Amgen 2012 Annual Report Download - page 76

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In April 2011, the Board of Directors approved a dividend policy related to our common stock and subsequently declared
quarterly cash dividends of $0.28 per share of common stock in July and October 2011, resulting in dividend payments aggregating
$500 million in 2011. In December 2011, the Board of Directors declared a 29% increase in our quarterly cash dividend to $0.36
per share of common stock, resulting in dividend payments aggregating $1.1 billion in 2012. In December 2012, the Board of
Directors declared a 31% increase in our quarterly cash dividend to $0.47 per share of common stock, payable in March 2013.
We believe that 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 — Global economic conditions may negatively affect us and may magnify certain risks that affect our
business.
A significant portion of our operating cash flows is dependent on the timing of payments from our customers located in the
United States and, to a lesser extent, our 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 on the economic stability and creditworthiness of their applicable country. Historically, some payments from a number of
European government healthcare providers have extended beyond the contractual terms of sale, and regional economic uncertainty
continues. In particular, credit and economic conditions in Southern Europe, particularly in Spain, Italy, Greece and Portugal,
continue to adversely impact the timing of collections of our trade receivables in this region. As of December 31, 2012, accounts
receivable in these four countries totaled $400 million, of which $281 million was past due, with the past due receivables primarily
in Italy, Spain and Portugal. Although economic conditions in this region may continue to affect the average length of time it takes
to collect payments, to date we have not incurred any significant losses related to these receivables; and the timing of payments
in these countries has not had nor is it currently expected to have a material adverse impact on our overall operating cash flows.
However, if government funding for healthcare were to become unavailable in these countries or if significant adverse adjustments
to past payment practices were to occur, we might not be able to collect the entire balance of these receivables. We will continue
working closely with these customers, monitoring the economic situation and taking appropriate actions as necessary.
Over the next several years, certain of the existing patents on our principal products will expire. As a result, we expect to
face increasing competition thereafter, including from biosimilars, which may have a material adverse impact on our product sales,
results of operations and liquidity. In the EU, there is already an established regulatory pathway for biosimilars and we are facing
increasing competition from biosimilars. The 2010 U.S. healthcare reform legislation authorized the FDA to approve biosimilars
under a new, abbreviated pathway. (See Item 1. Business — Marketed Products.) In the United States after patent expiration, we
expect to face greater competition than today, including from manufacturers with biosimilars approved in Europe that may seek
to obtain U.S. approval. 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, 2012, approximately $18.9 billion
was generated from operations in foreign tax jurisdictions and is intended to be invested indefinitely outside 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, 2012, were $2.5 billion and $24.0 billion,
respectively. The current and noncurrent portions of our long-term borrowings at December 31, 2011, were $84 million and $21.3
billion, respectively.