Amgen's Second Quarter 2013 Revenues Increased 5 Percent To $4.7 Billion And Adjusted Earnings Per Share (EPS) Increased 3 Percent To $1.89 Second Quarter 2013 GAAP EPS Were $1.65

2013 Total Revenues and Adjusted EPS Guidance Increased to the Upper End of $17.8-$18.2 Billion and $7.30-$7.45

THOUSAND OAKS, Calif., July 30, 2013 /PRNewswire/ -- Amgen (NASDAQ: AMGN) today announced financial results for the second quarter of 2013.  Key results for the quarter include:

  • Total revenues increased 5 percent to $4,679 million, with 9 percent product sales growth driven by Enbrel® (etanercept), Neulasta® (pegfilgrastim), XGEVA® (denosumab), and Prolia® (denosumab).  Product sales included a positive adjustment of $185 million to previous estimates for managed Medicaid rebates based on recent claims experience.  Other revenues were lower by $193 million as a result of a payment from Takeda recognized in the second quarter of 2012.
  • Adjusted EPS grew 3 percent to $1.89, with higher revenues and a lower tax rate partially offset by increased Research & Development (R&D) investment.  Adjusted net income increased 1 percent to $1,444 million.
  • GAAP EPS were $1.65 compared to $1.61 and GAAP net income was $1,258 million compared to $1,266 million.
  • The Company generated approximately $1.4 billion of free cash flow.

"We saw solid product trends during the second quarter and are carrying good momentum into the second half," said Robert A. Bradway, chairman and chief executive officer at Amgen. "We continue to make excellent progress with our pipeline of innovative molecules and look forward to multiple data readouts in 2014, including pivotal Phase 3 data for our cholesterol-lowering agent, AMG 145, in the first quarter."



Year-over-Year

$Millions, except EPS and percentages


Q2 '13


Q2 '12


YOY Δ








Total Revenues


$4,679


$4,477


5%

Adjusted Net Income


1,444


1,433


1%

Adjusted EPS


1.89


1.83


3%








GAAP Net Income


1,258


1,266


(1%)

GAAP EPS


$1.65


$1.61


2%








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 year-over-year.
  • Combined Neulasta and NEUPOGEN (filgrastim) sales increased 7 percent year-over-year.
    • Global Neulasta sales increased 10 percent driven by price increases, increases in wholesaler inventory and the Medicaid rebate adjustment, partially offset by unit declines.
    • Global NEUPOGEN sales declined 2 percent driven by lower units, partially offset by price increases and the Medicaid rebate adjustment. 
  • ENBREL sales increased 9 percent mainly driven by price increases.
  • Aranesp® (darbepoetin alfa) sales decreased 2 percent year-over-year.  Sequentially, sales were flat excluding the Medicaid rebate adjustment.
  • EPOGEN® (epoetin alfa) sales decreased 4 percent year-over-year.  Sequentially, sales increased 15 percent driven by an increase in units due to the peginesatide recall and the Medicaid rebate adjustment.
  • Sensipar®/Mimpara® (cinacalcet) sales increased 12 percent year-over-year driven by increases in unit demand.
  • Combined sales of Vectibix® (panitumumab) and Nplate® (romiplostim) increased 13 percent, mainly due to unit growth. 
  • XGEVA sales increased 39 percent year-over-year and 12 percent on a sequential basis, reflecting increased segment share.
  • Prolia sales increased 57 percent year-over-year and increased 32 percent on a sequential basis due to increased segment share, partially driven by seasonality.   

Product Sales Detail by Product and Geographic Region 

$Millions, except percentages


Q2 '13


Q2 '12


YOY Δ



US

ROW

TOTAL


TOTAL


TOTAL










Neulasta®/ NEUPOGEN®


$1,164

$280

$1,444


$1,347


7%

Neulasta®


897

223

1,120


1,015


10%

NEUPOGEN®


267

57

324


332


(2%)

Enbrel®


1,089

68

1,157


1,058


9%

Aranesp®


228

296

524


536


(2%)

EPOGEN®


502

0

502


525


(4%)

Sensipar® / Mimpara®


178

81

259


232


12%

Vectibix®


31

62

93


90


3%

Nplate®


62

43

105


86


22%

XGEVA®/ Prolia®

307

130

437


299


46%

XGEVA®


189

60

249


179


39%

Prolia®


118

70

188


120


57%

Other


0

74

74


27


*










Total product sales


$3,561

$1,034

$4,595


$4,200


9%










* Change in excess of 100%









Operating Expense and Tax Rate Analysis, on an Adjusted Basis

  • Cost of Sales margin, excluding the impact of the Puerto Rico excise tax, was flat year-over-year.
  • R&D expenses increased 17 percent primarily in support of our later-stage clinical programs, including AMG 145.
  • Selling, General & Administrative (SG&A) expenses increased 3 percent driven primarily by higher ENBREL profit share expenses. ENBREL profit share expenses increased 15 percent to $425 million

$Millions, except percentages







On an Adjusted Basis


Q2 '13


Q2 '12


YOY Δ










Cost of Sales

$714


$668


7%


% of sales

15.5%


15.9%


(0.4) pts.


% of sales (Excluding PR excise tax)

13.9%


13.9%


0 pts.

Research & Development

$944


$807


17%


% of sales

20.5%


19.2%


1.3 pts.

Selling, General & Administrative

$1,237


$1,199


3%


% of sales

26.9%


28.5%


(1.6) pts.

TOTAL Operating Expenses

$2,895


$2,674


8%

pts: percentage points







  • Adjusted Tax Rate for the second quarter of 2013 reflects the favorable tax impacts of the federal R&D credit and changes in the jurisdictional mix of income and expenses.









On an Adjusted Basis


Q2 '13


Q2 '12


YOY Δ










Tax Rate

11.9%


16.0%


(4.1) pts.

Tax Rate (Excluding PR excise tax credits)

16.3%


20.6%


(4.3) pts.

pts: percentage points







Cash Flow and Balance Sheet Discussion

  • The Company generated $1.4 billion of free cash flow in the second quarter of 2013 versus $2.2 billion in the second quarter of 2012. The decrease was primarily driven by cash received in the second quarter of 2012 from the termination of fixed to floating interest rate swap agreements and the collection of outstanding trade receivables in Spain.
  • The Company did not repurchase shares in the quarter and has $1.6 billion remaining under its stock repurchase authorization.
  • The Company previously announced that its Board of Directors declared a $0.47 per share dividend for the third quarter of 2013. The dividend will be paid on Sept. 6, 2013, to all stockholders of record as of the close of business on Aug. 16, 2013.

$Billions, except shares


Q2 '13


Q2 '12


YOY Δ










Operating Cash Flow

$1.6


$2.4


(0.8)

Capital Expenditures

(0.2)


(0.2)


0.0

Free Cash Flow

1.4


2.2


(0.8)

Dividend Paid

0.4


0.3


0.1

Cost of Shares Repurchased

0.0


1.2


(1.2)

Adjusted Avg. Diluted Shares (millions)

763


784


(21)










Cash Balance

22.0


22.5


(0.5)

Debt Outstanding

23.9


24.4


(0.5)

Stockholders' Equity

20.6


19.2


1.4

Note: Numbers may not add due to rounding







2013 Guidance

For the full year 2013, the Company expects:

  • Total revenues to be at the upper end of $17.8 billion to $18.2 billion
  • Adjusted EPS to be in the range of $7.30 to $7.45
  • Adjusted tax rate to be in the range of 9 percent to 10 percent.  This reflects the favorable tax impact of changes in the jurisdictional mix of income and expenses.  Excluding the Puerto Rico excise tax, Amgen expects the adjusted tax rate for 2013 to be in the range of 13 percent to 14 percent.
  • Capital expenditures to be approximately $700 million, unchanged from previous guidance.

Second Quarter Product and Pipeline Update

The Company provided the following information on selected products and clinical programs:

  • Talimogene laherparepvec:  The Company announced that primary analysis of the event-driven overall survival secondary endpoint from a Phase 3 study in melanoma is projected to occur in the first half of 2014.
  • Trebananib:  The Company announced that primary analysis of the event-driven overall survival secondary endpoint from a Phase 3 study in recurrent ovarian cancer is projected to occur in the second half of 2014.
  • XGEVA:  The Company discussed the FDA approval of XGEVA for the treatment of giant cell tumor of bone.
  • AMG 145: The Company announced that pivotal data from AMG 145 Phase 3 studies in subjects with elevated LDL cholesterol is expected in the first quarter of 2014.

Non-GAAP Financial Measures

The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures included above for the second quarters of 2013 and 2012 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 second quarters of 2013 and 2012.  In addition, management has presented its full year 2013 EPS and tax rate guidance in accordance with GAAP and on an "adjusted" (or non-GAAP) basis.  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. 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, 2012, and in any subsequent 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 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 business performance could affect or limit the ability of our Board of Directors to declare a dividend or our ability to pay a dividend or repurchase our common stock.

 

Amgen Inc.









Condensed Consolidated Statements of Income - GAAP







(In millions, except per share data)









(Unaudited)
























Three months ended


Six months ended





June 30,


June 30,





2013


2012


2013


2012

Revenues:










Product sales


$ 4,595


$ 4,200


$ 8,746


$ 8,101


Other revenues


84


277


171


424



Total revenues


4,679


4,477


8,917


8,525












Operating expenses:










Cost of sales


785


752


1,529


1,502


Research and development


967


826


1,845


1,562


Selling, general and administrative


1,256


1,231


2,414


2,310


Other


121


79


137


85



Total operating expenses


3,129


2,888


5,925


5,459












Operating income


1,550


1,589


2,992


3,066












Interest expense, net


241


256


504


491

Interest and other income, net


96


124


260


248












Income before income taxes


1,405


1,457


2,748


2,823












Provision for income taxes


147


191


56


373












Net income


$ 1,258


$ 1,266


$ 2,692


$ 2,450












Earnings per share:










Basic


$ 1.67


$ 1.63


$ 3.58


$ 3.13


Diluted


$ 1.65


$ 1.61


$ 3.52


$ 3.09












Average shares used in calculation of earnings per share:









Basic


752


776


752


783


Diluted


764


785


764


792












Amgen Inc.







Condensed Consolidated Balance Sheets - GAAP






(In millions)







(Unaudited)
























June 30,


December 31,








2013


2012

Assets








Current assets:








Cash, cash equivalents and marketable securities


$ 22,018


$ 24,061


Trade receivables, net


2,674


2,518


Inventories


2,773


2,744


Other current assets


2,208


1,886


    Total current assets


29,673


31,209

Property, plant and equipment, net


5,293


5,326

Intangible assets, net


3,776


3,968

Goodwill


12,578


12,662

Other assets


1,290


1,133

Total assets


$ 52,610


$ 54,298











Liabilities and Stockholders' Equity







Current liabilities:








Accounts payable and accrued liabilities


$ 4,777


$ 5,696


Current portion of long-term debt


7


2,495


    Total current liabilities


4,784


8,191

Long-term debt


23,908


24,034

Other non-current liabilities


3,324


3,013

Stockholders' equity


20,594


19,060

Total liabilities and stockholders' equity


$ 52,610


$ 54,298











Shares outstanding


753


756

Amgen Inc.









GAAP to "Adjusted" Reconciliations









(In millions)









(Unaudited)































Three months ended


Six months
ended




June 30,


June 30,




2013


2012


2013


2012













GAAP cost of sales

$ 785


$ 752


$ 1,529


$ 1,502



    Adjustments to cost of sales:










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

(70)


(70)


(141)


(141)



        Stock option expense (a)

(1)


(3)


(3)


(6)



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

-


(11)


-


(21)



            Total adjustments to cost of sales

(71)


(84)


(144)


(168)



Adjusted cost of sales

$ 714


$ 668


$ 1,385


$ 1,334























GAAP research and development expenses

$ 967


$ 826


$ 1,845


$ 1,562



    Adjustments to research and development expenses:










        Acquisition-related expenses (b)

(20)


(13)


(42)


(20)



        Stock option expense (a)

(3)


(6)


(8)


(12)



            Total adjustments to research and development expenses

(23)


(19)


(50)


(32)



Adjusted research and development expenses

$ 944


$ 807


$ 1,795


$ 1,530























GAAP selling, general and administrative expenses

$ 1,256


$ 1,231


$ 2,414


$ 2,310



    Adjustments to selling, general and administrative expenses:










        Acquisition-related expenses (c)

(16)


(25)


(26)


(40)



        Stock option expense (a)

(3)


(7)


(7)


(14)



            Total adjustments to selling, general and administrative expenses

(19)


(32)


(33)


(54)



Adjusted selling, general and administrative expenses

$ 1,237


$ 1,199


$ 2,381


$ 2,256























GAAP operating expenses

$ 3,129


$ 2,888


$ 5,925


$ 5,459



    Adjustments to operating expenses:










        Adjustments to cost of sales

(71)


(84)


(144)


(168)



        Adjustments to research and development expenses

(23)


(19)


(50)


(32)



        Adjustments to selling, general and administrative expenses

(19)


(32)


(33)


(54)



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

(110)


(1)


(111)


(3)



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

(11)


(69)


(11)


(70)



        Expense related to various legal proceedings

-


(9)


(15)


(12)



            Total adjustments to operating expenses

(234)


(214)


(364)


(339)



Adjusted operating expenses

$ 2,895


$ 2,674


$ 5,561


$ 5,120























GAAP income before income taxes

$ 1,405


$ 1,457


$ 2,748


$ 2,823



    Adjustments to income before income taxes:










        Adjustments to operating expenses

234


214


364


339



        Non-cash interest expense associated with our convertible notes

-


35


12


69



            Total adjustments to income before income taxes

234


249


376


408



Adjusted income before income taxes

$ 1,639


$ 1,706


$ 3,124


$ 3,231























GAAP provision for income taxes

$ 147


$ 191


$ 56


$ 373



    Adjustments to provision for income taxes:










        Income tax effect of the above adjustments (d)

48


82


88


138



        Income tax benefit from resolving certain non-routine transfer-pricing and acquisition-related issues with tax authorities

-


-


38


-



            Total adjustments to provision for income taxes

48


82


126


138



Adjusted provision for income taxes

$ 195


$ 273


$ 182


$ 511























GAAP net income

$ 1,258


$ 1,266


$ 2,692


$ 2,450



    Adjustments to net income:










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

186


167


288


270



        Income tax benefit from resolving certain non-routine transfer-pricing and acquisition-related issues with tax authorities

-


-


(38)


-



            Total adjustments to net income

186


167


250


270



Adjusted net income

$ 1,444


$ 1,433


$ 2,942


$ 2,720













Amgen Inc.









GAAP to "Adjusted" Reconciliations









(In millions, except per share data)








(Unaudited)






























The following table presents the computations for GAAP and "Adjusted" diluted EPS, computed under the treasury stock method


"Adjusted" EPS presented below excludes stock option expense:
















Three months ended


Three months ended




June 30, 2013


June 30, 2012




GAAP


"Adjusted"


GAAP


"Adjusted"



Income (Numerator):










Net income for basic and diluted EPS

$ 1,258


$ 1,444


$ 1,266


$ 1,433













Shares (Denominator):










Weighted-average shares for basic EPS

752


752


776


776



Effect of dilutive securities

12


11

(*)

9


8

(*)


Weighted-average shares for diluted EPS

764


763


785


784













Diluted EPS

$ 1.65


$ 1.89


$ 1.61


$ 1.83














Six months ended


Six months ended




June 30, 2013


June 30, 2012




GAAP


"Adjusted"


GAAP


"Adjusted"



Income (Numerator):










Net income for basic and diluted EPS

$ 2,692


$ 2,942


$ 2,450


$ 2,720













Shares (Denominator):










Weighted-average shares for basic EPS

752


752


783


783



Effect of dilutive securities

12


12

(*)

9


8

(*)


Weighted-average shares for diluted EPS

764


764


792


791













Diluted EPS

$ 3.52


$ 3.85


$ 3.09


$ 3.44













(*) Dilutive securities used to compute "Adjusted" diluted EPS for the three and six months ended June 30, 2013 and 2012 were computed under the treasury stock method assuming that we do not expense stock options












(a)

For the three and six months ended June 30, 2013, the total pre-tax expense for employee stock options was $7 million and $18 million, respectively, compared with $16 million and $32 million for the corresponding periods of the prior year












"Adjusted" diluted EPS including the impact of stock option expense for the three and six months ended June 30, 2013 and 2012 was as follows:













Three months ended


Six months ended




June 30,


June 30,




2013


2012


2013


2012













"Adjusted" diluted EPS, excluding stock option expense

$ 1.89


$ 1.83


$ 3.85


$ 3.44













Impact of stock option expense (net of tax)

(0.01)


(0.01)


(0.02)


(0.03)













"Adjusted" diluted EPS, including stock option expense

$ 1.88


$ 1.82


$ 3.83


$ 3.41












(b)

The adjustments in 2013 related primarily to non-cash amortization of intangible assets acquired in prior year business combinations. The adjustments in 2012 related primarily to non-cash amortization of intangible assets as well as retention and severance expenses












(c)

The adjustments in 2013 related primarily to non-cash amortization of intangible assets acquired in prior year business combinations. The adjustments in 2012 related primarily to transaction costs and non-cash amortization of intangible assets












(d)

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 and non-cash interest expense associated with our convertible notes, whereas the tax impact of other adjustments, including stock option expense, depends on whether the amounts are deductible in the tax jurisdictions where the expenses are incurred or the asset is located and the applicable tax rate(s) in those jurisdictions. Due to these factors, the effective tax rates for the adjustments to our GAAP income before income taxes, for the three and six months ended June 30, 2013, were 20.5% and 23.4%, respectively, compared with 32.9% and 33.8% for the corresponding periods of the prior year
















Note:

For the three and six months ended June 30, 2012, expenses related to amortization of certain acquired intangible assets within operating expenses have been reclassified to conform to the current year presentation




















Amgen Inc.






Reconciliation of Free Cash Flow






(In millions)






(Unaudited)


















Three months ended






June 30,






2013


2012



Cash Flows from Operations

$ 1,600


$ 2,375



Capital Expenditures

(159)


(172)



Free Cash Flow

$ 1,441


$ 2,203











Reconciliation of GAAP EPS Guidance to "Adjusted"









EPS Guidance for the Year Ending December 31, 2013











(Unaudited)






















































2013




















GAAP diluted EPS guidance


$ 6.78

-

$ 6.93




















Known adjustments to arrive at "Adjusted" earnings*:













Acquisition-related expenses

(a)

0.50









Stock option expense


0.03









Expense related to a legal proceeding


0.02









Non-cash interest expense associated with our convertible notes


0.01









Charges associated with cost savings initiatives


0.01









Tax settlement

(b)

(0.05)




















"Adjusted" diluted EPS guidance


$ 7.30

-

$ 7.45




















*


The known adjustments are presented net of their related aggregate tax impact of approximately $0.21 per share














(a)


To exclude acquisition-related expenses related primarily to non-cash amortization of intangible assets and expense resulting from changes in the estimated fair values of the contingent consideration obligations related to prior year business combinations
















(b)


To exclude income tax benefit from resolving certain non-routine transfer-pricing and acquisition-related issues with tax authorities

 

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


7%

-

8%



11%

-

12%
















Tax rate effect of known adjustments discussed above


2%



2%















"Adjusted" tax rate guidance


9%

-

10%



13%

-

14%















CONTACT: Amgen, Thousand Oaks
Christine Regan, 805-447-5476 (media)
Arvind Sood, 805-447-1060 (investors)

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

SOURCE Amgen



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