Delaware | 001-37702 | 95-3540776 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
One Amgen Center Drive | ||||
Thousand Oaks | ||||
California | 91320-1799 | |||
(Address of principal executive offices) | (Zip Code) |
o | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common stock, $0.0001 par value | AMGN | The NASDAQ Global Select Market |
1.250% Senior Notes Due 2022 | AMGN22 | New York Stock Exchange |
2.000% Senior Notes Due 2026 | AMGN26 | New York Stock Exchange |
• | Acquisition-related expenses: Acquisition-related charges are primarily associated with intangible assets acquired in connection with business acquisitions. Such charges include amortization of developed-product-technology rights, licensing rights, R&D technology rights, and marketing-related rights, as well as impairments of in-process R&D assets. The Company incurs charges related to these intangibles, and those charges are included in the Company’s Condensed Consolidated Financial Statements. Charges for purchased intangible assets are significantly impacted by the timing and magnitude of the Company’s acquisitions and potential product approvals as they relate to in-process R&D projects acquired. Accordingly, these charges may vary in amount from period to period. The Company excludes these charges for purposes of calculating the non-GAAP financial measures presented to facilitate a more meaningful evaluation of the Company’s current operating performance and comparisons to past operating performance. The Company believes that excluding the noncash charges related to those intangible assets acquired in business acquisitions 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. |
• | Net charges pursuant to the Company’s restructuring initiative: Restructuring costs are primarily related to facilities charges, including accelerated depreciation, and severance and benefits for employees terminated pursuant to the transformation and process improvement efforts. Restructuring costs are inconsistent in amount and are significantly impacted by the timing and nature of these events. Therefore, although the Company may incur these types of expenses in the future, it believes that eliminating these charges for purposes of calculating the non-GAAP financial measures provides a supplemental evaluation of the Company’s current operating performance and facilitates comparisons to past operating performance. |
• | Other items: The Company adjusts GAAP financial results for certain expenses associated with judgments and/or settlements for legal proceedings discussed in our filings. The Company excludes these expenses for the purpose of calculating the non-GAAP financial measures presented because the Company believes these items are outside the ordinary course of business. The Company believes eliminating these expenses provides a supplemental evaluation of the Company’s current operating performance and facilitates comparisons to past operating performance. |
• | The tax effect of the adjustments between GAAP and non-GAAP results take 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. |
AMGEN INC. | ||||
Date: July 30, 2019 | By: | /s/ David W. Meline | ||
Name: | David W. Meline | |||
Title: | Executive Vice President and Chief Financial Officer |
Exhibit 99.1 | ||
![]() News Release | One Amgen Center Drive Thousand Oaks, CA 91320-1799 Telephone 805-447-1000 www.amgen.com |
• | Total revenues decreased 3% to $5.9 billion in comparison to the second quarter of 2018 reflecting increasing competition due to patent expirations. |
◦ | Product sales declined 2% globally. Prolia® (denosumab), Repatha® (evolocumab), Parsabiv® (etelcalcitide) and Aimovig® (erenumab-aooe) units grew double-digits or better. |
• | GAAP earnings per share (EPS) increased 3% to $3.57 benefited by lower weighted-average shares outstanding. |
◦ | GAAP operating income decreased 5% to $2.7 billion and GAAP operating margin decreased 1.9 percentage points to 48.0%. |
• | Non-GAAP EPS increased 4% to $3.97 benefited by lower weighted-average shares outstanding. |
◦ | Non-GAAP operating income decreased 5% to $3.0 billion and non-GAAP operating margin decreased 1.8 percentage points to 53.3%. |
• | The Company generated $1.3 billion of free cash flow in the second quarter versus $1.9 billion in the second quarter of 2018 driven primarily by an advanced tax deposit payment. |
• | 2019 total revenues guidance revised to $22.4-$22.9 billion; EPS guidance to $12.10-$12.71 on a GAAP basis and $13.75-$14.30 on a non-GAAP basis. |
$Millions, except EPS and percentages | Q2'19 | Q2'18 | YOY Δ | |||||||
Total Revenues | $ | 5,871 | $ | 6,059 | (3%) | |||||
GAAP Operating Income | $ | 2,678 | $ | 2,832 | (5%) | |||||
GAAP Net Income | $ | 2,179 | $ | 2,296 | (5%) | |||||
GAAP EPS | $ | 3.57 | $ | 3.48 | 3% | |||||
Non-GAAP Operating Income | $ | 2,973 | $ | 3,131 | (5%) | |||||
Non-GAAP Net Income | $ | 2,423 | $ | 2,529 | (4%) | |||||
Non-GAAP EPS | $ | 3.97 | $ | 3.83 | 4% |
• | Total product sales decreased 2% for the second quarter of 2019 versus the second quarter of 2018. |
• | Prolia sales increased 14% driven by higher unit demand. |
• | EVENITY™ (romosozumab-aqqg) generated $28 million of sales in the second quarter of 2019. |
• | Repatha sales increased 3% driven by higher unit demand, offset partially by net selling price. |
• | Aimovig was launched in the U.S. in the second quarter of 2018 and generated $83 million in sales in the second quarter of 2019. |
• | Parsabiv sales increased 130% driven by higher unit demand, offset partially by net selling price. |
• | KYPROLIS® (carfilzomib) sales increased 2% driven by higher unit demand. |
• | XGEVA® (denosumab) sales increased 10% driven primarily by higher unit demand. |
• | Vectibix® (panitumumab) sales increased 13% driven by higher unit demand. |
• | Nplate® (romiplostim) sales increased 12% driven by higher unit demand. |
• | BLINCYTO® (blinatumomab) sales increased 30% driven by higher unit demand. |
• | Biosimilar sales generated $82 million in the second quarter of 2019. |
• | Enbrel® (etanercept) sales increased 5% driven primarily by net selling price and favorable changes in inventory levels, offset partially by lower unit demand. |
• | Neulasta® (pegfilgrastim) sales decreased 25% driven by lower net selling price and the impact of biosimilar competition on unit demand. |
• | NEUPOGEN® (filgrastim) sales decreased 26% driven primarily by the impact of competition on unit demand and lower net selling price, offset partially by favorable changes in accounting estimates of sales deductions. |
• | EPOGEN® (epoetin alfa) sales decreased 11% driven by lower net selling price. |
• | Aranesp® (darbepoetin alfa) sales decreased 8% driven by the impact of competition on unit demand. |
• | Sensipar/Mimpara® (cinacalcet) sales decreased 71% driven by the impact of generic competition on unit demand. |
$Millions, except percentages | Q2'19 | Q2'18 | YOY Δ | |||||||||||||||
US | ROW | TOTAL | TOTAL | TOTAL | ||||||||||||||
Prolia® | $ | 458 | $ | 240 | $ | 698 | $ | 610 | 14% | |||||||||
EVENITYTM | 3 | 25 | 28 | — | * | |||||||||||||
Repatha® | 91 | 61 | 152 | 148 | 3% | |||||||||||||
Aimovig® | 83 | — | 83 | 2 | * | |||||||||||||
Parsabiv® | 148 | 20 | 168 | 73 | * | |||||||||||||
KYPROLIS® | 166 | 101 | 267 | 263 | 2% | |||||||||||||
XGEVA® | 379 | 120 | 499 | 452 | 10% | |||||||||||||
Vectibix® | 79 | 117 | 196 | 173 | 13% | |||||||||||||
Nplate® | 122 | 79 | 201 | 179 | 12% | |||||||||||||
BLINCYTO® | 39 | 39 | 78 | 60 | 30% | |||||||||||||
Biosimilars** | — | 82 | 82 | 2 | * | |||||||||||||
Enbrel® | 1,315 | 48 | 1,363 | 1,302 | 5% | |||||||||||||
Neulasta® | 719 | 105 | 824 | 1,100 | (25%) | |||||||||||||
NEUPOGEN® | 55 | 20 | 75 | 102 | (26%) | |||||||||||||
EPOGEN® | 223 | — | 223 | 250 | (11%) | |||||||||||||
Aranesp® | 192 | 244 | 436 | 472 | (8%) | |||||||||||||
Sensipar®/Mimpara® | 43 | 79 | 122 | 420 | (71%) | |||||||||||||
Other*** | 27 | 52 | 79 | 71 | 11% | |||||||||||||
Total product sales | $ | 4,142 | $ | 1,432 | $ | 5,574 | $ | 5,679 | (2%) | |||||||||
* Change in excess of 100% | ||||||||||||||||||
** Biosimilars includes AMGEVITA™ and KANJINTI™. | ||||||||||||||||||
*** Other includes Bergamo, MN Pharma, IMLYGIC® and Corlanor®. |
• | Total Operating Expenses decreased 1%. Cost of Sales margin increased 0.2 percentage points due primarily to product mix, offset partially by the benefit of Hurricane Maria insurance proceeds and lower manufacturing costs. Research & Development (R&D) expenses increased 6% driven primarily by increased spending in research and early pipeline in support of our oncology programs, offset partially by decreased spending in support of marketed products. Selling, General & Administrative (SG&A) expenses decreased 7% driven primarily by reduced discretionary general and administrative expenses and the end of certain acquisition-related intangible asset amortization charges in 2018. |
• | Operating Margin decreased 1.9 percentage points to 48.0%. |
• | Tax Rate increased 1.7 percentage points due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform. |
• | Total Operating Expenses decreased 1%. Cost of Sales margin increased 0.1 percentage points due primarily to product mix, offset partially by the benefit of Hurricane Maria insurance proceeds and lower manufacturing costs. R&D expenses increased 7% driven primarily by increased spending in research and early pipeline in support of our oncology programs, offset partially by decreased spending in support of marketed products. Selling, General & Administrative (SG&A) expenses decreased 6% driven primarily by reduced discretionary general and administrative expenses. |
• | Operating Margin decreased 1.8 percentage points to 53.3%. |
• | Tax Rate increased 1.1 percentage points due primarily to a prior-year tax benefit associated with intercompany sales under U.S. corporate tax reform. |
$Millions, except percentages | GAAP | Non-GAAP | ||||||||||||||||||
Q2'19 | Q2'18 | YOY Δ | Q2'19 | Q2'18 | YOY Δ | |||||||||||||||
Cost of Sales | $ | 1,012 | $ | 1,024 | (1%) | $ | 736 | $ | 745 | (1%) | ||||||||||
% of product sales | 18.2 | % | 18.0 | % | 0.2 pts. | 13.2 | % | 13.1 | % | 0.1 pts. | ||||||||||
Research & Development | $ | 924 | $ | 869 | 6% | $ | 906 | $ | 850 | 7% | ||||||||||
% of product sales | 16.6 | % | 15.3 | % | 1.3 pts. | 16.3 | % | 15.0 | % | 1.3 pts. | ||||||||||
Selling, General & Administrative | $ | 1,260 | $ | 1,353 | (7%) | $ | 1,256 | $ | 1,333 | (6%) | ||||||||||
% of product sales | 22.6 | % | 23.8 | % | (1.2) pts. | 22.5 | % | 23.5 | % | (1.0) pts. | ||||||||||
Other | $ | (3 | ) | $ | (19 | ) | (84%) | $ | — | $ | — | —% | ||||||||
Total Operating Expenses | $ | 3,193 | $ | 3,227 | (1%) | $ | 2,898 | $ | 2,928 | (1%) | ||||||||||
Operating Margin | ||||||||||||||||||||
operating income as % of product sales | 48.0 | % | 49.9 | % | (1.9) pts. | 53.3 | % | 55.1 | % | (1.8) pts. | ||||||||||
Tax Rate | 15.0 | % | 13.3 | % | 1.7 pts. | 15.3 | % | 14.2 | % | 1.1 pts. | ||||||||||
pts: percentage points |
• | The Company generated $1.3 billion of free cash flow in the second quarter of 2019 versus $1.9 billion in the second quarter of 2018 driven primarily by an advanced tax deposit payment. |
• | The Company’s second quarter 2019 dividend of $1.45 per share was declared on March 7, 2019, and was paid on June 7, 2019, to all stockholders of record as of May 17, 2019, representing a 10% increase from 2018. |
• | During the second quarter, the Company repurchased 13.1 million shares of common stock at a total cost of $2.3 billion. At the end of the second quarter, the Company had $4.7 billion remaining under its stock repurchase authorization. |
$Billions, except shares | Q2'19 | Q2'18 | YOY Δ | ||||||||||
Operating Cash Flow | $ | 1.4 | $ | 2.1 | $ | (0.7 | ) | ||||||
Capital Expenditures | 0.1 | 0.2 | 0.0 | ||||||||||
Free Cash Flow | 1.3 | 1.9 | (0.6 | ) | |||||||||
Dividends Paid | 0.9 | 0.9 | 0.0 | ||||||||||
Share Repurchase | 2.3 | 3.2 | (0.8 | ) | |||||||||
Average Diluted Shares (millions) | 610 | 660 | (50 | ) | |||||||||
Cash and Investments | 21.8 | 29.4 | (7.6 | ) | |||||||||
Debt Outstanding | 30.6 | 34.5 | (3.9 | ) | |||||||||
Stockholders' Equity | 10.8 | 14.9 | (4.1 | ) | |||||||||
Note: Numbers may not add due to rounding |
• | Total revenues in the range of $22.4 billion to $22.9 billion. |
◦ | Previously, the Company expected total revenues in the range of $22.0 billion to $22.9 billion. |
• | On a GAAP basis, EPS in the range of $12.10 to $12.71 and a tax rate in the range of 13% to 14%. |
◦ | Previously, the Company expected GAAP EPS in the range of $11.68 to $12.73 and a tax rate in the range of 13% to 14%. |
• | On a non-GAAP basis, EPS in the range of $13.75 to $14.30 and a tax rate in the range of 14% to 15%. |
◦ | Previously, the Company expected non-GAAP EPS in the range of $13.25 to $14.30 and a tax rate in the range of 14% to 15%. |
• | Capital expenditures to be approximately $700 million. |
• | In June, Intermountain Healthcare and deCODE genetics, a wholly-owned subsidiary of Amgen based in Iceland, announced a global collaboration that combines Intermountain’s internationally-recognized expertise in precision medicine and clinical care with deCODE’s world-class expertise in human population genetics and will involve the participation of up to half a million individuals. |
• | In July, the Company completed the acquisition of Nuevolution, and is rapidly integrating its world-class DNA-encoded library and other technologies. |
• | In July, the Phase 3 GALACTIC-HF cardiovascular outcomes clinical trial completed enrollment. |
• | In June, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency adopted a negative opinion on the Marketing Authorization Application for EVENITY for the treatment of severe osteoporosis. In July, UCB submitted a written notice to the European Medicines Agency requesting a re-examination of the CHMP opinion. |
• | The Company discussed long-term efficacy and safety data recently presented at the meetings of the American Academy of Neurology and American Headache Society. |
• | The Company provided a clinical update, including tumor responses in colorectal and appendiceal cancer patients, completion of enrollment in the dose expansion arm and enrollment initiation in the checkpoint inhibitor combination arm of the first-in-human study. Initiation of a potentially registrational monotherapy study is planned for this year. |
• | Results from a Phase 3 study of ABP 798, a biosimilar candidate to Rituxan® (rituximab), in patients with Non-Hodgkin’s lymphoma are expected in Q3 2019. |
• | The Company announced that the U.S. Food and Drug Administration (FDA) has set a Dec. 14, 2019, Biosimilar User Fee Act target action date for the Biologics License Application of ABP 710, a biosimilar candidate to REMICADE® (infliximab). |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues: | |||||||||||||||
Product sales | $ | 5,574 | $ | 5,679 | $ | 10,860 | $ | 11,022 | |||||||
Other revenues | 297 | 380 | 568 | 591 | |||||||||||
Total revenues | 5,871 | 6,059 | 11,428 | 11,613 | |||||||||||
Operating expenses: | |||||||||||||||
Cost of sales | 1,012 | 1,024 | 2,067 | 1,968 | |||||||||||
Research and development | 924 | 869 | 1,803 | 1,629 | |||||||||||
Selling, general and administrative | 1,260 | 1,353 | 2,414 | 2,480 | |||||||||||
Other | (3 | ) | (19 | ) | (6 | ) | (22 | ) | |||||||
Total operating expenses | 3,193 | 3,227 | 6,278 | 6,055 | |||||||||||
Operating income | 2,678 | 2,832 | 5,150 | 5,558 | |||||||||||
Interest expense, net | 332 | 347 | 675 | 685 | |||||||||||
Interest and other income, net | 218 | 162 | 403 | 393 | |||||||||||
Income before income taxes | 2,564 | 2,647 | 4,878 | 5,266 | |||||||||||
Provision for income taxes | 385 | 351 | 707 | 659 | |||||||||||
Net income | $ | 2,179 | $ | 2,296 | $ | 4,171 | $ | 4,607 | |||||||
Earnings per share: | |||||||||||||||
Basic | $ | 3.59 | $ | 3.50 | $ | 6.78 | $ | 6.76 | |||||||
Diluted | $ | 3.57 | $ | 3.48 | $ | 6.75 | $ | 6.73 | |||||||
Weighted-average shares used in calculation of earnings per share: | |||||||||||||||
Basic | 607 | 656 | 615 | 682 | |||||||||||
Diluted | 610 | 660 | 618 | 685 |
June 30, | December 31, | ||||||
2019 | 2018 | ||||||
(Unaudited) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash, cash equivalents and marketable securities | $ | 21,758 | $ | 29,304 | |||
Trade receivables, net | 3,801 | 3,580 | |||||
Inventories | 3,176 | 2,940 | |||||
Other current assets | 2,011 | 1,794 | |||||
Total current assets | 30,746 | 37,618 | |||||
Property, plant and equipment, net | 4,882 | 4,958 | |||||
Intangible assets, net | 6,813 | 7,443 | |||||
Goodwill | 14,689 | 14,699 | |||||
Other assets | 2,243 | 1,698 | |||||
Total assets | $ | 59,373 | $ | 66,416 | |||
Liabilities and Stockholders' Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 7,806 | $ | 9,069 | |||
Current portion of long-term debt | 2,816 | 4,419 | |||||
Total current liabilities | 10,622 | 13,488 | |||||
Long-term debt | 27,798 | 29,510 | |||||
Long-term deferred tax liabilities | 763 | 864 | |||||
Long-term tax liabilities | 7,861 | 8,770 | |||||
Other noncurrent liabilities | 1,535 | 1,284 | |||||
Total stockholders’ equity | 10,794 | 12,500 | |||||
Total liabilities and stockholders’ equity | $ | 59,373 | $ | 66,416 | |||
Shares outstanding | 602 | 630 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP cost of sales | $ | 1,012 | $ | 1,024 | $ | 2,067 | $ | 1,968 | |||||||
Adjustments to cost of sales: | |||||||||||||||
Acquisition-related expenses (a) | (276 | ) | (279 | ) | (552 | ) | (545 | ) | |||||||
Total adjustments to cost of sales | (276 | ) | (279 | ) | (552 | ) | (545 | ) | |||||||
Non-GAAP cost of sales | $ | 736 | $ | 745 | $ | 1,515 | $ | 1,423 | |||||||
GAAP cost of sales as a percentage of product sales | 18.2 | % | 18.0 | % | 19.0 | % | 17.9 | % | |||||||
Acquisition-related expenses (a) | -5.0 | -4.9 | -5.0 | -5.0 | |||||||||||
Non-GAAP cost of sales as a percentage of product sales | 13.2 | % | 13.1 | % | 14.0 | % | 12.9 | % | |||||||
GAAP research and development expenses | $ | 924 | $ | 869 | $ | 1,803 | $ | 1,629 | |||||||
Adjustments to research and development expenses: | |||||||||||||||
Acquisition-related expenses (a) | (18 | ) | (19 | ) | (38 | ) | (40 | ) | |||||||
Total adjustments to research and development expenses | (18 | ) | (19 | ) | (38 | ) | (40 | ) | |||||||
Non-GAAP research and development expenses | $ | 906 | $ | 850 | $ | 1,765 | $ | 1,589 | |||||||
GAAP research and development expenses as a percentage of product sales | 16.6 | % | 15.3 | % | 16.6 | % | 14.8 | % | |||||||
Acquisition-related expenses (a) | -0.3 | -0.3 | -0.3 | -0.4 | |||||||||||
Non-GAAP research and development expenses as a percentage of product sales | 16.3 | % | 15.0 | % | 16.3 | % | 14.4 | % | |||||||
GAAP selling, general and administrative expenses | $ | 1,260 | $ | 1,353 | $ | 2,414 | $ | 2,480 | |||||||
Adjustments to selling, general and administrative expenses: | |||||||||||||||
Acquisition-related expenses (a) | (5 | ) | (20 | ) | (9 | ) | (45 | ) | |||||||
Certain net charges pursuant to our restructuring initiative | 1 | — | — | (3 | ) | ||||||||||
Total adjustments to selling, general and administrative expenses | (4 | ) | (20 | ) | (9 | ) | (48 | ) | |||||||
Non-GAAP selling, general and administrative expenses | $ | 1,256 | $ | 1,333 | $ | 2,405 | $ | 2,432 | |||||||
GAAP selling, general and administrative expenses as a percentage of product sales | 22.6 | % | 23.8 | % | 22.2 | % | 22.5 | % | |||||||
Acquisition-related expenses (a) | -0.1 | -0.3 | -0.1 | -0.4 | |||||||||||
Certain net charges pursuant to our restructuring initiative | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||
Non-GAAP selling, general and administrative expenses as a percentage of product sales | 22.5 | % | 23.5 | % | 22.1 | % | 22.1 | % | |||||||
GAAP operating expenses | $ | 3,193 | $ | 3,227 | $ | 6,278 | $ | 6,055 | |||||||
Adjustments to operating expenses: | |||||||||||||||
Adjustments to cost of sales | (276 | ) | (279 | ) | (552 | ) | (545 | ) | |||||||
Adjustments to research and development expenses | (18 | ) | (19 | ) | (38 | ) | (40 | ) | |||||||
Adjustments to selling, general and administrative expenses | (4 | ) | (20 | ) | (9 | ) | (48 | ) | |||||||
Certain net charges pursuant to our restructuring initiative | 1 | 7 | 2 | 6 | |||||||||||
Certain other expenses | — | (25 | ) | — | (25 | ) | |||||||||
Acquisition-related adjustments | 2 | 37 | 4 | 41 | |||||||||||
Total adjustments to operating expenses | (295 | ) | (299 | ) | (593 | ) | (611 | ) | |||||||
Non-GAAP operating expenses | $ | 2,898 | $ | 2,928 | $ | 5,685 | $ | 5,444 | |||||||
GAAP operating income | $ | 2,678 | $ | 2,832 | $ | 5,150 | $ | 5,558 | |||||||
Adjustments to operating expenses | 295 | 299 | 593 | 611 | |||||||||||
Non-GAAP operating income | $ | 2,973 | $ | 3,131 | $ | 5,743 | $ | 6,169 | |||||||
GAAP operating income as a percentage of product sales | 48.0 | % | 49.9 | % | 47.4 | % | 50.4 | % | |||||||
Adjustments to cost of sales | 5.0 | 4.9 | 5.0 | 5.0 | |||||||||||
Adjustments to research and development expenses | 0.3 | 0.3 | 0.3 | 0.4 | |||||||||||
Adjustments to selling, general and administrative expenses | 0.1 | 0.3 | 0.1 | 0.4 | |||||||||||
Certain net charges pursuant to our restructuring initiative | 0.0 | 0.0 | 0.0 | 0.0 | |||||||||||
Certain other expenses | 0.0 | 0.4 | 0.0 | 0.2 | |||||||||||
Acquisition-related adjustments | -0.1 | -0.7 | 0.1 | -0.4 | |||||||||||
Non-GAAP operating income as a percentage of product sales | 53.3 | % | 55.1 | % | 52.9 | % | 56.0 | % | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
GAAP interest and other income, net | $ | 218 | $ | 162 | $ | 403 | $ | 393 | |||||||
Adjustments to other income (b) | — | — | — | (75 | ) | ||||||||||
Non-GAAP interest and other income, net | $ | 218 | $ | 162 | $ | 403 | $ | 318 | |||||||
GAAP income before income taxes | $ | 2,564 | $ | 2,647 | $ | 4,878 | $ | 5,266 | |||||||
Adjustments to operating expenses | 295 | 299 | 593 | 611 | |||||||||||
Adjustments to other income (b) | — | — | — | (75 | ) | ||||||||||
Non-GAAP income before income taxes | $ | 2,859 | $ | 2,946 | $ | 5,471 | $ | 5,802 | |||||||
GAAP provision for income taxes | $ | 385 | $ | 351 | $ | 707 | $ | 659 | |||||||
Adjustments to provision for income taxes: | |||||||||||||||
Income tax effect of the above adjustments (c) | 70 | 74 | 138 | 138 | |||||||||||
Other income tax adjustments (d) | (19 | ) | (8 | ) | (27 | ) | 10 | ||||||||
Total adjustments to provision for income taxes | 51 | 66 | 111 | 148 | |||||||||||
Non-GAAP provision for income taxes | $ | 436 | $ | 417 | $ | 818 | $ | 807 | |||||||
GAAP tax as a percentage of income before taxes | 15.0 | % | 13.3 | % | 14.5 | % | 12.5 | % | |||||||
Adjustments to provision for income taxes: | |||||||||||||||
Income tax effect of the above adjustments (c) | 0.9 | 1.2 | 1.0 | 1.2 | |||||||||||
Other income tax adjustments (d) | -0.6 | -0.3 | -0.5 | 0.2 | |||||||||||
Total adjustments to provision for income taxes | 0.3 | 0.9 | 0.5 | 1.4 | |||||||||||
Non-GAAP tax as a percentage of income before taxes | 15.3 | % | 14.2 | % | 15.0 | % | 13.9 | % | |||||||
GAAP net income | $ | 2,179 | $ | 2,296 | $ | 4,171 | $ | 4,607 | |||||||
Adjustments to net income: | |||||||||||||||
Adjustments to income before income taxes, net of the income tax effect | 225 | 225 | 455 | 398 | |||||||||||
Other income tax adjustments (d) | 19 | 8 | 27 | (10 | ) | ||||||||||
Total adjustments to net income | 244 | 233 | 482 | 388 | |||||||||||
Non-GAAP net income | $ | 2,423 | $ | 2,529 | $ | 4,653 | $ | 4,995 | |||||||
Three months ended June 30, 2019 | Three months ended June 30, 2018 | ||||||||||||||
GAAP | Non-GAAP | GAAP | Non-GAAP | ||||||||||||
Net income | $ | 2,179 | $ | 2,423 | $ | 2,296 | $ | 2,529 | |||||||
Weighted-average shares for diluted EPS | 610 | 610 | 660 | 660 | |||||||||||
Diluted EPS | $ | 3.57 | $ | 3.97 | $ | 3.48 | $ | 3.83 | |||||||
Six months ended June 30, 2019 | Six months ended June 30, 2018 | ||||||||||||||
GAAP | Non-GAAP | GAAP | Non-GAAP | ||||||||||||
Net income | $ | 4,171 | $ | 4,653 | $ | 4,607 | $ | 4,995 | |||||||
Weighted-average shares for diluted EPS | 618 | 618 | 685 | 685 | |||||||||||
Diluted EPS | $ | 6.75 | $ | 7.53 | $ | 6.73 | $ | 7.29 |
(a) | The adjustments related primarily to noncash amortization of intangible assets acquired in business combinations. | |
(b) | For the six months ended June 30, 2018, the adjustment related to the net gain associated with the Kirin-Amgen share acquisition. | |
(c) | The tax effect of the adjustments between our GAAP and non-GAAP 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 and six months ended June 30, 2019, were 23.7% and 23.3%, compared with 24.7% and 25.7% for the corresponding periods of the prior year. | |
(d) | The adjustments related primarily to certain acquisition items and prior-period items excluded from GAAP earnings. | |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net cash provided by operating activities | $ | 1,414 | $ | 2,102 | $ | 3,259 | $ | 4,829 | |||||||
Net cash provided by investing activities | 2,745 | 2,938 | 6,300 | 17,844 | |||||||||||
Net cash used in financing activities | (5,992 | ) | (4,650 | ) | (10,979 | ) | (16,342 | ) | |||||||
(Decrease) increase in cash and cash equivalents | (1,833 | ) | 390 | (1,420 | ) | 6,331 | |||||||||
Cash and cash equivalents at beginning of period | 7,358 | 9,741 | 6,945 | 3,800 | |||||||||||
Cash and cash equivalents at end of period | $ | 5,525 | $ | 10,131 | $ | 5,525 | $ | 10,131 | |||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net cash provided by operating activities | $ | 1,414 | $ | 2,102 | $ | 3,259 | $ | 4,829 | |||||||
Capital expenditures | (144 | ) | (187 | ) | (260 | ) | (342 | ) | |||||||
Free cash flow | $ | 1,270 | $ | 1,915 | $ | 2,999 | $ | 4,487 |
GAAP diluted EPS guidance | $12.10 | — | $12.71 | |
Known adjustment to arrive at non-GAAP*: | ||||
Acquisition-related expenses (a) | 1.55 | — | 1.61 | |
Tax adjustments | 0.04 | |||
Non-GAAP diluted EPS guidance | $13.75 | — | $14.30 |
GAAP tax rate guidance | 13% | — | 14% | |
Tax rate of known adjustments discussed above | 1% | |||
Non-GAAP diluted EPS guidance | 14% | — | 15% |