Amgen 2002 Annual Report Download - page 23

Page 21
Financial Performance
Earnings performance Amgen’s expanding product
line delivered strong growth in 2002, and generated the
resources necessary to maintain a robust investment
program in research and development.
Amgen’s top line growth of 42% was largely the
result of a 24% increase in the combined sales of
Amgen’s anemia therapeutics EPOGEN
®
(Epoetin alfa)
and Aranesp
®
(darbepoetin alfa); a 37% increase in the
combined sales of the company’s infection-fighting
therapeutics NEUPOGEN
®
(Filgrastim) and Neulasta
™
(pegfilgrastim); and the addition of $362 million in sales
of ENBREL
®
(etanercept), Amgen’s new inflammation
therapeutic acquired in mid-2002 with the company’s
acquisition of Immunex Corporation.
Amgen anticipates continued strong growth in
product sales through 2005 as the company’s newest
therapeutics gather momentum, their use in treatment
settings is potentially expanded through approval of new
product indications, and the company continues to invest
in new product development.
Amgen’s adjusted earnings per share grew 18%,
to $1.39 from $1.18 in 2001. On a GAAP basis, there was
a loss per share of $1.21 in 2002, principally as a result
of a one-time expense of $3 billion associated with the
write-off of in-process research and development acquired
as part of the company’s purchase of Immunex. Earnings
per share for 2002 have been adjusted to exclude certain
expenses related to the Immunex acquisition. Earnings per
share for both 2002 and 2001 have been adjusted to exclude
certain non-recurring items. A reconciliation of the dif-
ferences between the GAAP loss/earnings per share and
adjusted earnings per share follows this section.
Amgen’s total research and development spending in
2002 rose 29%, exceeding $1 billion for the first time in
company history. Last year’s investment in research and
Total Revenues
($ in millions)
92 94 96 98 00 02
2002
2000
1998
1996
1994
1992
$5,523
3,629
2,718
2,240
1,648
1,093
Total revenues have
increased at a compound
annual growth rate of
17.6% over the past
ten years.
92 94 96 98 00 02
2002
2000
1998
1996
1994
1992
$1,117
845
663
528
324
182
Research and development
expenses have increased
at a compound annual
growth rate of 19.9%
over the past ten years.
Research and Development Expenses
($ in millions)
development represented 22% of total product sales, among
the highest reinvestment levels in the biotechnology and
pharmaceuticals industries. Amgen’s continuing efforts
to develop new products and broaden the use of its exist-
ing therapeutics is aimed at further diversifying the
company’s future revenue and earnings streams.
Financial foundation Amgen’s cash flow from
operations, generated largely by product sales, totaled
$2.2 billion in 2002. The size and quality of the com-
pany’s annual cash flow has allowed Amgen to internally
finance nearly all of its operations since the company’s
successful market debuts of EPOGEN
®
and NEUPOGEN
®
and is expected to do so in the future.
To ensure financial flexibility and adequate liquid-
ity, Amgen holds substantial cash and short-term
marketable securities. These aggregated approximately
$4.7 billion at the end of 2002. Amgen will continue
to use significant amounts of cash for the company’s
capital expenditure requirements and its share repurchase
program. In 2002, Amgen invested $658.5 million in
capital expenditures and plans to spend between $1.3 and
$1.5 billion in 2003. This increase will be driven by invest-
ment in the Puerto Rico manufacturing expansion, the
company’s Seattle inflammation research headquarters, and
its additional Rhode Island manufacturing facility.
In March 2002, Amgen received approximately
$2.8 billion from the issuance of 30-year zero coupon senior
notes that are convertible into shares of the company’s
common stock. Amgen utilized $650 million of the
proceeds from the sale of the notes to repurchase approx-
imately 11.3 million shares of its common stock. The
remaining cash proceeds were available for use for general
corporate purposes, including acquisitions, additional