CELGENE CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware
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22-2711928
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification Number)
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86 Morris Avenue, Summit, NJ
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07901
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(Address of principal executive offices)
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(Zip Code)
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(908) 673-9000
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(Registrant’s telephone number, including area code)
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Yes
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X
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No
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Yes
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X
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No
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Yes
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No
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X
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Page No.
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Consolidated Statements of Income - Three-Month Periods Ended March 31, 2017 and 2016
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Consolidated Statements of Comprehensive Income - Three-Month Periods Ended March 31, 2017 and 2016
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Three-Month Periods Ended March 31,
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||||||
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2017
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2016
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Revenue:
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Net product sales
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$
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2,950
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$
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2,495
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Other revenue
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10
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17
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Total revenue
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2,960
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2,512
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Expenses:
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Cost of goods sold (excluding amortization of acquired intangible assets)
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113
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106
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Research and development
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995
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733
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Selling, general and administrative
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620
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543
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Amortization of acquired intangible assets
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82
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92
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Acquisition related charges and restructuring, net
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39
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36
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Total costs and expenses
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1,849
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1,510
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Operating income
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1,111
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1,002
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Other income and (expense):
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|
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Interest and investment income, net
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15
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7
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Interest (expense)
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(127
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)
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(122
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)
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Other income, net
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26
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35
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Income before income taxes
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1,025
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922
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Income tax provision
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84
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121
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Net income
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$
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941
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$
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801
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Net income per common share:
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Basic
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$
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1.21
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$
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1.03
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Diluted
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$
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1.16
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$
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0.99
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Weighted average shares:
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Basic
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779.0
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780.6
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Diluted
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811.2
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807.7
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Three-Month Periods Ended March 31,
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||||||
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2017
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2016
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Net income
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$
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941
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$
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801
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Other comprehensive income (loss):
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|
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Foreign currency translation adjustments
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10
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18
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Net unrealized gains (losses) related to cash flow hedges:
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|
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Unrealized holding (losses)
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(81
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)
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(221
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)
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Tax (expense) benefit
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—
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10
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Unrealized holding (losses), net of tax
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(81
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)
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(211
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)
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Reclassification adjustment for (gains) included in net income
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(84
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)
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(86
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)
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Tax (benefit)
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(1
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)
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(1
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)
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Reclassification adjustment for (gains) included in net income
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(85
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)
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(87
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)
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Net unrealized gains (losses) on marketable securities available-for-sale:
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|
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Unrealized holding gains (losses)
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227
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(382
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)
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Tax (expense) benefit
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(80
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)
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139
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Unrealized holding gains (losses), net of tax
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147
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(243
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)
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||
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Reclassification adjustment for losses included in net income
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—
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10
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Tax (benefit)
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—
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(3
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)
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Reclassification adjustment for losses included in net income
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—
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7
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Total other comprehensive (loss)
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(9
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)
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(516
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)
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Comprehensive income
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$
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932
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$
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285
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March 31,
2017 |
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December 31,
2016 |
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Assets
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Current assets:
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Cash and cash equivalents
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$
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5,273
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$
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6,170
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Marketable securities available-for-sale
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3,588
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1,800
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Accounts receivable, net of allowances of $33 and $31 at March 31, 2017 and December 31, 2016, respectively
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1,614
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1,621
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Inventory
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509
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498
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Other current assets
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633
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779
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Total current assets
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11,617
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10,868
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Property, plant and equipment, net
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958
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930
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Intangible assets, net
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10,307
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10,392
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Goodwill
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4,866
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4,866
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Other non-current assets
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1,072
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1,030
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Total assets
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$
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28,820
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$
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28,086
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Short-term borrowings and current portion of long-term debt
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500
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501
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Accounts payable
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240
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247
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Accrued expenses and other current liabilities
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1,808
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2,115
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Income taxes payable
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25
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41
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Current portion of deferred revenue
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56
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55
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Total current liabilities
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2,629
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2,959
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Deferred revenue, net of current portion
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29
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28
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Income taxes payable
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441
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420
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Other non-current tax liabilities
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2,519
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2,519
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Other non-current liabilities
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1,774
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1,771
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Long-term debt, net of discount
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13,784
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13,789
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Total liabilities
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21,176
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21,486
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Commitments and Contingencies (Note 15)
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Stockholders’ Equity:
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Preferred stock, $.01 par value per share, 5.0 million shares authorized; none outstanding at March 31, 2017 and December 31, 2016, respectively
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—
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—
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Common stock, $.01 par value per share, 1,150.0 million shares authorized; issued 958.7 million and 954.1 million shares at March 31, 2017 and December 31, 2016, respectively
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10
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10
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Common stock in treasury, at cost; 177.7 million and 175.5 million shares at March 31, 2017 and December 31, 2016, respectively
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(16,557
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)
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(16,281
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)
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Additional paid-in capital
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12,749
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12,378
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Retained earnings
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11,032
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10,074
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Accumulated other comprehensive income
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410
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419
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Total stockholders’ equity
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7,644
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6,600
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Total liabilities and stockholders’ equity
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$
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28,820
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$
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28,086
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Three-Month Periods Ended March 31,
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||||||
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2017
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|
2016
|
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Cash flows from operating activities:
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|
|
|
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Net income
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$
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941
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$
|
801
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Adjustments to reconcile net income to net cash provided by operating activities:
|
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Depreciation
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32
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29
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Amortization and impairment charges
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89
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113
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Deferred income taxes
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(80
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)
|
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(43
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)
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Change in value of contingent consideration
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39
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33
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(Gain) on sale of business
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—
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(38
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)
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Share-based compensation expense
|
153
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146
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Share-based employee benefit plan expense
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10
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9
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Derivative instruments
|
7
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21
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Other, net
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(14
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)
|
|
(1
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)
|
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Change in current assets and liabilities, excluding the effect of acquisitions:
|
|
|
|
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Accounts receivable
|
17
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23
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Inventory
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(10
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)
|
|
(26
|
)
|
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Other operating assets
|
29
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|
|
39
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|
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Accounts payable and other operating liabilities
|
(365
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)
|
|
(130
|
)
|
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Income tax payable
|
4
|
|
|
22
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|
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Deferred revenue
|
1
|
|
|
2
|
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Net cash provided by operating activities
|
853
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|
|
1,000
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|
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Cash flows from investing activities:
|
|
|
|
|
|
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Proceeds from sales of marketable securities available-for-sale
|
266
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|
|
314
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|
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Purchases of marketable securities available-for-sale
|
(1,802
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)
|
|
(285
|
)
|
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Capital expenditures
|
(62
|
)
|
|
(60
|
)
|
||
Purchases of investment securities
|
(66
|
)
|
|
(79
|
)
|
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Other
|
4
|
|
|
—
|
|
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Net cash (used in) investing activities
|
(1,660
|
)
|
|
(110
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
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Payment for treasury shares
|
(293
|
)
|
|
(1,410
|
)
|
||
Net proceeds from common equity put options
|
—
|
|
|
3
|
|
||
Net proceeds from share-based compensation arrangements
|
184
|
|
|
62
|
|
||
Net cash (used in) financing activities
|
(109
|
)
|
|
(1,345
|
)
|
||
Effect of currency rate changes on cash and cash equivalents
|
19
|
|
|
20
|
|
||
Net (decrease) in cash and cash equivalents
|
(897
|
)
|
|
(435
|
)
|
||
Cash and cash equivalents at beginning of period
|
6,170
|
|
|
4,880
|
|
||
Cash and cash equivalents at end of period
|
$
|
5,273
|
|
|
$
|
4,445
|
|
|
Three-Month Periods Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Supplemental schedule of non-cash investing and financing activity:
|
|
|
|
|
|
||
Change in net unrealized (gain) loss on marketable securities available-for-sale
|
$
|
(227
|
)
|
|
$
|
382
|
|
Investment in Human Longevity, Inc. common stock
|
$
|
—
|
|
|
$
|
40
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
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Interest paid
|
$
|
198
|
|
|
$
|
201
|
|
Income taxes paid
|
$
|
128
|
|
|
$
|
102
|
|
|
Three-Month Periods Ended March 31,
|
||||||
(Amounts in millions, except per share)
|
2017
|
|
2016
|
||||
Net income
|
$
|
941
|
|
|
$
|
801
|
|
Weighted-average shares:
|
|
|
|
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Basic
|
779.0
|
|
|
780.6
|
|
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Effect of dilutive securities:
|
|
|
|
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Options, restricted stock units, performance-based restricted stock units and other
|
32.2
|
|
|
27.1
|
|
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Diluted
|
811.2
|
|
|
807.7
|
|
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Net income per share:
|
|
|
|
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Basic
|
$
|
1.21
|
|
|
$
|
1.03
|
|
Diluted
|
$
|
1.16
|
|
|
$
|
0.99
|
|
|
Three-Month Periods Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Gain from sale of put options
|
$
|
—
|
|
|
$
|
4
|
|
|
Pension
Liability
Adjustment
|
|
Net Unrealized
Gains (Losses) On
Available-for-Sale Marketable Securities
|
|
Net Unrealized
Gains (Losses)
Related to Cash Flow Hedges
|
|
Foreign
Currency
Translation
Adjustments
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||||
Balance as of December 31, 2016
|
$
|
(38
|
)
|
|
$
|
144
|
|
|
$
|
415
|
|
|
$
|
(102
|
)
|
|
$
|
419
|
|
Other comprehensive income (loss) before reclassifications, net of tax
|
—
|
|
|
147
|
|
|
(81
|
)
|
|
10
|
|
|
76
|
|
|||||
Reclassified (gains) from accumulated other comprehensive income, net of tax
|
—
|
|
|
—
|
|
|
(85
|
)
|
|
—
|
|
|
(85
|
)
|
|||||
Net current-period other comprehensive income (loss), net of tax
|
—
|
|
|
147
|
|
|
(166
|
)
|
|
10
|
|
|
(9
|
)
|
|||||
Balance as of March 31, 2017
|
$
|
(38
|
)
|
|
$
|
291
|
|
|
$
|
249
|
|
|
$
|
(92
|
)
|
|
$
|
410
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Balance as of December 31, 2015
|
$
|
(14
|
)
|
|
$
|
272
|
|
|
$
|
586
|
|
|
$
|
(76
|
)
|
|
$
|
768
|
|
Other comprehensive (loss) income before reclassifications, net of tax
|
—
|
|
|
(243
|
)
|
|
(211
|
)
|
|
18
|
|
|
(436
|
)
|
|||||
Reclassified losses (gains) from accumulated other comprehensive income, net of tax
|
—
|
|
|
7
|
|
|
(87
|
)
|
|
—
|
|
|
(80
|
)
|
|||||
Net current-period other comprehensive (loss)
income, net of tax
|
—
|
|
|
(236
|
)
|
|
(298
|
)
|
|
18
|
|
|
(516
|
)
|
|||||
Balance as of March 31, 2016
|
$
|
(14
|
)
|
|
$
|
36
|
|
|
$
|
288
|
|
|
$
|
(58
|
)
|
|
$
|
252
|
|
|
|
|
|
Gains (Losses) Reclassified Out of Accumulated
Other Comprehensive Income
|
||||||
Accumulated Other Comprehensive Income Components
|
|
Classification in the Consolidated Statements of Income
|
|
Three-Month Periods Ended March 31,
|
||||||
|
|
2017
|
|
2016
|
||||||
Gains (losses) from cash-flow hedges:
|
|
|
|
|
|
|
||||
Foreign exchange contracts
|
|
Net product sales
|
|
$
|
86
|
|
|
$
|
88
|
|
Treasury rate lock agreements
|
|
Interest (expense)
|
|
(1
|
)
|
|
(1
|
)
|
||
Interest rate swap agreements
|
|
Interest (expense)
|
|
(1
|
)
|
|
(1
|
)
|
||
|
|
Income tax provision
|
|
1
|
|
|
1
|
|
||
|
|
|
|
|
|
|
||||
Gains (losses) from available-for-sale marketable securities:
|
|
|
|
|
||||||
Realized (loss) on sales of marketable securities
|
|
Interest and investment income, net
|
|
—
|
|
|
(10
|
)
|
||
|
|
Income tax provision
|
|
—
|
|
|
3
|
|
||
Total reclassification, net of tax
|
|
|
|
$
|
85
|
|
|
$
|
80
|
|
•
|
Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Our level 1 assets consist of marketable equity securities. Our level 1 liability relates to our publicly traded Contingent Value Rights (CVRs). See Note 18 of Notes to Consolidated Financial Statements included in our
2016
Annual Report on Form 10-K for a description of the CVRs.
|
•
|
Level 2 inputs utilize observable quoted prices for similar assets and liabilities in active markets and observable quoted prices for identical or similar assets in markets that are not very active. Our level 2 assets consist primarily of U.S. Treasury securities, U.S. government-sponsored agency securities, U.S. government-sponsored agency mortgage-backed securities (MBS), global corporate debt securities, asset backed securities, ultra short income fund investments, time deposits and repurchase agreements with original maturities of greater than three months, foreign currency forward contracts, purchased foreign currency options and interest rate swap contracts. Our level 2 liabilities relate to written foreign currency options, foreign currency forward contracts and interest rate swap contracts.
|
•
|
Level 3 inputs utilize unobservable inputs and include valuations of assets or liabilities for which there is little, if any, market activity. We do not have any level 3 assets. Our level 3 liabilities consist of contingent consideration related to undeveloped product rights and technology platforms resulting from the acquisitions of Gloucester Pharmaceuticals, Inc. (Gloucester), Nogra Pharma Limited (Nogra), Avila Therapeutics, Inc. (Avila) and Quanticel Pharmaceuticals, Inc. (Quanticel).
|
Inputs
|
Ranges (weighted average) utilized as of:
|
|
March 31, 2017
|
December 31, 2016
|
|
Discount rate
|
1.5% to 12.0% (8.6%)
|
1.5% to 12.0% (8.6%)
|
Probability of payment
|
0% to 95% (41.8%)
|
0% to 95% (42%)
|
Projected year of payment for development and regulatory milestones
|
2017 to 2029 (2019)
|
2017 to 2029 (2019)
|
Projected year of payment for sales-based milestones and other amounts calculated as a percentage of annual sales
|
2019 to 2033 (2024)
|
2019 to 2033 (2024)
|
|
Balance as of March 31, 2017
|
|
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Available-for-sale securities
|
$
|
3,588
|
|
|
$
|
1,153
|
|
|
$
|
2,435
|
|
|
$
|
—
|
|
Forward currency contracts
|
224
|
|
|
—
|
|
|
224
|
|
|
—
|
|
||||
Purchased currency options
|
125
|
|
|
—
|
|
|
125
|
|
|
—
|
|
||||
Interest rate swaps
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Total assets
|
$
|
3,968
|
|
|
$
|
1,153
|
|
|
$
|
2,815
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent value rights
|
$
|
(47
|
)
|
|
$
|
(47
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Written currency options
|
(55
|
)
|
|
—
|
|
|
(55
|
)
|
|
—
|
|
||||
Other acquisition related contingent consideration
|
(1,527
|
)
|
|
—
|
|
|
—
|
|
|
(1,527
|
)
|
||||
Total liabilities
|
$
|
(1,629
|
)
|
|
$
|
(47
|
)
|
|
$
|
(55
|
)
|
|
$
|
(1,527
|
)
|
|
|
|
|
|
|
|
|
||||||||
|
Balance as of December 31, 2016
|
|
Quoted Price in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant
Other Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale securities
|
$
|
1,800
|
|
|
$
|
891
|
|
|
$
|
909
|
|
|
$
|
—
|
|
Forward currency contracts
|
379
|
|
|
—
|
|
|
379
|
|
|
—
|
|
||||
Purchased currency options
|
140
|
|
|
—
|
|
|
140
|
|
|
—
|
|
||||
Interest rate swaps
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Total assets
|
$
|
2,350
|
|
|
$
|
891
|
|
|
$
|
1,459
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Contingent value rights
|
$
|
(44
|
)
|
|
$
|
(44
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Written currency options
|
(54
|
)
|
|
—
|
|
|
(54
|
)
|
|
—
|
|
||||
Other acquisition related contingent consideration
|
(1,490
|
)
|
|
—
|
|
|
—
|
|
|
(1,490
|
)
|
||||
Total liabilities
|
$
|
(1,588
|
)
|
|
$
|
(44
|
)
|
|
$
|
(54
|
)
|
|
$
|
(1,490
|
)
|
|
|
Three-Month Period Ended March 31, 2017
|
||||||||||||||||||
Liabilities:
|
|
Gloucester
|
|
Nogra
|
|
Avila
|
|
Quanticel
|
|
Total
|
||||||||||
Balance as of December 31, 2016
|
|
$
|
(21
|
)
|
|
$
|
(1,346
|
)
|
|
$
|
(8
|
)
|
|
$
|
(115
|
)
|
|
$
|
(1,490
|
)
|
Amounts acquired or issued, including measurement period adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net change in fair value
|
|
(1
|
)
|
|
(31
|
)
|
|
—
|
|
|
(5
|
)
|
|
(37
|
)
|
|||||
Settlements, including transfers to Accrued expenses and other current liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance as of March 31, 2017
|
|
$
|
(22
|
)
|
|
$
|
(1,377
|
)
|
|
$
|
(8
|
)
|
|
$
|
(120
|
)
|
|
$
|
(1,527
|
)
|
|
|
Three-Month Period Ended March 31, 2016
|
||||||||||||||||||
Liabilities:
|
|
Gloucester
|
|
Nogra
|
|
Avila
|
|
Quanticel
|
|
Total
|
||||||||||
Balance as of December 31, 2015
|
|
$
|
(19
|
)
|
|
$
|
(1,239
|
)
|
|
$
|
(97
|
)
|
|
$
|
(167
|
)
|
|
$
|
(1,522
|
)
|
Amounts acquired or issued, including measurement period adjustments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net change in fair value
|
|
—
|
|
|
(28
|
)
|
|
1
|
|
|
(1
|
)
|
|
(28
|
)
|
|||||
Settlements, including transfers to Accrued expenses and other current liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Balance as of March 31, 2016
|
|
$
|
(19
|
)
|
|
$
|
(1,267
|
)
|
|
$
|
(96
|
)
|
|
$
|
(168
|
)
|
|
$
|
(1,550
|
)
|
|
|
Notional Amount
|
||||||
Foreign Currency
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Australian Dollar
|
|
$
|
70
|
|
|
$
|
49
|
|
British Pound
|
|
172
|
|
|
199
|
|
||
Canadian Dollar
|
|
194
|
|
|
193
|
|
||
Euro
|
|
1,501
|
|
|
1,812
|
|
||
Japanese Yen
|
|
637
|
|
|
597
|
|
||
Total
|
|
$
|
2,574
|
|
|
$
|
2,850
|
|
|
Notional Amount
1
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Foreign currency option contracts designated as hedging activity:
|
|
|
|
||||
Purchased Put
|
$
|
2,361
|
|
|
$
|
1,790
|
|
Written Call
|
2,659
|
|
|
2,009
|
|
|
Notional Amount
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Forward starting interest rate swap contracts:
|
|
|
|
||||
Forward starting swaps with effective dates in 2017
|
$
|
500
|
|
|
$
|
500
|
|
Forward starting swaps with effective dates in 2018
|
500
|
|
|
500
|
|
|
Notional Amount
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Interest rate swap contracts entered into as fair value hedges of the following fixed-rate senior notes:
|
|
|
|
||||
3.875% senior notes due 2025
|
$
|
300
|
|
|
$
|
200
|
|
|
|
|
|
March 31, 2017
|
||||||
|
|
Consolidated
Balance Sheet
Classification
|
|
Fair Value
|
||||||
Instrument
|
|
|
Asset
Derivatives
|
|
Liability Derivatives
|
|||||
Derivatives designated as hedging instruments:
|
|
|||||||||
Foreign exchange contracts
1
|
|
Other current assets
|
|
$
|
222
|
|
|
$
|
20
|
|
|
|
Other non-current assets
|
|
127
|
|
|
66
|
|
||
|
|
Other non-current liabilities
|
|
3
|
|
|
3
|
|
||
Interest rate swap agreements
|
|
Other current assets
|
|
1
|
|
|
—
|
|
||
|
|
Other non-current assets
|
|
38
|
|
|
7
|
|
||
|
|
Other non-current liabilities
|
|
—
|
|
|
2
|
|
||
Derivatives not designated as hedging instruments:
|
|
|||||||||
Foreign exchange contracts
1
|
|
Other current assets
|
|
40
|
|
|
6
|
|
||
|
|
Accrued expenses and other current liabilities
|
|
1
|
|
|
4
|
|
||
Interest rate swap agreements
|
|
Other current assets
|
|
1
|
|
|
1
|
|
||
|
|
Other non-current assets
|
|
3
|
|
|
2
|
|
||
Total
|
|
|
|
$
|
436
|
|
|
$
|
111
|
|
|
|
|
|
December 31, 2016
|
||||||
|
|
Consolidated
Balance Sheet
Classification
|
|
Fair Value
|
||||||
Instrument
|
|
|
Asset Derivatives
|
|
Liability Derivatives
|
|||||
Derivatives designated as hedging instruments:
|
|
|||||||||
Foreign exchange contracts
1
|
|
Other current assets
|
|
$
|
317
|
|
|
$
|
10
|
|
|
|
Other non-current assets
|
|
178
|
|
|
71
|
|
||
Interest rate swap agreements
|
|
Other current assets
|
|
1
|
|
|
—
|
|
||
|
|
Other non-current assets
|
|
38
|
|
|
7
|
|
||
|
|
Other non-current liabilities
|
|
—
|
|
|
2
|
|
||
Derivatives not designated as hedging instruments:
|
|
|||||||||
Foreign exchange contracts
1
|
|
Other current assets
|
|
57
|
|
|
4
|
|
||
|
|
Accrued expenses and other current liabilities
|
|
—
|
|
|
2
|
|
||
Interest rate swap agreements
|
|
Other current assets
|
|
2
|
|
|
2
|
|
||
|
|
Other non-current assets
|
|
3
|
|
|
2
|
|
||
Total
|
|
|
|
$
|
596
|
|
|
$
|
100
|
|
|
Three-Month Period Ended March 31, 2017
|
|
|
||||||||||||||
|
(Effective Portion)
|
|
(Ineffective Portion and Amount Excluded From Effectiveness Testing)
|
|
|
||||||||||||
Instrument
|
Amount of
Gain/(Loss) Recognized in OCI on Derivative 1 |
|
Classification of
Gain/(Loss) Reclassified from Accumulated OCI into Income |
|
Amount of
Gain/(Loss) Reclassified from Accumulated OCI into Income |
|
Classification of
Gain/(Loss) Recognized in Income on Derivative |
|
Amount of
Gain/(Loss) Recognized in Income on Derivative |
|
|
||||||
Foreign exchange contracts
|
$
|
(81
|
)
|
|
Net product sales
|
|
$
|
86
|
|
|
Other income, net
|
|
$
|
19
|
|
|
2
|
Treasury rate lock agreements
|
—
|
|
|
Interest (expense)
|
|
(1
|
)
|
|
Other income, net
|
|
—
|
|
|
|
|||
Interest rate swap agreements
|
—
|
|
|
Interest (expense)
|
|
(1
|
)
|
|
Other income, net
|
|
—
|
|
|
|
|
Three-Month Period Ended March 31, 2016
|
|
|
||||||||||||||
|
(Effective Portion)
|
|
(Ineffective Portion and Amount Excluded From Effectiveness Testing)
|
|
|
||||||||||||
Instrument
|
Amount of
Gain/(Loss) Recognized in OCI on Derivative |
|
Classification of
Gain/(Loss) Reclassified from Accumulated OCI into Income |
|
Amount of
Gain/(Loss) Reclassified from Accumulated OCI into Income |
|
Classification of
Gain/(Loss) Recognized in Income on Derivative |
|
Amount of
Gain/(Loss) Recognized in Income on Derivative |
|
|
||||||
Foreign exchange contracts
|
$
|
(195
|
)
|
|
Net product sales
|
|
$
|
88
|
|
|
Other income, net
|
|
$
|
14
|
|
|
1
|
Treasury rate lock agreements
|
—
|
|
|
Interest (expense)
|
|
(1
|
)
|
|
Other income, net
|
|
—
|
|
|
|
|||
Interest rate swap agreements
|
(26
|
)
|
|
Interest (expense)
|
|
(1
|
)
|
|
Other income, net
|
|
—
|
|
|
|
|
|
|
|
Amount of Gain Recognized in
Income on Derivative
|
||||||
|
|
Classification of Gain Recognized in Income on Derivative
|
|
Three-Month Periods Ended March 31,
|
||||||
Instrument
|
|
|
2017
|
|
2016
|
|||||
Interest rate swap agreements
|
|
Interest (expense)
|
|
$
|
9
|
|
|
$
|
13
|
|
|
|
|
|
Amount of Gain Recognized in
Income on Derivative
|
||||||
|
|
Classification of Gain (Loss) Recognized in Income on Derivative
|
|
Three-Month Periods Ended March 31,
|
||||||
Instrument
|
|
|
2017
|
|
2016
|
|||||
Foreign exchange contracts
|
|
Other income, net
|
|
$
|
(22
|
)
|
|
$
|
(28
|
)
|
Put options on our common stock
|
|
Other income, net
|
|
—
|
|
|
4
|
|
March 31, 2017
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
|
|
Estimated Fair Value
|
||||||||
U.S. Treasury securities
|
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
99
|
|
U.S. government-sponsored agency securities
|
|
23
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||
U.S. government-sponsored agency MBS
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||
Corporate debt - global
|
|
490
|
|
|
—
|
|
|
—
|
|
|
490
|
|
||||
Asset backed securities
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Ultra short income fund
|
|
200
|
|
|
—
|
|
|
—
|
|
|
200
|
|
||||
Time deposits
1
and Repurchase agreements
1
|
|
1,578
|
|
|
—
|
|
|
—
|
|
|
1,578
|
|
||||
Marketable equity securities
|
|
707
|
|
|
474
|
|
|
(28
|
)
|
|
1,153
|
|
||||
Total available-for-sale marketable securities
|
|
$
|
3,143
|
|
|
$
|
474
|
|
|
$
|
(29
|
)
|
|
$
|
3,588
|
|
December 31, 2016
|
|
Amortized Cost
|
|
Gross Unrealized Gain
|
|
Gross Unrealized Loss
|
|
Estimated Fair Value
|
||||||||
U.S. Treasury securities
|
|
$
|
121
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
$
|
120
|
|
U.S. government-sponsored agency MBS
|
|
31
|
|
|
—
|
|
|
—
|
|
|
31
|
|
||||
Corporate debt - global
|
|
378
|
|
|
—
|
|
|
(1
|
)
|
|
377
|
|
||||
Asset backed securities
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Time deposits
1
|
|
364
|
|
|
—
|
|
|
—
|
|
|
364
|
|
||||
Marketable equity securities
|
|
672
|
|
|
238
|
|
|
(19
|
)
|
|
891
|
|
||||
Total available-for-sale marketable securities
|
|
$
|
1,583
|
|
|
$
|
238
|
|
|
$
|
(21
|
)
|
|
$
|
1,800
|
|
|
|
Amortized
Cost
|
|
Fair
Value
|
||||
Duration of one year or less
|
|
$
|
541
|
|
|
$
|
541
|
|
Duration of one through three years
|
|
308
|
|
|
307
|
|
||
Duration of three through five years
|
|
9
|
|
|
9
|
|
||
Total
|
|
$
|
858
|
|
|
$
|
857
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Raw materials
|
$
|
257
|
|
|
$
|
274
|
|
Work in process
|
111
|
|
|
87
|
|
||
Finished goods
|
141
|
|
|
137
|
|
||
Total
|
$
|
509
|
|
|
$
|
498
|
|
March 31, 2017
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Intangible Assets, Net
|
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired developed product rights
|
|
$
|
3,406
|
|
|
$
|
(1,755
|
)
|
|
$
|
1,651
|
|
Technology
|
|
483
|
|
|
(347
|
)
|
|
136
|
|
|||
Licenses
|
|
66
|
|
|
(28
|
)
|
|
38
|
|
|||
Other
|
|
43
|
|
|
(32
|
)
|
|
11
|
|
|||
|
|
3,998
|
|
|
(2,162
|
)
|
|
1,836
|
|
|||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired IPR&D product rights
|
|
8,471
|
|
|
—
|
|
|
8,471
|
|
|||
Total intangible assets
|
|
$
|
12,469
|
|
|
$
|
(2,162
|
)
|
|
$
|
10,307
|
|
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
Gross Carrying Value
|
|
Accumulated Amortization
|
|
Intangible Assets, Net
|
||||||
Amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired developed product rights
|
|
$
|
3,406
|
|
|
$
|
(1,694
|
)
|
|
$
|
1,712
|
|
Technology
|
|
483
|
|
|
(326
|
)
|
|
157
|
|
|||
Licenses
|
|
66
|
|
|
(26
|
)
|
|
40
|
|
|||
Other
|
|
43
|
|
|
(31
|
)
|
|
12
|
|
|||
|
|
3,998
|
|
|
(2,077
|
)
|
|
1,921
|
|
|||
Non-amortizable intangible assets:
|
|
|
|
|
|
|
|
|
|
|||
Acquired IPR&D product rights
|
|
8,471
|
|
|
—
|
|
|
8,471
|
|
|||
Total intangible assets
|
|
$
|
12,469
|
|
|
$
|
(2,077
|
)
|
|
$
|
10,392
|
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
1.900% senior notes due 2017
|
|
$
|
500
|
|
|
$
|
501
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
2.125% senior notes due 2018
|
$
|
998
|
|
|
$
|
998
|
|
2.300% senior notes due 2018
|
402
|
|
|
402
|
|
||
2.250% senior notes due 2019
|
508
|
|
|
509
|
|
||
2.875% senior notes due 2020
|
1,493
|
|
|
1,493
|
|
||
3.950% senior notes due 2020
|
517
|
|
|
518
|
|
||
3.250% senior notes due 2022
|
1,051
|
|
|
1,054
|
|
||
3.550% senior notes due 2022
|
994
|
|
|
994
|
|
||
4.000% senior notes due 2023
|
742
|
|
|
744
|
|
||
3.625% senior notes due 2024
|
1,001
|
|
|
1,001
|
|
||
3.875% senior notes due 2025
|
2,476
|
|
|
2,475
|
|
||
5.700% senior notes due 2040
|
247
|
|
|
247
|
|
||
5.250% senior notes due 2043
|
393
|
|
|
393
|
|
||
4.625% senior notes due 2044
|
987
|
|
|
987
|
|
||
5.000% senior notes due 2045
|
1,975
|
|
|
1,974
|
|
||
Total long-term debt
|
$
|
13,784
|
|
|
$
|
13,789
|
|
|
Three-Month Periods Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cost of goods sold (excluding amortization of acquired intangible assets)
|
$
|
7
|
|
|
$
|
9
|
|
Research and development
|
65
|
|
|
62
|
|
||
Selling, general and administrative
|
81
|
|
|
75
|
|
||
Total share-based compensation expense
|
153
|
|
|
146
|
|
||
Tax benefit related to share-based compensation expense
|
41
|
|
|
40
|
|
||
Reduction in income
|
$
|
112
|
|
|
$
|
106
|
|
|
Stock
Options
|
|
RSUs
|
|
PSUs (in thousands)
|
|||
Outstanding as of December 31, 2016
|
73.8
|
|
|
7.1
|
|
|
463
|
|
Changes during the Year:
|
|
|
|
|
|
|
|
|
Granted
|
2.9
|
|
|
0.1
|
|
|
96
|
|
Exercised / Released
|
(4.4
|
)
|
|
(0.2
|
)
|
|
(1
|
)
|
Forfeited
|
(0.5
|
)
|
|
(0.1
|
)
|
|
(9
|
)
|
Outstanding as of March 31, 2017
|
71.8
|
|
|
6.9
|
|
|
549
|
|
|
Stock
Options
|
|
RSUs
|
|
PSUs
|
||||||
Unrecognized compensation cost
|
$
|
554
|
|
|
$
|
299
|
|
|
$
|
34
|
|
Expected weighted-average period in years of compensation cost to be recognized
|
2.1
|
|
|
1.4
|
|
|
1.7
|
|
|
|
Three-Month Periods Ended March 31,
|
||||||||
|
|
Research and Development Expense
|
|
|
||||||
|
|
Upfront Fees
|
|
Milestones
|
|
Extension/Termination of Arrangements
|
|
Amortization of Prepaid Research and Development
|
|
Equity Investments Made During Period
|
Juno
3
|
2017
|
$—
|
|
$—
|
|
$—
|
|
$—
|
|
$2
|
|
2016
|
—
|
|
—
|
|
—
|
|
—
|
|
41
|
Other Collaboration Arrangements
|
2017
|
10
|
|
—
|
|
7
|
|
4
|
|
10
|
|
2016
|
80
|
|
65
|
|
—
|
|
6
|
|
37
|
|
Balances as of:
|
|
Intangible Asset Balance
|
|
Equity Investment Balance
|
|
Percentage of Outstanding Equity
|
Juno
|
March 31, 2017
|
|
$—
|
|
$230
|
|
10%
|
|
December 31, 2016
|
|
—
|
|
194
|
|
10%
|
Other Collaboration Arrangements
|
March 31, 2017
|
|
19
|
|
848
|
|
N/A
|
|
December 31, 2016
|
|
22
|
|
658
|
|
N/A
|
1
|
Activity and balances are presented specifically for notable new collaborations and for those collaborations which we have described in detail in our
2016
Annual Report on Form 10-K if there has been significant activity during the periods presented. Amounts related to collaborations that are not specifically presented are included in the aggregate as Other Collaboration Arrangements.
|
2
|
In addition to the expenses noted in the tables above, we may also incur expenses for collaboration agreement related activities that are managed or funded by us.
|
3
|
Our equity investment in Juno made in the first quarter of 2016 was transacted at a price per share that exceeded the market value of Juno's publicly traded common stock on the transaction closing date, resulting in an expense for the premium of
$6 million
that was recorded in the Consolidated Statement of Income as Other income, net in the first quarter of 2016.
|
Product
|
|
Disease Indication
|
|
Major
Market
|
|
Regulatory
Agency
|
|
Date of Submission or Filing
|
enasidenib (AG-221)
1
|
|
Relapsed or refractory AML with isocitrate dehydrogenase-2 (IDH2) mutation
|
|
U.S.
|
|
FDA
2
|
|
Q1 2017 (filed)
|
Product
|
|
Disease Indication
|
|
Major
Market
|
|
Regulatory
Agency
|
|
Action
|
REVLIMID
®
|
|
Newly Diagnosed Multiple Myeloma Transplant Eligible (NDMM TE)
|
|
U.S.
|
|
FDA
1
|
|
Approval
|
REVLIMID
®
|
|
NDMM TE
|
|
EU
|
|
EC
2
|
|
Approval
|
REVLIMID
®
|
|
Adult T-cell leukemia/lymphoma (ATLL)
|
|
Japan
|
|
PMDA
3
|
|
Approval
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Net product sales
|
$
|
2,950
|
|
|
$
|
2,495
|
|
|
$
|
455
|
|
|
18.2
|
%
|
Total revenue
|
2,960
|
|
|
2,512
|
|
|
448
|
|
|
17.8
|
%
|
|||
Net income
|
941
|
|
|
801
|
|
|
140
|
|
|
17.5
|
%
|
|||
Diluted earnings per share
|
1.16
|
|
|
0.99
|
|
|
0.17
|
|
|
17.2
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase (Decrease)
|
||||||||
|
2017
|
|
2016
|
|
|||||||
Collaboration arrangements
|
$
|
21
|
|
|
$
|
151
|
|
|
$
|
(130
|
)
|
Research and development asset acquisition expenses
|
325
|
|
|
—
|
|
|
325
|
|
|||
Gain on sale of LifebankUSA business (See Note 3)
|
—
|
|
|
38
|
|
|
(38
|
)
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
U.S.
|
$
|
1,234
|
|
|
$
|
997
|
|
|
$
|
237
|
|
|
23.8
|
%
|
International
|
650
|
|
|
577
|
|
|
73
|
|
|
12.7
|
%
|
|||
Worldwide
|
$
|
1,884
|
|
|
$
|
1,574
|
|
|
$
|
310
|
|
|
19.7
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
U.S.
|
$
|
216
|
|
|
$
|
171
|
|
|
$
|
45
|
|
|
26.3
|
%
|
International
|
148
|
|
|
103
|
|
|
45
|
|
|
43.7
|
%
|
|||
Worldwide
|
$
|
364
|
|
|
$
|
274
|
|
|
$
|
90
|
|
|
32.8
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
U.S.
|
$
|
199
|
|
|
$
|
175
|
|
|
$
|
24
|
|
|
13.7
|
%
|
International
|
43
|
|
|
21
|
|
|
22
|
|
|
104.8
|
%
|
|||
Worldwide
|
$
|
242
|
|
|
$
|
196
|
|
|
$
|
46
|
|
|
23.5
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
U.S.
|
$
|
142
|
|
|
$
|
144
|
|
|
$
|
(2
|
)
|
|
(1.4
|
)%
|
International
|
94
|
|
|
81
|
|
|
13
|
|
|
16.0
|
%
|
|||
Worldwide
|
$
|
236
|
|
|
$
|
225
|
|
|
$
|
11
|
|
|
4.9
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
U.S.
|
$
|
50
|
|
|
$
|
66
|
|
|
$
|
(16
|
)
|
|
(24.2
|
)%
|
International
|
174
|
|
|
160
|
|
|
14
|
|
|
8.8
|
%
|
|||
Worldwide
|
$
|
224
|
|
|
$
|
226
|
|
|
$
|
(2
|
)
|
|
(0.9
|
)%
|
|
Government
Rebates
|
|
Chargebacks
and Distributor
Service Fees
|
|
Sales Discounts
|
|
Sales Returns and Allowances
|
|
Total
|
||||||||||
Balance as of December 31, 2016
|
$
|
371
|
|
|
$
|
190
|
|
|
$
|
16
|
|
|
$
|
18
|
|
|
$
|
595
|
|
Allowances for sales during prior periods
|
8
|
|
|
(20
|
)
|
|
—
|
|
|
(5
|
)
|
|
(17
|
)
|
|||||
Allowances for sales during 2017
|
210
|
|
|
246
|
|
|
42
|
|
|
2
|
|
|
500
|
|
|||||
Credits/deductions issued for sales during prior periods
|
(135
|
)
|
|
(76
|
)
|
|
(16
|
)
|
|
(1
|
)
|
|
(228
|
)
|
|||||
Credits/deductions issued for sales during 2017
|
(7
|
)
|
|
(141
|
)
|
|
(25
|
)
|
|
(1
|
)
|
|
(174
|
)
|
|||||
Balance as of March 31, 2017
|
$
|
447
|
|
|
$
|
199
|
|
|
$
|
17
|
|
|
$
|
13
|
|
|
$
|
676
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance as of December 31, 2015
|
$
|
225
|
|
|
$
|
142
|
|
|
$
|
12
|
|
|
$
|
17
|
|
|
$
|
396
|
|
Allowances for sales during prior periods
|
10
|
|
|
(6
|
)
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|||||
Allowances for sales during 2016
|
160
|
|
|
160
|
|
|
35
|
|
|
2
|
|
|
357
|
|
|||||
Credits/deductions issued for sales during prior periods
|
(78
|
)
|
|
(44
|
)
|
|
(10
|
)
|
|
(1
|
)
|
|
(133
|
)
|
|||||
Credits/deductions issued for sales during 2016
|
1
|
|
|
(103
|
)
|
|
(22
|
)
|
|
(1
|
)
|
|
(125
|
)
|
|||||
Balance as of March 31, 2016
|
$
|
318
|
|
|
$
|
149
|
|
|
$
|
15
|
|
|
$
|
13
|
|
|
$
|
495
|
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Cost of goods sold (excluding amortization of acquired intangible assets)
|
$
|
113
|
|
|
$
|
106
|
|
|
$
|
7
|
|
|
6.6
|
%
|
Percent of net product sales
|
3.8
|
%
|
|
4.2
|
%
|
|
|
|
|
|
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Research and development
|
$
|
995
|
|
|
$
|
733
|
|
|
$
|
262
|
|
|
35.7
|
%
|
Percent of total revenue
|
33.6
|
%
|
|
29.2
|
%
|
|
|
|
|
|
|
|
Three-Month Periods Ended March 31,
|
|
Increase (Decrease)
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Human pharmaceutical clinical programs
|
$
|
293
|
|
|
$
|
255
|
|
|
$
|
38
|
|
|
14.9
|
%
|
Other pharmaceutical programs
|
192
|
|
|
186
|
|
|
6
|
|
|
3.2
|
%
|
|||
Drug discovery and development
|
157
|
|
|
136
|
|
|
21
|
|
|
15.4
|
%
|
|||
Collaboration arrangements
|
21
|
|
|
151
|
|
|
(130
|
)
|
|
(86.1
|
)%
|
|||
Research and development asset acquisition expenses
|
325
|
|
|
—
|
|
|
325
|
|
|
100.0
|
%
|
|||
Cellular therapy
|
7
|
|
|
5
|
|
|
2
|
|
|
40.0
|
%
|
|||
Total
|
$
|
995
|
|
|
$
|
733
|
|
|
$
|
262
|
|
|
35.7
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Selling, general and administrative
|
$
|
620
|
|
|
$
|
543
|
|
|
$
|
77
|
|
|
14.2
|
%
|
Percent of total revenue
|
20.9
|
%
|
|
21.6
|
%
|
|
|
|
|
|
|
|
Three-Month Periods Ended March 31,
|
|
(Decrease)
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Amortization of acquired intangible assets
|
$
|
82
|
|
|
$
|
92
|
|
|
$
|
(10
|
)
|
|
(10.9
|
)%
|
|
Three-Month Periods
Ended March 31,
|
|
(Decrease)
|
||||||||
Acquisitions
|
2017
|
|
2016
|
|
|||||||
Abraxis
|
$
|
38
|
|
|
$
|
38
|
|
|
$
|
—
|
|
Avila
|
2
|
|
|
12
|
|
|
(10
|
)
|
|||
Gloucester
|
23
|
|
|
23
|
|
|
—
|
|
|||
Pharmion
|
1
|
|
|
1
|
|
|
—
|
|
|||
Quanticel
|
18
|
|
|
18
|
|
|
—
|
|
|||
Total amortization
|
$
|
82
|
|
|
$
|
92
|
|
|
$
|
(10
|
)
|
|
Three-Month Periods Ended March 31,
|
|
Increase
|
|
Percent Change
|
|||||||||
|
2017
|
|
2016
|
|
|
|||||||||
Acquisition related charges and restructuring, net
|
$
|
39
|
|
|
$
|
36
|
|
|
$
|
3
|
|
|
8.3
|
%
|
|
Three-Month Periods Ended March 31,
|
|
Increase (Decrease)
|
||||||||
|
2017
|
|
2016
|
|
|||||||
Foreign exchange gains, including foreign exchange derivative instruments not designated as hedging instruments (See Note 7)
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
—
|
|
Premium paid on equity investment
|
—
|
|
|
(6
|
)
|
|
6
|
|
|||
Fair value adjustments of forward point amounts (See Note 7)
|
19
|
|
|
13
|
|
|
6
|
|
|||
Gain from sale of put options (See Note 4)
|
—
|
|
|
4
|
|
|
(4
|
)
|
|||
Impairment charges
|
(3
|
)
|
|
(15
|
)
|
|
12
|
|
|||
Gain on sale of LifebankUSA business (See Note 3)
|
—
|
|
|
38
|
|
|
(38
|
)
|
|||
Other
|
9
|
|
|
—
|
|
|
9
|
|
|||
Total Other income, net
|
$
|
26
|
|
|
$
|
35
|
|
|
$
|
(9
|
)
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Increase (Decrease)
|
||||||
Financial assets:
|
|
|
|
|
|
|
|
||||
Cash and cash equivalents
|
$
|
5,273
|
|
|
$
|
6,170
|
|
|
$
|
(897
|
)
|
Marketable securities available-for-sale
|
3,588
|
|
|
1,800
|
|
|
1,788
|
|
|||
Total financial assets
|
$
|
8,861
|
|
|
$
|
7,970
|
|
|
$
|
891
|
|
Debt:
|
|
|
|
|
|
|
|
|
|||
Short-term borrowings and current portion of long-term debt
|
$
|
500
|
|
|
$
|
501
|
|
|
$
|
(1
|
)
|
Long-term debt, net of discount
|
13,784
|
|
|
13,789
|
|
|
(5
|
)
|
|||
Total debt
|
$
|
14,284
|
|
|
$
|
14,290
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
||||||
Working capital
1
|
$
|
9,044
|
|
|
$
|
7,964
|
|
|
$
|
1,080
|
|
1
|
Includes Cash and cash equivalents, Marketable securities available-for-sale, Accounts receivable, net of allowances, Inventory and Other current assets, less Short-term borrowings and current portion of long-term debt, Accounts payable, Accrued expenses and other current liabilities, and the current portion of Income taxes payable.
|
|
Three-Month Periods Ended March 31,
|
|
|
||||||||
|
2017
|
|
2016
|
|
Change
|
||||||
Net cash provided by operating activities
|
$
|
853
|
|
|
$
|
1,000
|
|
|
$
|
(147
|
)
|
Net cash (used in) investing activities
|
$
|
(1,660
|
)
|
|
$
|
(110
|
)
|
|
$
|
(1,550
|
)
|
Net cash (used in) financing activities
|
$
|
(109
|
)
|
|
$
|
(1,345
|
)
|
|
$
|
1,236
|
|
|
Duration
|
||||||||||||||
|
Less Than
1 Year
|
|
1 to 3 Years
|
|
3 to 5 Years
|
|
Total
|
||||||||
Principal amount
|
$
|
540
|
|
|
$
|
306
|
|
|
$
|
9
|
|
|
$
|
855
|
|
Fair value
|
541
|
|
|
307
|
|
|
9
|
|
|
857
|
|
||||
Weighted average interest rate
|
1.3
|
%
|
|
1.7
|
%
|
|
2.4
|
%
|
|
1.5
|
%
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
1.900% senior notes due 2017
|
|
$
|
500
|
|
|
$
|
501
|
|
|
Principal
Amount
|
|
Carrying
Value
|
||||
2.125% senior notes due 2018
|
$
|
1,000
|
|
|
$
|
998
|
|
2.300% senior notes due 2018
|
400
|
|
|
402
|
|
||
2.250% senior notes due 2019
|
500
|
|
|
508
|
|
||
2.875% senior notes due 2020
|
1,500
|
|
|
1,493
|
|
||
3.950% senior notes due 2020
|
500
|
|
|
517
|
|
||
3.250% senior notes due 2022
|
1,000
|
|
|
1,051
|
|
||
3.550% senior notes due 2022
|
1,000
|
|
|
994
|
|
||
4.000% senior notes due 2023
|
700
|
|
|
742
|
|
||
3.625% senior notes due 2024
|
1,000
|
|
|
1,001
|
|
||
3.875% senior notes due 2025
|
2,500
|
|
|
2,476
|
|
||
5.700% senior notes due 2040
|
250
|
|
|
247
|
|
||
5.250% senior notes due 2043
|
400
|
|
|
393
|
|
||
4.625% senior notes due 2044
|
1,000
|
|
|
987
|
|
||
5.000% senior notes due 2045
|
2,000
|
|
|
1,975
|
|
||
Total long-term debt
|
$
|
13,750
|
|
|
$
|
13,784
|
|
|
|
Notional Amount
|
||||||
Foreign Currency
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Australian Dollar
|
|
$
|
70
|
|
|
$
|
49
|
|
British Pound
|
|
172
|
|
|
199
|
|
||
Canadian Dollar
|
|
194
|
|
|
193
|
|
||
Euro
|
|
1,501
|
|
|
1,812
|
|
||
Japanese Yen
|
|
637
|
|
|
597
|
|
||
Total
|
|
$
|
2,574
|
|
|
$
|
2,850
|
|
|
Notional Amount
1
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Foreign currency option contracts designated as hedging activity:
|
|
|
|
||||
Purchased Put
|
$
|
2,361
|
|
|
$
|
1,790
|
|
Written Call
|
2,659
|
|
|
2,009
|
|
|
Notional Amount
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Forward starting interest rate swap contracts:
|
|
|
|
||||
Forward starting swaps with effective dates in 2017
|
$
|
500
|
|
|
$
|
500
|
|
Forward starting swaps with effective dates in 2018
|
500
|
|
|
500
|
|
|
Notional Amount
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
Interest rate swap contracts entered into as fair value hedges of the following fixed-rate senior notes:
|
|
|
|
||||
3.875% senior notes due 2025
|
$
|
300
|
|
|
$
|
200
|
|
•
|
In general, preclinical tests and clinical trials can take many years and require the expenditure of substantial resources, and the data obtained from these tests and trials may not lead to regulatory approval;
|
•
|
Delays or rejections may be encountered during any stage of the regulatory process if the clinical or other data fails to demonstrate compliance with a regulatory agency’s requirements for safety, efficacy and quality;
|
•
|
Requirements for approval may become more stringent due to changes in regulatory agency policy or the adoption of new regulations or legislation;
|
•
|
Even if a product is approved, the scope of the approval may significantly limit the indicated uses or the patient population for which the product may be marketed and may impose significant limitations in the nature of warnings, precautions and contra-indications that could materially affect the sales and profitability of the product;
|
•
|
After a product is approved, the FDA or similar bodies in other countries may withdraw or modify an approval in a significant manner or request that we perform additional clinical trials or change the labeling of the product due to a number of reasons, including safety concerns, adverse events and side effects;
|
•
|
Products, such as REVLIMID
®
and POMALYST
®
/IMNOVID
®
, that receive accelerated approval can be subject to an expedited withdrawal if post-marketing restrictions are not adhered to or are shown to be inadequate to assure safe use, or if the drug is shown to be unsafe or ineffective under its conditions of use;
|
•
|
Guidelines and recommendations published by various governmental and non-governmental organizations can reduce the use of our approved products;
|
•
|
Approved products, as well as their manufacturers, are subject to continuing and ongoing review by regulatory agencies, and the discovery of previously unknown problems with these products or the failure to comply with manufacturing or quality control requirements may result in restrictions on the manufacture, sale or use of a product or its withdrawal from the market; and
|
•
|
Changes in regulatory agency policy or the adoption of new regulations or legislation could impose restrictions on the sale or marketing of our approved products.
|
•
|
protection of the environment, privacy, healthcare reimbursement programs, and competition;
|
•
|
parallel importation of prescription drugs from outside the United States at prices that are regulated by the governments of various foreign countries; and
|
•
|
mandated disclosures of clinical trial or other data, such as the EMA’s policy on publication of clinical data.
|
•
|
Hematology and Oncology: AbbVie, Amgen, AstraZeneca, Bristol-Myers-Squibb, Eisai, Gilead, Johnson & Johnson, Merck, Novartis, Roche/Genentech, Sanofi and Takeda; and
|
•
|
Inflammation and Immunology: AbbVie, Amgen, Biogen, Eisai, Eli Lilly, Johnson & Johnson, Merck, Novartis, Pfizer and UCB S.A.
|
•
|
significant damage awards, fines, penalties or other payments, and administrative remedies, such as exclusion and/or debarment from government programs, or other rulings that preclude us from operating our business in a certain manner;
|
•
|
changes and additional costs to our business operations to avoid risks associated with such litigation or investigations;
|
•
|
product recalls;
|
•
|
reputational damage and decreased demand for our products; and
|
•
|
expenditure of significant time and resources that would otherwise be available for operating our business.
|
•
|
the failure of the product candidate in preclinical or clinical studies;
|
•
|
adverse patient reactions to the product candidate or indications of other safety concerns;
|
•
|
insufficient clinical trial data to support the effectiveness or superiority of the product candidate;
|
•
|
our inability to manufacture sufficient quantities of the product candidate for development or commercialization activities in a timely and cost-efficient manner;
|
•
|
our failure to obtain, or delays in obtaining, the required regulatory approvals for the product candidate, the facilities or the process used to manufacture the product candidate;
|
•
|
changes in the regulatory environment, including pricing and reimbursement, that make development of a new product or of an existing product for a new indication no longer attractive;
|
•
|
the failure to obtain or maintain satisfactory drug reimbursement rates by governmental or third-party payers; and
|
•
|
the development of a competitive product or therapy.
|
•
|
increased management, travel, infrastructure and legal compliance costs;
|
•
|
longer payment and reimbursement cycles;
|
•
|
difficulties in enforcing contracts and collecting accounts receivable;
|
•
|
local marketing and promotional challenges;
|
•
|
lack of consistency, and unexpected changes, in foreign regulatory requirements and practices;
|
•
|
increased risk of governmental and regulatory scrutiny and investigations;
|
•
|
increased exposure to fluctuations in currency exchange rates;
|
•
|
the burdens of complying with a wide variety of foreign laws and legal standards;
|
•
|
operating in locations with a higher incidence of corruption and fraudulent business practices;
|
•
|
difficulties in staffing and managing foreign sales and development operations;
|
•
|
import and export requirements, tariffs, taxes and other trade barriers;
|
•
|
weak or no protection of intellectual property rights;
|
•
|
possible enactment of laws regarding the management of and access to data and public networks and websites;
|
•
|
possible future limitations on foreign-owned businesses;
|
•
|
increased financial accounting and reporting burdens and complexities; and
|
•
|
other factors beyond our control, including political, social and economic instability, popular uprisings, war, terrorist attacks and security concerns in general.
|
•
|
demands on management related to the increase in our size after an acquisition;
|
•
|
the diversion of management’s attention from daily operations to the integration of acquired businesses and personnel;
|
•
|
higher than anticipated integration costs;
|
•
|
failure to achieve expected synergies and costs savings;
|
•
|
difficulties in the assimilation and retention of employees;
|
•
|
difficulties in the assimilation of different cultures and practices, as well as in the assimilation of broad and geographically dispersed personnel and operations; and
|
•
|
difficulties in the integration of departments, systems, including accounting systems, technologies, books and records and procedures, as well as in maintaining uniform standards and controls, including internal control over financial reporting, and related procedures and policies.
|
•
|
results of our clinical trials or adverse events associated with our marketed products;
|
•
|
fluctuations in our commercial and operating results;
|
•
|
announcements of technical or product developments by us or our competitors;
|
•
|
market conditions for pharmaceutical and biotechnology stocks in particular;
|
•
|
changes or anticipated changes in laws and governmental regulations, including changes in tax, healthcare, environmental, competition and patent laws;
|
•
|
new accounting pronouncements or regulatory rulings;
|
•
|
public announcements regarding medical advances in the treatment of the disease states that we are targeting;
|
•
|
patent or proprietary rights developments;
|
•
|
changes in pricing and third-party reimbursement policies for our products;
|
•
|
the outcome of litigation involving our products, processes or intellectual property;
|
•
|
the existence and outcome of governmental investigations and proceedings;
|
•
|
regulatory actions that may impact our products or potential products;
|
•
|
disruptions in our manufacturing processes or supply chain;
|
•
|
failure of our collaboration partners to successfully develop potential drug candidates;
|
•
|
competition; and
|
•
|
investor reaction to announcements regarding business or product acquisitions.
|
•
|
restructuring or refinancing our debt;
|
•
|
seeking additional debt or equity capital;
|
•
|
reducing or delaying our business activities, acquisitions, investments or capital expenditures, including research and
|
•
|
selling assets, businesses, products or other potential revenue streams.
|
•
|
an active public market for the CVRs may not continue to exist or the CVRs may trade at low volumes, both of which could have an adverse effect on the market price of the CVRs;
|
•
|
if the net sales targets specified in the CVR Agreement are not achieved within the time periods specified, no payment will be made and the CVRs will expire valueless;
|
•
|
since the U.S. federal income tax treatment of the CVRs is unclear, any part of a CVR payment could be treated as ordinary income and the tax thereon may be required to be paid prior to the receipt of the CVR payment;
|
•
|
any payments in respect of the CVRs are subordinated to the right of payment of certain of our other indebtedness;
|
•
|
we may under certain circumstances redeem the CVRs; and
|
•
|
upon expiration of our obligations under the CVR Agreement to continue to commercialize ABRAXANE
®
or any of the other Abraxis pipeline products, we may discontinue such efforts, which would have an adverse effect on the value of the CVRs.
|
Period
|
|
Total Number of
Shares Purchased
|
|
Average Price Paid
per Share
|
|
Total Number of Shares
Purchased as Part of
Publicly Announced Plans or Programs
|
|
Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs
|
||||||
January 1 - January 31
|
|
1,250,880
|
|
|
$
|
114.25
|
|
|
1,250,880
|
|
|
$
|
4,588,396,119
|
|
February 1 - February 28
|
|
707,600
|
|
|
$
|
117.37
|
|
|
707,600
|
|
|
$
|
4,505,341,920
|
|
March 1 - March 31
|
|
626,400
|
|
|
$
|
124.24
|
|
|
626,400
|
|
|
$
|
4,427,517,489
|
|
Total
|
|
2,584,880
|
|
|
$
|
117.53
|
|
|
2,584,880
|
|
|
|
|
|
|
CELGENE CORPORATION
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
April 27, 2017
|
By:
|
/s/Peter N. Kellogg
|
|
|
|
|
Peter N. Kellogg
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
|
|
(principal financial and accounting officer)
|
Name
|
|
Scott Smith
|
||
Job Title
|
|
President and Chief Operating Officer
|
||
Base Salary
|
|
$875,000
|
||
Bonus Target
|
|
90%
|
||
Stock Options
|
|
56,378
|
||
Restricted Stock Units
|
|
7,126
|
||
Performance Stock Units
|
|
Threshold
|
Target
|
Maximum
|
|
5,345
|
10,690
|
21,380
|
|
Severance Benefit
|
|
-Lump sum 12 months of base salary
-Lump sum 12 months of bonus at target
-12 months COBRA benefit at active employee rates, less applicable taxes
|
In the event of involuntary termination for reasons other than cause
|
|
"Double Trigger" due to Change in Control (CIC)
|
|
-All severance benefits
-Unvested RSUs and Options to fully vest
-Change in control payments would be reduced to avoid 280G excise tax, if beneficial to employee
|
In the event of position elimination due to change in control
|
|
Financial Planning Benefit
|
|
Up to $15,000 per year
|
Reimbursement of reasonable and customary fees associated with financial planning and/or tax preparation/advice
|
Acknowledged and agreed:
|
|
On behalf of Celgene Corporation:
|
||||
|
|
|
|
|
|
|
/s/Scott A. Smith
|
|
April 1, 2017
|
|
/s/Mark J. Alles
|
|
April 1, 2017
|
Scott A. Smith
|
|
Date
|
|
Mark J. Alles
|
|
Date
|
Date: April 27, 2017
|
/s/Mark J. Alles
|
|
|
Mark J. Alles
|
|
|
Chief Executive Officer
|
Date: April 27, 2017
|
/s/Peter N. Kellogg
|
|
|
Peter N. Kellogg
|
|
|
Executive Vice President
|
|
|
Chief Financial Officer
|
|
|
(principal financial and accounting officer)
|
Date:
|
April 27, 2017
|
|
|
/s/Mark J. Alles
|
|
|
|
|
Mark J. Alles
|
|
|
|
|
Chief Executive Officer
|
Date:
|
April 27, 2017
|
|
|
/s/Peter N. Kellogg
|
|
|
|
|
Peter N. Kellogg
|
|
|
|
|
Executive Vice President
Chief Financial Officer
|
|
|
|
|
(principal financial and accounting officer)
|