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Item 5. Market for Registrant’s Common Equity

2021-02-25 compared with 2020-02-25 · 72 added, 29 removed, 65 unchanged (61% of the section changed)

11 unchanged sentences

Equity Compensation Plan Information

The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2019 (in millions, except per share amounts):

Number of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

The following table provides certain information with respect to our equity compensation plans in effect as of December 31, 2020:

(in millions, except per share amounts) Number of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)

Weighted-average Exercise Price of Outstanding Options, Warrants and Rights (1)

Number of Common Shares Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Plan Category

Plan Category (a) (b) (c)

Equity Compensation plans approved by security holders:

2004 Equity Incentive Plan (2)

16.1 $ 69.43 85.9

Employee Stock Purchase Plan (3)

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0.5 $ 68.57 10.3

Does not take into account 18 million restricted stock units, performance share awards or units and phantom shares, which have no exercise price and were granted under our 2004 Equity Incentive Plan.

Total 16.6 $ 69.40 103.3

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(1) Does not take into account 20 million restricted stock units, performance share awards or units and phantom shares, which have no exercise price and were granted under our 2004 and 2018 Equity Incentive Plans.

(2) Includes awards and shares previously issuable under The Immunomedics, Inc.

Amended and Restated 2014 Long-Term Incentive Plan (the “Immunomedics Plan”), which was assumed in connection with our acquisition of Immunomedics, Inc.

and subsequently merged into the 2004 Equity Incentive Plan.

(3) Under our Employee Stock Purchase Plan, participants are permitted to purchase our common stock at a discount on certain dates through payroll deductions within a pre-determined purchase period.

Accordingly, these numbers are not determinable.

(4) Includes awards and shares issuable under the Forty Seven, Inc.

2018 Equity Incentive Plan, which was assumed in connection with our acquisition of Forty Seven, Inc.

(“Forty Seven”) and subsequently amended and restated as our 2018 Equity Incentive Plan.

Material Features of the Gilead Sciences, Inc.

2018 Equity Incentive Plan

The Forty Seven, Inc.

2018 Equity Incentive Plan was originally established by Forty Seven in June 2018.

In connection with Gilead’s acquisition of Forty Seven in April 2020, Gilead assumed the Forty Seven, Inc.

2018 Equity Incentive Plan, and amended and restated it as the Gilead Sciences, Inc.

2018 Equity Incentive Plan (the “2018 Plan”).

The 2018 Plan is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any affiliate, and provide a means by which the eligible recipients may benefit from increases in value of Gilead common stock.

From and after April 7, 2020, only employees and consultants of Forty Seven as of immediately prior to such date and employees and consultants of Gilead hired on or following such date are eligible to receive grants of new awards under the 2018 Plan.

The 2018 Plan provides for the award of incentive stock options and Nonstatutory stock options, each of which must generally have an exercise price equal to at least the fair market value of our common stock on the date of grant;

stock appreciation rights;

restricted stock awards;

restricted stock unit awards;

performance stock awards;

other stock awards;

and performance cash awards.

As of April 7, 2020, the aggregate number of shares of common stock issuable under the 2018 Plan (from and after such date) was 12,069,378.

From and after April 7, 2020, Gilead has granted restricted stock units and stock options under the 2018 Plan, and these are the only types of equity awards outstanding under the plan.

As of December 31, 2020, 10.3 million shares of Gilead common stock remained available for issuance under the 2018 Plan.

Issuer Purchases of Equity Securities

In the first quarter of 2016, our Board of Directors authorized a $12.0 billion share repurchase program (2016 Program) under which repurchases may be made in the open market or in privately negotiated transactions.

In the first quarter of 2016, our Board of Directors authorized a $12.0 billion stock repurchase program (“2016 Program”) under which repurchases may be made in the open market or in privately negotiated transactions.

We made repurchases under the 2016 Program starting in April 2016.

In the first quarter of 2020, our Board of Directors authorized a new $5.0 billion stock repurchase program (“2020 Program”), which will commence upon the completion of the 2016 Program.

Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.

During 2020, we repurchased and retired 22 million shares of our common stock for $1.6 billion through open market transactions under the 2016 Program.

The table below summarizes our stock repurchase activity for the three months ended December 31, 2019 (in thousands, except per share amounts):

Total Number of

As of December 31, 2020, the remaining authorized repurchase amount from both programs was $6.8 billion.

The table below summarizes our stock repurchase activity for the three months ended December 31, 2020:

Purchased (in thousands) Average

per Share (in dollars) Total Number of

Shares Purchased

as Part of a Publicly

Announced Program

Announced Program (in thousands) Maximum Fair

Value of Shares

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Purchased Under

the Programs (in millions)

October 1 - October 31, 2020 27 $ 63.84 — $ 6,816

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December 1 - December 31, 2020 34 $ 59.82 — $ 6,816

Total 232 (1) $ 60.78 — (1)

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The difference between the total number of shares purchased and the total number of shares purchased as part of a publicly announced program is due to shares of common stock withheld by us from employee restricted stock unit awards in order to satisfy applicable tax withholding obligations.

In the first quarter of 2020, our Board of Directors authorized a new $5.0 billion stock repurchase program (2020 Program), which will commence upon the completion of the 2016 Program.

Purchases under the 2020 Program may be made in the open market or in privately negotiated transactions.

(1) A total of 232 thousand shares were transferred to us from employees in satisfaction of minimum tax withholding obligations associated with the vesting of restricted stock units during the period.

We did not purchase any shares of our common stock in the open market pursuant to our repurchase program.

SELECTED FINANCIAL DATA

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SELECTED CONSOLIDATED FINANCIAL DATA

(in millions, except per share amounts)

Year Ended December 31,

(in millions, except per share amounts) 2020 2019 2018 2017 2016

CONSOLIDATED STATEMENT OF INCOME DATA (1) :

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Total costs and expenses (2)

$ 20,618 $ 18,162 $ 13,927 $ 11,983 $ 12,757

Income from operations $ 4,071 $ 4,287 $ 8,200 $ 14,124 $ 17,633

Provision for income taxes (3)

Income tax expense (benefit) (3)

$ 1,580 $ (204) $ 2,339 $ 8,885 $ 3,609

Net income (2)(3)

$ 89 $ 5,364 $ 5,460 $ 4,644 $ 13,488

Net income attributable to Gilead (2)(3)

$ 123 $ 5,386 $ 5,455 $ 4,628 $ 13,501

Net income per share attributable to Gilead

common stockholders - basic (2)(3)

$ 0.10 $ 4.24 $ 4.20 $ 3.54 $ 10.08

Shares used in per share calculation - basic 1,257 1,270 1,298 1,307 1,339

1 unchanged sentence

common stockholders - diluted (2)(3)

$ 0.10 $ 4.22 $ 4.17 $ 3.51 $ 9.94

Shares used in per share calculation - diluted 1,263 1,277 1,308 1,319 1,358

Cash dividends declared per share $ 2.72 $ 2.52 $ 2.28 $ 2.08 $ 1.84

(in millions) 2020 2019 2018 2017 2016

CONSOLIDATED BALANCE SHEET DATA (1) :

Cash, cash equivalents and marketable debt securities (4)(5)

$ 7,910 $ 25,840 $ 31,512 $ 36,694 $ 32,380

Working capital (3)(4)(5)

$ 4,599 $ 20,537 $ 25,231 $ 20,188 $ 10,370

Total assets (4)(5)

$ 68,407 $ 61,627 $ 63,675 $ 70,283 $ 56,977

Other long-term obligations $ 5,128 $ 1,009 $ 1,040 $ 558 $ 297

Long-term debt, including current portion (4)

$ 31,402 $ 24,593 $ 27,322 $ 33,542 $ 26,346

Retained earnings (3)

$ 14,381 $ 19,388 $ 19,024 $ 19,012 $ 18,154

Total stockholders’ equity (3)

$ 18,221 $ 22,650 $ 21,534 $ 20,501 $ 19,363

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(1) See Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Item 7 of this Annual Report on Form 10-K for a description of our results of operations for 2020.

In 2018, we adopted Accounting Standards Update No.

2014-09 (Topic 606) “Revenue from Contracts with Customers” using the modified retrospective method.

As such, results for reporting periods beginning after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 605 “Revenue Recognition.”

In December 2019, we recorded a deferred tax benefit of $1.2 billion related to intangible asset transfers from a foreign subsidiary to Ireland and the United States.

(2) In 2020, we recorded acquired in-process research and development (“IPR&D”) expenses of $5.9 billion primarily related to our acquisition of Forty Seven, Inc.

(“Forty Seven”) as well as other collaborations and investments we entered into during the year.

In 2019, we recorded acquired IPR&D expenses of $5.1 billion primarily due to $3.92 billion of upfront collaboration and licensing expenses related to our global research and development collaboration with Galapagos NV, and a pre-tax impairment charge of $800 million from assets obtained in our acquisition of Kite Pharma, Inc.

(3) In 2020, we recorded discrete tax benefits of $167 million related to settlements with taxing authorities.

In 2019, we recorded a deferred tax benefit of $1.2 billion related to intangible asset transfers from a foreign subsidiary to Ireland and the United States.

In 2018, we recorded a deferred tax charge of $588 million related to a transfer of acquired intangible assets from a foreign subsidiary to the United States.

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Tax Reform also lowered the corporate tax rate in the United States from 35% to 21% effective for tax years beginning after December 31, 2017.

Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional details.

Investments in equity securities, other than equity method investments, for which we have not elected the fair value method of accounting, are recorded at fair market value, if fair value is readily determinable and, beginning January 1, 2018, unrealized gains and losses are included in Other income (expense), net on our Consolidated Statements of Income.

For periods presented prior to January 1, 2018, unrealized gains and losses were included in accumulated other comprehensive income as a separate component of stockholders’ equity.

(4) In 2020, in connection with the acquisition of Immunomedics, we issued $7.25 billion principal amount of senior unsecured notes and borrowed an aggregate principal amount of $1.0 billion under a three-year term loan facility.

Also in 2020, we repaid $2.5 billion principal amount of our senior unsecured notes at maturity.

In 2019, we repaid $2.8 billion principal amount of our senior unsecured notes at maturity.

In 2018, we repaid $1.8 billion principal amount of our senior unsecured notes at maturity and repaid $4.5 billion of term loans borrowed in connection with our acquisition of Kite Pharma, Inc.

In 2017, in connection with the acquisition of Kite Pharma, Inc., we issued $3.0 billion aggregate principal amount of senior unsecured notes and borrowed $6.0 billion aggregate principal amount term loan facility credit agreement, of which $1.5 billion was repaid in 2017.

In 2018, we repaid $1.8 billion principal amount of our senior unsecured notes at maturity and repaid $4.5 billion of term loans borrowed in connection with our acquisition of Kite.

In 2017, in connection with the acquisition of Kite, we issued $3.0 billion aggregate principal amount of senior unsecured notes and borrowed $6.0 billion aggregate principal amount term loan facility credit agreement, of which $1.5 billion was repaid in 2017.

In 2016, we issued $5.0 billion principal amount of senior unsecured notes and repaid $285 million of principal balance of convertible senior notes and $700 million of principal balance of senior unsecured notes at maturity.

In 2015, we issued $10.0 billion principal amount of senior unsecured notes and repaid $213 million of principal balance of convertible senior notes at maturity.

In 2019, we adopted Accounting Standards Update No.

2016-02 (Topic 842) “Leases,” which requires lessees to recognize right-of-use assets and lease liabilities for operating leases with a lease term greater than one year.

We adopted Topic 842 using the modified retrospective method.

As such, results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 840 “Leases.” See Note 1.

Organization and Summary of Significant Accounting Policies and Note 13.

Leases, of the Notes to Consolidated Financial Statements included in Item 8 of our Annual Report on Form 10-K for further information.

Debt and Credit Facilities of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.

(5) In 2020, we made cash payments of $25.7 billion primarily related to our acquisitions of Immunomedics in October 2020 and Forty Seven in April 2020.

Acquisitions of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K for additional information.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 5. Market for Registrant’s Common Equity