Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following MD&A is intended to assist the reader in understanding Amgen’s business. MD&A is provided as a supplement to and should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2022. Our results of operations discussed in MD&A are presented in conformity with GAAP. Amgen operates in one business segment: human therapeutics. Therefore, our results of operations are discussed on a consolidated basis.

Forward-looking statements

This report and other documents we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about us, our future performance, our business, our beliefs and our management’s assumptions. In addition, we, or others on our behalf, may make forward-looking statements in press releases, written statements or our communications and discussions with investors and analysts in the normal course of business through meetings, webcasts, phone calls and conference calls. Such words as “expect,” “anticipate,” “outlook,” “could,” “target,” “project,” “intend,” “plan,” “believe,” “seek,” “estimate,” “should,” “may,” “assume” and “continue” as well as variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance, and they involve certain risks, uncertainties and assumptions that are difficult to predict. We describe our respective risks, uncertainties and assumptions that could affect the outcome or results of operations in Item 1A. Risk Factors in Part II herein and in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022. We have based our forward-looking statements on our management’s beliefs and assumptions based on information available to our management at the time the statements are made. We caution you that actual outcomes and results may differ materially from what is expressed, implied or forecasted by our forward-looking statements. Reference is made in particular to forward-looking statements regarding product sales, regulatory activities, clinical trial results, reimbursement, expenses, EPS, liquidity and capital resources, trends, planned dividends, stock repurchases, collaborations and effects of pandemics. Except as required under the federal securities laws and the rules and regulations of the SEC, we do not have any intention or obligation to update publicly any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise.

Overview

Amgen is a biotechnology company committed to unlocking the potential of biology for patients suffering from serious illnesses. A biotechnology pioneer since 1980, Amgen has grown to be one of the world’s leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.

Our principal products are Prolia, ENBREL, XGEVA, Otezla, Repatha, Nplate, KYPROLIS, Aranesp and EVENITY. We also market a number of other products, including Neulasta, Vectibix, MVASI, BLINCYTO, AMJEVITA/AMGEVITA, TEZSPIRE, Parsabiv, LUMAKRAS/LUMYKRAS, Aimovig, EPOGEN, KANJINTI and TAVNEOS.

Macroeconomic challenges, including effects from the COVID-19 pandemic

Uncertain macroeconomic conditions, including higher inflation, rising interest rates and instability in the financial system, geopolitical conflicts and rising healthcare costs continue to pose challenges to our business. As a result of public and private healthcare-provider focus, the industry continues to be subject to cost containment measures and significant pricing pressures, including net price declines. Moreover, legislation enacted to reduce healthcare expenditures, including provisions of the IRA, have affected, and are likely to continue to affect, our business. See Part II, Item 1A. Risk Factors—Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Since the onset of the pandemic in 2020, we have been closely monitoring the pandemic’s effects on our global operations. To date, we have been able to effectively serve physicians and patients as we have avoided disruptions to delivery and shortages of our supply of medicines. With regard to our clinical trial activities, we are continuously monitoring COVID-19 infection rates, including changes from new variants; we are working to mitigate effects on future study enrollment in our clinical trials; and we are evaluating the impact in all relevant countries. We remain focused on supporting our active clinical sites in their providing care for patients and in our providing investigational drug supply. Given the evolution of COVID-19 since its onset, including the proliferation of variants, we cannot predict the impact of future virus surges on our business and will continue to closely monitor the impact of COVID-19 on our business and on the healthcare sector more generally.

Significant developments

Following is a summary of selected significant developments affecting our business that occurred since the filing of our Annual Report on Form 10-K for the year ended December 31, 2022. For additional developments or for a more comprehensive discussion of certain developments discussed below, see our Annual Report on Form 10-K for the year ended December 31, 2022.

Proposed acquisition of Horizon Therapeutics plc

The Irish High Court set a court hearing date of May 22, 2023, to consider the application to sanction our proposed acquisition of Horizon. The Irish High Court will be informed in advance if the hearing date needs to be adjourned to a later date as a result of a condition to closing, including required regulatory clearances, not having been satisfied by the scheduled hearing date.

In connection with our proposed acquisition of Horizon, in March 2023 we issued $24.0 billion of senior notes and subsequently terminated our bridge credit agreement.

Selected financial information

The following is an overview of our results of operations (in millions, except percentages and per-share data):

			Three months ended March 31,
			2023						2022						Change
Product sales
U.S.			$	3,975					$	4,037					(2)		%
ROW			1,871						1,694						10		%
Total product sales			5,846						5,731						2		%
Other revenues			259						507						(49)		%
Total revenues			$	6,105					$	6,238					(2)		%
Operating expenses			$	4,184					$	3,738					12		%
Operating income			$	1,921					$	2,500					(23)		%
Net income			$	2,841					$	1,476					92		%
Diluted EPS			$	5.28					$	2.68					97		%
Diluted shares			538						551						(2)		%

In the following discussion of changes in product sales, any reference to unit demand growth or decline refers to changes in purchases of our products by healthcare providers (such as physicians or their clinics), dialysis centers, hospitals and pharmacies. In addition, any reference to increases or decreases in inventory refers to changes in inventory held by wholesaler customers and end users (such as pharmacies).

Total product sales increased for the three months ended March 31, 2023, driven by volume growth for certain brands, including Nplate, Repatha, EVENITY, TEZSPIRE, Prolia, BLINCYTO and KYPROLIS, partially offset by declines in net selling prices of certain products, including ENBREL, Neulasta and MVASI, unfavorable changes to estimated sales deductions, higher inventory drawdowns compared to the prior year and unfavorable changes to foreign currency exchange rates. For the remainder of 2023, we expect that net selling price will continue to decline year-over-year at a portfolio level, driven by increased competition.

As a result of uncertain macroeconomic conditions, we expect volatility around foreign currency exchange rates to continue. The impact of unfavorable changes to foreign currency exchange rates will be partially offset by corresponding decreases in our international operating expenses. While not designed to completely address foreign currency changes, our hedging activities also seek to offset, in part, such effects on our net income by hedging our net foreign currency exposure, primarily with respect to product sales denominated in euros.

Our product sales have been affected by reduced demand as a result of the COVID-19 pandemic. In general, the dynamics of the pandemic were most significant on our product sales in the early months of the pandemic. Further, the cumulative decrease in diagnoses over the course of the pandemic suppressed the volume of new patients starting treatment, which continues to impact the business. Given the unpredictable nature of the pandemic, there could be future intermittent disruptions in physician–patient interactions, and as a result, we may again experience quarter-to-quarter variability. In addition, other

disruptions, including changes in the healthcare ecosystem, uncertain macroeconomic conditions and geopolitical conflicts, have the potential to introduce variability into product sales. For example, growth in numbers of Medicaid enrollees and uninsured individuals, provisions of the IRA and actions by governments and other entities to curb high inflation may have a negative impact on product sales. See Part II, Item 1A. Risk Factors, of this Quarterly Report on Form 10-Q.

Other revenues decreased for the three months ended March 31, 2023, due to lower revenue from our COVID-19 manufacturing collaboration.

Operating expenses increased for the three months ended March 31, 2023, primarily due to expenses related to our restructuring plan, higher research and development spend, changes in our product mix and higher amortization expense from acquisition-related assets. See Note 2, Restructuring, to the condensed consolidated financial statements.

Results of operations

Product sales

Worldwide product sales were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Prolia			$	927					$	852					9		%
ENBREL			579						862						(33)		%
XGEVA			536						502						7		%
Otezla			392						451						(13)		%
Repatha			388						329						18		%
Nplate			362						266						36		%
KYPROLIS			358						287						25		%
Aranesp			355						358						(1)		%
EVENITY			254						170						49		%
Other products(1)			1,695						1,654						2		%
Total product sales			$	5,846					$	5,731					2		%

---

(1) Consists of product sales of our non-principal products, as well as our Bergamo and Gensenta subsidiaries.

Future sales of our products will depend in part on the factors discussed below and in the following sections of this report: (i) Part I, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Selected financial information; and (ii) Part II, Item 1A. Risk Factors, and in the following sections of our Annual Report on Form 10-K for the year ended December 31, 2022: (i) Part I, Item 1. Business—Marketing, Distribution and Selected Marketed Products; (ii) Part I, Item 1A. Risk Factors; and (iii) Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview, and Results of operations—Product sales.

Prolia

Total Prolia sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Prolia — U.S.			$	623					$	582					7		%
Prolia — ROW			304						270						13		%
Total Prolia			$	927					$	852					9		%

The increase in global Prolia sales for the three months ended March 31, 2023, was driven by volume growth.

ENBREL

Total ENBREL sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
ENBREL — U.S.			$	564					$	843					(33)		%
ENBREL — Canada			15						19						(21)		%
Total ENBREL			$	579					$	862					(33)		%

The decrease in ENBREL sales for the three months ended March 31, 2023, was driven by lower net selling price and inventory and unfavorable changes to estimated sales deductions. ENBREL followed the historical pattern of lower first quarter sales relative to the remainder of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S. patients worked through deductibles. For the remainder of 2023, we expect reduced year-over-year declines in net selling price.

XGEVA

Total XGEVA sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
XGEVA — U.S.			$	384					$	368					4		%
XGEVA — ROW			152						134						13		%
Total XGEVA			$	536					$	502					7		%

The increase in global XGEVA sales for the three months ended March 31, 2023, was driven by higher net selling price and volume growth.

Otezla

Total Otezla sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Otezla — U.S.			$	294					$	350					(16)		%
Otezla — ROW			98						101						(3)		%
Total Otezla			$	392					$	451					(13)		%

The decrease in global Otezla sales for the three months ended March 31, 2023, was driven by lower inventory and net selling price, partially offset by volume growth. Otezla followed the historical pattern of lower first quarter sales relative to the remainder of the year due to the impact of benefit plan changes, insurance reverifications and increased co-pay expenses as U.S. patients worked through deductibles.

For a discussion of litigation related to Otezla, see Part IV—Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022, and Note 14, Contingencies and commitments, to the condensed consolidated financial statements.

Repatha

Total Repatha sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Repatha — U.S.			$	197					$	165					19		%
Repatha — ROW			191						164						16		%
Total Repatha			$	388					$	329					18		%

The increase in global Repatha sales for the three months ended March 31, 2023, was driven by volume growth, partially offset by lower net selling price.

For a discussion of ongoing litigation related to Repatha, see Part IV—Note 19, Contingencies and commitments, to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2022, and Note 14, Contingencies and commitments, to the condensed consolidated financial statements.

Nplate

Total Nplate sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Nplate — U.S.			$	246					$	156					58		%
Nplate — ROW			116						110						5		%
Total Nplate			$	362					$	266					36		%

The increase in global Nplate sales for the three months ended March 31, 2023, was driven by volume growth. Nplate sales for the first quarter of 2023 included an $82 million order from the U.S. government.

KYPROLIS

Total KYPROLIS sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
KYPROLIS — U.S.			$	234					$	196					19		%
KYPROLIS — ROW			124						91						36		%
Total KYPROLIS			$	358					$	287					25		%

The increase in global KYPROLIS sales for the three months ended March 31, 2023, was driven by volume growth and higher net selling price.

The FDA has reported that it has granted tentative or final approval of ANDAs for generic carfilzomib products filed by a number of companies. The date of approval of those ANDAs for generic carfilzomib products is governed by the Hatch–Waxman Act and any applicable settlement agreements between us and certain companies that seek to develop generic carfilzomib products.

Aranesp

Total Aranesp sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Aranesp — U.S.			$	115					$	137					(16)		%
Aranesp — ROW			240						221						9		%
Total Aranesp			$	355					$	358					(1)		%

The decrease in global Aranesp sales for the three months ended March 31, 2023, was driven by lower net selling price and unfavorable changes to foreign currency exchange rates, partially offset by volume growth. ROW Aranesp sales for the three months ended March 31, 2023, were favorably impacted by the timing of orders in certain markets outside the United States. U.S. Aranesp sales for the three months ended March 31, 2023, were unfavorably impacted by independent and medium-sized dialysis organizations transitioning from Aranesp to EPOGEN.

We expect Aranesp to continue to face competition from EPOGEN and its biosimilars, which will impact net selling price and volume in the future.

EVENITY

Total EVENITY sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
EVENITY — U.S.			$	164					$	110					49		%
EVENITY — ROW			90						60						50		%
Total EVENITY			$	254					$	170					49		%

The increase in global EVENITY sales for the three months ended March 31, 2023, was primarily driven by volume growth across our markets.

Other products

Other product sales by geographic region were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Neulasta — U.S.			$	211					$	304					(31)		%
Neulasta — ROW			38						44						(14)		%
Vectibix — U.S.			111						85						31		%
Vectibix— ROW			122						116						5		%
MVASI — U.S.			121						168						(28)		%
MVASI — ROW			81						76						7		%
BLINCYTO — U.S.			126						79						59		%
BLINCYTO — ROW			68						59						15		%
AMJEVITA — U.S.			51						—						NM
AMGEVITA — ROW			113						108						5		%
TEZSPIRE — U.S.			96						7						*
Parsabiv — U.S.			58						57						2		%
Parsabiv — ROW			33						29						14		%
LUMAKRAS — U.S.			48						48						—		%
LUMYKRAS — ROW			26						14						86		%
Aimovig — U.S.			64						98						(35)		%
Aimovig — ROW			5						3						67		%
EPOGEN — U.S.			60						120						(50)		%
KANJINTI — U.S.			33						80						(59)		%
KANJINTI — ROW			14						16						(13)		%
TAVNEOS — U.S.			23						—						NM
Other — U.S.(1)			152						84						81		%
Other — ROW(1)			41						59						(31)		%
Total other products			$	1,695					$	1,654					2		%
Total U.S. — other products			$	1,154					$	1,130					2		%
Total ROW — other products			541						524						3		%
Total other products			$	1,695					$	1,654					2		%

NM = not meaningful

• Change in excess of 100%

---

(1) Consists of Corlanor, AVSOLA, NEUPOGEN, RIABNI, IMLYGIC and Sensipar/Mimpara as well as sales by our Bergamo and Gensenta subsidiaries.

Operating expenses

Operating expenses were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022						Change
Operating expenses:
Cost of sales			$	1,720					$	1,561					10		%
% of product sales			29.4		%				27.2		%
% of total revenues			28.2		%				25.0		%
Research and development			$	1,058					$	959					10		%
% of product sales			18.1		%				16.7		%
% of total revenues			17.3		%				15.4		%
Selling, general and administrative			$	1,258					$	1,228					2		%
% of product sales			21.5		%				21.4		%
% of total revenues			20.6		%				19.7		%
Other			$	148					$	(10)					*
Total operating expenses			$	4,184					$	3,738					12		%

• Change in excess of 100%

Cost of sales

Cost of sales increased to 28.2% of total revenues for the three months ended March 31, 2023, primarily driven by higher amortization expense from acquisition-related assets, changes in our product mix, expenses related to our restructuring plan and higher profit share expense.

Research and development

The increase in R&D expense for the three months ended March 31, 2023, was primarily driven by higher spend in late-stage development, research and early pipeline programs, and marketed product support.

Selling, general and administrative

The increase in SG&A expense for the three months ended March 31, 2023, was primarily driven by higher general and administrative expenses, including acquisition-related expenses.

Other

Other operating expenses for the three months ended March 31, 2023, consisted primarily of expenses related to our restructuring plan. See Note 2, Restructuring, to the condensed consolidated financial statements. Other operating expenses for the three months ended March 31, 2022, consisted primarily of an IPR&D asset adjustment.

Nonoperating expense/income and income taxes

Nonoperating expense/income and income taxes were as follows (dollar amounts in millions):

			Three months ended March 31,
			2023						2022
Interest expense, net			$	(543)					$	(295)
Other income (expense), net			$	2,064					$	(530)
Provision for income taxes			$	601					$	199
Effective tax rate			17.5		%				11.9		%

Interest expense, net

The increase in Interest expense, net, for the three months ended March 31, 2023, was primarily due to higher overall debt outstanding and higher LIBORs on debt for which we effectively pay a variable rate of interest through the use of interest rate swaps.

Other income (expense), net

The increase in Other income (expense), net, for the three months ended March 31, 2023, was primarily due to the gain recognized from the change in method of accounting for our investment in BeiGene from the equity method to recording the investment at fair value, with changes in fair value recognized in earnings. In addition, we recognized gains on our other strategic equity investments in the current year period compared with losses in the prior year. See Note 7, Investments, to the condensed consolidated financial statements.

Income taxes

The increase in our effective tax rate for the three months ended March 31, 2023, was primarily due to the new Puerto Rico income tax beginning in 2023 and an increase in interest expense on tax reserves.

The Administration and Congress continue to discuss changes to existing tax law that could substantially increase the taxes we pay to the U.S. government. Further, the OECD recently reached an agreement to align countries on a minimum corporate tax rate and an expansion of the taxing rights of market countries. Some individual countries, including those in the EU, have proposed legislation to implement the global minimum tax agreement. If enacted, either by all OECD participants or unilaterally by individual countries, this agreement could result in a tax increase that could affect our U.S. and foreign tax liabilities.

The U.S. Treasury released final foreign tax credit regulations in December 2021 that eliminated U.S. creditability of the Puerto Rico Excise Tax beginning in 2023. In response, on June 30, 2022, the U.S. territory of Puerto Rico enacted Act 52-2022, which provides for an alternative income tax rate on industrial development income that the U.S. Treasury confirmed will be creditable under federal law. As part of this new law, eligible businesses will be subject to incremental income and withholding taxes in lieu of payment of the Puerto Rico Excise Tax. In order to qualify for the alternative income tax, our current tax grant with the Puerto Rico government was amended in December 2022. We qualified for this alternative income tax, beginning January 1, 2023, and our tax expense increased. See Note 5, Income taxes, to the condensed consolidated financial statements.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process. The two cases were consolidated in U.S. Tax Court on December 19, 2022. On February 10, 2023, the U.S. Tax Court entered an order setting a trial date of November 4, 2024.

We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we are under examination by a number of state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We continue to believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our condensed consolidated financial statements.

We are no longer subject to U.S. federal income tax examinations for years ended on or before December 31, 2009.

See our Annual Report on Form 10-K for the year ended December 31, 2022, Part I, Item 1A, Risk Factors—The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability, and Note 5, Income taxes, to the condensed consolidated financial statements in this filing for further discussion.

Financial condition, liquidity and capital resources

Selected financial data were as follows (in millions):

			March 31, 2023						December 31, 2022
Cash, cash equivalents and marketable securities			$	31,561					$	9,305
Total assets			$	88,720					$	65,121
Current portion of long-term debt			$	834					$	1,591
Long-term debt			$	60,761					$	37,354
Stockholders’ equity			$	5,348					$	3,661

Cash, cash equivalents and marketable securities

Our balance of cash, cash equivalents and marketable securities was $31.6 billion as of March 31, 2023, of which $27.8 billion is anticipated to be used for the proposed acquisition of Horizon. See Note 3, Acquisitions and divestitures, to the condensed consolidated financial statements. The primary objective of our investment portfolio is to maintain safety of principal, prudent levels of liquidity and acceptable levels of risk. Our investment policy limits interest-bearing security investments to certain types of debt and money market instruments issued by institutions with primarily investment-grade credit ratings, and it places restrictions on maturities and concentration by asset class and issuer.

Capital allocation

Consistent with the objective to optimize our capital structure, we deploy our accumulated cash balances in a strategic manner and consider a number of alternatives, including investments in innovation both internally and externally, strategic transactions (including those that expand our portfolio of products in areas of therapeutic interest), repayment of debt, payment of dividends and stock repurchases.

We intend to continue to invest in our business while returning capital to stockholders through the payment of cash dividends and stock repurchases, thereby reflecting our confidence in the future cash flows of our business and our desire to optimize our cost of capital. The timing and amount of future dividends and stock repurchases will vary based on a number of factors, including future capital requirements for strategic transactions, availability of financing on acceptable terms, debt

service requirements, our credit rating, changes to applicable tax laws or corporate laws, changes to our business model and periodic determination by our Board of Directors that cash dividends and/or stock repurchases are in the best interests of stockholders and are in compliance with applicable laws and the Company’s agreements. In addition, the timing and amount of stock repurchases may also be affected by our overall level of cash, stock price and blackout periods, during which we are restricted from repurchasing stock. The manner of stock repurchases may include block purchases, tender offers, accelerated share repurchases and market transactions.

In December 2022, the Board of Directors declared a quarterly cash dividend of $2.13 per share of common stock for the first quarter of 2023, an increase of 10% for this period, which was paid in March 2023. In March 2023, the Board of Directors declared a quarterly cash dividend of $2.13 per share of common stock to be paid in June 2023.

During the three months ended March 31, 2023, we did not repurchase any of our common stock. As of March 31, 2023, $7.0 billion of authorization remained available under our stock repurchase program.

As a result of stock repurchases and quarterly dividend payments, we have an accumulated deficit as of March 31, 2023 and December 31, 2022. Our accumulated deficit is not anticipated to affect our future ability to operate, repurchase stock, pay dividends or repay our debt given our continuing profitability and strong financial position.

We believe that existing funds, cash generated from operations and existing sources of and access to financing are adequate to satisfy our needs for working capital, capital expenditure and debt service requirements, our plans to pay dividends and repurchase stock, and other business initiatives we plan to strategically pursue, including acquisitions and licensing activities. We anticipate that our liquidity needs can be met through a variety of sources, including cash provided by operating activities, sales of marketable securities, borrowings through commercial paper and/or syndicated credit facilities and access to other domestic and foreign debt markets and equity markets. See Part II, Item 1A. Risk Factors—Global economic conditions may negatively affect us and may magnify certain risks that affect our business.

Financing arrangements

In February 2023, we filed a shelf registration statement with the SEC that allows us to issue unspecified amounts of debt securities; common stock; preferred stock; warrants to purchase debt securities, common stock, preferred stock or depositary shares; rights to purchase common stock or preferred stock; securities purchase contracts; securities purchase units; and depositary shares. Under this shelf registration statement, all of the securities available for issuance may be offered from time to time with terms to be determined at the time of issuance. This shelf registration statement expires in February 2026.

During the three months ended March 31, 2023, in connection with the proposed acquisition of Horizon, we issued $24.0 billion of debt composed of eight series of notes. If the proposed acquisition of Horizon does not occur by a specified date, or at all, we will be required to redeem all but one of the series of notes at a price equal to 101% of the principal amount of the notes plus accrued and unpaid interest. In connection with the issue of these notes, we elected to terminate all remaining commitments under the bridge credit agreement we entered into in December 2022. See Note 10, Financing arrangements, to the condensed consolidated financial statements.

During the three months ended March 31, 2023, we amended and restated our syndicated, unsecured, revolving credit agreement under which we may borrow up to $4.0 billion (increased from $2.5 billion prior to the amendment) for general corporate purposes, including as a liquidity backstop for our commercial paper program. The commitments under the revolving credit agreement may be increased by up to $1.25 billion with the agreement of the banks (increased from $750 million prior to the amendment). Each bank that is a party to the agreement has an initial commitment term of five years. This term may be extended for up to two additional one-year periods with the agreement of the banks. Annual commitment fees for this agreement are 0.09% of the unused portion of the facility based on our current credit rating. Generally, we would be charged interest for any amounts borrowed under this facility, based on our current credit rating, at (i) SOFR plus 1.01% or (ii) the highest of (A) the administrative agent bank base commercial lending rate, (B) the overnight federal funds rate plus 0.50% or (C) one-month SOFR plus 1.1%. As of March 31, 2023 and December 31, 2022, no amounts were outstanding under this facility.

Certain of our financing arrangements contain nonfinancial covenants. In addition, our revolving credit agreement includes a financial covenant that requires us to maintain a specified minimum interest coverage ratio of (i) the sum of consolidated net income, interest expense, provision for income taxes, depreciation expense, amortization expense, unusual or nonrecurring charges and other noncash items (consolidated earnings before interest, taxes, depreciation and amortization) to (ii) consolidated interest expense, each as defined and described in the credit agreement. We were in compliance with all applicable covenants under these arrangements as of March 31, 2023.

Cash flows

Our summarized cash flow activity was as follows (in millions):

			Three months ended March 31,
			2023						2022
Net cash provided by operating activities			$	1,064					$	2,164
Net cash provided by (used in) investing activities			$	1,358					$	(111)
Net cash provided by (used in) financing activities			$	21,509					$	(3,514)

Operating

Cash provided by operating activities has been and is expected to continue to be our primary recurring source of funds. Cash provided by operating activities during the three months ended March 31, 2023, decreased primarily due to lower net income after adjustments for noncash items, as well as the impact of working capital items due to the timing of payments for sales incentives and discounts, partially offset by higher inventory build in the prior year.

Investing

Cash provided by investing activities during the three months ended March 31, 2023, was primarily due to net cash inflows related to marketable securities activity of $1.7 billion, partially offset by capital expenditures of $344 million, including construction costs of new plants in North Carolina and Ohio. Cash used in investing activities during the three months ended March 31, 2022, was primarily due to $190 million of capital expenditures, partially offset by proceeds from sales of property, plant and equipment. We currently estimate 2023 spending on capital projects to be approximately $925 million.

Financing

Cash provided by financing activities during the three months ended March 31, 2023, was primarily due to proceeds from the issuance of debt of $23.8 billion, partially offset by the payment of dividends of $1.1 billion as well as the repayment and extinguishment of debt of $1.1 billion. Cash used in financing activities during the three months ended March 31, 2022, was primarily due to payments to repurchase our common stock of $6.4 billion, including amounts paid under the accelerated stock repurchase agreements, and the payment of dividends of $1.1 billion, partially offset by proceeds from the issuance of debt of $4.0 billion. See Note 10, Financing arrangements, and Note 11, Stockholders’ equity, to the condensed consolidated financial statements for further discussion.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the notes to the financial statements. Some of those judgments can be subjective and complex, and therefore, actual results could differ materially from those estimates under different assumptions or conditions. A summary of our critical accounting policies and estimates is presented in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of our Annual Report on Form 10-K for the year ended December 31, 2022.