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Amgen's Second Quarter 2012 Revenues Increased 13 Percent To $4.5 Billion And Adjusted Earnings Per Share (EPS) Increased 34 Percent To $1.83 Amgen (NASDAQ:AMGN) today announced financial results for the second quarter of 2012. Key results for the quarter include: Total revenues increased...

Thursday, July 26, 2012 4 min read
Key Takeaway: THOUSAND OAKS, Calif. , July 26, 2012 /PRNewswire/ -- Amgen (NASDAQ: AMGN ) today announced financial results for the second quarter of 2012. Key results for the quarter include: "I am very pleased with the performance of the business in the first half," said Bob Bradway , CEO a

Full Press Release Details

THOUSAND OAKS, Calif. , July 26, 2012 /PRNewswire/ -- Amgen (NASDAQ: AMGN ) today announced financial results for the second quarter of 2012. Key results for the quarter include:
"I am very pleased with the performance of the business in the first half," said Bob Bradway , CEO at Amgen. "I am excited about the growth opportunities in our research and development pipeline, particularly our biologic AMG 145 for hypercholesterolemia."
Year-Over-Year (YOY)
$Millions, except EPS and percentages Q2 '12 Q2 '11 YOY Δ
Total Revenue $4,477 $3,959 13%
Adjusted Net Income 1,433 1,281 12%
Adjusted EPS 1.83 1.37 34%
GAAP Net Income 1,266 1,170 8%
GAAP EPS $1.61 $1.25 29%
Adjusted EPS, adjusted operating income, adjusted net income, and free cash flow are non-GAAP financial measures. These adjustments and other items are presented on the attached reconciliations.
Product Sales Performance
$Millions, except percentages Q2 '12 Q2 '11 YOY Δ
US ROW TOTAL TOTAL TOTAL
Neulasta ® / NEUPOGEN ® $1,062 $285 $1,347 $1,326 2%
Neulasta ® 794 221 1,015 1,015 0%
NEUPOGEN ® 268 64 332 311 7%
Enbrel ® 991 67 1,058 956 11%
Aranesp ® 215 321 536 585 (8%)
EPOGEN ® 525 0 525 543 (3%)
Sensipar ® / Mimpara ® 150 82 232 199 17%
Vectibix ® 31 59 90 81 11%
Nplate ® 50 36 86 75 15%
XGEVA ® 156 23 179 73 *
Prolia ® 75 45 120 44 *
Other 0 27 27 11 *
Total product sales $3,255 $945 $4,200 $3,893 8%
* Not meaningful
Operating Expense and Tax Rate Analysis, on an Adjusted Basis
$Millions, except percentages
On an Adjusted Basis Q2 '12 Q2 '11 YOY Δ
Cost of Sales $668 $569 17%
% of sales 15.9% 14.6% 1.3 pts
% of sales (Excluding PR excise tax) 13.9% 13.5% 0.4 pts
Research & Development (R&D) $807 $808 0%
% of sales 19.2% 20.8% (1.6) pts
Selling, General & Administrative (SG&A) $1,199 $1,111 8%
% of sales 28.5% 28.5% 0 pts
TOTAL Operating Expenses $2,674 $2,488 7%
pts: percentage points
On an Adjusted Basis Q2 '12 Q2 '11 YOY Δ
Tax Rate 16.0% 15.2% 0.8 pts
Tax Rate (Excluding PR excise tax) 20.6% 20.3% 0.3 pts
pts: percentage points
Cash Flow and Balance Sheet Discussion
$Billions, except shares Q2 '12 Q2 '11 YOY Δ
Operating Cash Flow $2.4 $1.5 $0.9
Capital Expenditures 0.2 0.1 0.1
Free Cash Flow 2.2 1.4 0.8
Dividend Paid 0.3 0.0 0.3
Cost of Shares Repurchased 1.2 0.7 0.5
Adjusted Avg. Diluted Shares (millions) 784 934 (150)
Cash Balance 22.5 19.2 3.3
Adjusted Debt Outstanding 24.5 14.2 10.3
Stockholders' Equity 19.2 25.6 (6.4)
For the full year 2012, the Company now expects:
The Company continues to expect:
Second Quarter Pipeline Update
The Company provided the following information on selected clinical programs:
Non-GAAP Financial Measures
The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures included above for the second quarters of 2012 and 2011 exclude, for the applicable periods, certain expenses related to acquisitions and cost-savings initiatives, non-cash interest expense associated with our convertible notes and certain other adjustments, as applicable. These adjustments and other items are presented on the attached reconciliations.
Management has presented its operating results in accordance with GAAP and on an "adjusted" (or non-GAAP) basis for the second quarters of 2012 and 2011. In addition, management has presented its outstanding debt in accordance with GAAP and on an "adjusted" (or non-GAAP) basis as of June 30, 2012 and 2011. The Company believes that the presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses these non-GAAP financial measures in connection with its own budgeting and financial planning. These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in conformity with GAAP.
Forward-Looking Statements
This news release contains forward-looking statements that involve significant risks and uncertainties, including those discussed below and others that can be found in our Form 10-K for the year ended Dec. 31, 2011 , and in our periodic reports on Form 10-Q and Form 8-K. Amgen is providing this information as of the date of this news release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
No forward-looking statement can be guaranteed and actual results may differ materially from those we project. The Company's results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments (domestic or foreign) involving current and future products, sales growth of recently launched products, competition from other products (domestic or foreign) and difficulties or delays in manufacturing our products. In addition, sales of our products are affected by reimbursement policies imposed by third-party payers, including governments, private insurance plans and managed care providers and may be affected by regulatory, clinical and guideline developments and domestic and international trends toward managed care and health care cost containment as well as U.S. legislation affecting pharmaceutical pricing and reimbursement. Government and others' regulations and reimbursement policies may affect the development, usage and pricing of our products. Furthermore, our research, testing, pricing, marketing and other operations are subject to extensive regulation by domestic and foreign government regulatory authorities. We, or others, could identify safety, side effects or manufacturing problems with our products after they are on the market. Our business may be impacted by government investigations, litigation and product liability claims. Further, while we routinely obtain patents for our products and technology, the protection offered by our patents and patent applications may be challenged, invalidated or circumvented by our competitors. We depend on third parties for a significant portion of our manufacturing capacity for the supply of certain of our current and future products and limits on supply may constrain sales of certain of our current products and product candidate development. In addition, we compete with other companies with respect to some of our marketed products as well as for the discovery and development of new products. Discovery or identification of new product candidates cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate will be successful and become a commercial product. Further, some raw materials, medical devices and component parts for our products are supplied by sole third-party suppliers. Our business performance could affect or limit the ability of our Board of Directors to declare a dividend or our ability to pay a dividend or repurchase our common stock.
Amgen Inc.
Condensed Consolidated Statements of Income - GAAP
(In millions, except per share data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
Revenues:
Product sales $ 4,200 $ 3,893 $ 8,101 $ 7,511
Other revenues 277 66 424 154
Total revenues 4,477 3,959 8,525 7,665
Operating expenses:
Cost of sales (excludes amortization of certain
acquired intangible assets presented below) 682 602 1,361 1,166
Research and development 826 819 1,562 1,555
Selling, general and administrative 1,228 1,130 2,304 2,153
Amortization of certain acquired intangible assets 73 73 147 147
Other 79 3 85 19
Total operating expenses 2,888 2,627 5,459 5,040
Operating income 1,589 1,332 3,066 2,625
Interest expense, net 256 122 491 257
Interest and other income, net 124 129 248 277
Income before income taxes 1,457 1,339 2,823 2,645
Provision for income taxes 191 169 373 350
Net income $ 1,266 $ 1,170 $ 2,450 $ 2,295
Earnings per share:
Basic $ 1.63 $ 1.26 $ 3.13 $ 2.47
Diluted $ 1.61 $ 1.25 $ 3.09 $ 2.45
Average shares used in calculation
of earnings per share:
Basic 776 927 783 930
Diluted 785 935 792 938
Amgen Inc.
Product Sales Detail by Product and Geographic Region
(In millions)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
Neulasta ® - U.S. $ 794 $ 769 $ 1,608 $ 1,479
NEUPOGEN ® - U.S. 268 230 507 450
Neulasta ® - ROW 221 246 446 472
NEUPOGEN ® - ROW 64 81 130 157
Enbrel ® - U.S. 991 894 1,869 1,715
Enbrel ® - Canada 67 62 127 116
Aranesp ® - U.S. 215 241 417 491
Aranesp ® - ROW 321 344 637 674
EPOGEN ® - U.S. 525 543 971 1,078
Sensipar ® - U.S. 150 124 290 240
Mimpara ® - ROW 82 75 161 146
Vectibix ® - U.S. 31 31 62 61
Vectibix ® - ROW 59 50 118 95
Nplate ® - U.S. 50 40 104 77
Nplate ® - ROW 36 35 72 63
XGEVA ® - U.S. 156 73 295 115
XGEVA ® - ROW 23 - 37 -
Prolia ® - U.S. 75 30 129 47
Prolia ® - ROW 45 14 79 24
Other - ROW 27 11 42 11
Total product sales $ 4,200 $ 3,893 $ 8,101 $ 7,511
U.S. $ 3,255 $ 2,975 $ 6,252 $ 5,753
ROW 945 918 1,849 1,758
Total product sales $ 4,200 $ 3,893 $ 8,101 $ 7,511
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
June 30, December 31,
2012 2011
Assets
Current assets:
Cash, cash equivalents and marketable securities $ 22,475 $ 20,641
Trade receivables, net 2,708 2,896
Inventories 2,592 2,484
Other current assets 1,787 1,572
Total current assets 29,562 27,593
Property, plant and equipment, net 5,437 5,420
Intangible assets, net 3,470 2,584
Goodwill 12,428 11,750
Other assets 1,329 1,524
Total assets $ 52,226 $ 48,871
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 5,616 $ 5,670
Current portion of long-term debt 2,416 84
Total current liabilities 8,032 5,754
Long-term debt 21,962 21,344
Other non-current liabilities 2,993 2,744
Stockholders' equity 19,239 19,029
Total liabilities and stockholders' equity $ 52,226 $ 48,871
Shares outstanding 769 796
Amgen Inc.
GAAP to "Adjusted" Reconciliations
(In millions)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
GAAP cost of sales $ 682 $ 602 $ 1,361 $ 1,166
Adjustments to cost of sales:
Incremental expense resulting from accelerating depreciation and/or accruing losses for facility operating leases as a result of our transaction with Boehringer Ingelheim involving our Fremont, California manufacturing facility (11) (23) (21) (44)
Acquisition-related expenses - (7) - (7)
Stock option expense (a) (3) (3) (6) (6)
Total adjustments to cost of sales (14) (33) (27) (57)
Adjusted cost of sales $ 668 $ 569 $ 1,334 $ 1,109
GAAP research and development expenses $ 826 $ 819 $ 1,562 $ 1,555
Adjustments to research and development expenses:
Acquisition-related expenses (13) (1) (20) (25)
Stock option expense (a) (6) (10) (12) (19)
Total adjustments to research and development expenses (19) (11) (32) (44)
Adjusted research and development expenses $ 807 $ 808 $ 1,530 $ 1,511
GAAP selling, general and administrative expenses $ 1,228 $ 1,130 $ 2,304 $ 2,153
Adjustments to selling, general and administrative expenses:
Acquisition-related expenses (22) (6) (34) (8)
Stock option expense (a) (7) (13) (14) (23)
Total adjustments to selling, general and administrative expenses (29) (19) (48) (31)
Adjusted selling, general and administrative expenses $ 1,199 $ 1,111 $ 2,256 $ 2,122
GAAP operating expenses $ 2,888 $ 2,627 $ 5,459 $ 5,040
Adjustments to operating expenses:
Adjustments to cost of sales (14) (33) (27) (57)
Adjustments to research and development expenses (19) (11) (32) (44)
Adjustments to selling, general and administrative expenses (29) (19) (48) (31)
Non-cash amortization of product technology rights acquired in a prior year business combination (73) (73) (147) (147)
Certain charges (or the reversal of certain previously over-accrued charges) pursuant to our continuing efforts to improve cost efficiencies in our operations (69) 5 (70) (11)
Expense resulting from changes in the estimated fair values of the contingent consideration obligations related to a prior year business combination (1) (3) (3) (3)
Expense related to certain legal proceedings (9) (5) (12) (5)
Total adjustments to operating expenses (214) (139) (339) (298)
Adjusted operating expenses $ 2,674 $ 2,488 $ 5,120 $ 4,742
GAAP operating income $ 1,589 $ 1,332 $ 3,066 $ 2,625
Adjustments to operating expenses 214 139 339 298
Adjusted operating income $ 1,803 $ 1,471 $ 3,405 $ 2,923
GAAP income before income taxes $ 1,457 $ 1,339 $ 2,823 $ 2,645
Adjustments to income before income taxes:
Adjustments to operating expenses 214 139 339 298
Non-cash interest expense associated with our convertible notes 35 32 69 76
Total adjustments to income before income taxes 249 171 408 374
Adjusted income before income taxes $ 1,706 $ 1,510 $ 3,231 $ 3,019
GAAP provision for income taxes $ 191 $ 169 $ 373 $ 350
Adjustments to provision for income taxes:
Income tax effect of the above adjustments (b) 82 60 138 125
Income tax benefit related to certain prior period charges excluded from "Adjusted" earnings - - - 5
Total adjustments to provision for income taxes 82 60 138 130
Adjusted provision for income taxes $ 273 $ 229 $ 511 $ 480
GAAP net income $ 1,266 $ 1,170 $ 2,450 $ 2,295
Adjustments to income before income taxes, net of the tax effect of the above adjustments 167 111 270 249
Income tax benefit related to certain prior period charges excluded from "Adjusted" earnings - - - (5)
Adjusted net income $ 1,433 $ 1,281 $ 2,720 $ 2,539
Amgen Inc.
GAAP to "Adjusted" Reconciliations
(In millions, except per share data)
(Unaudited)
The following table presents the computations for GAAP and "Adjusted" diluted EPS, computed under the treasury stock method.
"Adjusted" EPS presented below excludes stock option expense:
Three months ended Three months ended
June 30, 2012 June 30, 2011
GAAP "Adjusted" GAAP "Adjusted"
Income (Numerator):
Net income for basic and diluted EPS $ 1,266 $ 1,433 $ 1,170 $ 1,281
Shares (Denominator):
Weighted-average shares for basic EPS 776 776 927 927
Effect of dilutive securities 9 8 (*) 8 7 (*)
Weighted-average shares for diluted EPS 785 784 935 934
Diluted EPS $ 1.61 $ 1.83 $ 1.25 $ 1.37
Six months ended Six months ended
June 30, 2012 June 30, 2011
GAAP "Adjusted" GAAP "Adjusted"
Income (Numerator):
Net income for basic and diluted EPS $ 2,450 $ 2,720 $ 2,295 $ 2,539
Shares (Denominator):
Weighted-average shares for basic EPS 783 783 930 930
Effect of dilutive securities 9 8 (*) 8 7 (*)
Weighted-average shares for diluted EPS 792 791 938 937
Diluted earnings per share $ 3.09 $ 3.44 $ 2.45 $ 2.71
(*) Dilutive securities used to compute "Adjusted" diluted EPS for the three and six months ended June 30, 2012 and 2011 were computed under the treasury stock method assuming that we do not expense stock options.
(a) For the three and six months ended June 30, 2012 and 2011, the total pre-tax expense for employee stock options was $16 million and $32 million, respectively and $26 million and $48 million, respectively.
"Adjusted" diluted EPS including the impact of stock option expense for the three and six months ended June 30, 2012 and 2011 was as follows:
Three months ended Six months ended
June 30, June 30,
2012 2011 2012 2011
"Adjusted" diluted EPS, excluding stock option expense $ 1.83 $ 1.37 $ 3.44 $ 2.71
Impact of stock option expense (net of tax) (0.01) (0.02) (0.03) (0.04)
"Adjusted" diluted EPS, including stock option expense $ 1.82 $ 1.35 $ 3.41 $ 2.67
(b) The tax effect of the adjustments between our GAAP and "Adjusted" results takes into account the tax treatment and related tax rate(s) that apply to each adjustment in the applicable tax jurisdiction(s). Generally, this results in a tax impact at the U.S. marginal tax rate for certain adjustments, including amortization of intangible assets and non-cash interest expense associated with our convertible notes, whereas the tax impact of other adjustments, including stock option expense, depends on whether the amounts are deductible in the tax jurisdictions where the expenses are incurred or the asset is located and the applicable tax rate(s) in those jurisdictions. Due to these factors, the effective tax rates for the adjustments to our GAAP income before income taxes, for the three and six months ended June 30, 2012 and 2011 were 32.9% and 33.8% and 35.1% and 33.4%, respectively.
Amgen Inc.
Reconciliation of GAAP Debt Outstanding to "Adjusted" Debt Outstanding
(In millions)
(Unaudited)
GAAP Adjustments for accounting standard (a) "Adjusted"
June 30, 2011 $ 13,930 $ 221 $ 14,151
June 30, 2012 $ 24,378 $ 84 $ 24,462
Reconciliation of Free Cash Flow
(In millions)
(Unaudited)
Three months ended
June 30,
2012 2011
Cash Flows from Operations $ 2,375 $ 1,536
Capital Expenditures (172) (123)
Free Cash Flow $ 2,203 $ 1,413
Amgen Inc. Reconciliation of GAAP EPS Guidance to "Adjusted" EPS Guidance for the Year Ending December 31, 2012 (Unaudited)
2012
GAAP EPS (diluted) guidance a. $ 5.60 - $ 5.76
Known adjustments to arrive at "Adjusted" earnings*:
Amortization of certain acquired intangible assets (a) 0.24
Non-cash interest expense associated with our convertible notes (b) 0.11
Charges associated with cost savings initiatives (c) 0.10
Acquisition-related expenses (d) 0.08
Stock option expense (e) 0.06 - 0.05
Legal settlements (f) 0.01
"Adjusted" EPS (diluted) guidance a. $ 6.20 - $ 6.35
* The known adjustments are presented net of their related aggregate tax impact of approximately $0.31 to $0.32 per share.
(a) To exclude the non-cash amortization of product technology rights acquired in a prior year business combination.
(b) To exclude the non-cash interest expense associated with our convertible notes.
(c) To exclude certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations.
(d) To exclude acquisition-related expenses.
(e) To exclude stock option expense.
(f) To exclude the expenses related to certain legal proceedings.
Reconciliation of GAAP Tax Rate Guidance to "Adjusted"
Tax Rate Guidance for the Year Ending December 31, 2012
(Unaudited)
2012 with PR excise tax 2012 without PR excise tax
GAAP tax rate guidance 11.2% - 12.3% 17.0% - 18.1%
Tax rate effect of known adjustments discussed above 2.8% - 2.7% 2.0% - 1.9%
"Adjusted" tax rate guidance 14.0% - 15.0% 19.0% - 20.0%
(Logo: http://photos.prnewswire.com/prnh/20081015/AMGENLOGO )
CONTACT: Amgen, Thousand Oaks Christine Regan , 805-447-5476 (media) Arvind Sood , 805-447-1060 (investors)

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Last updated: Jul 26, 2012