Amgen's Full Year 2012 Revenues Increased 11 Percent To $17.3 Billion And Adjusted Earnings Per Share (EPS) Increased 22 Percent To $6.51

Full Year 2012 GAAP EPS Were $5.52

2013 Total Revenues and Adjusted EPS Expected to be in the Range of $17.8-$18.2 Billion and $6.85-$7.15, Respectively

23 Jan, 2013, 16:01 ET from Amgen

THOUSAND OAKS, Calif., Jan. 23, 2013 /PRNewswire/ -- Amgen (NASDAQ: AMGN) today announced financial results for the fourth quarter and full year of 2012. Key results include:

  • For the full year, total revenues increased 11 percent to $17,265 million, with 9 percent product sales growth driven by strong performance across the portfolio. Adjusted EPS grew 22 percent to $6.51 due to 15 percent adjusted operating income growth and lower shares outstanding. 
  • For the fourth quarter, total revenues increased 11 percent to $4,421 million, with product sales growing at the same rate. Adjusted EPS grew 16 percent to $1.40 due to 11 percent adjusted operating income growth and lower shares outstanding. 
  • GAAP EPS were $1.01 in the fourth quarter compared to $1.08 a year ago, and were $5.52 for the full year compared to $4.04 in 2011. Full year 2011 was negatively impacted by a previously disclosed charge for a legal settlement reserve.
  • Free cash flow for the full year was $5.2 billion compared to $4.5 billion in 2011.
  • The Company announced that it has initiated Phase 3 studies for AMG 145 in subjects with high levels of low-density lipoprotein (LDL) cholesterol. 

"We achieved strong operating performance in 2012 as we delivered for patients and created value for shareholders," said Robert A. Bradway, chairman and chief executive officer at Amgen.  "We enter 2013 with good momentum, a broad late-stage pipeline and a continued focus on building our business internationally."

Year-over-Year

Year-over-Year

$Millions, except EPS and percentages

Q4 '12

Q4 '11

YOY Δ

FY '12

FY '11

YOY Δ

Total Revenues

$4,421

$3,973

11%

$17,265

$15,582

11%

Adjusted Net Income

1,088

1,039

5%

5,119

4,858

5%

Adjusted EPS

1.40

1.21

16%

6.51

5.33

22%

GAAP Net Income

788

934

(16%)

4,345

3,683

18%

GAAP EPS

$1.01

$1.08

(6%)

$5.52

$4.04

37%

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 9 percent for the full year, driven by strong performance across the portfolio.  Product sales increased 11 percent for the fourth quarter of 2012 versus the fourth quarter of 2011 driven by Enbrel® (etanercept), XGEVA® (denosumab) and Prolia® (denosumab).
  • Combined Neulasta® (pegfilgrastim) and NEUPOGEN® (Filgrastim) sales declined 1 percent for the fourth quarter of 2012 versus the fourth quarter of 2011, and increased 3 percent for the full year.
    • Global Neulasta sales for the fourth quarter of 2012 versus the fourth quarter of 2011 were flat as price increases were offset by unit declines and unfavorable inventory changes. Sales increased 4 percent for the full year mainly due to price increases.
    • Global NEUPOGEN sales for the fourth quarter of 2012 versus the fourth quarter of 2011 declined 3 percent driven by a decrease in unit demand from loss of share to biosimilars in Europe. Sales were flat for the full year as price increases offset unit declines.
  • ENBREL sales for the fourth quarter of 2012 versus the fourth quarter of 2011 increased 23 percent driven by increases in the average net sales price and unit demand. Sales increased 14 percent for the full year due mainly to price increases and unit growth.
  • Aranesp® (darbepoetin alfa) sales decreased 9 percent for the fourth quarter of 2012 versus the fourth quarter of 2011 and 11 percent for the full year due to changes in practice patterns.  Sequentially, sales were down 2 percent. 
  • EPOGEN® (epoetin alfa) sales for the fourth quarter of 2012 versus the fourth quarter of 2011 decreased 1 percent driven by a reduction in dose utilization, offset largely by a reduction in customer discounts and favorable changes in accounting estimates. Sales for the full year decreased 5 percent as unit declines were offset partially by a reduction in customer discounts and favorable changes in accounting estimates.
  • Sensipar®/Mimpara® (cinacalcet) sales increased 19 percent for the fourth quarter of 2012 versus the fourth quarter of 2011 and 18 percent for the full year due to unit growth and price increases.
  • Combined sales of Vectibix® (panitumumab) and Nplate® (romiplostim) increased 15 percent for the fourth quarter of 2012 versus the fourth quarter of 2011 and 17 percent for the full year due to unit growth.
  • XGEVA sales increased 7 percent on a sequential basis and 113 percent for the full year due to unit growth.
  • Prolia sales increased 40 percent on a sequential basis and 133 percent for the full year due to unit growth.  

Product Sales Detail by Product and Geographic Region

$Millions, except percentages

Q4 '12

Q4 '11

YOY Δ

US

ROW

TOTAL

TOTAL

TOTAL

Neulasta®/ NEUPOGEN®

$1,026

$280

$1,306

$1,319

(1%)

Neulasta®

775

219

994

998

0%

NEUPOGEN®

251

61

312

321

(3%)

Enbrel®

1,086

75

1,161

945

23%

Aranesp®

187

302

489

538

(9%)

EPOGEN®

479

0

479

486

(1%)

Sensipar® / Mimpara®

177

79

256

216

19%

Vectibix®

30

61

91

87

5%

Nplate®

57

44

101

80

26%

XGEVA®

178

37

215

134

60%

Prolia®

95

59

154

81

90%

Other 

0

85

85

21

*

Total product sales

$3,315

$1,022

$4,337

$3,907

11%

* Change in excess of 100%

 

$Millions, except percentages

FY '12

FY '11

YOY Δ

US

ROW

TOTAL

TOTAL

TOTAL

Neulasta®/ NEUPOGEN®

$4,214

$1,138

$5,352

$5,212

3%

Neulasta®

3,207

885

4,092

3,952

4%

NEUPOGEN®

1,007

253

1,260

1,260

0%

Enbrel®

3,967

269

4,236

3,701

14%

Aranesp®

782

1,258

2,040

2,303

(11%)

EPOGEN®

1,941

0

1,941

2,040

(5%)

Sensipar® / Mimpara®

639

311

950

808

18%

Vectibix®

122

237

359

322

11%

Nplate®

214

154

368

297

24%

XGEVA®

644

104

748

351

*

Prolia®

292

180

472

203

*

Other 

0

173

173

58

*

Total product sales

$12,815

$3,824

$16,639

$15,295

9%

* Change in excess of 100%

Operating Expense and Tax Rate Analysis, on an Adjusted Basis

  • Cost of Sales, excluding the impact of the Puerto Rico excise tax, increased 0.3 points to 14.7 percent in the fourth quarter of 2012 and increased 0.4 points to 14.4 percent for the full year due to product mix, offset partially by manufacturing efficiencies and higher average net sales price. 
  • Research & Development (R&D) expenses increased 9 percent in the fourth quarter of 2012 driven by later-stage clinical programs, primarily AMG 145 and romosozumab (AMG 785). For the full year, R&D expenses increased 6 percent driven by later-stage clinical programs, primarily AMG 145 and romosozumab (AMG 785), offset partially by reduced expenses associated with marketed product support.
  • Selling, General & Administrative (SG&A) expenses increased 13 percent in the fourth quarter of 2012 driven by higher ENBREL profit share expenses and international expansion.  ENBREL profit share expenses increased 27 percent to $414 million in the fourth quarter.  For the full year, SG&A expenses increased 6 percent, driven primarily by higher ENBREL profit share expenses and international expansion, offset partially by a favorable change to the estimated U.S. healthcare reform federal excise fee. ENBREL profit share expenses increased 16 percent to $1,495 million in 2012.

$Millions, except percentages

On an Adjusted Basis

Q4 '12

Q4 '11

YOY Δ

FY '12

FY '11

YOY Δ

Cost of Sales

$727

$643

13%

$2,735

$2,345

17%

% of sales

16.8%

16.5%

0.3 pts

16.4%

15.3%

1.1 pts

% of sales (Excluding PR excise tax)

14.7%

14.4%

0.3 pts

14.4%

14.0%

0.4 pts

Research & Development

$917

$842

9%

$3,296

$3,116

6%

% of sales

21.1%

21.6%

(0.5) pts

19.8%

20.4%

(0.6) pts

Selling, General & Administrative

$1,351

$1,199

13%

$4,717

$4,434

6%

% of sales

31.2%

30.7%

0.5 pts

28.3%

29.0%

(0.7) pts

TOTAL Operating Expenses

$2,995

$2,684

12%

$10,748

$9,895

9%

pts: percentage points

 

  • Tax Rate increased by 1.8 points to 16.1 percent in the fourth quarter of 2012 due primarily to the unfavorable tax impact of changes in the jurisdictional mix of income and expenses, as well as the benefit in the fourth quarter of 2011 from the federal R&D tax credit which was not reinstated prior to 2012 year-end. This increase was offset partially by the favorable resolution of certain state tax matters related to prior years. For the full year, the adjusted tax rate increased 1.6 points to 15.9 percent due primarily to the federal R&D tax credit included in 2011 but not in 2012, the unfavorable tax impact of changes in the jurisdictional mix of income and expenses, offset partially by the favorable resolution of certain state tax matters related to prior years. 

On an Adjusted Basis

Q4 '12

Q4 '11

YOY Δ

FY '12

FY '11

YOY Δ

Tax Rate

16.1%

14.3%

1.8 pts

15.9%

14.3%

1.6 pts

Tax Rate (Excluding PR excise tax credits)

20.3%

18.1%

2.2 pts

20.3%

19.2%

1.1 pts

pts: percentage points

Cash Flow and Balance Sheet Discussion

  • The Company generated $0.6 billion of free cash flow in the fourth quarter of 2012 versus $1.4 billion in the fourth quarter of 2011. The decrease was driven by a $0.8 billion payment related to a previously disclosed legal settlement. For the full year, free cash flow increased $0.7 billion to $5.2 billion driven by improved collections of receivables, termination of fixed to floating interest rate swap agreements, and higher net income, offset partially by the aforementioned legal settlement payment.
  • During the fourth quarter, Amgen repurchased approximately 14 million shares of common stock at a total cost of $1.2 billion and at an average price of $86.56. This brings the total shares repurchased under its $10 billion authorized stock repurchase program to 146 million at a total cost of $9.7 billion and at an average price of $66.37. The Company previously announced a $2 billion increase in share repurchase authorization by its Board of Directors. Amgen expects that this increase will cover the Company's share repurchase activity into 2014.
  • The Company previously announced that its Board of Directors declared a $0.47 per share dividend for the first quarter of 2013. The dividend will be paid on March 7, 2013, to all stockholders of record as of the close of business on Feb. 13, 2013. This represents a 31 percent increase from that paid in each of the previous four quarters.

$Billions, except shares

Q4 '12

Q4 '11

YOY Δ

FY '12

FY '11

YOY Δ

Operating Cash Flow

$0.8

$1.6

($0.8)

$5.9

$5.1

$0.8

Capital Expenditures

0.2

0.2

0.0

0.7

0.6

0.1

Free Cash Flow

0.6

1.4

(0.8)

5.2

4.5

0.7

Dividend Paid

0.3

0.2

0.1

1.1

0.5

0.6

Cost of Shares Repurchased

1.2

5.2

(4.0)

4.7

8.3

(3.6)

Adjusted Avg. Diluted Shares (millions)

778

860

(82)

786

912

(126)

Cash Balance

24.1

20.6

3.5

24.1

20.6

3.5

Adjusted Debt Outstanding

26.5

21.6

4.9

26.5

21.6

4.9

Stockholders' Equity

19.1

19.0

0.1

19.1

19.0

0.1

Note: Numbers may not add due to rounding

2013 Guidance

For the full year 2013, the Company expects:

  • Total revenues to be in the range of $17.8 billion to $18.2 billion and adjusted EPS to be in the range of $6.85 to $7.15.
  • Adjusted tax rate to be in the range of 14 percent to 15 percent. This reflects the impact of the foreign tax credit associated with the Puerto Rico excise tax. Excluding the Puerto Rico excise tax, Amgen expects the adjusted tax rate for 2013 to be in the range of 17 percent to 18 percent.
  • Capital expenditures to be approximately $700 million.

Product and Pipeline Update

  • AMG 145:  The Company recently initiated Phase 3 studies in subjects with high levels of LDL cholesterol.
  • Trebananib (AMG 386):  Enrollment has resumed for the Phase 3 study in recurrent ovarian cancer that was previously suspended due to DOXIL® (doxorubicin HCl liposome injection) supply issues.
  • Aranesp:  The Company announced top-line results of the Phase 3 RED-HF® (Reduction of Events With Darbepoetin Alfa in Heart Failure) Trial.
  • deCODE Genetics:  The Company completed the acquisition of deCODE Genetics in December 2012.

Non-GAAP Financial Measures The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures included above for the three and twelve months ended Dec. 31, 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 and Free Cash Flow which is a non-GAAP financial measure for the three and twelve months ended Dec. 31, 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 Dec. 31, 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.

About Amgen Amgen discovers, develops, manufactures and delivers innovative human therapeutics. A biotechnology pioneer since 1980, Amgen was one of the first companies to realize the new science's promise by bringing safe, effective medicines from lab to manufacturing plant to patient. Amgen therapeutics have changed the practice of medicine, helping millions of people around the world in the fight against cancer, kidney disease, rheumatoid arthritis, bone disease and other serious illnesses. With a deep and broad pipeline of potential new medicines, Amgen remains committed to advancing science to dramatically improve people's lives. To learn more about our pioneering science and vital medicines, visit www.amgen.com. 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, 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. 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 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

Years ended

December 31, 

December 31, 

2012

2011

2012

2011

Revenues:

Product sales

$  4,337

$       3,907

$ 16,639

$ 15,295

Other revenues

84

66

626

287

Total revenues

4,421

3,973

17,265

15,582

Operating expenses:

Cost of sales (excludes amortization of certain

acquired intangible assets presented below)

852

656

2,918

2,427

Research and development

938

851

3,380

3,167

Selling, general and administrative

1,370

1,208

4,801

4,486

Amortization of certain acquired intangible assets

73

73

294

294

Other

100

23

295

896

Total operating expenses

3,333

2,811

11,688

11,270

Operating income

1,088

1,162

5,577

4,312

Interest expense, net

291

195

1,053

610

Interest and other income, net

126

84

485

448

Income before income taxes

923

1,051

5,009

4,150

Provision for income taxes

135

117

664

467

Net income

$     788

$          934

$   4,345

$   3,683

Earnings per share:

Basic

$    1.03

$         1.09

$     5.61

$     4.07

Diluted

$    1.01

$         1.08

$     5.52

$     4.04

Average shares used in calculation

of earnings per share:

Basic

763

854

775

905

Diluted

778

861

787

912

 

Amgen Inc.

Condensed Consolidated Balance Sheets - GAAP 

(In millions)

(Unaudited)

December 31, 

December 31, 

2012

2011

Assets

Current assets:

Cash, cash equivalents and marketable securities

$                 24,061

$                 20,641

Trade receivables, net

2,518

2,896

Inventories

2,744

2,484

Other current assets

1,886

1,572

Total current assets

31,209

27,593

Property, plant and equipment, net

5,326

5,420

Intangible assets, net

3,968

2,584

Goodwill

12,662

11,750

Other assets

1,133

1,524

Total assets

$                 54,298

$                 48,871

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable and accrued liabilities

$                   5,608

$                   5,670

Current portion of long-term debt

2,495

84

Total current liabilities

8,103

5,754

Long-term debt

24,034

21,344

Other non-current liabilities

3,101

2,744

Stockholders' equity

19,060

19,029

Total liabilities and stockholders' equity

$                 54,298

$                 48,871

Shares outstanding

756

796

Amgen Inc.

GAAP to "Adjusted" Reconciliations

(In millions)

(Unaudited)

Three months ended

Years ended

December 31, 

December 31, 

2012

2011

2012

2011

GAAP cost of sales

$    852

$          656

$   2,918

$        2,427

Adjustments to cost of sales:

Certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations (a)

(118)

(11)

(160)

(65)

Acquisition-related expenses

(4)

-

(11)

(7)

Stock option expense (b)

(3)

(2)

(12)

(10)

Total adjustments to cost of sales

(125)

(13)

(183)

(82)

Adjusted cost of sales

$    727

$          643

$   2,735

$        2,345

GAAP research and development expenses

$    938

$          851

$   3,380

$        3,167

Adjustments to research and development expenses:

Acquisition-related expenses

(16)

(1)

(50)

(28)

Certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations

-

-

(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

Stock option expense  (b)

(5)

(8)

(22)

(35)

Total adjustments to research and development expenses

(21)

(9)

(84)

(51)

Adjusted research and development expenses

$    917

$          842

$   3,296

$        3,116

GAAP selling, general and administrative expenses

$  1,370

$        1,208

$   4,801

$        4,486

Adjustments to selling, general and administrative expenses:

Acquisition-related expenses

(14)

(1)

(59)

(12)

Stock option expense (b)

(5)

(8)

(25)

(40)

Total adjustments to selling, general and administrative expenses

(19)

(9)

(84)

(52)

Adjusted selling, general and administrative expenses

$  1,351

$        1,199

$   4,717

$        4,434

GAAP operating expenses

$  3,333

$        2,811

$  11,688

$      11,270

Adjustments to operating expenses:

Adjustments to cost of sales

(125)

(13)

(183)

(82)

Adjustments to research and development expenses

(21)

(9)

(84)

(51)

Adjustments to selling, general and administrative expenses

(19)

(9)

(84)

(52)

Non-cash amortization of product technology rights acquired in a prior year business combination

(73)

(73)

(294)

(294)

Certain charges pursuant to our continuing efforts to improve cost efficiencies in our operations

(69)

(30)

(175)

(109)

Acquisition-related expenses

(6)

-

(25)

-

(Expense)/benefit resulting from changes in the estimated fair values of the contingent consideration obligations related to a prior year business combination

(26)

8

(31)

(1)

Benefit/(expenses) related to various legal proceedings

1

(1)

(64)

(786)

Total adjustments to operating expenses

(338)

(127)

(940)

(1,375)

Adjusted operating expenses

$  2,995

$        2,684

$  10,748

$        9,895

GAAP operating income

$  1,088

$        1,162

$   5,577

$        4,312

Adjustments to operating expenses

338

127

940

1,375

Adjusted operating income

$  1,426

$        1,289

$   6,517

$        5,687

GAAP income before income taxes

$    923

$        1,051

$   5,009

$        4,150

Adjustments to income before income taxes:

Adjustments to operating expenses

338

127

940

1,375

Non-cash interest expense associated with our convertible notes

36

34

140

143

Total adjustments to income before income taxes

374

161

1,080

1,518

Adjusted income before income taxes

$  1,297

$        1,212

$   6,089

$        5,668

GAAP provision for income taxes

$    135

$          117

$      664

$          467

Adjustments to provision for income taxes:

Income tax effect of the above adjustments (c)

97

56

329

331

Income tax net expense/(benefit) related to certain prior period items excluded from "Adjusted" earnings

(23)

-

(23)

12

Total adjustments to provision for income taxes

74

56

306

343

Adjusted provision for income taxes

$    209

$          173

$      970

$          810

GAAP net income

$    788

$          934

$   4,345

$        3,683

Adjustments to income before income taxes, net of the tax effect of the above adjustments

277

105

751

1,187

Income tax net expense/(benefit) related to certain prior period items excluded from "Adjusted" earnings

23

-

23

(12)

Adjusted net income

$  1,088

$        1,039

$   5,119

$        4,858

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

December 31, 2012

December 31, 2011

GAAP

"Adjusted"  

GAAP

"Adjusted"  

Income (Numerator):

Net income for basic and diluted EPS

$    788

$        1,088

$      934

$        1,039

Shares (Denominator):

Weighted-average shares for basic EPS

763

763

854

854

Effect of dilutive securities

15

15

(*)

7

6

(*)

Weighted-average shares for diluted EPS

778

778

861

860

Diluted EPS

$   1.01

$         1.40

$     1.08

$         1.21

Year ended

Year ended

December 31, 2012

December 31, 2011

GAAP

"Adjusted" 

GAAP

"Adjusted" 

Income (Numerator):

Net income for basic and diluted EPS

$  4,345

$        5,119

$   3,683

$        4,858

Shares (Denominator):

Weighted-average shares for basic EPS

775

775

905

905

Effect of dilutive securities

12

11

(*)

7

7

(*)

Weighted-average shares for diluted EPS

787

786

912

912

Diluted earnings per share

$   5.52

$         6.51

$     4.04

$         5.33

(*)  Dilutive securities used to compute "Adjusted" diluted EPS for the three months and years ended December 31, 2012 and 2011 were computed under the treasury stock method assuming that we do not expense stock options.

(a)

The adjustments during the years ended 2012 and 2011 include incremental expenses resulting from our transaction with Boehringer Ingelheim.  The adjustment during the three months ended December 31, 2012, relates to a charge in connection with the rationalization of our worldwide manufacturing operations.

(b)

For the three months and years ended December 31, 2012 and 2011, the total pre-tax expense for employee stock options was $13 million and $59 million, respectively and $18 million and $85 million, respectively.

"Adjusted" diluted EPS including the impact of stock option expense for the three months and years ended December 31, 2012 and 2011 was as follows: 

Three months ended

Years ended

December 31, 

December 31, 

2012

2011

2012

2011

"Adjusted" diluted EPS, excluding stock option expense

$   1.40

$         1.21

$     6.51

$         5.33

Impact of stock option expense (net of tax)

(0.01)

(0.02)

(0.06)

(0.07)

"Adjusted" diluted EPS, including stock option expense

$   1.39

$         1.19

$     6.45

$         5.26

(c)

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 months and years ended December 31, 2012, were 25.9% and 30.5%, respectively, compared with 34.8% and 21.8% for the corresponding periods of the prior year.

Amgen Inc.

Reconciliation of GAAP Debt Outstanding to "Adjusted" Debt Outstanding

(In millions)

(Unaudited)

GAAP

Adjustments for accounting standard (a)

"Adjusted"

December 31, 2011

$           21,428

$                  154

$           21,582

December 31, 2012

$           26,529

$                    12

$           26,541

(a)

To exclude the impact of bifurcating the debt and equity components of our convertible notes as required by U.S. accounting standards for these securities commencing in 2009.

 

Reconciliation of Free Cash Flow

(In millions)

(Unaudited)

Three months ended

Years ended

December 31, 

December 31,

2012

2011

2012

2011

Cash Flows from Operations

$                       812

$                  1,584

$              5,882

$              5,119

Capital Expenditures

(200)

(224)

(689)

(567)

Free Cash Flow

$                       612

$                  1,360

$              5,193

$              4,552

Amgen Inc.

Reconciliation of GAAP EPS Guidance to "Adjusted" 

EPS Guidance for the Year Ending December 31, 2013

(Unaudited)

2013

GAAP EPS (diluted) guidance

$        6.46

-

$        6.76

Known adjustments to arrive at "Adjusted" earnings*:

Amortization of acquired intangible assets

(a)

0.34

Stock option expense

(b)

0.04

Non-cash interest expense associated with our convertible notes

(c)

0.01

"Adjusted" EPS (diluted) guidance

$        6.85

-

$        7.15

*

The known adjustments are presented net of their related aggregate tax impact of approximately $0.19 per share. 

(a)

To exclude the non-cash amortization of intangible assets acquired in prior year business combinations.

(b)

To exclude stock option expense.

(c)

To exclude the non-cash interest expense associated with our convertible notes.

Reconciliation of GAAP Tax Rate Guidance to "Adjusted" 

Tax Rate Guidance for the Year Ending December 31, 2013

(Unaudited)

2013 with PR excise tax credit

2013 without PR excise tax credit

GAAP tax rate guidance

12.5%

-

13.6%

15.8%

-

16.9%

Tax rate effect of known adjustments discussed above

1.5%

-

1.4%

1.2%

-

1.1%

"Adjusted" tax rate guidance

14.0%

-

15.0%

17.0%

-

18.0%

 

 

CONTACT: Amgen, Thousand Oaks Ashleigh Koss, 805-313-6151 (media) Arvind Sood, 805-447-1060 (investors)

(Logo: http://photos.prnewswire.com/prnh/20081015/AMGENLOGO)

SOURCE Amgen



RELATED LINKS

http://www.amgen.com