaining
uncertainties, the Company has not taken any benefit for the possible
recovery of attorneys' fees and costs or audit costs and has retained
spillover reserves. If, as a result of these further arbitration
rulings or challenges, any adjustments to the results of the Company's
13
audit yield results that are different from the results of the audit
currently employed by the Company, the Company may be required to pay
additional compensation to Johnson & Johnson for sales during 1995,
1996 and 1997, or Johnson & Johnson may be required to pay
compensation to the Company for such prior period sales.
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 exist
between the Company and Johnson & Johnson under the License Agreement
14
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 is scheduled to commence in July
1998.
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 three months ended March 31, 1998, the Company
repurchased 6.2 million shares of its common stock at a total cost of
$337.8 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 March 31, 1998, $374.4 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 months ended
March 31, 1998 and 1997, total comprehensive income was $184.3 million
and $178.3 million, respectively.
Item 2. 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. During the
three months ended March 31, 1998, operations provided $292.8 million
of cash compared with $232.1 million during the same period last year.
The Company had cash, cash equivalents and marketable securities of
$880.1 million at March 31, 1998, compared with $1,026.5 million at
December 31, 1997.
Capital expenditures totaled $127.4 million for the three months
ended March 31, 1998, compared with $102.5 million for the same period
a year ago. The Company anticipates spending approximately $400
million to $500 million in 1998 on capital projects and equipment to
expand the Company's global operations. Thereafter, over the next few
15
years, the Company anticipates that capital expenditures will average
in excess of $400 million per year.
The Company receives cash from the exercise of employee stock
options. During the three months ended March 31, 1998, stock options
and their related tax benefits provided $47.8 million of cash compared
with $32.9 million for the same period last year. 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.
The Company has a stock repurchase program primarily to offset
the dilutive effect of its employee stock option and stock purchase
plans. During the three months ended March 31, 1998, the Company
purchased 6.2 million shares of its common stock at a cost of $337.8
million compared with 1.7 million shares purchased at a cost of $101.7
million during the same period last year. 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 March 31,
1998, $374.4 million of this authorization remained.
To provide for financial flexibility and increased liquidity,
the Company has established several sources of debt financing. The
Company established a $500 million debt shelf registration statement
and in December 1997, pursuant to such registration statement, the
Company issued $100 million of debt securities that bear interest at
a fixed rate of 6.5% and mature in 10 years (the "Notes"). As of
March 31, 1998, the Company had $259 million of unsecured debt
securities outstanding. This amount includes the Notes, $59 million
of debt securities that bear interest at fixed rates averaging 5.8%
and have remaining maturities of less than six years and $100 million
of debt securities that bear interest at a fixed rate of 8.1% and
mature in 2097. The Company also has a commercial paper program
which provides for short-term borrowings up to an aggregate face
amount 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 and issued commercial
paper with a face amount of $100 million. These borrowings had
maturities of less than three months and had effective interest rates
averaging 5.6%. The Company has a $150 million revolving line of
credit for borrowings and to support the commercial paper program.
As of March 31, 1998, no amounts were outstanding under the line of
credit.
The primary objectives for the Company's investment portfolio
are liquidity and safety of principal. Investments are made to
achieve the highest rate of return to the Company, consistent with
these two objectives. The Company's investment 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 Company invests
its excess cash in securities with varying maturities to meet
projected cash needs.
16
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 for
the foreseeable future, as well as to support its stock repurchase
program. However, the Company may raise additional capital from time
to time.
17
Results of Operations
Product sales
Product sales were $566.8 million during the three months ended
March 31, 1998, an increase of $30.8 million or 6% over the same
period last year.
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) sales were $304.4 million for the three months ended
March 31, 1998, an increase of $12.8 million or 4% over the same
period last year. This increase was primarily due to growth in the
U.S. dialysis patient population and certain dialysis providers using
a different method of anemia measurement, hemoglobin, instead of
hematocrit. EPOGEN(R) sales continued to be adversely affected by
reimbursement changes (the "HCFA Policy Changes") implemented on
September 1, 1997 by the Health Care Financing Administration
("HCFA"). Prior to the HCFA Policy Changes, fiscal intermediaries
under contract with HCFA were authorized to pay reimbursement claims
for patients whose hematocrits exceeded 36 percent, the top of the
suggested target hematocrit range in the Company's labeling, if
deemed medically justified. Under the HCFA Policy Changes, medical
justification was not accepted for payment of claims of hematocrits
that exceeded 36 percent and, if the current month's hematocrit were
greater than 36 percent and the patient's hematocrit exceeded 36.5
percent on an historical 90-day "rolling average" basis,
reimbursement for the current month would be denied in full.
Beginning in the second quarter of 1997, the Company has experienced
a decline in the growth rate of EPOGEN(R) sales as dialysis providers
attempted to lower hematocrits by lowering or withholding EPOGEN(R)
doses in order to avoid or minimize claim denials under the HCFA
Policy Changes. However, in March 1998, HCFA announced the easing of
restrictions on reimbursement that had been instituted under the HCFA
Policy Changes.
In March 1998, HCFA issued two revisions (the "HCFA Revisions")
to the HCFA Policy Changes in a program memorandum. The first
revision provides that, for a month in which the three month "rolling
average" hematocrit exceeds 36.5 percent, HCFA will pay the lower of
100 percent of the actual dosage billed for that month, or 80 percent
of the prior month's allowable EPOGEN(R) dosage. The second revision
re-establishes authorization to make payment for EPOGEN(R) when a
patient's hematocrit exceeds 36 percent when accompanied by
documentation establishing medical necessity. Dialysis providers are
currently in the process of understanding the HCFA Revisions,
revising their protocols and discerning how fiscal intermediaries
will implement the HCFA Revisions. The Company believes that fiscal
intermediaries are likely to implement the HCFA Revisions at variable
rates which may have an impact on dialysis providers' practice
pattern changes and the rate of change. The Company believes that,
compared with the HCFA Policy Changes, the HCFA Revisions may result
in fewer doses being withheld and that physicians generally are not
likely to reduce doses by more than 20 percent from the previous
18
month's level. Accordingly, it is difficult to predict what effect
the HCFA Revisions will have on EPOGEN(R) sales.
NEUPOGEN(R) (Filgrastim)
Worldwide NEUPOGEN(R) sales were $261.2 million for the three
months ended March 31, 1998, an increase of $16.8 million or 7% over
the same period last year. This increase was primarily due to the
impact of wholesaler stocking, and to a lesser extent, an increase in
underlying demand, which includes price changes. Unfavorable foreign
currency effects and European Union ("EU") government initiatives to
lower health care expenditures reduced growth in reported sales. In
addition, the Company believes that the use of protease inhibitors as
a treatment for AIDS continues to reduce sales of NEUPOGEN(R) for off-
label use as a supportive therapy in this setting. NEUPOGEN(R) is not
approved or promoted for such use, except in Australia and Canada.
Cost containment pressures in the U.S. health care marketplace
have contributed to the slowing of growth in domestic NEUPOGEN(R)
usage over the past several quarters. These pressures are expected
to continue to influence growth for the foreseeable future. In
addition, quarterly NEUPOGEN(R) sales volume is influenced by a
number of factors including underlying demand and wholesaler
inventory management practices.
The growth of the colony stimulating factor ("CSF") market in
the EU in which NEUPOGEN(R) competes has slowed, principally due to
EU government pressures on physician prescribing practices in
response to ongoing government initiatives to reduce health care
expenditures. Additionally, the Company faces competition from
another granulocyte CSF product. Amgen's CSF market share in the EU
has remained relatively constant over the last several quarters,
however, the Company does not expect the competitive intensity to
subside in the near future.
Other product sales
INFERGEN(R) (Interferon alfacon-1) sales were $1.2 million for
the three months ended March 31, 1998. INFERGEN(R) was launched in
October 1997 for the treatment of chronic hepatitis C virus
infection. There are existing treatments for this infection against
which INFERGEN(R) competes, and the Company cannot predict the extent
to which it will penetrate this market.
Cost of sales
Cost of sales as a percentage of product sales was 13.9% and
13.4% for the three months ended March 31, 1998 and 1997,
respectively. In 1998, cost of sales as a percentage of product sales
is expected to be slightly higher than 1997.
Research and development
During the three months ended March 31, 1998, research and
development expenses increased $4.8 million or 3% compared with the
19
same period last year. This increase is primarily due to higher
clinical and preclinical expenses, including staff-related costs,
necessary to support ongoing product development activities. In
1998, annual research and development expenses are expected to
increase, but at a substantially lower rate than 1997. This increase
is planned for internal development of product candidates, and for
discovery and licensing efforts.
Marketing and selling/General and administrative
Marketing and selling expenses decreased $1.3 million or 2%
during the three months ended March 31, 1998 compared with the same
period last year. This decrease was primarily due to lower expenses
related to the Johnson & Johnson arbitration and lower European
marketing expenses partially offset by higher U.S. marketing costs.
General and administrative expenses increased $1.9 million or 4%
during the three months ended March 31, 1998 compared with the same
period last year. This increase is primarily due to higher staff-
related expenses, partially offset by lower legal fees.
In 1998, marketing and selling expenses combined with general
and administrative expenses are expected to have little growth.
Income taxes
The Company's effective tax rate for the three months ended March
31, 1998 was 30.0% compared with 28.0% for the same period last year.
The increase in the effective tax rate in the current year is due to a
provision in the federal tax law which caps tax benefits associated
with the Company's Puerto Rico operations at the 1995 income level.
Foreign currency transactions
The Company has a program to manage certain portions of its
exposure to fluctuations in foreign currency exchange rates arising
from international operations. The Company generally hedges the
receivables and payables 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 and expenses. At
March 31, 1998, outstanding foreign currency option and forward
contracts totaled $49.9 million and $40.6 million, respectively.
Year 2000
The Year 2000 issue results from computer programs that do not
differentiate between the year 1900 and the year 2000 because they
were written using two digits rather than four to define the
applicable year; accordingly, computer systems that have time-
sensitive calculations may not properly recognize the year 2000. The
Company has conducted an initial review of its computer systems,
devices, applications and manufacturing equipment (collectively,
"Computer Systems") to identify those areas that could be affected by
Year 2000 noncompliance. Additionally, the Company has appointed a
20
program manager for Year 2000 compliance and is presently assessing
in detail the affected Computer Systems and is developing plans to
address the required modifications. The Company presently intends to
utilize internal and external resources to identify, correct or
reprogram and test its Computer Systems for Year 2000 compliance.
The total cost associated with Year 2000 compliance is not known at
this time. The Company has not communicated with many of its
suppliers, service providers, distributors, wholesalers and other
entities with which it has a business relationship (collectively,
"Third Party Businesses") regarding compliance with Year 2000
requirements, although the Company does intend to communicate with
key Third Party Businesses. In addition, the Company has not
determined the impact, if any, on its operations if Third Party
Businesses fail to comply with Year 2000 requirements. While the
Company has developed plans to complete modifications of its business
critical Computer Systems prior to the year 2000, if modifications of
such business critical Computer Systems, or Computer Systems of key
Third Party Businesses are not completed in a timely manner, the Year
2000 issue could have a material adverse effect on the operations and
financial position of the Company. The Company may also be affected
by the failure of state, federal and private payors or reimbursers to
be Year 2000 compliant if such entities are unable to make timely,
proper or complete payments to sellers of the Company's products.
The Company cannot predict the extent of any such impact.
Financial Outlook
Future NEUPOGEN(R) (Filgrastim) sales growth is 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. Although not
approved or promoted for use in Amgen's domestic or foreign markets,
except for Australia and Canada, the Company believes that
approximately 5%-10% of its worldwide NEUPOGEN(R) sales are from off-
label use as a supportive therapy to various AIDS treatments.
Changes in AIDS therapies, including protease inhibitors that may be
less myelosuppressive, are believed to have adversely affected and
are expected to continue to adversely affect such sales. NEUPOGEN(R)
usage is expected to continue to be affected by cost containment
pressures on health care providers worldwide. In addition, reported
NEUPOGEN(R) sales will continue to be affected by changes in foreign
currency exchange rates and government budgets.
The Company expects a high single digit sales growth rate for
EPOGEN(R) in 1998. Although HCFA announced revisions to its
EPOGEN(R) reimbursement policy in March 1998 (see, "Results of
Operations - Product sales - EPOGEN(R) (Epoetin alfa)"), the timing
and magnitude of any EPOGEN(R) sales growth due to increases in dose
cannot be predicted principally due to the timing and variety of
dialysis providers' and fiscal intermediaries' reaction to the HCFA
Revisions; however, the Company believes that increases in the U.S.
dialysis patient population will continue to grow EPOGEN(R) sales in
the near term and long term. Patients receiving treatment for end
stage renal disease are covered primarily under medical programs
21
provided by the federal government. Therefore, EPOGEN(R) sales may
also be affected by future changes in reimbursement rates or a change
in the basis for reimbursement by the federal government. The
previously disclosed report of the Office of the Inspector General
has been issued, recommending a 10% reduction in the Medicare
reimbursement rate for EPOGEN(R). The Company believes the
recommendation would primarily affect dialysis providers and that it
is difficult to predict the impact on Amgen.
INFERGEN(R) (Interferon alfacon-1) was launched in October 1997
for the treatment of chronic hepatitis C virus infection. There are
existing treatments for this infection against which INFERGEN(R)
competes, and the Company cannot predict the extent to which it will
penetrate this market. The Company is presently engaged in certain
litigation related to INFERGEN(R), as described in "Part I, Item 3.
Legal Proceedings - INFERGEN(R) litigation" in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997.
The Company anticipates a single digit total product sales
growth rate for 1998. Without giving effect to the 1997 legal
assessment, earnings per share in 1998 is expected to grow at a rate
between high single and low double digits. Estimates of future
product sales and earnings per share, however, are necessarily
speculative in nature and are difficult to predict with accuracy.
Following an approximate six-month period, during which Amgen
considered a number of corporate partnering alternatives for its
inflammation program in Boulder, Colorado, Amgen has decided to
pursue separate paths with its inflammation product development
programs and its inflammation discovery research program. Amgen will
retain its principal inflammation product candidates, STNFr-1 and IL-
1ra, and relocate the related development programs to Thousand Oaks,
California. Amgen will not continue the Boulder inflammation
discovery research program; employees are seeking investment capital
in order to continue this research in a new company. If those
efforts are successful, Amgen expects to receive equity in exchange
for its intellectual property. However, there can be no assurance
these efforts will be successful or that an exchange could be
negotiated on acceptable terms.
Except for the historical information contained herein, the
matters discussed herein are by their nature forward-looking.
Investors are cautioned that forward-looking statements or
projections made by the Company, including those made in this
document, are subject to risks and uncertainties that may cause
actual results to differ materially from those projected. Reference
is made in particular to forward-looking statements regarding product
sales, earnings per share and expenses. Amgen operates in a rapidly
changing environment that involves a number of risks, some of which
are beyond the Company's control. Future operating results and the
Company's stock price may be affected by a number of factors,
including, without limitation: (i) the results of preclinical and
clinical trials; (ii) regulatory approvals of product candidates, new
indications and manufacturing facilities; (iii) reimbursement for
Amgen's products by governments and private payors; (iv) health care
22
guidelines relating to Amgen's products; (v) intellectual property
matters (patents) and the results of litigation; (vi) competition;
(vii) fluctuations in operating results and (viii) rapid growth of
the Company. These factors and others are discussed herein and in
the sections appearing in "Item 1. Business - Factors That May Affect
the Company" in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997, which sections are incorporated herein by
reference and filed as an exhibit hereto.
Legal Matters
The Company is engaged in arbitration proceedings with one of its
licensees and various other legal proceedings. For a discussion of
these matters, see Note 4 to the Condensed Consolidated Financial
Statements.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is engaged in arbitration proceedings with one of its
licensees. For a discussion of these and other matters, see Note 4 to
the Condensed Consolidated Financial Statements, "Contingencies".
Other legal proceedings are also reported in Note 4 to the Condensed
Consolidated Financial Statements and in the Company's Form 10-K for
the year ended December 31, 1997, with material developments since
that report described below. While it is not possible 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 annual financial statements of the
Company.
Transkaryotic Therapies and Hoechst litigation
On April 15, 1997, Amgen filed suit in the United States District
Court in Boston Massachusetts against Transkaryotic Therapies Inc.
("TKT") and Hoechst Marion Roussel alleging infringement of several
U.S. patents owned by Amgen that claim an erythropoietin product and
processes for making erythropoietin. The suit seeks an injunction
preventing the defendants from making, importing, using or selling
erythropoietin in the U.S. On July 9, 1997, the court denied TKT's
motion to dismiss the lawsuit on the pleadings. On April 15, 1998,
the court issued an order granting the defendants' motion for summary
judgment of non-infringement on the grounds that defendants'
activities to date were protected by the clinical trial exemption.
The court also ruled that Amgen's motion for summary judgment for
infringement would be administratively closed. Although the matter is
administratively closed, it may be re-opened upon motion of either
party for good cause shown.
23
Item 5. Other Information
The Company's 1999 Annual Meeting of Stockholders will be held on
May 13, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) Reference is made to the Index to Exhibits included herein.
(b) Reports on Form 8-K
None
24
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: 5/12/98 By:/s/Kathryn E. Falberg
------------------ ------------------------------------
Kathryn E. Falberg
Vice President, Finance,
Chief Financial Officer and
Chief Accounting Officer
25
AMGEN INC.
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Restated Certificate of Incorporation as amended. (19)
3.2 Amended and Restated Bylaws. (23)
4.1 Indenture dated January 1, 1992 between the Company and
Citibank N.A., as trustee. (8)
4.2 Forms of Commercial Paper Master Note Certificates. (10)
4.3 First Supplement to Indenture, dated February 26, 1997
between the Company and Citibank N.A., as trustee. (16)
4.4 Officer's Certificate pursuant to Sections 2.1 and 2.3
of the Indenture, as supplemented, establishing a series
of securities "8-1/8% Debentures due April 1, 2097."
(18)
4.5 8-1/8% Debentures due April 1, 2097. (18)
4.6 Form of stock certificate for the common stock, par
value $.0001 of the Company. (19)
4.7 Officer's Certificate pursuant to Sections 2.1 and 2.3
of the Indenture, dated as of January 1, 1992, as
supplemented by the First supplemental Indenture, dated
as of February 26, 1997, each between the Company and
Citibank, N.A., as Trustee, establishing a series of
securities entitled "6.50% Notes Due December 1, 2007".
(22)
4.8 6.50% Notes Due December 1, 2007 described in Exhibit
4.7. (22)
4.9* Corporate Commercial Paper - Master Note between and
among Amgen Inc., as Issuer, Cede & Co., as nominee of
The Depository Trust Company and Citibank, N.A. as
Paying Agent.
10.1 Company's Amended and Restated 1991 Equity Incentive
Plan. (23)
10.2 Company's Amended and Restated 1984 Stock Option Plan.
(14)
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
26
Corporation (with certain confidential information
deleted therefrom). (3)
10.7 Company's Amended and Restated Employee Stock Purchase
Plan. (14)
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 1988 Stock Option Plan.
(14)
10.14 Company's Amended and Restated Retirement and Savings
Plan. (14)
10.15 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)
10.16 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). (7)
10.17 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. (9)
10.18* Amgen Inc. Supplemental Retirement Plan (As Amended and
Restated Effective January 1, 1998).
10.19 Promissory Note of Mr. Kevin W. Sharer, dated June 4,
1993. (11)
10.20 Amgen Performance Based Management Incentive Plan. (17)
10.21 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. (12)
10.22 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995. (13)
10.23 Promissory Note of Mr. George A. Vandeman, dated
December 15, 1995. (13)
10.24 Promissory Note of Mr. Stan Benson, dated March 19,
1996. (13)
10.25 Amendment No. 1 to the Company's Amended and Restated
Retirement and Savings Plan. (14)
27
10.26 Amendment Number 5 to the Company's Amended and Restated
Retirement and Savings Plan dated January 1, 1993. (17)
10.27 Amendment Number 2 to the Company's Amended and Restated
Retirement and Savings Plan dated April 1, 1996. (17)
10.28 First Amendment to Credit Agreement, dated as of
December 12, 1996, among Amgen Inc., the Borrowing
Subsidiaries named therein, and Swiss Bank Corporation
as Administrative Agent. (17)
10.29 Fourth Amendment to Rights Agreement, dated February 18,
1997 between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (15)
10.30 Preferred Share Rights Agreement, dated February 18,
1997, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (15)
10.31 Consulting Agreement, dated November 15, 1996, between
the Company and Daniel Vapnek. (17)
10.32 Agreement, dated May 30, 1995, between the Company and
George A. Vandeman. (17)
10.33 First Amendment, effective January 1, 1998, to the
Company's Amended and Restated Employee Stock Purchase
Plan. (20)
10.34 Third Amendment, effective January 1, 1997, to the
Company's Amended and Restated Retirement and Savings
Plan dated April 1, 1996. (20)
10.35 Heads of Agreement dated April 10, 1997, between the
Company and Kirin Amgen, Inc., on the one hand, and F.
Hoffmann-La Roche Ltd, on the other hand (with certain
confidential information deleted therefrom). (20)
10.36 Binding Term Sheet, dated August 20, 1997, between
Guilford Pharmaceuticals Inc. ("Guilford") and GPI NIL
Holdings, Inc., and Amgen Inc. (with certain
confidential information deleted therefrom). (21)
10.37 Promissory Note of Ms. Kathryn E. Falberg, dated April
7, 1995. (23)
10.38 Promissory Note of Mr. Edward F. Garnett, dated July 18,
1997. (23)
10.39 Fourth Amendment to the Company's Amended and Restated
Retirement and Savings Plan as amended and restated
effective April 1, 1996. (23)
10.40 Fifth Amendment to the Company's Amended and Restated
Retirement and Savings Plan as amended and restated
effective April 1, 1996. (23)
10.41 Company's Amended and Restated 1987 Directors' Stock
Option Plan. (17)
10.42* Amended and Restated Agreement on G-CSF in the EU
between Amgen Inc. and F. Hoffmann-La Roche Ltd (with
certain confidential information deleted therefrom).
10.43 Collaboration and License Agreement, dated December 15,
1997, between the Company, GPI NIL Holdings, Inc. and
Guilford Pharmaceuticals Inc. ("Guilford") (with certain
confidential information deleted therefrom). (24)
27* Financial Data Schedule.
99* Sections appearing under the heading "Business - Factors
That May Affect Company" in the Company's Annual Report
on Form 10-K for the year ended December 31, 1997.
----------------
28
* Filed herewith.
(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 dated November 8, 1989,
amending the Annual Report on Form 10-K for the year ended March
31, 1989 on June 28, 1989 and incorporated herein by reference.
(8) Filed as an exhibit to Form S-3 Registration Statement dated
December 19, 1991 and incorporated herein by reference.
(9) Filed as an exhibit to the Form 8-A dated March 31, 1993 and
incorporated herein by reference.
(10) 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.
(11) 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.
(12) 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.
(13) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1995 on March 29, 1996 and incorporated
herein by reference.
(14) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1996 on November 5, 1996 and incorporated herein
by reference.
(15) Filed as an exhibit to the Form 8-K Current Report dated
February 18, 1997 on February 28, 1997 and incorporated herein
by reference.
(16) Filed as an exhibit to the Form 8-K Current Report dated March
14, 1997 on March 14, 1997 and incorporated herein by reference.
(17) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1996 on March 24, 1997 and incorporated
herein by reference.
(18) Filed as an exhibit to the Form 8-K Current Report dated April
8, 1997 on April 8, 1997 and incorporated herein by reference.
(19) Filed as an exhibit to the Form 10-Q for the quarter ended March
31, 1997 on May 13, 1997 and incorporated herein by reference.
(20) Filed as an exhibit to the Form 10-Q for the quarter ended June
30, 1997 on August 12, 1997 and incorporated herein by
reference.
29
(21) Filed as exhibit 10.47 to the Guilford Form 8-K Current Report
dated August 20, 1997 on September 4, 1997 and incorporated
herein by reference.
(22) Filed as an exhibit to the Form 8-K Current Report dated and
filed on December 5, 1997 and incorporated herein by reference.
(23) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1997 on March 24, 1998 and incorporated
herein by reference.
(24) Filed as Exhibit 10.40 to the Guilford Form 10-K for the year
ended December 31, 1997 and incorporated herein by reference.
30