Amgen 2011 Annual Report Download - page 96

We believe existing funds, cash generated from operations and existing sources of and access to financing
are adequate to satisfy our needs for working capital; capital expenditure and debt service requirements; our
plans to pay dividends and repurchase stock; and other business initiatives we plan to strategically pursue,
including acquisitions and licensing activities, in each case for the foreseeable future. We anticipate that our
liquidity needs can be met through a variety of sources, including cash provided by operating activities, sales of
marketable securities, borrowings through commercial paper and/or our syndicated credit facility and access to
other domestic and foreign debt markets and equity markets. With respect to our U.S. operations, we believe that
existing funds intended for use in the United States; cash generated from our U.S. operations, including
intercompany payments and receipts; and existing sources of and access to financing (collectively referred to as
“U.S. funds”) are adequate to continue to meet our U.S. obligations (including our plans to repurchase stock and
pay dividends with U.S. funds) for the foreseeable future. See Item 1A. Risk Factors — Current economic
conditions may magnify certain risks that affect our business.
A significant portion of our operating cash flows is dependent upon the timing of payments from our
customers located in the United States and, to a lesser extent, customers outside the United States, which include
government owned or supported healthcare providers (government healthcare providers). Payments from these
government healthcare providers are dependent, in part, upon the economic stability and creditworthiness of their
applicable country. Deteriorating credit and economic conditions in parts of Southern Europe, particularly in
Spain, Italy, Greece and Portugal, may continue to increase the average length of time it takes to collect
payments, particularly in certain regions within these countries. However, the timing of payments from
government healthcare providers has not nor is it expected to have a material adverse impact on our operating
cash flows. To date we have not incurred any significant losses on collections of trade receivables from these
government healthcare providers.
Over the next several years, many of the existing patents on our principal products will expire. As a result,
we expect to face increasing competition from biosimilars that may have a material adverse impact on our
product sales, results of operations and liquidity. Upon patent expiration for small molecule products, there is
typically intense competition from generics manufacturers, which generally leads to significant and rapid
declines in sales of the branded product. Given that our principal products are biologics, we do not believe the
impact of biosimilar competition will be as significant as with small molecule products, in part because
successful competitors must have a broad range of specialized skills and capabilities unique to biologics,
including significant regulatory, clinical and manufacturing expertise, and since the products are similar, but not
identical, the biosimilars will have to compete against a product with an established efficacy and safety record.
As discussed above, we have many opportunities to grow our business, including the continued
commercialization of XGEVA®and Prolia®and expansion into emerging markets and Japan, which we believe
may offset the adverse financial impact of our principal products’ patent expiries.
Cash, cash equivalents and marketable securities
Of our total cash, cash equivalents and marketable securities balances as of December 31, 2011,
approximately $16.9 billion was generated from operations in foreign tax jurisdictions and is intended to be
invested indefinitely outside of the United States. Under current tax laws, if these funds were repatriated for use
in our U.S. operations, we would be required to pay additional income taxes at the tax rates then in effect.
The primary objective of our investment portfolio is to enhance overall returns in an efficient manner while
maintaining safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy
limits debt security investments to certain types of debt and money market instruments issued by institutions with
primarily investment grade credit ratings and places restrictions on maturities and concentration by asset class
and issuer.
Financing arrangements
The current and noncurrent portions of our long-term borrowings at December 31, 2011, were $84 million
and $21.3 billion, respectively. The current and noncurrent portions of our long-term borrowings at
December 31, 2010, were $2.5 billion and $10.9 billion, respectively.
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