AMGEN INC. 
THOUSAND OAKS, Calif., Jan. 27, 2015 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the fourth quarter and full year of 2014. Key results include:
-- For the fourth quarter, total revenues increased 6 percent to $5,331
million, with product sales growing at 8 percent. Adjusted EPS grew 19
percent to $2.16.
-- For the full year, total revenues increased 7 percent to $20,063
million, with 6 percent product sales growth driven by strong
performance across the portfolio. Adjusted operating income grew 22
percent to $8,475 million. Adjusted EPS grew 14 percent to $8.70,
driven by higher operating income offset partially by a higher tax rate
in 2014.
-- 2014 adjusted operating margin improved by 6 percentage points to 44
percent.
-- GAAP EPS were $1.68 in the fourth quarter compared to $1.33 a year ago
and $6.70 for the full year compared to $6.64 in 2013.
-- Free cash flow for the full year was $7.8 billion compared to $5.6
billion in 2013 driven by higher revenues, higher operating income and
improved working capital.
"2014 was an outstanding year for Amgen," said Robert A. Bradway, chairman and chief executive officer. "Following tremendous progress in our pipeline, we look forward to embarking on a new product cycle with the launch of important new medicines throughout 2015."
Year-over-Year Year-over-Year
-------------- --------------
$Millions, except EPS and percentages Q4 '14 Q4 '13 YOY FY '14 FY '13 YOY
------ ------ ----- ------ ------ -----
Total Revenues $5,331 $5,011 6% $20,063 $18,676 7%
Adjusted
Operating Income $2,033 $1,767 15% $8,475 $6,972 22%
Adjusted Net
Income $1,670 $1,391 20% $6,700 $5,814 15%
Adjusted EPS $2.16 $1.82 19% $8.70 $7.60 14%
GAAP Operating
Income $1,459 $1,187 23% $6,191 $5,867 6%
GAAP Net Income $1,294 $1,021 27% $5,158 $5,081 2%
GAAP EPS $1.68 $1.33 26% $6.70 $6.64 1%
-------- ----- ----- --- ----- ----- ---
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.
-- Total product sales increased 8 percent for the fourth quarter of 2014
versus the fourth quarter of 2013. The increase was driven primarily by
Enbrel(®) (etanercept), Neulasta(®) (pegfilgrastim), Prolia(®)
(denosumab), XGEVA(®) (denosumab) and Vectibix(®) (panitumumab).
Growth for the quarter was due primarily to higher unit demand, and to a
lesser extent, price. Product sales increased 6 percent for the full
year driven by strong performance across the portfolio.
-- Enbrel sales increased 11 percent year-over-year for the fourth quarter
and 3 percent for the full year driven by price, and to a lesser extent,
higher unit demand.
-- Neulasta sales increased 7 percent year-over-year for the fourth quarter
and 5 percent for the full year driven mainly by price. NEUPOGEN(®)
(filgrastim) sales decreased 11 percent year-over-year for the fourth
quarter driven by the impact of competition in the United States (U.S.)
and unfavorable changes in inventory levels and foreign exchange rates,
offset partially by the benefit from the acquisition of commercial
rights in new markets. NEUPOGEN sales declined 17 percent for the full
year due primarily to an unfavorable comparison to 2013 as a result of
the $155 million order from the U.S. government in 2013.
-- Prolia sales increased 33 percent year-over-year for the fourth quarter
and 38 percent for the full year, driven by higher unit demand from
share growth.
-- XGEVA sales increased 14 percent year-over-year for the fourth quarter
and 20 percent for the full year driven by higher unit demand. XGEVA
continues to capture share in a growing market.
-- Vectibix sales increased 29 percent year-over-year for the fourth
quarter and 30 percent for the full year driven by higher unit demand.
-- Kyprolis(® )(carfilzomib) sales increased 25 percent year-over-year for
the fourth quarter driven by higher unit demand. 2014 sales totaled $331
million in the first full year of commercialization since the
acquisition of Onyx Pharmaceuticals, Inc. (Onyx).
-- EPOGEN(®) (epoetin alfa) sales increased 3 percent year-over-year for
the fourth quarter as price and favorable changes in inventory levels
were offset partially by a decline in unit demand. Sales increased 4
percent for the full year driven by price, offset partially by declines
in unit demand.
-- Sensipar(®)/Mimpara(®) (cinacalcet) sales increased 3 percent
year-over-year for the fourth quarter as unit demand growth of 10
percent and price growth were offset partially by unfavorable changes in
inventory levels. Sales increased 6 percent for the full year driven
primarily by unit demand.
-- Aranesp(®) (darbepoetin alfa) sales increased 2 percent year-over-year
for the fourth quarter and 1 percent for the full year driven largely by
higher unit demand.
-- Nplate(®) (romiplostim) decreased 1 percent year-over-year for the
fourth quarter as 7 percent unit demand growth was more than offset by
unfavorable changes in inventory levels and foreign exchange rates.
Sales for the full year increased 10 percent due mainly to higher unit
demand.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages Q4 '14 Q4 '13 YOY
------ ------ -----
US ROW TOTAL TOTAL TOTAL
--- --- ----- ----- -----
Neulasta(R)/ NEUPOGEN(R) $1,143 $311 $1,454 $1,407 3%
Neulasta(R) 946 234 1,180 1,098 7%
NEUPOGEN(R) 197 77 274 309 (11%)
Enbrel(R) 1,261 76 1,337 1,200 11%
XGEVA(R)/ Prolia(R) 422 218 640 522 23%
XGEVA(R) 225 100 325 286 14%
Prolia(R) 197 118 315 236 33%
EPOGEN(R) 539 0 539 525 3%
Aranesp(R) 206 273 479 470 2%
Sensipar(R) / Mimpara(R) 229 88 317 307 3%
Vectibix(R) 49 83 132 102 29%
Nplate(R) 67 52 119 120 (1%)
Kyprolis(R) 84 7 91 73 25%
Other 3 63 66 73 (10%)
--- --- ---
Total product sales $4,003 $1,171 $5,174 $4,799 8%
====== ====== ====== ====== ===
$Millions, except percentages FY '14 FY '13 YOY
------ ------ -----
US ROW TOTAL TOTAL TOTAL
--- --- ----- ----- -----
Neulasta(R)/ NEUPOGEN(R) $4,488 $1,267 $5,755 $5,790 (1%)
Neulasta(R) 3,649 947 4,596 4,392 5%
NEUPOGEN(R) 839 320 1,159 1,398 (17%)
Enbrel(R) 4,404 284 4,688 4,551 3%
XGEVA(R)/ Prolia(R) 1,482 769 2,251 1,763 28%
XGEVA(R) 857 364 1,221 1,019 20%
Prolia(R) 625 405 1,030 744 38%
EPOGEN(R) 2,031 0 2,031 1,953 4%
Aranesp(R) 794 1,136 1,930 1,911 1%
Sensipar(R) / Mimpara(R) 796 362 1,158 1,089 6%
Vectibix(R) 168 337 505 389 30%
Nplate(R) 260 209 469 427 10%
Kyprolis(R) 306 25 331 73 *
Other 3 206 209 246 (15%)
--- --- ---
Total product sales $14,732 $4,595 $19,327 $18,192 6%
======= ====== ======= ======= ===
* Not meaningful
----------------
Operating Expense, Operating Income and Tax Rate Analysis, on an Adjusted Basis
-- Cost of Sales margin decreased 0.1 point in the fourth quarter of 2014
and remained flat for the full year.
-- Research & Development (R&D) expenses in the fourth quarter of 2014 were
unchanged from the same quarter last year and included a $60 million
upfront payment related to the Company's cancer immunotherapy
collaboration with Kite Pharma. For the full year, R&D expenses
increased 5 percent driven by the addition of Onyx programs and support
for later-stage clinical programs, offset partially by reduced expenses
associated with marketed product support and Discovery Research &
Translational Sciences.
-- Selling, General & Administrative (SG&A) expenses were flat in the
fourth quarter of 2014. Increased commercial expenses in preparation for
new product launches were offset largely by lower ENBREL-related
payments. For the full year, SG&A expenses decreased 10 percent driven
primarily by lower ENBREL-related payments, offset partially by the
addition of Onyx and increased commercial expenses in preparation for
new product launches.
-- Operating Income increased 15 percent in the fourth quarter of 2014.
For the full year, Operating Income increased 22 percent driven by
higher revenues, lower ENBREL-related payments and over $300 million in
cost savings from previously announced actions to transform to a more
focused operating model. Total savings were offset substantially by the
impact of consolidating the expenses of Onyx on a full year basis, as
well as increased investments in later-stage clinical programs, new
product launch preparation, and external business development including
the Kite Pharma collaboration.
-- Adjusted Tax Rate for the fourth quarter of 2014 reflects the favorable
tax benefit from the extension of the 2014 federal R&D tax credit,
offset partially by the unfavorable tax impact of changes in the
geographic mix of earnings. Extension of the federal R&D tax credit, as
well as certain other business tax provisions for 2014, resulted in a
tax benefit of $109 million for the Company in the fourth quarter. The
full year adjusted tax rate increased due to the combination of the
favorable resolution of the Company's federal income tax audit in 2013,
the unfavorable tax impact of changes in the geographic mix of earnings
in 2014, and the retroactive extension of the 2012 federal R&D credit in
2013.
$Millions, except percentages
On an Adjusted Basis Q4 '14 Q4 '13 YOY FY '14 FY '13 YOY
------ ------ ----- ------ ------ -----
Cost of Sales* $825 $770 7% $3,059 $2,870 7%
% of sales 15.9% 16.0% (0.1) pts. 15.8% 15.8% 0.0 pts.
Research & Development $1,168 $1,168 0% $4,121 $3,929 5%
% of sales 22.6% 24.3% (1.7) pts. 21.3% 21.6% (0.3) pts.
Selling, General &
Administrative $1,305 $1,306 (0%) $4,408 $4,905 (10%)
% of sales 25.2% 27.2% (2.0) pts. 22.8% 27.0% (4.2) pts.
TOTAL Operating Expenses $3,298 $3,244 2% $11,588 $11,704 (1%)
Tax Rate* 10.2% 12.7% (2.5) pts. 14.9% 9.2% 5.7 pts.
pts: percentage points
* Impact of Puerto Rico excise tax is included in Cost of Sales and Tax Rate. Excluding Puerto
Rico excise tax, Cost of Sales would be 1.9 pts. lower for 2014 and Tax Rate would be 3.3 pts.
higher for 2014.
--- ----------------------------------------------------------------------------------------------
Cash Flow and Balance Sheet
-- The Company generated $2.2 billion of free cash flow in the fourth
quarter of 2014 versus $1.6 billion in the fourth quarter of 2013. For
the full year, free cash flow increased $2.2 billion to $7.8 billion,
driven by higher revenues, higher operating income, and improvements in
working capital.
-- The Company's first quarter 2015 dividend of $0.79 per share declared on
Dec. 17, 2014, will be paid on March 6, 2015, to all stockholders of
record as of Feb. 12, 2015.
-- During the fourth quarter, the Company repurchased 0.9 million shares of
common stock at a total cost of $153 million. The company has $3.8
billion remaining under its stock repurchase authorization.
$Billions, except shares Q4 '14 Q4 '13 YOY FY '14 FY '13 YOY
------ ------ ----- ------ ------ -----
Operating Cash Flow $2.4 $1.8 $0.6 $8.6 $6.3 $2.3
Capital
Expenditures 0.2 0.2 0.0 0.7 0.7 0.0
Free Cash Flow 2.2 1.6 0.6 7.8 5.6 2.2
Dividends Paid 0.5 0.4 0.1 1.9 1.4 0.5
Share Repurchase 0.2 0.0 0.2 0.2 0.8 (0.6)
Avg. Diluted Shares
(millions) 772 766 6 770 765 5
Cash and
Investments* 27.0 22.8 4.2 27.0 22.8 4.2
Debt Outstanding 30.7 32.1 (1.4) 30.7 32.1 (1.4)
Stockholders'
Equity 25.8 22.1 3.7 25.8 22.1 3.7
* 2013 includes long-term restricted investments.
Note: Numbers may not add due to rounding
-----------------------------------------
2015 Guidance
For the full year 2015, the Company reaffirmed:
-- Total revenues to be in the range of $20.8 billion to $21.3 billion and
adjusted EPS to be in the range of $9.05 to $9.40.
-- Adjusted tax rate to be in the range of 18 percent to 19 percent. This
excludes the benefit of the federal R&D tax credit, which has not yet
been extended for 2015.
-- Capital expenditures to be approximately $800 million.
Fourth Quarter Product and Pipeline Update
Key 2015 milestones:
Clinical
Program Lead Indication Milestone
-------- --------------- ---------
Repatha(TM)
(evolocumab) Dyslipidemia Global regulatory reviews
------------ ------------ -------------------------
Corlanor(R)
(ivabradine) Chronic heart failure US regulatory review
------------ --------------------- --------------------
Kyprolis Relapsed multiple myeloma Global submissions
-------- ------------------------- ------------------
Talimogene
laherparepvec Metastatic melanoma Global regulatory reviews
------------- ------------------- -------------------------
Brodalumab* Asthma Phase 2b data
---------- ------ -------------
Moderate-to-
severe plaque
psoriasis Global submissions
------------- ------------------
AMG
416 Secondary hyperparathyroidism Phase 3 data vs. Sensipar
--- ----------------------------- -------------------------
AMG
334 Episodic migraine Phase 3 initiation
--- ----------------- ------------------
Omecamtiv
mecarbil** Chronic heart failure Phase 2b data
---------- --------------------- -------------
ABP
501
(adalimumab) Moderate-to-severe rheumatoid arthritis Phase 3 data
------------ --------------------------------------- ------------
ABP
215
(bevacizumab) Non-small cell lung cancer Phase 3 data
------------- -------------------------- ------------
*Developed in collaboration with
AstraZeneca
**Developed in collaboration with
Cytokinetics
The Company provided the following information on selected product and pipeline programs:
BLINCYTO(TM )(blinatumomab)
-- The Company discussed the U.S. Food and Drug Administration (FDA)
approval of BLINCYTO for Philadelphia chromosome-negative
relapsed/refractory B-precursor acute lymphoblastic leukemia.
Neulasta
-- The Company discussed that the FDA has granted approval of the Neulasta
Delivery Kit, which contains the On-Body Injector for Neulasta.
Kyprolis
-- The Company announced that it has submitted a supplemental New Drug
Application in the U.S. and a Marketing Authorization Application (MAA)
in the European Union (EU) for relapsed multiple myeloma, and has been
granted an accelerated assessment by the European Medicines Agency
(EMA).
Corlanor(®) (ivabradine)
-- The Company announced a three month extension of the Prescription Drug
User Fee Act (PDUFA) target action date for the Corlanor application due
to a request from the FDA for submission of additional existing clinical
data, which has been submitted.
Talimogene laherparepvec
-- The Company announced a three month extension of the PDUFA target action
date for the talimogene laherparepvec application due to a request from
the FDA for submission of additional existing manufacturing data, which
has been submitted.
AMG 334
-- The Company discussed the completion of a Phase 2b study in episodic
migraine as well as plans to initiate a Phase 3 study in 2015.
Brodalumab
-- The Company announced that it plans to submit a Biologics License
Application (BLA) in the U.S. and a MAA in the EU for moderate-to-severe
plaque psoriasis in 2015.
AMG 416
-- The Company announced that it expects Phase 3 data from its head-to-head
study vs. Sensipar in the first half of 2015.
Immuno-oncology
-- The Company discussed how the recent Kite Pharma collaboration
complements the Company's immuno-oncology platforms.
Biosimilars
-- The Company announced that it expects Phase 3 data for biosimilar
candidate ABP 501 (adalimumab) in patients with moderate-to-severe
rheumatoid arthritis in the first quarter of 2015 and biosimilar
candidate ABP 215 (bevacizumab) in patients with advanced non-small cell
lung cancer in the second half of 2015.
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the fourth quarters and full years of 2014 and 2013 in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on an adjusted (or non-GAAP) basis. In addition, management has presented its full year 2015 EPS and tax rate guidance in accordance with GAAP and on an adjusted (or non-GAAP) basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and cost-savings initiatives and certain other items from the related GAAP financial measures. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the fourth quarters and full years of 2014 and 2013. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release.
The Company believes that its presentation of non-GAAP financial measures provides useful supplementary information to and facilitates additional analysis by investors. The Company uses certain non-GAAP financial measures to enhance an investor's overall understanding of the financial performance and prospects for the future of the Company's core business activities by facilitating comparisons of results of core business operations among current, past and future periods. In addition, the Company believes that excluding the non-cash amortization of intangible assets, including developed product technology rights, acquired in business combinations treats those assets as if the Company had developed them internally in the past, and thus provides a supplemental measure of profitability in which the Company's acquired intellectual property is treated in a comparable manner to its internally developed intellectual property. The Company believes that FCF provides a further measure of the Company's liquidity.
The Company uses the non-GAAP financial measures set forth in the news release in connection with its own budgeting and financial planning. The non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP.
About Amgen
Amgen is committed to unlocking the potential of biology for patients suffering from serious illnesses by discovering, developing, manufacturing and delivering innovative human therapeutics. This approach begins by using tools like advanced human genetics to unravel the complexities of disease and understand the fundamentals of human biology.
Amgen focuses on areas of high unmet medical need and leverages its biologics manufacturing expertise to strive for solutions that improve health outcomes and dramatically improve people's lives. A biotechnology pioneer since 1980, Amgen has grown to be one of the world's leading independent biotechnology companies, has reached millions of patients around the world and is developing a pipeline of medicines with breakaway potential.
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, 2013, and in any subsequent periodic reports on Form 10-Q and Form 8-K. Words such as "expect," "anticipate," "outlook," "could," "target," "project," "intend," "plan," "believe," "seek," "estimate," "should," "may," "assume," or "continue," and variations of such words and similar expressions are intended to identify such forward looking statements. Reference is made in particular to forward-looking statements regarding product sales, revenue, expenses, earnings per share, tax rates, clinical trial results, regulatory filings and actions, Company strategy, restructuring charges, staff reductions and facility closures/dispositions and trends. We are providing this information as of the date of this news release and do 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. Our 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 efforts to integrate the operations of companies we have acquired may not be successful. Cost saving initiatives may result in us incurring impairment or other related charges on our assets. We may experience difficulties, delays or unexpected costs and not achieve anticipated cost savings from our recently announced restructuring plans. 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,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Revenues:
Product sales $5,174 $4,799 $19,327 $18,192
Other
revenues 157 212 736 484
Total revenues 5,331 5,011 20,063 18,676
----- ----- ------ ------
Operating expenses:
Cost of sales 1,183 1,029 4,422 3,346
Research and
development 1,234 1,249 4,297 4,083
Selling,
general and
administrative 1,327 1,521 4,699 5,184
Other 128 25 454 196
Total operating expenses 3,872 3,824 13,872 12,809
----- ----- ------ ------
Operating income 1,459 1,187 6,191 5,867
Interest expense, net 261 261 1,071 1,022
Interest and other income, net 88 88 465 420
--- --- --- ---
Income before income taxes 1,286 1,014 5,585 5,265
Provision for income taxes (8) (7) 427 184
Net income $1,294 $1,021 $5,158 $5,081
====== ====== ====== ======
Earnings per share:
Basic $1.70 $1.35 $6.80 $6.75
Diluted $1.68 $1.33 $6.70 $6.64
Weighted average shares used in calculation of earnings per share:
Basic 761 754 759 753
Diluted 772 766 770 765
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
December 31, December 31,
2014 2013
---- ----
Assets
Current assets:
Cash, cash
equivalents and
marketable
securities $27,026 $19,401
Trade
receivables, net 2,546 2,697
Inventories 2,647 3,019
Other current
assets 2,494 2,250
Total current
assets 34,713 27,367
Property, plant and equipment, net 5,223 5,349
Intangible assets, net 12,693 13,262
Goodwill 14,788 14,968
Restricted investments - 3,412
Other assets 1,592 1,767
----- -----
Total assets $69,009 $66,125
======= =======
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
and accrued
liabilities $6,508 $5,442
Current portion
of long-term
debt 500 2,505
Total current
liabilities 7,008 7,947
Long-term debt 30,215 29,623
Long-term deferred tax liability 3,461 3,498
Other non-current liabilities 2,547 2,961
Stockholders' equity 25,778 22,096
------ ------
Total liabilities and stockholders' equity $69,009 $66,125
======= =======
Shares outstanding 760 755
Amgen Inc.
GAAP to Adjusted Reconciliations
(In millions)
(Unaudited)
Three months ended Years ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
GAAP cost of sales $1,183 $1,029 $4,422 $3,346
Adjustments to cost of sales:
Acquisition-related expenses (a) (279) (256) (1,249) (467)
Impairment and accelerated
depreciation charges pursuant to
our restructuring initiative (76) - (104) -
Stock option expense (3) (3) (10) (9)
Total adjustments to cost of sales (358) (259) (1,363) (476)
Adjusted cost of sales $825 $770 $3,059 $2,870
==== ==== ====== ======
GAAP research and development
expenses $1,234 $1,249 $4,297 $4,083
Adjustments to research and development expenses:
Acquisition-related expenses (b) (32) (79) (124) (142)
Accelerated depreciation and other
charges pursuant to our
restructuring initiative (34) - (49) -
Stock option expense - (2) (3) (12)
Total adjustments to research and
development expenses (66) (81) (176) (154)
Adjusted research and development
expenses $1,168 $1,168 $4,121 $3,929
====== ====== ====== ======
GAAP selling, general and
administrative expenses $1,327 $1,521 $4,699 $5,184
Adjustments to selling, general and administrative expenses:
Acquisition-related expenses (c) (32) (212) (150) (266)
Expense resulting from clarified
guidance on branded prescription
drug fee (d) 16 - (129) -
Accelerated depreciation and other
charges pursuant to our
restructuring initiative (6) - (9) -
Stock option expense - (3) (3) (13)
Total adjustments to selling,
general and administrative expenses (22) (215) (291) (279)
Adjusted selling, general and
administrative expenses $1,305 $1,306 $4,408 $4,905
====== ====== ====== ======
GAAP operating expenses $3,872 $3,824 $13,872 $12,809
Adjustments to operating expenses:
Adjustments to cost of sales (358) (259) (1,363) (476)
Adjustments to research and
development expenses (66) (81) (176) (154)
Adjustments to selling, general and
administrative expenses (22) (215) (291) (279)
Certain charges pursuant to our
restructuring and other cost
savings initiatives (e) (66) (25) (434) (71)
(Expense)/Benefit resulting from
changes in the estimated fair
values of the contingent
consideration obligations related
to prior year business combinations (17) (2) 30 (113)
Write-off of a non-key in-process
R&D program acquired in a prior
year business combination (46) - (46) -
Other (f) 1 2 (4) (12)
Total adjustments to operating
expenses (574) (580) (2,284) (1,105)
Adjusted operating expenses $3,298 $3,244 $11,588 $11,704
====== ====== ======= =======
GAAP operating income $1,459 $1,187 $6,191 $5,867
Adjustments to operating expenses 574 580 2,284 1,105
Adjusted operating income $2,033 $1,767 $8,475 $6,972
====== ====== ====== ======
GAAP income before income taxes $1,286 $1,014 $5,585 $5,265
Adjustments to income before income taxes:
Adjustments to operating expenses 574 580 2,284 1,105
Non-cash interest expense
associated with our convertible
notes - - - 12
Bridge financing costs associated
with the Onyx business combination - - - 22
Total adjustments to income before
income taxes 574 580 2,284 1,139
Adjusted income before income taxes $1,860 $1,594 $7,869 $6,404
====== ====== ====== ======
GAAP provision for income taxes $(8) $(7) $427 $184
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (g) 187 228 717 376
Other income tax adjustments (h) 11 (18) 25 30
Total adjustments to provision for
income taxes 198 210 742 406
Adjusted provision for income taxes $190 $203 $1,169 $590
==== ==== ====== ====
GAAP net income $1,294 $1,021 $5,158 $5,081
Adjustments to net income:
Adjustments to income before income
taxes, net of the income tax effect
of the above adjustments 387 352 1,567 763
Other income tax adjustments (h) (11) 18 (25) (30)
Total adjustments to net income 376 370 1,542 733
Adjusted net income $1,670 $1,391 $6,700 $5,814
====== ====== ====== ======
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.
Three months ended Three months ended
December 31, 2014 December 31, 2013
----------------- -----------------
GAAP Adjusted GAAP Adjusted
---- -------- ---- --------
Net income $1,294 $1,670 $1,021 $1,391
Weighted-average shares
for diluted EPS 772 772 766 766
Diluted EPS $1.68 $2.16 $1.33 $1.82
===== ===== ===== =====
Year ended Year ended
December 31, 2014 December 31, 2013
----------------- -----------------
GAAP Adjusted GAAP Adjusted
---- -------- ---- --------
Net income $5,158 $6,700 $5,081 $5,814
Weighted-average shares
for diluted EPS 770 770 765 765
Diluted EPS $6.70 $8.70 $6.64 $7.60
===== ===== ===== =====
(a) The adjustments
related
primarily to
non-cash
amortization
of intangible
assets,
including
developed
product
technology
rights,
acquired in
business
combinations.
For the year
ended December
31, 2014, the
adjustments
also included
a $99-million
charge related
to the
termination of
a supply
contract with
F. Hoffmann-
La Roche Ltd.
as a result of
acquiring the
licenses to
filgrastim and
pegfilgrastim
effective
January 1,
2014.
(b) The 2014
adjustments
related
primarily to
non-cash
amortization
of intangible
assets
acquired in
business
combinations.
For the three
months ended
December 31,
2013, the
adjustments
related
primarily to
charges
associated
with the Onyx
business
combination,
which included
the
acceleration
of Onyx
unvested
equity
compensation
(Onyx equity
compensation).
The three
months and
year ended
December 31,
2013, also
included
adjustments
related
primarily to
non-cash
amortization
of intangible
assets
acquired in
business
combinations.
(c) The 2014
adjustments
related
primarily to
non-cash
amortization
of intangible
assets
acquired in
business
combinations.
The
adjustments in
2013 related
primarily to
the Onyx
equity
compensation.
(d) The 2014
adjustments
related to the
Internal
Revenue
Service
issuing final
regulations
that required
us to
recognize an
additional
year of the
non-tax
deductible
branded
prescription
drug fee.
(e) The adjustments
related
primarily to
severance
expenses.
(f) The adjustments
for 2014 and
the three
months ended
December 31,
2013, related
primarily to
various
acquisition-
related
expenses. For
the year ended
December 31,
2013, the
adjustments
related
primarily to
various legal
proceedings.
(g) 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,
whereas the
tax impact of
other
adjustments,
including
restructuring
expense,
depends on
whether the
amounts are
deductible in
the respective
tax
jurisdictions
and the
applicable tax
rate(s) in
those
jurisdictions.
Due to these
factors, the
effective tax
rates for the
adjustments to
our GAAP
income before
income taxes,
for the three
months and
year ended
December 31,
2014, were
32.6% and
31.4%,
respectively,
compared with
39.3% and
33.0% for the
corresponding
periods of the
prior year.
(h) The adjustments
in 2014 and
the three
months ended
December 31,
2013, related
primarily to
certain prior
period items
excluded from
adjusted
earnings. For
the year ended
December 31,
2013, the
adjustments
related to
resolving
certain non-
routine
transfer-
pricing and
acquisition-
related issues
with tax
authorities as
well as the
impact related
to certain
prior period
items excluded
from adjusted
earnings.
Amgen Inc.
Reconciliations of Free Cash Flow
(In millions)
(Unaudited)
Three months ended Years ended
December 31, December 31,
------------ ------------
2014 2013 2014 2013
---- ---- ---- ----
Operating
Cash
Flow $2,445 $1,835 $8,555 $6,291
Capital
Expenditures (203) (201) (718) (693)
Free
Cash
Flow $2,242 $1,634 $7,837 $5,598
====== ====== ====== ======
Reconciliation of GAAP EPS Guidance to Adjusted
EPS Guidance for the Year Ending December 31, 2015
(Unaudited)
2015
----
GAAP diluted EPS guidance $7.48 - $7.87
Known adjustments to arrive at
Adjusted earnings*:
Acquisition-related expenses (a) 1.21
Restructuring and other cost
savings initiatives 0.32 - 0.36
Adjusted diluted EPS guidance $9.05 - $9.40
===== === =====
* The known adjustments are presented net of
their related tax impact which amount to
approximately $0.73 to $0.75 per share in
the aggregate.
(a) The adjustments relate primarily to non-cash
amortization of intangible assets acquired
in prior year business combinations.
Reconciliation of GAAP Tax Rate Guidance to Adjusted
Tax Rate Guidance for the Year Ending December 31, 2015
(Unaudited)
2015
----
GAAP tax rate guidance 14% - 16%
Tax rate effect
of known
adjustments
discussed above 3% - 4%
--- ---
Adjusted tax rate guidance 18% - 19%
=== === ===
CONTACT: Amgen, Thousand Oaks
Cuyler Mayer, 805-447-6332 (media)
Trish Hawkins, 805-447-5631 (media)
Arvind Sood, 805-447-1060 (investors)
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SOURCE Amgen
