Amgen's First Quarter 2013 Revenues Increased 5 Percent To $4.2 Billion And Adjusted Earnings Per Share (EPS) Increased 22 Percent To $1.96 First Quarter 2013 GAAP EPS Were $1.88 2013 Adjusted EPS Expected to be Above the Midpoint of the Range of $7.05-$7.35; 2013 Revenue Guidance Range of $17.8-$18.2 Billion Unchanged PR Newswire THOUSAND OAKS, Calif., April 23, 2013 THOUSAND OAKS, Calif., April 23, 2013 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the first quarter of 2013. Key results for the quarter include: oTotal revenues increased 5 percent to $4,238 million, with 6 percent product sales growth driven by Enbrel^® (etanercept), XGEVA^® (denosumab) and Prolia^® (denosumab). oAdjusted EPS grew 22 percent to $1.96 driven by tax benefits and fewer shares outstanding in the quarter. Adjusted net income increased 16 percent to $1,498 million. oGAAP EPS were $1.88 compared to $1.48 and GAAP net income was $1,434 million compared to $1,184 million. oFree cash flow was $0.9 billion compared to $0.8 billion. "We are on track to deliver our full-year growth objectives," said Robert A. Bradway, chairman and chief executive officer at Amgen. "In addition, our key pipeline projects are progressing well and we are looking forward to clinical results from ongoing trials." Year-over-Year $Millions, except EPS and percentages Q1 '13 Q1 '12 YOY Δ Total Revenues $4,238 $4,048 5% Adjusted Net Income 1,498 1,287 16% Adjusted EPS $1.96 $1.61 22% GAAP Net Income 1,434 1,184 21% GAAP EPS $1.88 $1.48 27% 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 oTotal product sales increased 6 percent driven by ENBREL, XGEVA and Prolia. oCombined Neulasta^® (pegfilgrastim) and NEUPOGEN^® (Filgrastim) sales were in line with the prior year. oGlobal Neulasta sales were in line with the prior year as price increases were offset by modest unit declines. oGlobal NEUPOGEN sales declined 2 percent driven by lower units. oENBREL sales increased 11 percent mainly driven by increases in the average net sales price and a favorable change in accounting estimates, partially offset by a slight decline in units and a reduction in wholesaler inventory. oAranesp^® (darbepoetin alfa) sales decreased 10 percent year over year and 4 percent sequentially. Outside the U.S., sales were in line with the prior quarter. In the U.S., segment share remained relatively stable, but overall demand declined sequentially. oEPOGEN^® (epoetin alfa) sales decreased 2 percent year over year. Sequentially, sales decreased 9 percent driven by a favorable change in accounting estimates in the fourth quarter and lower average net prices. oSensipar^®/Mimpara^® (cinacalcet) sales increased 21 percent driven by increased unit demand and a favorable change in accounting estimates. oCombined sales of Vectibix^® (panitumumab) and Nplate^® (romiplostim) increased 2 percent. oXGEVA sales increased 46 percent year over year and 4 percent on a sequential basis, reflecting increased segment share. oProlia sales increased 61 percent year over year reflecting increased segment share and declined 8 percent on a sequential basis primarily due to seasonality. Product Sales Detail by Product and Geographic Region $Millions, except percentages Q1 '13 Q1 '12 YOY Δ US ROW TOTAL TOTAL TOTAL Neulasta^®/ NEUPOGEN^® $1,069 $269 $1,338 $1,344 0% Neulasta^® 827 212 1,039 1,039 0% NEUPOGEN^® 242 57 299 305 (2%) Enbrel^® 974 65 1,039 938 11% Aranesp^® 168 300 468 518 (10%) EPOGEN^® 435 0 435 446 (2%) Sensipar^® / Mimpara^® 179 85 264 219 21% Vectibix^® 27 60 87 90 (3%) Nplate^® 55 41 96 90 7% XGEVA^®/ Prolia^® 265 100 365 241 51% XGEVA^® 178 45 223 153 46% Prolia^® 87 55 142 88 61% Other 0 59 59 15 * Total product sales $3,172 $979 $4,151 $3,901 6% * Change in excess of 100% Operating Expense and Tax Rate Analysis, on an Adjusted Basis oCost of Sales, excluding the impact of the Puerto Rico excise tax, decreased 0.9 points. oResearch & Development (R&D) expenses increased 18 percent in the first quarter of 2013 primarily in support of our later-stage clinical programs, including AMG 145. oSelling, General & Administrative (SG&A) expenses increased 8 percent in the first quarter of 2013 driven primarily by higher ENBREL profit share expenses. ENBREL profit share expenses increased 17 percent to $378 million in the first quarter. $Millions, except percentages On an Adjusted Basis Q1 '13 Q1 '12 YOY Δ Cost of Sales $671 $666 1% % of sales 16.2% 17.1% (0.9) pts % of sales (Excluding PR excise tax) 14.1% 15.0% (0.9) pts Research & Development $851 $723 18% % of sales 20.5% 18.5% 2.0 pts Selling, General & Administrative $1,144 $1,057 8% % of sales 27.6% 27.1% 0.5 pts TOTAL Operating Expenses $2,666 $2,446 9% pts: percentage points oAdjusted Tax Rate for Q1 2013 reflects the federal and state tax benefits associated with the resolution of the Company's federal audit for tax years 2007-2009. In addition, the American Taxpayer Relief Act of 2012 was enacted in the first quarter of 2013, resulting in recognition of the full 2012 federal R&D credit in the first quarter of 2013. On an Adjusted Basis Q1 '13 Q1 '12 YOY Δ Tax Rate* (0.9%) 15.6% (16.5) pts Tax Rate (Excluding PR excise tax credits) 4.2% 20.2% (16.0) pts pts: percentage points * Note: Q1 represents a net tax benefit of $13M Cash Flow and Balance Sheet Discussion oThe Company generated $0.9 billion of free cash flow in the first quarter of 2013 versus $0.8 billion in the first quarter of 2012. The increase was driven primarily by higher revenues offset partially by higher cash taxes. oDuring the quarter, the Company repurchased approximately 9 million shares of common stock at a total cost of $0.8 billion and at an average price of $85.03. The Company has $1.6 billionremaining under its stock repurchase authorization. oDuring the quarter, the Company settled in cash $2.5 billion of 0.375 percent Convertible Senior Notes upon their maturity. oThe Company previously announced that its Board of Directors declared a $0.47 per share dividend for the second quarter of 2013. The dividend will be paid on June 7, 2013, to all stockholders of record as of the close of business on May 16, 2013. $Billions, except shares Q1 '13 Q1 '12 YOY Δ Operating Cash Flow $1.0 $1.0 $0.1 Free Cash Flow 0.9 0.8 0.1 Dividend Paid 0.4 0.3 0.1 Cost of Shares Repurchased 0.8 1.4 (0.7) Adjusted Avg. Diluted Shares (millions) 764 799 (35) Cash Balance 21.3 19.4 1.9 Debt Outstanding 23.9 21.4 2.5 Stockholders' Equity 19.5 18.9 0.6 Note: Numbers may not add due to rounding 2013 Guidance For the full year 2013, the Company expects: oTotal revenue guidance range unchanged at $17.8 billion to $18.2 billion. oAdjusted EPS to be above the midpoint of the range of $7.05–$7.35. oAdjusted tax rate to be in the range of 11 percent to 12 percent. This reflects the impact of a higher excise tax enacted by the Puerto Rico government, to be effective July 1 of this year. The tax, which is charged to Cost of Sales, is creditable against U.S. federal income taxes. Excluding the Puerto Rico excise tax, Amgen expects the adjusted tax rate for 2013 to be in the range of 15 percent to 16 percent. oCapital expenditures guidance unchanged at approximately $700 million. First Quarter Product and Pipeline Update The Company provided the following information on clinical programs: oTalimogene laherparepvec: The Company discussed that data from a Phase 3 study in melanoma will be presented at the American Society of Clinical Oncology (ASCO) 2013 Annual Meeting in June. The Company also discussed that primary analysis of the overall survival secondary end point is expected in late 2013. oTrebananib: The Company stated that progression-free survival results from a Phase 3 study in recurrent ovarian cancer are expected mid-year. oAMG 416: The Company stated that it recently initiated Phase 3 studies for the treatment of secondary hyperparathyroidism. oBiosimilars: The Company discussed plans to commence a pivotal study for biosimilar Herceptin^® (trastuzumab) in the second quarter. Note: Herceptin® is a product of Genentech, a member of the Roche group Non-GAAP Financial Measures The Adjusted non-GAAP (U.S. Generally Accepted Accounting Principles) financial measures included above for the first 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 first 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 March 31, 2013 2012 Revenues: Product sales $ 4,151 $ 3,901 Other revenues 87 147 Total revenues 4,238 4,048 Operating expenses: Cost of sales 744 750 Research and development 878 736 Selling, general and administrative 1,158 1,079 Other 16 6 Total operating expenses 2,796 2,571 Operating income 1,442 1,477 Interest expense, net 263 235 Interest and other income, net 164 124 Income before income taxes 1,343 1,366 Provision for income taxes (91) 182 Net income $ 1,434 $ 1,184 Earnings per share: Basic $ 1.91 $ 1.50 Diluted $ 1.88 $ 1.48 Average shares used in calculation of earnings per share: Basic 751 791 Diluted 764 800 Amgen Inc. Condensed Consolidated Balance Sheets - GAAP (In millions) (Unaudited) March 31, December 31, 2013 2012 Assets Current assets: Cash, cash equivalents and marketable $ 21,271 $ securities 24,061 Trade receivables, net 2,528 2,518 Inventories 2,737 2,744 Other current assets 2,159 1,886 Total current assets 28,695 31,209 Property, plant and equipment, net 5,296 5,326 Intangible assets, net 3,897 3,968 Goodwill 12,604 12,662 Other assets 1,148 1,133 Total assets $ 51,640 $ 54,298 Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $ 5,135 $ 5,696 Current portion of long-term debt 7 2,495 Total current liabilities 5,142 8,191 Long-term debt 23,885 24,034 Other non-current liabilities 3,122 3,013 Stockholders' equity 19,491 19,060 Total liabilities and stockholders' equity $ 51,640 $ 54,298 Shares outstanding 750 756 Amgen Inc. GAAP to "Adjusted" Reconciliations (In millions) (Unaudited) Three months ended March 31, 2013 2012 GAAP cost of sales $ 744 $ 750 Adjustments to cost of sales: Non-cash amortization of product technology rights (71) (71) acquired in a prior year business combination Stock option expense (a) (2) (3) Certain charges pursuant to our continuing efforts - (10) to improve cost efficiencies in our operations Total adjustments to cost of sales (73) (84) Adjusted cost of sales $ 671 $ 666 GAAP research and development expenses $ 878 $ 736 Adjustments to research and development expenses: Acquisition-related expenses (b) (22) (7) Stock option expense (a) (5) (6) Total adjustments to research and development (27) (13) expenses Adjusted research and development expenses $ 851 $ 723 GAAP selling, general and administrative expenses $ 1,158 $ 1,079 Adjustments to selling, general and administrative expenses: Acquisition-related expenses (c) (10) (15) Stock option expense (a) (4) (7) Total adjustments to selling, general and (14) (22) administrative expenses Adjusted selling, general and administrative $ 1,144 $ 1,057 expenses GAAP operating expenses $ 2,796 $ 2,571 Adjustments to operating expenses: Adjustments to cost of sales (73) (84) Adjustments to research and development expenses (27) (13) Adjustments to selling, general and administrative (14) (22) expenses Expense resulting from changes in the estimated fair values of the contingent (1) (2) considerationobligations related to a prior year business combination Certain charges pursuant to our continuing efforts - (1) to improve cost efficiencies in our operations Expense related to various legal proceedings (15) (3) Total adjustments to operating expenses (130) (125) Adjusted operating expenses $ 2,666 $ 2,446 GAAP income before income taxes $ 1,343 $ 1,366 Adjustments to income before income taxes: Adjustments to operating expenses 130 125 Non-cash interest expense associated with our 12 34 convertible notes Total adjustments to income before income taxes 142 159 Adjusted income before income taxes $ 1,485 $ 1,525 GAAP provision for income taxes $ $ 182 (91) Adjustments to provision for income taxes: Income tax effect of the above adjustments (d) 40 56 Income tax benefit from resolving certain non-routine transfer-pricing and 38 - acquisition-related issues with tax authorities Total adjustments to provision for income taxes 78 56 Adjusted provision for income taxes $ $ 238 (13) GAAP net income $ 1,434 $ 1,184 Adjustments to net income: Adjustments to income before income taxes, net of 102 103 the tax effect of the above adjustments Income tax benefit from resolving certain non-routine transfer-pricing and (38) - acquisition-related issueswith tax authorities Total adjustments to net income 64 103 Adjusted net income $ 1,498 $ 1,287 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 March 31, 2013 March 31, 2012 GAAP "Adjusted" GAAP "Adjusted" Income (Numerator): Net income for basic $ $ 1,498 $ $ 1,287 and diluted EPS 1,434 1,184 Shares (Denominator): Weighted-average 751 751 791 791 shares for basic EPS Effect of dilutive 13 13 (*) 9 8 (*) securities Weighted-average shares for diluted 764 764 800 799 EPS Diluted EPS $ $ 1.96 $ $ 1.61 1.88 1.48 (*) Dilutive securities used to compute "Adjusted" diluted EPS for the three months ended March 31, 2013 and 2012 were computed under the treasury stock methodassuming that we do not expense stock options. For the three months ended March 31, 2013 and 2012, the total pre-tax (a) expense for employee stock options was $11 million and $16 million, respectively "Adjusted" diluted EPS including the impact of stock option expense for the three months ended March 31, 2013 and 2012 was as follows: Three months ended March 31, 2013 2012 "Adjusted" diluted $ EPS, excluding stock 1.96 $ 1.61 option expense Impact of stock option expense (net (0.01) (0.02) of tax) "Adjusted" diluted $ EPS, including stock 1.95 $ 1.59 option expense The adjustments in 2013 related primarily to non-cash amortization of intangible assets acquired in prior year business combinations. The (b) adjustments in 2012 included non-cash amortization of intangible assets acquired in a prior year business combination and other acquisition-related expenses The adjustments in 2013 related to non-cash amortization of intangible assets acquired in prior year business combinations. The adjustments in (c) 2012 related primarily to transaction costs as well as non-cash amortization of intangible assets acquired in prior year business combinations The tax effect of the adjustments between our GAAP and "Adjusted" (d) 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 months ended March 31, 2013 and 2012, were 28.2% and 35.2%, respectively For the three months ended March 31, 2012, expenses related to Note: 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 March 31, 2013 2012 Cash Flows from Operations $ 1,049 $ 972 Capital Expenditures (158) (144) Free Cash Flow $ 891 $ 828 Reconciliation of GAAP EPS Guidance to "Adjusted" EPS Guidance for the Year Ending December 31, 2013 (Unaudited) The Company updated its "Adjusted" EPS guidance to be above the midpoint of the range of $7.05 to $7.35 2013 GAAP diluted EPS guidance $ 6.68 - $ 6.98 Known adjustments to arrive at "Adjusted" earnings*: Acquisition-related (a) 0.36 expenses Stock option expense 0.03 Expense related to a legal 0.02 proceeding Non-cash interest expense associated with our 0.01 convertible notes Tax settlement (b) (0.05) "Adjusted" diluted EPS guidance $ 7.05 - $ 7.35 * The known adjustments are presented net of their related aggregate tax impact of approximately $0.20 per share. To exclude acquisition-related expenses related primarily to non-cash (a) amortization of intangible assets acquired in 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 2013 without PR credit excise tax credit GAAP tax rate guidance 9% - 10% 13% - 14% Tax rate effect of known 2% 2% adjustments discussed above "Adjusted" tax rate guidance 11% - 12% 15% - 16% 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 Website: http://www.amgen.com
Amgen's First Quarter 2013 Revenues Increased 5 Percent To $4.2 Billion And Adjusted Earnings Per Share (EPS) Increased 22
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