Full Press Release Details
THOUSAND OAKS, Calif. , Oct. 23, 2012 /PRNewswire/ -- Amgen (NASDAQ: AMGN ) today announced financial results for the third quarter of 2012. Key results for the quarter include:
"We delivered solid growth in revenues and earnings," said Robert A. Bradway , president and CEO at Amgen. "Our marketed products are performing well and we continue to make progress with key pipeline projects."
| Year-over-Year | ||||||
| $Millions, except EPS and percentages | Q3 '12 | Q3 '11 | YOY Δ | |||
| Total Revenues | $4,319 | $3,944 | 10% | |||
| Adjusted Net Income | 1,311 | 1,280 | 2% | |||
| Adjusted EPS | 1.67 | 1.40 | 19% | |||
| GAAP Net Income | 1,107 | 454 | 144% | |||
| GAAP EPS | $1.41 | $0.50 | 182% |
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
Product Sales Detail by Product and Geographic Region
| $Millions, except percentages | Q3 '12 | Q3 '11 | YOY Δ | |||||
| US | ROW | TOTAL | TOTAL | TOTAL | ||||
| Neulasta ® / NEUPOGEN ® | $1,073 | $282 | $1,355 | $1,335 | 1% | |||
| Neulasta ® | 824 | 220 | 1,044 | 1,003 | 4% | |||
| NEUPOGEN ® | 249 | 62 | 311 | 332 | (6%) | |||
| Enbrel ® | 1,012 | 67 | 1,079 | 925 | 17% | |||
| Aranesp ® | 178 | 319 | 497 | 600 | (17%) | |||
| EPOGEN ® | 491 | 0 | 491 | 476 | 3% | |||
| Sensipar ® / Mimpara ® | 172 | 71 | 243 | 206 | 18% | |||
| Vectibix ® | 30 | 58 | 88 | 79 | 11% | |||
| Nplate ® | 53 | 38 | 91 | 77 | 18% | |||
| XGEVA ® | 171 | 30 | 201 | 102 | 97% | |||
| Prolia ® | 68 | 42 | 110 | 51 | 116% | |||
| Other | 0 | 46 | 46 | 26 | 77% | |||
| Total product sales | $3,248 | $953 | $4,201 | $3,877 | 8% |
Operating Expense and Tax Rate Analysis, on an Adjusted Basis
| $Millions, except percentages | ||||||
| On an Adjusted Basis | Q3 '12 | Q3 '11 | YOY Δ | |||
| Cost of Sales | $674 | $593 | 14% | |||
| % of sales | 16.0% | 15.3% | 0.7 pts | |||
| % of sales (Excluding PR excise tax) | 14.0% | 13.4% | 0.6 pts | |||
| Research & Development | $849 | $763 | 11% | |||
| % of sales | 20.2% | 19.7% | 0.5 pts | |||
| Selling, General & Administrative | $1,110 | $1,113 | (0%) | |||
| % of sales | 26.4% | 28.7% | (2.3) pts | |||
| TOTAL Operating Expenses | $2,633 | $2,469 | 7% | |||
| pts: percentage points |
| On an Adjusted Basis | Q3 '12 | Q3 '11 | YOY Δ | ||
| Tax Rate | 16.0% | 10.9% | 5.1 pts | ||
| Tax Rate (Excluding PR excise tax credits) | 20.2% | 17.4% | 2.8 pts | ||
| pts: percentage points |
Cash Flow and Balance Sheet Discussion
| $Billions, except shares | Q3 '12 | Q3 '11 | YOY Δ | ||
| Operating Cash Flow | $1.7 | $1.0 | $0.8 | ||
| Capital Expenditures | 0.2 | 0.1 | 0.1 | ||
| Free Cash Flow | 1.6 | 0.9 | 0.7 | ||
| Dividend Paid | 0.3 | 0.3 | 0.0 | ||
| Cost of Shares Repurchased | 0.8 | 2.4 | (1.6) | ||
| Adjusted Avg. Diluted Shares (millions) | 783 | 913 | (130) | ||
| Cash Balance | 25.4 | 17.7 | 7.7 | ||
| Adjusted Debt Outstanding | 26.5 | 14.5 | 12.0 | ||
| Stockholders' Equity | 19.9 | 23.6 | (3.7) | ||
| Note: Numbers may not add due to rounding |
For the full year 2012, the Company now expects:
The Company continues to expect:
Third Quarter Product and Pipeline Update
The Company provided the following information on selected products and clinical programs:
Non-GAAP Financial Measures
The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures included above for the third quarters of 2012 and 2011 exclude, for the applicable periods, certain expenses related to acquisitions, cost-savings initiatives, various legal proceedings, 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 third 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 Sept. 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 | Nine months ended | |||||||||
| September 30, | September 30, | |||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||
| Revenues: | ||||||||||
| Product sales | $ 4,201 | $ 3,877 | $ 12,302 | $ 11,388 | ||||||
| Other revenues | 118 | 67 | 542 | 221 | ||||||
| Total revenues | 4,319 | 3,944 | 12,844 | 11,609 | ||||||
| Operating expenses: | ||||||||||
| Cost of sales (excludes amortization of certain | ||||||||||
| acquired intangible assets presented below) | 705 | 605 | 2,066 | 1,771 | ||||||
| Research and development | 880 | 761 | 2,442 | 2,316 | ||||||
| Selling, general and administrative | 1,127 | 1,125 | 3,431 | 3,278 | ||||||
| Amortization of certain acquired intangible assets | 74 | 74 | 221 | 221 | ||||||
| Other | 110 | 854 | 195 | 873 | ||||||
| Total operating expenses | 2,896 | 3,419 | 8,355 | 8,459 | ||||||
| Operating income | 1,423 | 525 | 4,489 | 3,150 | ||||||
| Interest expense, net | 271 | 158 | 762 | 415 | ||||||
| Interest and other income, net | 111 | 87 | 359 | 364 | ||||||
| Income before income taxes | 1,263 | 454 | 4,086 | 3,099 | ||||||
| Provision for income taxes | 156 | - | 529 | 350 | ||||||
| Net income | $ 1,107 | $ 454 | $ 3,557 | $ 2,749 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ 1.44 | $ 0.50 | $ 4.57 | $ 2.98 | ||||||
| Diluted | $ 1.41 | $ 0.50 | $ 4.51 | $ 2.96 | ||||||
| Average shares used in calculation | ||||||||||
| of earnings per share: | ||||||||||
| Basic | 771 | 907 | 779 | 922 | ||||||
| Diluted | 783 | 914 | 789 | 930 |
| Amgen Inc | |||||||||
| Condensed Consolidated Balance Sheets - GAAP | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
| September 30, | December 31, | ||||||||
| 2012 | 2011 | ||||||||
| Assets | |||||||||
| Current assets: | |||||||||
| Cash, cash equivalents and marketable securities | $ 25,374 | $ 20,641 | |||||||
| Trade receivables, net | 2,696 | 2,896 | |||||||
| Inventories | 2,769 | 2,484 | |||||||
| Other current assets | 1,766 | 1,572 | |||||||
| Total current assets | 32,605 | 27,593 | |||||||
| Property, plant and equipment, net | 5,381 | 5,420 | |||||||
| Intangible assets, net | 3,680 | 2,584 | |||||||
| Goodwill | 12,589 | 11,750 | |||||||
| Other assets | 1,193 | 1,524 | |||||||
| Total assets | $ 55,448 | $ 48,871 | |||||||
| Liabilities and Stockholders' Equity | |||||||||
| Current liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ 5,909 | $ 5,670 | |||||||
| Current portion of long-term debt | 2,458 | 84 | |||||||
| Total current liabilities | 8,367 | 5,754 | |||||||
| Long-term debt | 24,020 | 21,344 | |||||||
| Other non-current liabilities | 3,159 | 2,744 | |||||||
| Stockholders' equity | 19,902 | 19,029 | |||||||
| Total liabilities and stockholders' equity | $ 55,448 | $ 48,871 | |||||||
| Shares outstanding | 768 | 796 |
| Amgen Inc. | ||||||||
| GAAP to "Adjusted" Reconciliations | ||||||||
| (In millions) | ||||||||
| (Unaudited) | ||||||||
| Three months ended | Nine months ended | |||||||
| September 30, | September 30, | |||||||
| 2012 | 2011 | 2012 | 2011 | |||||
| GAAP cost of sales | $ 705 | $ 605 | $ 2,066 | $ 1,771 | ||||
| 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 | (21) | (10) | (42) | (54) | ||||
| Acquisition-related expenses | (7) | - | (7) | (7) | ||||
| Stock option expense (a) | (3) | (2) | (9) | (8) | ||||
| Total adjustments to cost of sales | (31) | (12) | (58) | (69) | ||||
| Adjusted cost of sales | $ 674 | $ 593 | $ 2,008 | $ 1,702 | ||||
| GAAP research and development expenses | $ 880 | $ 761 | $ 2,442 | $ 2,316 | ||||
| Adjustments to research and development expenses: | ||||||||
| Acquisition-related expenses | (14) | (2) | (34) | (27) | ||||
| Certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations | (12) | - | (12) | - | ||||
| Reversal of previously accrued expenses for bonuses and stock-based compensation awards, which were forfeited as a result of the employees' termination pursuant to our continuing efforts to improve cost efficiencies in our operations | - | 12 | - | 12 | ||||
| Stock option expense (a) | (5) | (8) | (17) | (27) | ||||
| Total adjustments to research and development expenses | (31) | 2 | (63) | (42) | ||||
| Adjusted research and development expenses | $ 849 | $ 763 | $ 2,379 | $ 2,274 | ||||
| GAAP selling, general and administrative expenses | $ 1,127 | $ 1,125 | $ 3,431 | $ 3,278 | ||||
| Adjustments to selling, general and administrative expenses: | ||||||||
| Acquisition-related expenses | (11) | (3) | (45) | (11) | ||||
| Stock option expense (a) | (6) | (9) | (20) | (32) | ||||
| Total adjustments to selling, general and administrative expenses | (17) | (12) | (65) | (43) | ||||
| Adjusted selling, general and administrative expenses | $ 1,110 | $ 1,113 | $ 3,366 | $ 3,235 | ||||
| GAAP operating expenses | $ 2,896 | $ 3,419 | $ 8,355 | $ 8,459 | ||||
| Adjustments to operating expenses: | ||||||||
| Adjustments to cost of sales | (31) | (12) | (58) | (69) | ||||
| Adjustments to research and development expenses | (31) | 2 | (63) | (42) | ||||
| Adjustments to selling, general and administrative expenses | (17) | (12) | (65) | (43) | ||||
| Non-cash amortization of product technology rights acquired in a prior year business combination | (74) | (74) | (221) | (221) | ||||
| Certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations | (36) | (68) | (106) | (79) | ||||
| Write-off of a non-key contract asset acquired in a business combination | (19) | - | (19) | - | ||||
| Expense resulting from changes in the estimated fair values of the contingent consideration obligations related to a prior year business combination | (2) | (6) | (5) | (9) | ||||
| Expenses related to various legal proceedings | (53) | (780) | (65) | (785) | ||||
| Total adjustments to operating expenses | (263) | (950) | (602) | (1,248) | ||||
| Adjusted operating expenses | $ 2,633 | $ 2,469 | $ 7,753 | $ 7,211 | ||||
| GAAP operating income | $ 1,423 | $ 525 | $ 4,489 | $ 3,150 | ||||
| Adjustments to operating expenses | 263 | 950 | 602 | 1,248 | ||||
| Adjusted operating income | $ 1,686 | $ 1,475 | $ 5,091 | $ 4,398 | ||||
| GAAP income before income taxes | $ 1,263 | $ 454 | $ 4,086 | $ 3,099 | ||||
| Adjustments to income before income taxes: | ||||||||
| Adjustments to operating expenses | 263 | 950 | 602 | 1,248 | ||||
| Non-cash interest expense associated with our convertible notes | 35 | 33 | 104 | 109 | ||||
| Total adjustments to income before income taxes | 298 | 983 | 706 | 1,357 | ||||
| Adjusted income before income taxes | $ 1,561 | $ 1,437 | $ 4,792 | $ 4,456 | ||||
| GAAP provision for income taxes | $ 156 | $ - | $ 529 | $ 350 | ||||
| Adjustments to provision for income taxes: | ||||||||
| Income tax effect of the above adjustments (b) | 94 | 150 | 232 | 275 | ||||
| Income tax benefit related to certain prior period charges excluded from "Adjusted" earnings | - | 7 | - | 12 | ||||
| Total adjustments to provision for income taxes | 94 | 157 | 232 | 287 | ||||
| Adjusted provision for income taxes | $ 250 | $ 157 | $ 761 | $ 637 | ||||
| GAAP net income | $ 1,107 | $ 454 | $ 3,557 | $ 2,749 | ||||
| Adjustments to income before income taxes, net of the tax effect of the above adjustments | 204 | 833 | 474 | 1,082 | ||||
| Income tax benefit related to certain prior period charges excluded from "Adjusted" earnings | - | (7) | - | (12) | ||||
| Adjusted net income | $ 1,311 | $ 1,280 | $ 4,031 | $ 3,819 |
| 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 | ||||||||
| September 30, 2012 | September 30, 2011 | ||||||||
| GAAP | "Adjusted" | GAAP | "Adjusted" | ||||||
| Income (Numerator): | |||||||||
| Net income for basic and diluted EPS | $ 1,107 | $ 1,311 | $ 454 | $ 1,280 | |||||
| Shares (Denominator): | |||||||||
| Weighted-average shares for basic EPS | 771 | 771 | 907 | 907 | |||||
| Effect of dilutive securities | 12 | 12 | (*) | 7 | 6 | (*) | |||
| Weighted-average shares for diluted EPS | 783 | 783 | 914 | 913 | |||||
| Diluted EPS | $ 1.41 | $ 1.67 | $ 0.50 | $ 1.40 |
| Nine months ended | Nine months ended | ||||||||
| September 30, 2012 | September 30, 2011 | ||||||||
| GAAP | "Adjusted" | GAAP | "Adjusted" | ||||||
| Income (Numerator): | |||||||||
| Net income for basic and diluted EPS | $ 3,557 | $ 4,031 | $ 2,749 | $ 3,819 | |||||
| Shares (Denominator): | |||||||||
| Weighted-average shares for basic EPS | 779 | 779 | 922 | 922 | |||||
| Effect of dilutive securities | 10 | 10 | (*) | 8 | 7 | (*) | |||
| Weighted-average shares for diluted EPS | 789 | 789 | 930 | 929 | |||||
| Diluted earnings per share | $ 4.51 | $ 5.11 | $ 2.96 | $ 4.11 |
| (*) | Dilutive securities used to compute "Adjusted" diluted EPS for the three and nine months ended September 30, 2012 and 2011 were computed under the treasury stock method assuming that we do not expense stock options. | |
| (a) | For the three and nine months ended September 30, 2012 and 2011, the total pre-tax expense for employee stock options was $14 million and $46 million, respectively and $19 million and $67 million, respectively |
| "Adjusted" diluted EPS including the impact of stock option expense for the three and nine months ended September 30, 2012 and 2011 was as follows: | |||||||||
| Three months ended | Nine months ended | ||||||||
| September 30, | September 30, | ||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||
| "Adjusted" diluted EPS, excluding stock option expense | $ 1.67 | $ 1.40 | $ 5.11 | $ 4.11 | |||||
| Impact of stock option expense (net of tax) | (0.01) | (0.01) | (0.04) | (0.05) | |||||
| "Adjusted" diluted EPS, including stock option expense | $ 1.66 | $ 1.39 | $ 5.07 | $ 4.06 |
| Amgen Inc | |||||||||
| Reconciliation of GAAP Debt Outstanding to "Adjusted" Debt Outstanding | |||||||||
| (In millions) | |||||||||
| (Unaudited) | |||||||||
| GAAP | Adjustments for accounting standard (a) | "Adjusted" | |||||||
| September 30, 2011 | $ 14,265 | $ 188 | $ 14,453 | ||||||
| September 30, 2012 | $ 26,478 | $ 48 | $ 26,526 |
| Reconciliation of Free Cash Flow | ||||||
| (In millions) | ||||||
| (Unaudited) | ||||||
| Three months ended | ||||||
| September 30, | ||||||
| 2012 | 2011 | |||||
| Cash Flows from Operations | $ 1,723 | $ 969 | ||||
| Capital Expenditures | (173) | (120) | ||||
| Free Cash Flow | $ 1,550 | $ 849 |
| Amgen Inc | ||||
| Reconciliation of GAAP EPS Guidance to "Adjusted" | ||||
| EPS Guidance for the Year Ending December 31, 2012 | ||||
| (Unaudited) | ||||
| 2012 | ||||
| GAAP EPS (diluted) guidance | $ 5.79 | - | $ 5.89 | |
| Known adjustments to arrive at "Adjusted" earnings*: | ||||
| Amortization of certain acquired intangible assets | (a) | 0.24 | ||
| Charges associated with cost savings initiatives | (b) | 0.13 | ||
| Acquisition-related expenses | (c) | 0.12 | ||
| Non-cash interest expense associated with our convertible notes | (d) | 0.11 | ||
| Stock option expense | (e) | 0.05 | ||
| Legal settlements | (f) | 0.06 | ||
| "Adjusted" EPS (diluted) guidance | $ 6.50 | - | $ 6.60 |
| * | The known adjustments are presented net of their related aggregate tax impact of approximately $0.36 per share. | |
| (a) | To exclude the non-cash amortization of product technology rights acquired in a prior year business combination | |
| (b) | To exclude certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations | |
| (c) | To exclude acquisition-related expenses | |
| (d) | To exclude the non-cash interest expense associated with our convertible notes | |
| (e) | To exclude stock option expense | |
| (f) | To exclude the expenses related to various 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 | 10.7% | - | 11.9% | 16.7% | - | 17.9% | ||||
| Tax rate effect of known adjustments discussed above | 3.3% | - | 3.1% | 2.3% | - | 2.1% | ||||
| "Adjusted" tax rate guidance | 14.0% | - | 15.0% | 19.0% | - | 20.0% |
CONTACT: Amgen, Thousand Oaks Christine Regan , 805-447-5476 (media) Arvind Sood , 805-447-1060 (investors)