AMGEN INC. THOUSAND OAKS, Calif., July 29, 2014 /PRNewswire/ -- Amgen (NASDAQ: AMGN) today announced financial results for the second quarter of 2014. Key results include:
-- Total revenues increased 11 percent to $5,180 million, with 8 percent
product sales growth driven by strong performance across the portfolio,
particularly Enbrel(® )(etanercept), Kyprolis(®) (carfilzomib),
Prolia(®) (denosumab) and XGEVA(® )(denosumab).
-- Adjusted EPS grew 25 percent to $2.37, driven by higher revenues and a
significant increase in the profitability of ENBREL. Adjusted net income
increased 26 percent to $1,823 million.
-- The Company generated $2.1 billion of free cash flow compared with $1.4
billion in the second quarter of 2013.
-- GAAP EPS were $2.01 compared to $1.65 a year ago and GAAP net income was
$1,547 million compared to $1,258 million.
"Robust growth through the first half of 2014 affirms the underlying strength of our business," said Robert A. Bradway, chairman & chief executive officer. "We are making excellent progress in advancing our pipeline as we prepare to launch a number of promising new innovative medicines. From a position of strength, we have announced today restructuring initiatives that will allow us to reallocate resources to invest in our upcoming launches and drive growth."
Year-over-Year
--------------
$Millions, except EPS and percentages Q2 '14 Q2 '13 YOY
------ ------ -----
Total Revenues $5,180 $4,679 11%
Adjusted Net Income $1,823 $1,444 26%
Adjusted EPS $2.37 $1.89 25%
GAAP Net Income $1,547 $1,258 23%
GAAP EPS $2.01 $1.65 22%
-------- ----- ----- ---
References in this release to
"adjusted" measures, measures
presented "on an adjusted basis"
or to free cash flow refer to non-
GAAP financial measures. These
adjustments and other items are
presented on the attached
reconciliations.
Product Sales Performance
-- Total product sales increased 8 percent for the second quarter of 2014
versus the second quarter of 2013. The increase was mainly driven by
ENBREL, Kyprolis, Prolia and XGEVA. Product sales in the second quarter
of 2013 included a positive adjustment of $185 million to previous
estimates for managed Medicaid rebates based on claims experience.
-- Enbrel sales increased 7 percent year-over-year for the second quarter
driven mainly by price. ENBREL continues to benefit from strong
underlying demand and segment growth.
-- Kyprolis sales for the second quarter of 2014 were $78 million. The
year-over-year comparison is not relevant as Onyx Pharmaceuticals, Inc.
(Onyx) was acquired in Q4 of 2013.
-- Prolia sales increased 40 percent year-over-year for the second quarter
driven by higher unit demand from share growth.
-- XGEVA sales increased 20 percent year-over-year for the second quarter
driven by higher unit demand. XGEVA continues to capture share in a
growing market despite competition from generic zoledronic acid.
-- Combined Neulasta(® )(pegfilgrastim) and NEUPOGEN(®) (filgrastim)
sales declined year-over-year by 1 percent for the second quarter.
-- Global Neulasta sales increased 1 percent year-over-year for the
second quarter driven by price offset partially by the prior year
positive Medicaid rebate estimate adjustment.
-- Global NEUPOGEN sales decreased 9 percent year-over-year for the
second quarter due to the prior year positive Medicaid rebate
adjustment.
-- Underlying demand was slightly impacted by short- and long-acting
competition in the U.S. and Europe, respectively.
-- Aranesp(®) (darbepoetin alfa) sales decreased 1 percent year-over-year
for the second quarter mainly due to the prior year positive Medicaid
rebate estimate adjustment. Underlying demand continues to decrease
slightly due to practice patterns in the U.S. and competitive pricing
pressures in Europe.
-- EPOGEN(®) (epoetin alfa) sales increased 2 percent year-over-year for
the second quarter driven by price, offset partially by the prior year
positive Medicaid rebate estimate adjustment. Unit demand continues to
be relatively stable.
-- Sensipar(®)/Mimpara(®) (cinacalcet) sales increased 15 percent
year-over-year for the second quarter driven primarily by higher unit
demand growth across all regions and price increases in the U.S.
-- Vectibix(®) (panitumumab) increased 42 percent year-over-year for the
second quarter driven by higher unit demand across all regions.
-- Nplate(®) (romiplostim) increased 12 percent year-over-year for the
second quarter driven mainly by higher unit demand and strong market
growth across all regions.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages Q2 '14 Q2 '13 YOY
------ ------ -----
US ROW TOTAL TOTAL TOTAL
--- --- ----- ----- -----
Neulasta(R)/ NEUPOGEN(R) $1,109 $320 $1,429 $1,444 (1%)
Neulasta(R) 895 238 1,133 1,120 1%
NEUPOGEN(R) 214 82 296 324 (9%)
Enbrel(R) 1,171 72 1,243 1,157 7%
Aranesp(R) 223 294 517 524 (1%)
EPOGEN(R) 512 0 512 502 2%
Sensipar(R) / Mimpara(R) 204 94 298 259 15%
Vectibix(R) 36 96 132 93 42%
Nplate(R) 62 56 118 105 12%
XGEVA(R)/ Prolia(R) 366 197 563 437 29%
XGEVA(R) 207 92 299 249 20%
Prolia(R) 159 105 264 188 40%
Kyprolis(R) 75 3 78 0 *
Other 0 59 59 74 (20%)
--- --- ---
Total product sales $3,758 $1,191 $4,949 $4,595 8%
====== ====== ====== ====== ===
* Not meaningful
----------------
Operating Expense and Tax Rate Analysis, on an Adjusted Basis
-- Cost of Sales margin, excluding the impact of the Puerto Rico excise
tax, was essentially flat year-over-year.
-- Research & Development (R&D) expenses increased 4 percent in the second
quarter of 2014 driven by the addition of Onyx programs offset partially
by reduced expenses associated with marketed product support.
-- Selling, General & Administrative (SG&A) expenses decreased 12 percent
in the second quarter of 2014 driven primarily by the end of the ENBREL
profit share, offset partially by the addition of Onyx.
$Millions, except percentages
On an Adjusted Basis Q2 '14 Q2 '13 YOY
------ ------ -----
Cost of Sales $789 $714 11%
% of sales 15.9% 15.5% 0.4 pts.
% of sales
(Excluding
PR excise
tax) 14.0% 13.9% 0.1 pts.
Research & Development $979 $944 4%
% of sales 19.8% 20.5% (0.7) pts.
Selling, General &
Administrative $1,093 $1,237 (12%)
% of sales 22.1% 26.9% (4.8) pts.
TOTAL Operating Expenses $2,861 $2,895 (1%)
pts: percentage points
PR: Puerto Rico
---------------
-- Tax Rate for the second quarter of 2014 increased due to changes in the
geographic mix of earnings. In addition, the federal R&D credit has not
yet been extended for 2014 and is therefore not reflected in the current
quarter.
On an Adjusted Basis Q2 '14 Q2 '13 YOY
------ ------ -----
Tax Rate 16.2% 11.9% 4.3 pts.
Tax Rate (Excluding PR excise tax
credits) 19.7% 16.3% 3.4 pts.
pts: percentage points
PR: Puerto Rico
---------------
Cash Flow and Balance Sheet Discussion
-- The Company generated $2.1 billion of free cash flow in the second
quarter of 2014 versus $1.4 billion in the second quarter of 2013. The
increase was driven primarily by higher revenues and improvements in
working capital.
-- The Company's second quarter 2014 dividend of $0.61 per share declared
on July 25, 2014, will be paid on Sept. 5, 2014, to all stockholders of
record as of the close of business on Aug. 14, 2014.
$Billions, except shares Q2 '14 Q2 '13 YOY
------ ------ -----
Operating Cash Flow $2.2 $1.6 $0.6
Capital Expenditures 0.2 0.2 0.0
Free Cash Flow 2.1 1.4 0.6
Dividends Paid 0.5 0.4 0.1
Avg. Diluted Shares (millions) 768 763 5
Cash and Investments 26.2 22.0 4.2
Debt Outstanding 33.3 23.9 9.4
Stockholders' Equity 24.4 20.6 3.8
Note: Numbers
may not add due
to rounding
---------------
Reallocating Resources to Drive Growth
-- The Company announced a restructuring plan today to invest in continuing
innovation and the launch of its new pipeline molecules, while improving
its cost structure. Initial efforts include streamlining the
organization, reducing layers of management, increasing managerial spans
of responsibility and beginning implementation of a revised geographic
site plan.
-- As a first step, the Company will reduce staff by 2,400-2,900, beginning
later this year and continuing through 2015, predominantly in the U.S.
This represents approximately 12 percent to 15 percent of Amgen's global
workforce. The Company will also close its facilities in the states of
Washington and Colorado.
"The talented staff members at these locations have made enormous contributions to advancing biotechnology over the years and the surrounding communities have been very supportive, so it is with great reluctance that we acknowledge the need to exit," continued Bradway. "At each site, we are actively engaging in discussions with third-parties about potential future use of the facilities."
-- The Company will expand its presence in the biotechnology hubs of South
San Francisco, Calif., and Cambridge, Mass., and retain its headquarters
in Thousand Oaks, Calif, with a reduced number of staff consolidated
into fewer of the existing buildings.
-- Company-wide, these actions will result in an approximate 23 percent
reduction in the Company's facilities footprint.
-- These actions will result in pre-tax accounting charges in the range of
$775-950 million, primarily incurred in 2014-2015. The combination of
these efforts will reduce operating expenses by approximately $700
million in 2016 compared to 2013, although most of the savings will be
reinvested to support global launches of new products. The savings from
these actions are reflected in the Company's 2014 guidance. 2015 savings
are expected to be modest due to the timing of these actions during the
calendar year.
-- As a next step, the Company is evaluating additional efficiency
initiatives, particularly in the area of shared services and other
external expense categories to support its growth objectives.
-- The Company plans to review these initiatives, together with an estimate
of resulting cost savings, pipeline progress and commercial plans, and
performance against its strategic priorities during a business review
meeting in the fourth quarter.
2014 Guidance
For the full year 2014, the Company expects:
-- Total Revenues to be in the range of $19.5 billion to $19.7 billion and
adjusted EPS to be in the range of $8.20 to $8.40.
-- Adjusted tax rate to be in the range of 15 percent to 16 percent. This
assumes the federal R&D credit will be extended for 2014 and also
includes the impact of the foreign tax credit associated with the Puerto
Rico excise tax. The Puerto Rico excise tax credit reduces the adjusted
rate by three to four percentage points.
-- Capital expenditures to be approximately $800 million.
Second Quarter Product and Pipeline Update
Projected 2014 milestones for innovative pivotal programs:
Clinical Program Lead Indication Milestone Timing
---------------- --------------- --------- ------
Evolocumab Dyslipidemia U.S., EU submission Q3 2014
---------- ------------ ------------------- -------
Ivabradine Chronic heart failure U.S. submission Achieved
---------- --------------------- --------------- --------
Kyprolis(R) Multiple myeloma Phase 3 ASPIRE interim
analysis* Q3 2014
Phase 3 FOCUS data*
--- ------------------
Talimogene
laherparepvec Metastatic melanoma U.S. submission Achieved
--- ---
EU submission Q3 2014
--- ------------- -------
Blinatumomab Relapsed/refractory acute lymphoblastic
leukemia U.S. submission H2 2014
------------ --------------------------------------- --------------- -------
Trebananib Recurrent ovarian cancer Phase 3 data*** Q4 2014
---------- ------------------------ ------------- -------
Brodalumab** Psoriasis Phase 3 data Achieved****,
Q4 2014
--- -------
AMG 416 Secondary hyperparathyroidism Phase 3 data Achieved****,
Q3 2014
--- -------
* Event driven studies
**Developed in collaboration
with AstraZeneca
** Overall survival (secondary
endpoint)
**** Positive data received from
first pivotal study
Evolocumab
-- The Company announced that it expects to submit a Biologics License
Application in the U.S. and a Marketing Authorization Application in the
EU during Q3 2014 for dyslipidemia.
Ivabradine
-- The Company announced that it has submitted a New Drug Application for
chronic heart failure in the U.S.
Kyprolis
-- The Company stated that the event driven interim analysis of the ASPIRE
study and the event driven final analysis of the FOCUS study are
expected in Q3 2014.
-- The Company announced that enrollment has completed for the ENDEAVOR
study in patients with relapsed multiple myeloma.
Talimogene laherparepvec
-- The Company announced that it has submitted a Biologics License
Application in the U.S. and that it expects to submit a Marketing
Authorization Application in the EU during Q3 2014 for regionally and
distantly metastatic melanoma.
Blinatumomab
-- The Company discussed the recent Food and Drug Administration (FDA)
Breakthrough Therapy Designation and stated that it expects to submit a
Biologics License Application in the U.S. during H2 2014 for adults with
Philadelphia-negative relapsed/refractory B-precursor acute
lymphoblastic leukemia.
Vectibix
-- The Company discussed the recent FDA approval of Vectibix for use in
combination with FOLFOX as first-line treatment, and conversion of
accelerated approval to full approval in the monotherapy setting in
patients with wild-type KRAS metastatic colorectal cancer.
Trebananib
-- The Company announced that the primary analysis of the event-driven
overall survival secondary endpoint from the ongoing pivotal Phase 3
study in recurrent ovarian cancer (TRINOVA-1) is projected to occur in
Q4 2014.
Brodalumab
-- The Company discussed positive results from the Phase 3 placebo
controlled study in patients with moderate to severe psoriasis. Results
from two Phase 3 ustekinumab controlled studies in patients with
moderate to severe psoriasis are expected in Q4 2014.
AMG 416 (formerly known as velcalcetide)
-- The Company discussed positive results from a Phase 3 placebo controlled
study for the treatment of secondary hyperparathyroidism in patients
with chronic kidney disease receiving hemodialysis. Results from a
second placebo controlled Phase 3 study are expected in Q3 2014.
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the second quarters of 2014 and 2013 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on an adjusted (or non-GAAP) basis. In addition, management has presented its full year 2014 EPS and tax rate guidance in accordance with GAAP and on an adjusted (or non-GAAP) basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, cost-savings initiatives and certain other items from the related GAAP financial measures. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the second quarters of 2014 and 2013. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release.
The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor's overall understanding of the financial performance and prospects for the future of the Company's core business activities by facilitating comparisons of results of core business operations among current, past and future periods. In addition, the Company believes that excluding the non-cash amortization of intangible assets, including developed product technology rights, acquired in business combinations treats those assets as if the Company had developed them internally in the past, and thus provides a supplemental measure of profitability in which the Company's acquired intellectual property is treated in a comparable manner to its internally developed intellectual property. The Company believes that FCF provides a further measure of the Company's liquidity.
The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
Amgen Webcast
As previously announced, Amgen will hold a conference call to discuss these results and the matters described in this news release today, July 29, 2014, at 2 p.m. PT. Participating in the call from Amgen will be Robert A. Bradway, chairman and chief executive officer, and other members of Amgen's senior management team. Slides further detailing these results and the matters to be discussed in the webcast are now available on Amgen's website, www.amgen.com, under Investors.
Live audio of the conference call will be simultaneously broadcast over the Internet and will be available to members of the news media, investors and the general public.
The webcast, as with other selected presentations regarding developments in Amgen's business given by management at certain investor and medical conferences, can be found on Amgen's website under Investors. Information regarding webcast presentation times, webcast availability, webcast links are noted on Amgen's Investor Relations Events Calendar. The webcast will be archived and available for replay for at least 90 days after the event
About Amgen
Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology.
Amgen focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer since 1980, Amgen has grown to be the world's largest independent biotechnology company, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.
For more information, visit www.amgen.com and follow us on www.twitter.com/amgen.
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, 2013, and in any subsequent periodic reports on Form 10-Q and Form 8-K. Words such as "expect," "anticipate," "outlook," "could," "target," "project," "intend," "plan," "believe," "seek," "estimate," "should," "may," "assume," or "continue," and variations of such words and similar expressions are intended to identify such forward looking statements. Reference is made in particular to forward-looking statements regarding product sales, revenue, expenses, earnings per share, tax rates, clinical trial results, regulatory filings and actions, Company strategy, restructuring charges, staff reductions and facility closures/dispositions and trends. We are providing this information as of the date of this news release and do 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. Our 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 payors, 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 healthcare 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. If we fail to meet the compliance obligations in the corporate integrity agreement between us and the U.S. government, we could become subject to significant sanctions. 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 efforts to integrate the operations of companies we have acquired may not be successful. Cost saving initiatives may result in us incurring impairment or other related charges on our assets. We may experience difficulties, delays or unexpected costs and not achieve anticipated cost savings from our recently announced restructuring plans. 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.
CONTACT: Amgen, Thousand Oaks
David Caouette, 805-447-2661 (media)
Arvind Sood, 805-447-1060 (investors)
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,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
Revenues:
Product sales $4,949 $4,595 $9,305 $8,746
Other
revenues 231 84 396 171
Total revenues 5,180 4,679 9,701 8,917
----- ----- ----- -----
Operating expenses:
Cost of sales 1,081 785 2,171 1,529
Research and
development 1,018 967 2,045 1,845
Selling,
general and
administrative 1,136 1,256 2,159 2,414
Other 43 121 60 137
Total operating expenses 3,278 3,129 6,435 5,925
----- ----- ----- -----
Operating income 1,902 1,550 3,266 2,992
Interest expense, net 282 241 541 504
Interest and other income, net 138 96 237 260
--- --- --- ---
Income before income taxes 1,758 1,405 2,962 2,748
Provision for income taxes 211 147 342 56
Net income $1,547 $1,258 $2,620 $2,692
====== ====== ====== ======
Earnings per share:
Basic $2.04 $1.67 $3.46 $3.58
Diluted $2.01 $1.65 $3.41 $3.52
Average shares used in calculation
of earnings per share:
Basic 759 752 758 752
Diluted 768 764 768 764
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
June 30, December 31,
2014 2013
---- ----
Assets
Current assets:
Cash, cash
equivalents
and
marketable
securities $26,188 $19,401
Trade
receivables,
net 2,697 2,697
Inventories 2,954 3,019
Other current
assets 2,489 2,250
Total
current
assets 34,328 27,367
Property, plant
and equipment,
net 5,371 5,349
Intangible assets,
net 13,499 13,262
Goodwill 14,844 14,968
Restricted
investments - 3,412
Other assets 1,492 1,767
----- -----
Total assets $69,534 $66,125
======= =======
Liabilities and
Stockholders'
Equity
Current
liabilities:
Accounts
payable
and
accrued
liabilities $5,366 $5,442
Current
portion of
long-term
debt 2,500 2,505
Total
current
liabilities 7,866 7,947
Long-term debt 30,828 29,623
Other non-current
liabilities 6,458 6,459
Stockholders'
equity 24,382 22,096
------ ------
Total liabilities
and stockholders'
equity $69,534 $66,125
======= =======
Shares outstanding 759 755
Amgen Inc.
GAAP to Adjusted Reconciliations
(In millions)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
-------- --------
2014 2013 2014 2013
---- ---- ---- ----
GAAP cost of sales $1,081 $785 $2,171 $1,529
Adjustments to cost of sales:
Acquisition-related expenses (a) (290) (70) (694) (141)
Stock option expense (2) (1) (4) (3)
Total adjustments to cost of sales (292) (71) (698) (144)
Adjusted cost of sales $789 $714 $1,473 $1,385
====
GAAP research and development expenses $1,018 $967 $2,045 $1,845
Adjustments to research and development
expenses:
Acquisition-related expenses (b) (38) (20) (69) (42)
Stock option expense (1) (3) (3) (8)
Total adjustments to research and development
expenses (39) (23) (72) (50)
Adjusted research and development expenses $979 $944 $1,973 $1,795
====
GAAP selling, general and administrative
expenses $1,136 $1,256 $2,159 $2,414
Adjustments to selling, general and
administrative expenses:
Acquisition-related expenses (b) (42) (16) (80) (26)
Stock option expense (1) (3) (3) (7)
Total adjustments to selling, general and
administrative expenses (43) (19) (83) (33)
Adjusted selling, general and administrative
expenses $1,093 $1,237 $2,076 $2,381
======
GAAP operating expenses $3,278 $3,129 $6,435 $5,925
Adjustments to operating expenses:
Adjustments to cost of sales (292) (71) (698) (144)
Adjustments to research and development
expenses (39) (23) (72) (50)
Adjustments to selling, general and
administrative expenses (43) (19) (83) (33)
Certain charges pursuant to our efforts to
improve cost efficiencies in our operations
(c) (23) (11) (38) (11)
Expense resulting from changes in the estimated
fair values of the contingent consideration
obligations related to prior year business
combinations (14) (110) (15) (111)
Other (d) (6) - (7) (15)
Total adjustments to operating expenses (417) (234) (913) (364)
Adjusted operating expenses $2,861 $2,895 $5,522 $5,561
======
GAAP income before income taxes $1,758 $1,405 $2,962 $2,748
Adjustments to income before income taxes:
Adjustments to operating expenses 417 234 913 364
Non-cash interest expense associated with our
convertible notes - - - 12
Total adjustments to income before income taxes 417 234 913 376
Adjusted income before income taxes $2,175 $1,639 $3,875 $3,124
======
GAAP provision for income taxes $211 $147 $342 $56
Adjustments to provision for income taxes:
Income tax effect of the above adjustments (e) 148 48 279 88
Other income tax adjustments (f) (7) - (7) 38
Total adjustments to provision for income taxes 141 48 272 126
Adjusted provision for income taxes $352 $195 $614 $182
====
GAAP net income $1,547 $1,258 $2,620 $2,692
Adjustments to net income:
Adjustments to income before income taxes, net
of the income tax effect of the above
adjustments 269 186 634 288
Other income tax adjustments (f) 7 - 7 (38)
Total adjustments to net income 276 186 641 250
Adjusted net income $1,823 $1,444 $3,261 $2,942
======
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. Dilutive securities used to
compute Adjusted diluted EPS were computed assuming
that we do not expense stock options.
Three months ended Three months ended
June 30, 2014 June 30, 2013
------------- -------------
GAAP Adjusted GAAP Adjusted
---- -------- ---- --------
Net income $1,547 $1,823 $1,258 $1,444
Weighted-average shares
for diluted EPS 768 768 764 763
Diluted EPS $2.01 $2.37 $1.65 $1.89
=====
Six months ended Six months ended
June 30, 2014 June 30, 2013
------------- -------------
GAAP Adjusted GAAP Adjusted
---- -------- ---- --------
Net income $2,620 $3,261 $2,692 $2,942
Weighted-average shares
for diluted EPS 768 768 764 764
Diluted EPS $3.41 $4.25 $3.52 $3.85
=====
(a) The adjustments
related
primarily to
non-cash
amortization of
intangible
assets,
including
developed
product
technology
rights,
acquired in
business
combinations.
For the six
months ended
June 30, 2014,
the adjustments
also included a
$99-million
charge related
to the
termination of
a supply
contract with
F. Hoffmann-La
Roche Ltd. as a
result of
acquiring the
licenses to
filgrastim and
pegfilgrastim
effective
January 1,
2014.
(b) The adjustments
related
primarily to
non-cash
amortization of
intangible
assets acquired
in business
combinations
and also
included other
acquisition-
related
expenses.
(c) The adjustments
related
primarily to
severance
expenses.
(d) The 2014
adjustments
related
primarily to
various
acquisition-
related
expenses. The
2013
adjustments
related to
various legal
proceedings.
(e) 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 the
majority of
amortization of
intangible
assets, 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, 2014
and 2013, were
35.5% and
30.6%,
respectively,
compared with
20.5% and 23.4%
for the
corresponding
periods of the
prior year.
(f) The adjustments
in 2014 related
to certain
prior period
items excluded
from adjusted
earnings. The
adjustments in
2013 related to
resolving
certain non-
routine
transfer-
pricing and
acquisition-
related matters
with tax
authorities.
Amgen Inc.
Reconciliations of Free Cash Flow
(In millions)
(Unaudited)
Three months ended
June 30,
--------
2014 2013
---- ----
Operating
Cash Flow $2,227 $1,600
Capital
Expenditures (173) (159)
Free Cash
Flow $2,054 $1,441
========
Amgen Inc
Reconciliation of GAAP EPS Guidance to Adjusted
EPS Guidance for the Year Ending December 31, 2014
(Unaudited)
2014
----
GAAP diluted EPS guidance $6.38 - $6.67
Known adjustments to arrive at Adjusted
earnings*:
Acquisition-related expenses (a) 1.32
Other (b) 0.04
Tax adjustments (c) 0.01
Restructuring charges (d) 0.36 - 0.45
Adjusted diluted EPS guidance $8.20 - $8.40
===== === =====
* The known adjustments are presented
net of their related tax impact
which amount to approximately $0.84
per share in the aggregate.
(a) The adjustments relate primarily to
non-cash amortization of intangible
assets acquired in prior year
business combinations
(b) The adjustments relate primarily to
cost savings initiatives and also
include stock option expense and
various legal proceedings
(c) The adjustments related to certain
prior period items excluded from
adjusted earnings
(d) Estimated 2014 impact of
restructuring charges announced on
July 29, 2014
Reconciliation of GAAP Tax Rate Guidance to Adjusted
Tax Rate Guidance for the Year Ending December 31, 2014
(Unaudited)
2014
----
GAAP tax rate guidance 8% - 9%
Tax rate effect
of known
adjustments
discussed above 7%
Adjusted tax rate guidance 15% - 16%
=== === ===
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SOURCE Amgen
