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

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