Amgen 2001 Annual Report Download - page 27

AMGEN 2001 ANNUAL REPORT
Liquidity and Capital Resources
The Company had cash, cash equivalents, and marketable
securities of $2,662.2 million and $2,028.1 million
at December 31, 2001 and 2000, respectively. Cash
provided by operating activities has been and is expected
to continue to be the Company’s primary source of funds.
Cash provided from operations was $1,480.2 million
and $1,634.6 million in 2001 and 2000, respectively.
Capital expenditures
totaled $441.8 million
in 2001 compared with
$437.7 million in 2000. The
Company anticipates spend-
ing approximately $450 mil-
lion to $550 million in
2002 on capital projects and
equipment to expand its
global 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.
Employee stock option exercises and proceeds from the
sale of stock by Amgen pursuant to the employee stock
purchase plan provided $277.7 million and $333.7 mil-
lion of cash in 2001 and 2000, respectively. 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 pri-
marily to reduce the dilutive effect of its employee stock
option and stock purchase plans. In 2001, the Company
repurchased 12.7 million shares of its common stock
at a total cost of $737.5 million. In 2000, the Company
repurchased 12.2 million shares of its common stock at
a total cost of $799.9 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 repurchased 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. As of December 31,
2001, $1,262.5 million was available for stock repur-
chases through December 31, 2002.
On February 22, 2002, the Company announced
that it has agreed to issue $3.5 billion in aggregate
face amount of 30-year zero coupon senior notes (the
“Convertible Notes”) that are convertible into shares of
the Company’s common stock. The proceeds from the
offering, net of estimated issuance costs, are expected to
be approximately $2.45 billion. The Company may raise
up to an additional $321 million upon exercise of an
over-allotment option that has been granted in connec-
tion with the offering. The Company expects to use
approximately $650 million of the net proceeds to repur-
chase shares of its common stock simultaneously with the
issuance of the Convertible Notes, with the remaining
proceeds to be used for general corporate purposes. The
terms of the Convertible Notes include a yield to matu-
rity of 1.125% and an initial conversion premium of
40%. The issuance of the Convertible Notes is subject
to customary closing conditions and is expected to be
completed by March 1, 2002.
To provide for financial flexibility and increased
liquidity, the Company has established several other
sources of debt financing. As of December 31, 2001, 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. As of
December 31, 2001, the Company’s outstanding long-
term debt was rated A2 by Moody’s and A by Standard &
Poor’s. Under the Shelf, all of the remaining $400 mil-
lion 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 commercial paper program which provides for unse-
cured short-term borrowings up to an aggregate face
amount of $200 million. As of December 31, 2001, com-
mercial paper with a face amount of $100 million was
outstanding. These borrowings had maturities of less
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
97 98 99 00 01
Cash, Cash Equivalents
and Marketable
Securities
($ in millions)
2001 $2,662.2
2000 2,028.1
1999 1,333.0
1998 1,276.0
1997 1,026.5
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