The biotechnology company Amgen was founded in 1980 as AMGen. With approximately 20,000 employees, Amgen is one of the world's largest biotechnology companies with annual sales of approximately $ 24 billion in 2018.
SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-12477 AMGEN INC. (Exact name of registrant as specified in its charter) Delaware 95-3540776 ------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1840 DeHavilland Drive, Thousand Oaks, California 91320-1789 --------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (805) 447-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of March 31, 1997, the registrant had 264,872,827 shares of Common Stock, $.0001 par value, outstanding.
AMGEN INC. INDEX Page No. PART I FINANCIAL INFORMATION Item 1.Financial Statements .......................3 Condensed Consolidated Statements of Operations - three months ended March 31, 1997 and 1996 ...................4 Condensed Consolidated Balance Sheets - March 31, 1997 and December 31, 1996 ............5 Condensed Consolidated Statements of Cash Flows - three months ended March 31, 1997 and 1996 ...............6 - 7 Notes to Condensed Consolidated Financial Statements ......................................8 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations ................................15 PART II OTHER INFORMATION Item 1.Legal Proceedings .........................20 Item 5.Other Information .........................22 Item 6.Exhibits and Reports on Form 8-K ..........22 Signatures........................................23 Index to Exhibits.................................24 PAGE 2
PART I - FINANCIAL INFORMATION Item 1. Financial Statements The information in this report for the three months ended March 31, 1997 and 1996 is unaudited but includes all adjustments (consisting only of normal recurring accruals) which Amgen Inc. ("Amgen" or the "Company") considers necessary for a fair presentation of the results of operations for those periods. The condensed consolidated financial statements should be read in conjunction with the Company's financial statements and the notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. Interim results are not necessarily indicative of results for the full fiscal year. PAGE 3
AMGEN INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In millions, except per share data) (Unaudited) Three Months Ended March 31, 1997 1996 ------- ------- Revenues: Product sales .................... $536.0 $476.9 Corporate partner revenues ....... 27.4 21.8 Royalty income ................... 12.1 9.2 ------ ------ Total revenues ............... 575.5 507.9 ------ ------ Operating expenses: Cost of sales .................... 72.0 66.9 Research and development ......... 147.7 130.6 Marketing and selling ............ 68.1 67.6 General and administrative ....... 44.4 39.2 Loss of affiliates, net .......... 8.5 13.3 ------ ------ Total operating expenses ..... 340.7 317.6 ------ ------ Operating income .................. 234.8 190.3 ------ ------ Other income (expense): Interest and other income ........ 15.9 19.0 Interest expense, net ............ (0.3) (2.3) ------ ------ Total other income (expense) . 15.6 16.7 ------ ------ Income before income taxes ........ 250.4 207.0 Provision for income taxes ........ 70.1 63.4 ------ ------ Net income ........................ $180.3 $143.6 ====== ====== Earnings per share: Primary earnings per share ....... $0.65 $0.51 Fully diluted earnings per share . $0.65 $0.51 Shares used in calculation of: Primary earnings per share ....... 278.1 283.6 Fully diluted earnings per share . 278.1 283.6 See accompanying notes. PAGE 4
AMGEN INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except per share data) (Unaudited) March 31, December 31, 1997 1996 --------- ----------- ASSETS Current assets: Cash and cash equivalents ............... $ 264.8 $ 169.3 Marketable securities ................... 779.5 907.7 Trade receivables, net .................. 206.5 225.4 Inventories ............................. 100.4 97.4 Other current assets .................... 86.0 102.8 -------- -------- Total current assets................. 1,437.2 1,502.6 Property, plant and equipment at cost, net 981.6 910.5 Investments in affiliated companies....... 113.0 109.6 Other assets.............................. 241.3 242.9 -------- -------- $2,773.1 $2,765.6 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable ........................ $ 76.6 $ 75.0 Accrued liabilities ..................... 422.3 449.7 Current portion of long-term debt ....... 40.0 118.2 -------- -------- Total current liabilities............ 538.9 642.9 Long-term debt............................ 59.0 59.0 Put warrants.............................. 157.4 157.4 Commitments and contingencies Stockholders' equity: Common stock, and additional paid-in capital; $.0001 par value; 750 shares authorized; outstanding - 264.9 shares in 1997 and 264.7 shares in 1996................................. 1,059.8 1,026.9 Retained earnings ....................... 958.0 879.4 -------- -------- Total stockholders' equity........... 2,017.8 1,906.3 -------- -------- $2,773.1 $2,765.6 ======== ======== See accompanying notes. PAGE 5
AMGEN INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Three Months Ended March 31, 1997 1996 ------- ------- Cash flows from operating activities: Net income ............................... $180.3 $143.6 Depreciation and amortization ............ 36.4 27.9 Loss of affiliates, net .................. 8.5 13.3 Cash provided by (used in): Trade receivables, net .................. 18.9 (13.7) Inventories ............................. (3.0) (1.4) Other current assets .................... 16.8 1.0 Accounts payable ........................ 1.6 (22.4) Accrued liabilities ..................... (27.4) (55.0) ------ ------ Net cash provided by operating activities .......................... 232.1 93.3 ------ ------ Cash flows from investing activities: Purchases of property, plant and equipment .............................. (102.5) (42.5) Proceeds from maturities of marketable securities ............................. 149.3 84.9 Proceeds from sales of marketable securities ............................. 184.6 383.5 Purchases of marketable securities ....... (205.7) (358.1) Increase in investments in affiliated companies .............................. - (2.0) Increase in other assets ................. (3.4) (17.9) ------ ------ Net cash provided by investing activities ......................... 22.3 47.9 ------ ------ See accompanying notes. (Continued on next page) PAGE 6
AMGEN INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (In millions) (Unaudited) Three Months Ended March 31, 1997 1996 ------- ------- Cash flows from financing activities: Decrease in commercial paper ............. $ - $(69.7) Repayment of long-term debt .............. (78.2) - Net proceeds from issuance of common stock upon the exercise of stock options ................................ 24.3 33.4 Tax benefits related to stock options .... 8.6 8.6 Repurchases of common stock .............. (101.7) (104.5) Other .................................... (11.9) (13.3) ------ ------ Net cash used in financing activities .. (158.9) (145.5) ------ ------ Increase (decrease) in cash and cash equivalents ............................. 95.5 (4.3) Cash and cash equivalents at beginning of period .................................. 169.3 66.7 ------ ------ Cash and cash equivalents at end of period $264.8 $ 62.4 ====== ====== See accompanying notes. PAGE 7
AMGEN INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1997 1. Summary of significant accounting policies Business Amgen Inc. ("Amgen" or the "Company") is a global biotechnology company that discovers, develops, manufactures and markets human therapeutics based on advances in cellular and molecular biology. Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries as well as affiliated companies for which the Company has a controlling financial interest and exercises control over their operations ("majority controlled affiliates"). All material intercompany transactions and balances have been eliminated in consolidation. Investments in affiliated companies which are 50% or less owned and where the Company exercises significant influence over operations are accounted for using the equity method. All other equity investments are accounted for under the cost method. The caption "Loss of affiliates, net" includes Amgen's equity in the operating results of affiliated companies and the minority interest others hold in the operating results of Amgen's majority controlled affiliates. Inventories Inventories are stated at the lower of cost or market. Cost is determined in a manner which approximates the first-in, first-out (FIFO) method. Inventories are shown net of applicable reserves and allowances. Inventories consist of the following (in millions): March 31, December 31, 1997 1996 ------ ------- Raw materials ...... $ 14.2 $15.9 Work in process .... 54.7 56.2 Finished goods ..... 31.5 25.3 ------ ----- $100.4 $97.4 ====== ===== Product sales Product sales consist of two products, EPOGEN(R) (Epoetin alfa) and NEUPOGEN(R) (Filgrastim). Quarterly NEUPOGEN(R) sales volume in the United States is influenced by a number of factors including underlying demand and PAGE 8
wholesaler inventory management practices. Wholesaler inventory reductions tend to reduce domestic NEUPOGEN(R) sales in the first quarter each year. In addition, the discretionary aspects of some cancer chemotherapy administration has had a slight seasonal effect on NEUPOGEN(R) sales. The Company has the exclusive right to sell Epoetin alfa for dialysis, diagnostics and all non-human uses in the United States. The Company sells Epoetin alfa under the brand name EPOGEN(R). Amgen has granted to Ortho Pharmaceutical Corporation, a subsidiary of Johnson & Johnson ("Johnson & Johnson"), a license relating to Epoetin alfa for sales in the United States for all human uses except dialysis and diagnostics. Pursuant to this license, Amgen does not recognize product sales it makes into the exclusive market of Johnson & Johnson and does recognize the product sales made by Johnson & Johnson into Amgen's exclusive market. These sales amounts, and adjustments thereto, are derived from third-party data on shipments to end users and their usage (see Note 4, "Contingencies - Johnson & Johnson arbitrations"). Income taxes Income taxes are accounted for in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109 (Note 3). Stock option and purchase plans The Company's stock options and purchase plans are accounted for under Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees". Earnings per share Earnings per share are computed in accordance with the treasury stock method. Primary and fully diluted earnings per share are based upon the weighted average number of common shares and dilutive common stock equivalents during the period in which they were outstanding. Common stock equivalents are outstanding options under the Company's stock option plans. Put warrants on the Company's common stock may also be dilutive under the reverse treasury stock method. In February 1997, SFAS No. 128, "Earnings Per Share" was issued and is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. Under the new requirements, primary and fully diluted earnings per share will be replaced with basic and diluted earnings per share. Basic earnings per share excludes the dilutive effect of stock options and will therefore be higher than primary earnings per share. Basic earnings per share for the three months ended March 31, 1997 and 1996 was $.68 and $.54, respectively. Diluted earnings per share under the new standard is expected to be essentially the same as primary earnings per share amounts calculated under principles currently used. PAGE 9
Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. Basis of presentation The financial information for the three months ended March 31, 1997 and 1996 is unaudited but includes all adjustments (consisting only of normal recurring accruals) which the Company considers necessary for a fair presentation of the results of operations for these periods. Interim results are not necessarily indicative of results for the full fiscal year. 2. Debt During the three months ended March 31, 1997, the Company paid off $78.2 million of maturing debt consisting of $28.2 million of promissory notes and $50 million of debt securities. Long-term debt consists of the following (in millions): March 31, December 31, 1997 1996 -------- -------- Promissory notes .......... $ 40.0 $ 68.2 Debt securities ........... 59.0 109.0 ------ ------ 99.0 177.2 Less current portion ...... (40.0) (118.2) ------ ------ $ 59.0 $ 59.0 ====== ====== The Company has registered $213 million of unsecured debt securities of which $59 million were outstanding and $100 million were available for issuance at March 31, 1997. The debt securities outstanding at March 31, 1997 bear interest at fixed rates averaging 5.8% and mature in approximately one to six years. In April 1997, the Company issued $100 million of debt securities under its shelf registration which bear interest at a fixed rate of 8.1% and mature on April 1, 2097. These securities may be redeemed in whole or in part at the Company's option at any time for a redemption price equal to the greater of the principal amount to be redeemed or the sum of the present values of the principal and remaining interest payments discounted at a determined rate plus, in each case, accrued interest. These securities place limitations on liens and sale/leaseback transactions. PAGE 10
As of March 31, 1997, $150 million was available under the Company's line of credit for borrowing and to support the Company's commercial paper program. No borrowings on this line of credit were outstanding at March 31, 1997. 3. Income taxes The provision for income taxes consists of the following (in millions): Three Months Ended March 31, 1997 1996 ------ ------ Federal(including U.S. possessions) . $65.1 $57.3 State ............................... 5.0 6.1 ----- ----- $70.1 $63.4 ===== ===== The decrease in the effective tax rate in the current year is the result of a favorable ruling received in the third quarter of 1996 from the Puerto Rican government with respect to tollgate taxes applicable to earnings in Puerto Rico. 4. Contingencies Johnson & Johnson arbitrations In September 1985, the Company granted Johnson & Johnson a license relating to certain patented technology and know-how of the Company to sell a genetically engineered form of recombinant human erythropoietin, called Epoetin alfa, throughout the United States for all human uses except dialysis and diagnostics. Johnson & Johnson sells Epoetin alfa under the brand name PROCRIT(R). A number of disputes have arisen between Amgen and Johnson & Johnson as to their respective rights and obligations under the various agreements between them, including the agreement granting the license (the "License Agreement"). These disputes have been the subject of arbitration proceedings before Judicial Arbitration and Mediation Services, Inc. in Chicago, Illinois commencing in January 1989. A dispute that has not yet been resolved and is the subject of the current arbitration proceeding relates to the audit methodology currently employed by the Company for Epoetin alfa sales. The Company and Johnson & Johnson are required to compensate each other for Epoetin alfa sales which either party makes into the other party's exclusive market. The Company has established and is employing an audit methodology to assign the proceeds of sales of EPOGEN and PROCRIT in Amgen's and Johnson & Johnson's respective exclusive markets. Based upon this audit methodology, the Company is seeking payment of approximately $12.6 million (excluding interest) from Johnson & Johnson for the period 1991 through 1994. Johnson & PAGE 11
Johnson has disputed this methodology and is proposing an alternative methodology for adoption by the arbitrator pursuant to which it is seeking payment of approximately $423 million (including interest through December 1996) for the period 1989 through 1994. If as a result of the arbitration proceeding, a methodology different from that currently employed by the Company is instituted to assign the proceeds of sales between the parties, it may yield results that are different from the results of the audit methodology currently employed by the Company. As a result of the arbitration, it is possible that the Company would recognize a different level of EPOGEN sales than is currently being recognized. As a result of the arbitration, the Company may be required to pay additional compensation to Johnson & Johnson for sales during prior periods, or Johnson & Johnson may be required to pay compensation to the Company for such prior period sales. While it is impossible to predict accurately or determine the outcome of these proceedings, based primarily upon the merits of its claims and based upon certain liabilities established due to the inherent uncertainty of any arbitrated result, the Company believes that the outcome of these proceedings will not have a material adverse effect on its financial statements. A trial commenced in March 1996, regarding the audit methodologies and compensation for sales by Johnson & Johnson into Amgen's exclusive market and sales by Amgen into Johnson & Johnson's exclusive market. In December 1996, testimony in the arbitration ended. Final argument before the arbitrator on the parties' respective audit methodologies and claims is scheduled for May 19, 1997, whereafter the matter will be fully briefed and submitted to the arbitrator for decision. The Company has filed a demand in the arbitration to terminate Johnson & Johnson's rights under the License Agreement and to recover damages for breach of the License Agreement. A hearing on this demand will be scheduled following the adjudication of the audit methodologies for Epoetin alfa sales. On October 2, 1995, Johnson & Johnson filed a demand for a separate arbitration proceeding against the Company before the American Arbitration Association ("AAA") in Chicago, Illinois. Johnson & Johnson alleges in this demand that the Company has breached the License Agreement. The demand also includes allegations of various antitrust violations. In this demand, Johnson & Johnson seeks an injunction, declaratory relief, unspecified compensatory damages, punitive damages and costs. On October 27, 1995, the Company filed a complaint in the Circuit Court of Cook County, Illinois, which is now pending in the United States District Court for the Northern District of Illinois, seeking an order compelling Johnson & Johnson to arbitrate the Company's claim for termination before the arbitrator and any related counterclaims asserted in Johnson & Johnson's October 2, 1995 arbitration demand filed with the AAA. The Company is unable to predict at this time the outcome of the demand for termination or when it will be resolved. The Company has filed a motion to stay the AAA arbitration pending the outcome of the existing arbitration proceedings before Judicial Arbitration and Mediation Services, Inc. discussed above. The Company has also filed an answer and counterclaim denying that AAA has jurisdiction to hear PAGE 12
or decide the claims stated in the demand, denying the allegations in the demand and counter claiming for certain unpaid invoices. Synergen ANTRIL(TM) litigation Lawsuits have been filed against the Company's wholly-owned subsidiary, Amgen Boulder Inc. (formerly Synergen, Inc.), alleging misrepresentations in connection with Synergen's research and development of ANTRIL(TM) for the treatment of sepsis. One suit, filed by a limited partner of the partnership with which Amgen Boulder Inc. is affiliated, has been certified as a class action. That suit seeks rescission of certain payments made by the limited partners to the partnership (or unspecified damages not less than $52 million) and treble damages based on a variety of allegations relating to state and federal law claims. The plaintiffs in that suit also have filed a second amended complaint alleging violations of federal securities laws. In August and September 1996, the parties filed cross-motions for summary judgement. The Court heard argument on November 1, 1996. Since then, the parties' representatives have reached a tentative settlement agreement which is subject to final approval by the Court and the approval of the limited partners of the partnership. Under its terms, the plaintiffs, who include present limited partners of the partnership, will receive $14.5 million in exchange for the transfer of ownership of their units; the suit will be dismissed with prejudice and the parties will exchange mutual releases. In a separate matter, two broker dealers who acted as market makers in Synergen, Inc. options have also filed a suit claiming in excess of $3.2 million in trading losses. FoxMeyer Health Corporation On January 10, 1997, FoxMeyer Health Corporation ("FMHC") filed suit (the "FoxMeyer Lawsuit") alleging that defendant McKesson Corporation defrauded FMHC, misused confidential information received from FMHC about subsidiaries of FMHC (FoxMeyer Corporation and FoxMeyer Drug Corporation, collectively the "FoxMeyer Subsidiaries"), and attempted to monopolize the market for pharmaceutical and health care product distribution by attempting to injure or destroy the FoxMeyer Subsidiaries. The Company is named as one of twelve "Manufacturer Defendants" alleged to have conspired with McKesson Corporation in doing, among other things, the above and (i) inducing FMHC to refrain from seeking other suitable purchasers for the FoxMeyer Subsidiaries and (ii) causing FMHC to believe that McKesson Corporation was serious about purchasing FMHC's assets at fair value, when, in fact, McKesson Corporation was not. The Manufacturer Defendants and McKesson Corporation are also alleged to have intentionally and tortiously interfered with a number of business expectancies and opportunities. The complaint seeks from the Manufacturer Defendants and McKesson Corporation compensatory damages of at least $400 million and punitive damages in an unspecified amount, as well as FMHC's costs and attorney's fees. On January 31, 1997, the Company filed an answer denying FMHC's allegations. On February 4, 1997, a notice of removal was filed in the Federal District Court for Dallas, Texas (the "District Court"), which was referred by the District Court to the Federal Bankruptcy Court in PAGE 13
Dallas, Texas. Subsequently, on February 7, 1997, a motion to transfer venue was filed in the Federal Bankruptcy Court in Dallas, Texas, requesting that this matter be transferred to the Federal Bankruptcy Court in Delaware, where the FoxMeyer Subsidiaries' Chapter XI bankruptcy action is pending. The Company is a creditor in such bankruptcy proceeding. On March 18, 1997, the Manufacturer Defendants filed in the Delaware bankruptcy court a motion to intervene in the creditors committee (the "Chapter XI Committee") action that asserted that the Delaware bankruptcy court should enjoin the FoxMeyer Lawsuit. Also on March 18, 1997, the Delaware bankruptcy court converted the FoxMeyer Subsidiaries' Chapter XI bankruptcy action to a liquidation proceeding under Chapter VII. The order converting the FoxMeyer Subsidiaries' bankruptcy to a Chapter VII proceeding also stayed all adversary proceedings and other proceedings filed in the bankruptcy until a permanent trustee is elected. As such, no substantive resolution of the motions filed in the Delaware bankruptcy court is expected until after election of the permanent trustee. Similarly, on April 1, 1997, the Delaware bankruptcy court ordered that the litigants in the FoxMeyer Lawsuit be stayed from any further litigation until election of the permanent trustee. Accordingly, no substantial resolution of any motions currently pending in the FoxMeyer Litigation is expected until after election of the permanent trustee. False Claims Act matter Amgen has been advised that it and certain purchasers of its products have been named as defendants in a civil lawsuit initiated by a former employee of Amgen in the United States District Court for the Eastern District of Pennsylvania. This suit was filed under the qui tam provisions of the Federal False Claims Act (the "Act") which permit an individual to bring suit in the name of the United States and share in any recovery. The suit alleges, among other things, that Amgen individually and in conspiracy with some of its customers violated the Act as a result of certain of its sales and reporting practices relating to its products. Under the law, the government must investigate the allegations and determine whether it wishes to intervene and take responsibility for the lawsuit. The lawsuit will remain under seal until the government completes its investigation and determines whether to intervene. However, permission from the Court has been obtained by Amgen to make the disclosures contained herein. The Complaint seeks an order requiring Amgen to cease and desist from such allegedly improper practices, as well as treble damages in an unspecified amount plus a civil penalty of not less than $5,000 and not more than $10,000 for each alleged violation of the Act. If the government does not intervene, the plaintiff has the right to continue to pursue the claim on the government's behalf. Amgen is fully cooperating with the government's investigation and is engaged in ongoing discussions with it regarding the allegations. Amgen has advised the government that it disputes and will vigorously contest the allegations in the Complaint. Although it is too early in this action for Amgen to fully assess this matter or reliably predict its outcome, an unfavorable result in this matter could have a material adverse effect on the Company's results of operations in that period. PAGE 14
While it is not possible to predict accurately or determine the eventual outcome of the above described legal matters or various other legal proceedings (including patent disputes) involving Amgen, except with respect to the False Claims Act matter, the Company believes that the outcome of these proceedings will not have a material adverse effect on its financial statements. 5. Stockholders' equity During the three months ended March 31, 1997, the Company repurchased 1.7 million shares of its common stock at a total cost of $101.7 million under its common stock repurchase program. The Board of Directors has authorized the Company to repurchase up to $450 million of shares during 1997. Stock repurchased under the program is retired. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources Cash provided by operating activities has been and is expected to continue to be the Company's primary source of funds. During the three months ended March 31, 1997, operations provided $232.1 million of cash compared with $93.3 million during the same period last year. The Company had cash, cash equivalents and marketable securities of $1,044.3 million at March 31, 1997, compared with $1,077 million at December 31, 1996. Capital expenditures totaled $102.5 million for the three months ended March 31, 1997, compared with $42.5 million for the same period a year ago. Over the next few years, the Company expects to spend approximately $350 million per year on capital projects and equipment to expand the Company's global operations. The Company receives cash from the exercise of employee stock options. During the three months ended March 31, 1997, stock options and their related tax benefits provided $32.9 million of cash compared with $42 million for the same period last year. Proceeds from the exercise of stock options and their related tax benefits 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 to offset the dilutive effect of its employee benefit stock option and stock purchase plans. During the three months ended March 31, 1997, the Company purchased 1.7 million shares of its common stock at a cost of $101.7 million compared with 1.8 million shares purchased at a cost of $104.5 million during the same period last year. The Company expects to repurchase up to $450 million of its stock under the program in 1997. PAGE 15
To provide for financial flexibility and increased liquidity, the Company has established several sources of debt financing. The Company had a shelf registration under which it could issue up to $213 million of debt securities. During the three months ended March 31, 1997, $50 million of maturing debt securities under this shelf registration were repaid. The $59 million of debt securities outstanding at March 31, 1997 mature in approximately one to six years. In April 1997, the Company issued the remaining $100 million of debt securities under the shelf registration which bear interest at a fixed rate of 8.1% and mature on April 1, 2097. These debt securities were issued to refinance a portion of debt that has matured or will mature in 1997 (see Note 2 to the Condensed Consolidated Financial Statements). The Company also repaid $28.2 million of promissory notes during the three months ended March 31, 1997. The Company has a commercial paper program which provides for short-term borrowings up to an aggregate face amount of $200 million. As of March 31, 1997, the Company had no outstanding commercial paper. The Company also has a $150 million revolving line of credit. No borrowings on this line of credit were outstanding at March 31, 1997. 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 investments to certain types of instruments issued by institutions with investment grade credit ratings and places restrictions on maturities and concentration by type and issuer. The Company invests its excess cash in securities with varying maturities to meet projected cash needs. 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 to take advantage of favorable conditions in the markets or in connection with the Company's corporate development activities. Results of Operations Product sales Product sales increased $59.1 million or 12% for the three months ended March 31, 1997, compared with the same period last year. NEUPOGEN(R) (Filgrastim) Worldwide NEUPOGEN(R) sales were $244.4 million for the three months ended March 31, 1997, an increase of $11.6 million or 5% over the same period last year. This increase is primarily due to demand growth in domestic and, to a lesser extent, international markets. Unfavorable foreign currency effects reduced worldwide NEUPOGEN(R) sales growth by approximately three percentage points. In addition, PAGE 16
tight European governmental budgets have reduced the sales growth rate. Quarterly NEUPOGEN(R) sales volume in the United States is influenced by a number of factors including underlying demand and wholesaler inventory management practices. Wholesaler inventory reductions tend to reduce domestic NEUPOGEN(R) sales in the first quarter each year. In addition, the discretionary aspects of some cancer chemotherapy administration has had a slight seasonal effect on NEUPOGEN(R) sales. Cost containment pressures in the health care marketplace have contributed to the slowing of growth in domestic NEUPOGEN(R) usage over the past several years. These pressures are expected to continue to influence such growth for the foreseeable future. The growth of the colony stimulating factor ("CSF") market in the EU in which NEUPOGEN (R) competes has slowed, and is expected to continue to slow, principally due to governmental budget issues and cost controls in EU countries. Despite these market factors, as well as competition from another granulocyte CSF product, the Company experienced slightly positive NEUPOGEN(R) sales growth, measured in local currencies, in the EU in 1996 and in the current period. Although the Company's CSF market share in the EU has remained relatively constant over the last several quarters, the Company does not expect the competitive intensity to subside in the near future. EPOGEN(R) (Epoetin alfa) EPOGEN(R) sales were $291.6 million for the three months ended March 31, 1997, an increase of $47.5 million or 19% over the same period last year. This increase is primarily due to a continued increase in the U.S. dialysis patient population and the administration of higher doses. Cost of sales Cost of sales as a percentage of product sales was 13.4% and 14.0% for the three months ended March 31, 1997 and 1996, respectively. In 1997, cost of sales as a percentage of product sales is expected to range from 13%-14% reflecting continuing efficiencies of the Puerto Rican operations. Research and development During the three months ended March 31, 1997, research and development expenses increased $17.1 million or 13% compared with the same period last year. This increase is primarily due to staff- related expenses for clinical and preclinical activities necessary to support ongoing product development activities. In 1997, annual research and development expenses are expected to increase at a rate exceeding the Company's product sales growth rate. Increases are planned for internal efforts on development of product candidates, for discovery, and for licensing efforts. PAGE 17
Marketing and selling/General and administrative Marketing and selling expenses increased $0.5 million or 1% during the three months ended March 31, 1997 compared with the same period last year. This increase was relatively small because higher staff-related costs and higher outside marketing expenses were substantially offset by lower European marketing expenses resulting from the favorable effects of foreign currency exchange rates and lower expenses related to the Johnson & Johnson arbitration. General and administrative expenses increased $5.2 million or 13% during the three months ended March 31, 1997 compared with the same period last year. This increase is primarily due to higher legal and staff-related expenses. In 1997, marketing and selling expenses combined with general and administrative expenses are expected to have an aggregate annual growth rate lower than the anticipated annual product sales growth rate due in part to the favorable impact of foreign currency exchange rates on European expenses and reduced expenses related to the Johnson & Johnson arbitration. Interest and other income Interest and other income decreased $3.1 million or 16% during the three months ended March 31, 1997 compared with the same period last year. This decrease is primarily due to capital gains realized in the prior year period which did not reoccur in the current year period. Interest and other income is expected to fluctuate from period to period primarily due to changes in cash balances and interest rates. Income taxes The Company's effective tax rate for the three months ended March 31, 1997 was 28.0% compared with 30.6% for the same period last year. The decrease in the tax rate is the result of a favorable ruling received in the third quarter of 1996 from the Puerto Rican government with respect to tollgate taxes applicable to earnings in Puerto Rico. Foreign currency transactions The Company has a program to manage certain portions of its exposure to fluctuations in foreign currency exchange rates arising from international operations. The Company generally hedges the receivables and payables with foreign currency forward contracts, which typically mature within six months. The Company uses foreign currency option and forward contracts which generally expire within 12 months to hedge certain anticipated future sales and expenses. At March 31, 1997, outstanding foreign currency option and forward contracts totaled $34.6 million and $107.2 million, respectively. PAGE 18
Financial Outlook Worldwide NEUPOGEN(R) (Filgrastim) sales for 1997 are expected to grow at a rate lower than the 1996 growth rate. Future NEUPOGEN(R) sales increases are dependent primarily upon further penetration of existing markets, the timing and nature of additional indications for which the product may be approved and the effects of competitive products. Although not approved or promoted for use in the United States, the Company believes that approximately 15%-20% of its domestic NEUPOGEN(R) sales are from off-label use as a supportive therapy for various AIDS-related treatments. Changes in AIDS therapies, including therapies that may be less myelosuppressive, may affect such sales. NEUPOGEN(R) usage is expected to continue to be affected by cost containment pressures on health care providers worldwide. In addition, international NEUPOGEN(R) sales will continue to be subject to changes in foreign currency exchange rates. EPOGEN(R) (Epoetin alfa) sales for 1997 are expected to remain strong but grow at a rate lower than the 1996 growth rate. The Company anticipates that increases in both the U.S. dialysis patient population and dosing will continue to drive EPOGEN(R) sales. The Company believes that as more dialysis patients' hematocrits reach target levels, the contribution of dosing to sales increases will diminish. Patients receiving treatment for end stage renal disease are covered primarily under medical programs provided by the federal government. Therefore, EPOGEN(R) sales may also be affected by future changes in reimbursement rates or the basis for reimbursement by the federal government. On February 12, 1997, the Health Care Finance Administration ("HCFA") issued an Electronic Program Memorandum to their Fiscal Intermediaries and Carriers (as defined by HCFA) regarding the institution of a ninety day rolling hematocrit edit when hematocrits exceed 36%. The new method of calculation is referred to as the hematocrit measurement audit (HMA). The HMA allows reimbursement for patients who temporarily exceed 36% through the averaging of submitted claims for the previous 90 days. The HMA eliminates reimbursement for the last submitted claim if an average hematocrit of 36.5% is exceeded for the previous 90 days and also eliminates medical justification for hematocrits being kept over 36%. Fiscal Intermediaries and Carriers must implement this change by July 1, 1997. The Company anticipates that total product sales and earnings will grow at double digit rates in 1997, but these growth rates are expected to be lower than 1996 growth rates. Estimates of future product sales and earnings, however, are necessarily speculative in nature and are difficult to predict with accuracy. Except for the historical information contained herein, the matters discussed herein are by their nature forward-looking. For reasons stated, or for various unanticipated reasons, actual results may differ materially. Amgen operates in a rapidly changing environment that involves a number of risks, some of which are beyond the Company's control. Future operating results and matters which may affect the Company's stock price may be affected by a number of factors, certain of which are discussed elsewhere herein and are discussed in the sections appearing under the heading "Management's PAGE 19
Discussion and Analysis of Financial Condition and Results of Operations--Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, which sections are incorporated herein by reference and filed as an exhibit hereto. Legal Matters The Company is engaged in arbitration proceedings with one of its licensees and various other legal proceedings. For a discussion of these matters, see Note 4 to the Condensed Consolidated Financial Statements. PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company is engaged in arbitration proceedings with one of its licensees. For a complete discussion of these matters see Note 4 to the Condensed Consolidated Financial Statements - "Contingencies - Johnson & Johnson arbitrations". Other legal proceedings are also reported in Note 4 to the Condensed Consolidated Financial Statements and in the Company's Form 10-K for the year ended December 31, 1996, with material developments since that report described below. While it is not possible to predict accurately or to determine the eventual outcome of these matters, except with respect to the False Claims Act matter, the Company believes that the outcome of these legal proceedings will not have a material adverse effect on the financial statements of the Company. Transkaryotic Therapies and Hoechst litigation On April 15, 1997, Amgen filed suit in the United States District Court in Boston Massachusetts against Transkaryotic Therapies Inc. and Hoechst Marion Roussel alleging infringement of several U.S. patents owned by Amgen that claim an erythropoietin product and processes for making erythropoietin. The suit seeks an injunction preventing the defendants from making, importing, using or selling erythropoietin in the U.S. Genentech litigation On October 16, 1996, Genentech, Inc. filed suit in the United States District Court for the Northern District of California seeking an unspecified amount of compensatory damages, treble damages and injunctive relief on its U.S. Patents 4,704,362, 5,221,619 and 4,342,832 (the "`362, `619 and `832 Patents"), relating to vectors for expressing cloned genes and the methods for such expression. Genentech, Inc. alleges that Amgen has infringed its patents by manufacturing and selling NEUPOGEN(R). On December 2, 1996, Amgen was served with this lawsuit. On January 21, 1997, the Company answered the complaint and asserted counterclaims relating to invalidity and non-infringement of the patents-in-suit. On February 10, 1997, Genentech, Inc. served Amgen with a reply to the PAGE 20
counterclaim and an additional counterclaim asserting U.S. Patent 5,583,013 (the "`013 Patent"), issued December 10, 1996, seeking relief similar to that sought for the `362, `619 and `832 Patents. On March 31, 1997, Amgen answered this pleading and asserted counterclaims relating to invalidity and non-infringement of the `013 Patent. FoxMeyer Health Corporation On January 10, 1997, FoxMeyer Health Corporation ("FMHC") filed suit (the "FoxMeyer Lawsuit") in the District Court of Dallas County, Dallas, Texas, alleging that defendant McKesson Corporation defrauded FMHC, misused confidential information received from FMHC about subsidiaries of FMHC (FoxMeyer Corporation and FoxMeyer Drug Corporation, collectively the "FoxMeyer Subsidiaries"), and attempted to monopolize the market for pharmaceutical and health care product distribution by attempting to injure or destroy the FoxMeyer Subsidiaries. The Company is named as one of twelve "Manufacturer Defendants" alleged to have conspired with McKesson Corporation in doing, among other things, the above and (i) inducing FMHC to refrain from seeking other suitable purchasers for the FoxMeyer Subsidiaries and (ii) causing FMHC to believe that McKesson Corporation was serious about purchasing FMHC's assets at fair value, when, in fact, McKesson Corporation was not. The Manufacturer Defendants and McKesson Corporation are also alleged to have intentionally and tortiously interfered with a number of business expectancies and opportunities. The complaint seeks from the Manufacturer Defendants and McKesson Corporation compensatory damages of at least $400 million and punitive damages in an unspecified amount, as well as FMHC's costs and attorney's fees. On January 31, 1997, the Company filed an answer denying FMHC's allegations. On February 4, 1997, a notice of removal was filed in the Federal District Court for Dallas, Texas (the "District Court"), which was referred by the District Court to the Federal Bankruptcy Court in Dallas, Texas. Subsequently, on February 7, 1997, a motion to transfer venue was filed in the Federal Bankruptcy Court in Dallas, Texas, requesting that this matter be transferred to the Federal Bankruptcy Court in Delaware, where the FoxMeyer Subsidiaries' Chapter XI bankruptcy action is pending. The Company is a creditor in such bankruptcy proceeding. On March 18, 1997, the Manufacturer Defendants filed in the Delaware bankruptcy court a motion to intervene in the creditors committee (the "Chapter XI Committee") action that asserted that the Delaware bankruptcy court should enjoin the FoxMeyer Lawsuit. Also on March 18, 1997, the Delaware bankruptcy court converted the FoxMeyer Subsidiaries' Chapter XI bankruptcy action to a liquidation proceeding under Chapter VII. The order converting the FoxMeyer Subsidiaries' bankruptcy to a Chapter VII proceeding also stayed all adversary proceedings and other proceedings filed in the bankruptcy until a permanent trustee is elected. As such, no substantive resolution of the motions filed in the Delaware bankruptcy court is expected until after election of the permanent trustee. Similarly, on April 1, 1997, the Delaware bankruptcy court ordered that the litigants in the FoxMeyer Lawsuit be stayed from any further litigation until election of the permanent trustee. Accordingly, no substantial resolution of any motions currently pending in the PAGE 21
FoxMeyer Litigation is expected until after election of the permanent trustee. Consensus interferon litigation On December 3, 1996, Schering Corporation filed suit in the U.S. District Court for the District of Delaware against the Company alleging infringement of U.S. Patent No. 4,530,901 (the "`901 Patent") by the manufacture and use of the Company's consensus interferon product. The complaint seeks unspecified damages and injunctive relief. The Company filed a motion to dismiss (the "Motion to Dismiss") the action on January 24, 1997. On January 22, 1997, the Company filed an action for declaratory relief in the United States District Court for the Central District of California in Los Angeles naming Biogen Inc. and Schering Corporation as parties. The action seeks a declaration that the `901 Patent is not infringed by the Company's use of Infergen(R) and/or that the `901 Patent is invalid. By agreement between the parties, the Motion to Dismiss was withdrawn and a motion to transfer the case to California was filed on March 10, 1997. Item 5. Other Information The Company's 1998 Annual Meeting of Stockholders will be held on May 7, 1998, at 10:30 A.M., PDT, at the Regent Beverly Wilshire, 9500 Wilshire Boulevard, Los Angeles, California, 90212. Item 6. Exhibits and Reports on Form 8-K (a) Reference is made to the Index to Exhibits included herein. (b) Reports on Form 8-K The Company filed three Current Reports on Form 8-K each reporting events under Item 5 thereof during the three months ended March 31, 1997. The report filed on February 26, 1997 contains a press release reporting the Company's results of operations for the year ended December 31, 1996 and a discussion of various legal matters involving the Company. The report filed on February 28, 1997 contains information regarding the Company's new Stockholder Rights Plan and redemption of rights under the then existing rights plan. The report filed on March 14, 1997 contains a press release reporting the Company's clinical progress and new research programs and the first supplemental indenture to the indenture providing for issuance of the Company's debt securities. PAGE 22
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Amgen Inc. (Registrant) Date: 5/12/97 By:/s/ Robert S. Attiyeh ------------------ ------------------------------------ Robert S. Attiyeh Senior Vice President, Finance and Corporate Development, and Chief Financial Officer Date: 5/12/97 By:/s/ Larry A. May ------------------ ------------------------------------ Larry A. May Vice President, Corporate Controller and Chief Accounting Officer PAGE 23
AMGEN INC. INDEX TO EXHIBITS Exhibit No. Description *3.1 Restated Certificate of Incorporation as amended. 3.2 Amended and Restated Bylaws. (21) 4.1 Indenture dated January 1, 1992 between the Company and Citibank N.A., as trustee. (11) 4.2 Forms of Commercial Paper Master Note Certificates. (14) 4.3 First Supplement to Indenture, dated February 26, 1997 between the Company and Citibank N.A., as trustee. (24) 4.4 Officer's Certificate pursuant to Sections 2.1 and 2.3 of the Indenture, as supplemented, establishing a series of securities "8-1/8% Debentures due April 1, 2097." (26) 4.5 8-1/8% Debentures due April 1, 2097. (26) *4.6 Form of stock certificate for the common stock, par value $.0001 of the Company. 10.1 Company's Amended and Restated 1991 Equity Incentive Plan. (25) 10.2 Company's Amended and Restated 1984 Stock Option Plan. (22) 10.3 Shareholder's Agreement of Kirin-Amgen, Inc., dated May 11, 1984, between the Company and Kirin Brewery Company, Limited (with certain confidential information deleted therefrom). (1) 10.4 Amendment Nos. 1, 2, and 3, dated March 19, 1985, July 29, 1985 and December 19, 1985, respectively, to the Shareholder's Agreement of Kirin-Amgen, Inc., dated May 11, 1984 (with certain confidential information deleted therefrom). (3) 10.5 Product License Agreement, dated September 30, 1985, and Technology License Agreement, dated, September 30, 1985 between the Company and Ortho Pharmaceutical Corporation (with certain confidential information deleted therefrom). (2) 10.6 Product License Agreement, dated September 30, 1985, and Technology License Agreement, dated September 30, 1985 between Kirin-Amgen, Inc. and Ortho Pharmaceutical Corporation (with certain confidential information deleted therefrom). (3) 10.7 Company's Amended and Restated Employee Stock Purchase Plan. (22) 10.8 Research, Development Technology Disclosure and License Agreement PPO, dated January 20, 1986, by and between the Company and Kirin Brewery Co., Ltd. (4) 10.9 Amendment Nos. 4 and 5, dated October 16, 1986 (effective July 1, 1986) and December 6, 1986 (effective July 1, 1986), respectively, to the Shareholders Agreement of Kirin-Amgen, Inc. dated May 11, 1984 (with certain confidential information deleted therefrom). (5) PAGE 24
10.10 Assignment and License Agreement, dated October 16, 1986, between the Company and Kirin-Amgen, Inc. (with certain confidential information deleted therefrom). (5) 10.11 G-CSF European License Agreement, dated December 30, 1986, between Kirin-Amgen, Inc. and the Company (with certain confidential information deleted therefrom). (5) 10.12 Research and Development Technology Disclosure and License Agreement: GM-CSF, dated March 31, 1987, between Kirin Brewery Company, Limited and the Company (with certain confidential information deleted therefrom). (5) 10.13 Company's Amended and Restated 1987 Directors' Stock Option Plan. (25) 10.14 Company's Amended and Restated 1988 Stock Option Plan. (22) 10.15 Company's Amended and Restated Retirement and Savings Plan. (22) 10.16 Amendment, dated June 30, 1988, to Research, Development, Technology Disclosure and License Agreement: GM-CSF dated March 31, 1987, between Kirin Brewery Company, Limited and the Company. (6) 10.17 Agreement on G-CSF in the EU, dated September 26, 1988, between Amgen Inc. and F. Hoffmann-La Roche & Co. Limited Company (with certain confidential information deleted therefrom). (8) 10.18 Supplementary Agreement to Agreement dated January 4, 1989 to Agreement on G-CSF in the EU, dated September 26, 1988, between the Company and F. Hoffmann-La Roche & Co. Limited Company, (with certain confidential information deleted therefrom). (8) 10.19 Agreement on G-CSF in Certain European Countries, dated January 1, 1989, between Amgen Inc. and F. Hoffmann-La Roche & Co. Limited Company (with certain confidential information deleted therefrom). (8) 10.20 Rights Agreement, dated January 24, 1989, between Amgen Inc. and American Stock Transfer and Trust Company, Rights Agent. (7) 10.21 First Amendment to Rights Agreement, dated January 22, 1991, between Amgen Inc. and American Stock Transfer and Trust Company, Rights Agent. (9) 10.22 Second Amendment to Rights Agreement, dated April 2, 1991, between Amgen Inc. and American Stock Transfer and Trust Company, Rights Agent. (10) 10.23 Agency Agreement, dated November 21, 1991, between Amgen Manufacturing, Inc. and Citicorp Financial Services Corporation. (12) 10.24 Agency Agreement, dated May 21, 1992, between Amgen Manufacturing, Inc. and Citicorp Financial Services Corporation. (12) 10.25 Guaranty, dated July 29, 1992, by the Company in favor of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. (13) 10.26 936 Promissory Note No. 01, dated December 11, 1991, issued by Amgen Manufacturing, Inc. (12) 10.27 936 Promissory Note No. 02, dated December 11, 1991, issued by Amgen Manufacturing, Inc. (12) 10.28 936 Promissory Note No. 001, dated July 29, 1992, issued by Amgen Manufacturing, Inc. (12) PAGE 25
10.29 936 Promissory Note No. 002, dated July 29, 1992, issued by Amgen Manufacturing, Inc. (12) 10.30 Guaranty, dated November 21, 1991, by the Company in favor of Citicorp Financial Services Corporation. (12) 10.31 Partnership Purchase Agreement, dated March 12, 1993, between the Company, Amgen Clinical Partners, L.P., Amgen Development Corporation, the Class A limited partners and the Class B limited partner. (13) 10.32 Amgen Supplemental Retirement Plan dated June 1, 1993. (15) 10.33 Promissory Note of Mr. Kevin W. Sharer, dated June 4, 1993. (15) 10.34 Promissory Note of Mr. Larry A. May, dated February 24, 1993. (16) 10.35 Amgen Performance Based Management Incentive Plan. (25) 10.36 Agreement and Plan of Merger, dated as of November 17, 1994, among Amgen Inc., Amgen Acquisition Subsidiary, Inc. and Synergen, Inc. (17) 10.37 Third Amendment to Rights Agreement, dated as of February 21, 1995, between Amgen Inc. and American Stock Transfer Trust and Trust Company (18) 10.38 Credit Agreement, dated as of June 23, 1995, among Amgen Inc., the Borrowing Subsidiaries named therein, the Banks named therein, Swiss Bank Corporation and ABN AMRO Bank N.V., as Issuing Banks, and Swiss Bank Corporation, as Administrative Agent. (19) 10.39 Promissory Note of Mr. George A. Vandeman, dated December 15, 1995. (20) 10.40 Promissory Note of Mr. George A. Vandeman, dated December 15, 1995. (20) 10.41 Promissory Note of Mr. Stan Benson, dated March 19, 1996. (20) 10.42 Amendment No. 1 to the Company's Amended and Restated Retirement and Savings Plan. (22) 10.43 Amendment Number 5 to the Company's Amended and Restated Retirement and Savings Plan dated January 1, 1993. (25) 10.44 Amendment Number 2 to the Company's Amended and Restated Retirement and Savings Plan dated April 1, 1996. (25) 10.45 First Amendment to Credit Agreement, dated as of December 12, 1996, among Amgen Inc., the Borrowing Subsidiaries named therein, and Swiss Bank Corporation as Administrative Agent. (25) 10.46 Fourth Amendment to Rights Agreement, dated February 18, 1997 between Amgen Inc. and American Stock Transfer and Trust Company, Rights Agent. (23) 10.47 Preferred Share Rights Agreement, dated February 18, 1997, between Amgen Inc. and American Stock Transfer and Trust Company, Rights Agent. (23) 10.48 Consulting Agreement, dated November 15, 1996, between the Company and Daniel Vapnek. (25) 10.49 Agreement, dated May 30, 1995, between the Company and George A. Vandeman. (25) *11 Computation of per share earnings. *27 Financial Data Schedule. *99 Sections appearing under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations-Factors That May Affect Future Results" in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. ---------------- PAGE 26
* Filed herewith. (1) Filed as an exhibit to the Annual Report on Form 10-K for the year ended March 31, 1984 on June 26, 1984 and incorporated herein by reference. (2) Filed as an exhibit to Quarterly Report on Form 10-Q for the quarter ended September 30, 1985 on November 14, 1985 and incorporated herein by reference. (3) Filed as an exhibit to Quarterly Report on Form 10-Q for the quarter ended December 31, 1985 on February 3, 1986 and incorporated herein by reference. (4) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration Statement (Registration No. 33-3069) on March 11, 1986 and incorporated herein by reference. (5) Filed as an exhibit to the Form 10-K Annual Report for the year ended March 31, 1987 on May 18, 1987 and incorporated herein by reference. (6) Filed as an exhibit to Form 8 amending the Quarterly Report on Form 10-Q for the quarter ended June 30, 1988 on August 25, 1988 and incorporated herein by reference. (7) Filed as an exhibit to the Form 8-K Current Report dated January 24, 1989 and incorporated herein by reference. (8) Filed as an exhibit to the Annual Report on Form 10-K for the year ended March 31, 1989 on June 28, 1989 and incorporated herein by reference. (9) Filed as an exhibit to the Form 8-K Current Report dated January 22, 1991 and incorporated herein by reference. (10) Filed as an exhibit to the Form 8-K Current Report dated April 12, 1991 and incorporated herein by reference. (11) Filed as an exhibit to Form S-3 Registration Statement dated December 19, 1991 and incorporated herein by reference. (12) Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 1992 on March 30, 1993 and incorporated herein by reference. (13) Filed as an exhibit to the Form 8-A dated March 31, 1993 and incorporated herein by reference. (14) Filed as an exhibit to the Form 10-Q for the quarter ended March 31, 1993 on May 17, 1993 and incorporated herein by reference. (15) Filed as an exhibit to the Form 10-Q for the quarter ended September 30, 1993 on November 12, 1993 and incorporated herein by reference. (16) Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 1993 on March 25, 1994 and incorporated herein by reference. (17) Filed as an exhibit to the Form 8-K Current Report dated November 18, 1994 on December 2, 1994 and incorporated herein by reference. (18) Filed as an exhibit to the Form 8-K Current Report dated February 21, 1995 on March 7, 1995 and incorporated herein by reference. PAGE 27
(19) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 1995 on August 11, 1995 and incorporated herein by reference. (20) Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 1995 on March 29, 1996 and incorporated herein by reference. (21) Filed as an exhibit to the Form 10-Q for the quarter ended June 30, 1996 on August 12, 1996 and incorporated herein by reference. (22) Filed as an exhibit to the Form 10-Q for the quarter ended September 30, 1996 on November 5, 1996 and incorporated herein by reference. (23) Filed as an exhibit to the Form 8-K Current Report dated February 18, 1997 on February 28, 1997 and incorporated herein by reference. (24) Filed as an exhibit to the Form 8-K Current Report dated March 14, 1997 on March 14, 1997 and incorporated herein by reference. (25) Filed as an exhibit to the Annual Report on Form 10-K for the year ended December 31, 1996 on March 24, 1997 and incorporated herein by reference. (26) Filed as an exhibit to the Form 8-K Current Report dated April 8, 1997 on April 8, 1997 and incorporated herein by reference. PAGE 28