Amgen 2000 Annual Report Download - page 19

Liquidity and Capital Resources
The Company had cash, cash equivalents and marketable securi-
ties of $2,028.1 million at December 31, 2000, compared with
$1,333.0 million at December 31, 1999. Cash provided by operat-
ing activities has been and is expected to continue to be the
Company’s primary source of funds. In 2000, operations provided
$1,634.6 million of cash compared with $1,226.9 million in 1999.
Capital expenditures totaled $437.7 million in 2000 compared with
$304.2 million in 1999. The Company anticipates spending
approximately $450 million to $550 million in 2001 on capital proj-
ects and equipment to expand the Company’s operations.
The Company receives cash from the exercise of employee stock
options and proceeds from the sale of stock by Amgen pursuant
to the employee stock purchase plan. In 2000, employee stock
option exercises and proceeds from the sale of stock by Amgen
pursuant to the employee stock purchase plan provided $333.7
million of cash compared with $248.8 million in 1999. Proceeds
from the exercise of employee stock options 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 reduce
the dilutive effect of its employee stock option and stock purchase
plans. In 2000, the Company repurchased 12.2 million shares of its
common stock at a total cost of $799.9 million, and in 1999, the
Company repurchased 27.1 million shares of common stock at a
cost of $1,024.7 million. In December 2000, the Board of Directors
authorized the Company to repurchase up to $2 billion of common
stock between January 1, 2001 and December 31, 2002. The
amount the Company spends on and the number of shares repur-
chased each quarter varies based on a variety of factors, including
the stock price and blackout periods in which the Company is
restricted from repurchasing shares.
To provide for financial flexibility and increased liquidity, the
Company has established several sources of debt financing. As of
December 31, 2000, the Company had $223 million of unsecured
long-term debt securities outstanding. These unsecured long-term
debt securities consisted of: 1) $100 million of debt securities that
bear interest at a fixed rate of 6.5% and mature in 2007 under a
$500 million debt shelf registration (the “Shelf”), 2) $100 million of
debt securities that bear interest at a fixed rate of 8.1% and mature
in 2097 and 3) $23 million of debt securities that bear interest at a
fixed rate of 6.2% and mature in 2003. Under the Shelf, all of the
remaining $400 million of debt securities available for issuance
may be offered under the Company’s medium-term note program
with terms to be determined by market conditions.
The Company’s sources of debt financing also include a com-
mercial paper program which provides for unsecured short-term
borrowings up to an aggregate face amount of $200 million. As of
December 31, 2000, commercial paper with a face amount of
$100 million was outstanding. These borrowings had maturities of
less than two months and had effective interest rates averaging
6.7%. In addition, the Company has an unsecured $150 million
credit facility that expires on May 28, 2003. This credit facility sup-
ports the Company’s commercial paper program. As of December
31, 2000, no amounts were outstanding under this line of credit.
The primary objectives for the Company’s investment portfolio are
liquidity and safety of principal. Investments are made to achieve
the highest rate of return to the Company, consistent with these
two objectives. The Company’s investment policy limits invest-
ments to certain types of instruments issued by institutions with
investment grade credit ratings and places restrictions on maturi-
ties and concentration by type and issuer.
The Company believes that existing funds, cash generated from
operations and existing sources of debt financing are adequate to
satisfy its working capital and capital expenditure requirements for
the foreseeable future, as well as to support its stock repurchase
program. However, the Company may raise additional capital from
time to time.
22
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Cash, Cash Equivalents and Marketable Securities
($ in millions)
98
00 $2,028.1
99 $1,333.0
98 $1,276.0
97 $1,026.5
96 $1,077.0
99 009796