The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from PR Newswire

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

Tuesday, April 23, 2013

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

16:00 EDT Tuesday, April 23, 2013

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

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:

  • Total revenues increased 5 percent to $4,238 million, with 6 percent product sales growth driven by Enbrel® (etanercept), XGEVA® (denosumab) and Prolia® (denosumab).
  • Adjusted 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.
  • GAAP EPS were $1.88 compared to $1.48 and GAAP net income was $1,434 million compared to $1,184 million.
  • Free 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 ?

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

  • Total product sales increased 6 percent driven by ENBREL, XGEVA and Prolia.
  • Combined Neulasta® (pegfilgrastim) and NEUPOGEN® (Filgrastim) sales were in line with the prior year.
    • Global Neulasta sales were in line with the prior year as price increases were offset by modest unit declines.
    • Global NEUPOGEN sales declined 2 percent driven by lower units.
  • ENBREL 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.
  • Aranesp® (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.
  • EPOGEN® (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.
  • Sensipar®/Mimpara® (cinacalcet) sales increased 21 percent driven by increased unit demand and a favorable change in accounting estimates.
  • Combined sales of Vectibix® (panitumumab) and Nplate® (romiplostim) increased 2 percent.
  • XGEVA sales increased 46 percent year over year and 4 percent on a sequential basis, reflecting increased segment share.
  • Prolia 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 ?

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

  • Cost of Sales, excluding the impact of the Puerto Rico excise tax, decreased 0.9 points.
  • Research & 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.
  • Selling, 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 ?

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

  • Adjusted 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 ?

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

  • The 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.
  • During 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 billion remaining under its stock repurchase authorization.
  • During the quarter, the Company settled in cash $2.5 billion of 0.375 percent Convertible Senior Notes upon their maturity.
  • The 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 ?

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:

  • Total revenue guidance range unchanged at $17.8 billion to $18.2 billion.
  • Adjusted EPS to be above the midpoint of the range of $7.05?$7.35.
  • Adjusted 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.
  • Capital expenditures guidance unchanged at approximately $700 million.

First Quarter Product and Pipeline Update

The Company provided the following information on clinical programs:

  • Talimogene 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.
  • Trebananib:  The Company stated that progression-free survival results from a Phase 3 study in recurrent ovarian cancer are expected mid-year.
  • AMG 416:  The Company stated that it recently initiated Phase 3 studies for the treatment of secondary hyperparathyroidism.
  • Biosimilars:  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 MeasuresThe 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 AmgenAmgen 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 StatementsThis 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 securities

$      21,271

$               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 acquired in a prior year business combination

(71)

(71)

Stock option expense (a)

(2)

(3)

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

-

(10)

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 expenses

(27)

(13)

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 administrative expenses

(14)

(22)

Adjusted selling, general and administrative expenses

$     1,144

$     1,057

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 expenses

(14)

(22)

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

(1)

(2)

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

-

(1)

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 convertible notes

12

34

Total adjustments to income before income taxes

142

159

Adjusted income before income taxes

$     1,485

$     1,525

GAAP provision for income taxes

$         (91)

$        182

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 acquisition-related issues with tax authorities

38

-

Total adjustments to provision for income taxes

78

56

Adjusted provision for income taxes

$         (13)

$        238

GAAP net income

$     1,434

$     1,184

Adjustments to net income:

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

102

103

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

(38)

-

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 and diluted EPS

$     1,434

$     1,498

$     1,184

$     1,287

Shares (Denominator):

Weighted-average shares for basic EPS

751

751

791

791

Effect of dilutive securities

13

13

(*)

9

8

(*)

Weighted-average shares for diluted EPS

764

764

800

799

Diluted EPS

$       1.88

$       1.96

$       1.48

$       1.61

(*)  Dilutive securities used to compute "Adjusted" diluted EPS for the three months ended March 31, 2013 and 2012 were computed under the treasury stock method assuming that we do not expense stock options. 

(a)

For the three months ended March 31, 2013 and 2012, the total pre-tax 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 option expense

$       1.96

$       1.61

Impact of stock option expense (net of tax)

(0.01)

(0.02)

"Adjusted" diluted EPS, including stock option expense

$       1.95

$       1.59

(b)

The adjustments in 2013 related primarily to non-cash amortization of intangible assets acquired in prior year business combinations. The adjustments in 2012 included non-cash amortization of intangible assets acquired in a prior year business combination and other acquisition-related expenses

(c)

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

(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 months ended March 31, 2013 and 2012, were 28.2% and 35.2%, respectively

Note:

For the three months ended March 31, 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

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 expenses

(a)

0.36

Stock option expense

0.03

Expense related to a legal proceeding

0.02

Non-cash interest expense associated with our convertible notes

0.01

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. 

(a)

To exclude acquisition-related expenses related primarily to non-cash 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 credit

2013 without PR excise tax credit

GAAP tax rate guidance

9%

-

10%

13%

-

14%

Tax rate effect of known adjustments discussed above

2%

2%

"Adjusted" tax rate guidance

11%

-

12%

15%

-

16%

 

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

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

SOURCE Amgen

Products
  • Globe Unlimited

    Digital all access pass across devices. subscribe

  • The Globe and Mail Newspaper

    Newspaper delivered to your doorstep. subscribe

  • Globe2Go

    The digital replica of our newspaper. subscribe

  • Globe eBooks

    A collection of articles by the Globe. subscribe

See all Globe Products

Advertise with us

GlobeLink.ca

Your number one partner for reaching Canada's Influential Achievers. learn more

The Globe at your Workplace
Our Company
Customer Service
Globe Recognition
Mobile Apps
NEWS APP
INVESTING APP
Other Sections