0001193125-15-021824.txt : 20150127 0001193125-15-021824.hdr.sgml : 20150127 20150127161501 ACCESSION NUMBER: 0001193125-15-021824 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20150127 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20150127 DATE AS OF CHANGE: 20150127 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMGEN INC CENTRAL INDEX KEY: 0000318154 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 953540776 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-12477 FILM NUMBER: 15551933 BUSINESS ADDRESS: STREET 1: ONE AMGEN CENTER DRIVE CITY: THOUSAND OAKS STATE: CA ZIP: 91320 BUSINESS PHONE: (805)447-1000 MAIL ADDRESS: STREET 1: ONE AMGEN CENTER DRIVE CITY: THOUSAND OAKS STATE: CA ZIP: 91320 FORMER COMPANY: FORMER CONFORMED NAME: AMGEN DATE OF NAME CHANGE: 19870305 8-K 1 d858799d8k.htm FORM 8-K Form 8-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)

January 27, 2015

 

 

AMGEN INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   000-12477   95-3540776

(State or Other Jurisdiction

of Incorporation)

  

(Commission

File Number)

  

(IRS Employer

Identification No.)

 

One Amgen Center Drive

Thousand Oaks, CA

   91320-1799
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code

805-447-1000

N/A

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 2.02 Results of Operations and Financial Condition.

On January 27, 2015, Amgen Inc. (the Company) issued a press release announcing its unaudited results of operations for the three months and year ended December 31, 2014 and its unaudited financial position as of December 31, 2014. The full text of the press release is furnished as Exhibit 99.1 hereto.

In its press release the Company included certain non-U.S. Generally Accepted Accounting Principles (GAAP) financial measures as defined in Regulation G promulgated by the Securities and Exchange Commission. The non-GAAP financial measures included in the press release are adjusted earnings per share, free cash flow, adjusted operating income, adjusted operating margin, adjusted tax rate, adjusted net income, adjusted operating expenses and non-GAAP sub-components of adjusted operating expenses such as adjusted cost of sales, adjusted research and development expenses and adjusted selling, general and administrative expenses. Reconciliations for such non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the press release.

The press release also contains a discussion of why the Company’s management believes that presentation of the non-GAAP financial measures included in the press release provides useful information to investors regarding the Company’s financial condition and results of operations, as well as a discussion of the additional purposes for which the Company’s management uses these non-GAAP financial measures.

This information and the information contained in the press release shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in Item 2.02 of this Current Report is not incorporated by reference into any filings of the Company made under the Securities Act of 1933, as amended, whether made before or after the date of this Current Report, regardless of any general incorporation language in the filing unless specifically stated so therein.

 

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

99.1    Press Release dated January 27, 2015

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    AMGEN INC.
Date: January 27, 2015     By:   /s/ David W. Meline
    Name:   David W. Meline
    Title:   Executive Vice President and Chief Financial Officer

 

EXHIBIT INDEX

 

Exhibit

Number

   

Document Description

99.1    Press release dated January 27, 2015
 EX-99.1 2 d858799dex991.htm EX-99.1 EX-99.1

EXHIBIT 99.1

 

LOGO     
    

One Amgen Center Drive

Thousand Oaks, CA 91320-1799

Telephone 805-447-1000

www.amgen.com

News Release

AMGEN’S 2014 REVENUES INCREASED 7 PERCENT

TO $20.1 BILLION AND ADJUSTED EARNINGS PER

SHARE (EPS) INCREASED 14 PERCENT TO $8.70

2014 GAAP EPS Were $6.70

2015 Revenues and Adjusted EPS Reaffirmed to be in the Range of

$20.8-$21.3 Billion and $9.05-$9.40, Respectively

THOUSAND OAKS, Calif. (Jan. 27, 2015) – 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 r     FY ‘14      FY ‘13      YOY r  

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.

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 2

 

  •  

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.

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 3

 

Product Sales Detail by Product and Geographic Region

 

$Millions, except percentages    Q4 ‘14      Q4 ‘13      YOY r  
     US      ROW      TOTAL      TOTAL      TOTAL  

Neulasta®/ NEUPOGEN®

    $ 1,143       $ 311       $ 1,454       $ 1,407         3 % 

Neulasta®

     946         234         1,180         1,098         7 % 

NEUPOGEN®

     197         77         274         309         (11 %) 

Enbrel®

     1,261         76         1,337         1,200         11 % 

XGEVA®/ Prolia®

      422         218         640         522         23 % 

XGEVA®

     225         100         325         286         14 % 

Prolia®

     197         118         315         236         33 % 

EPOGEN®

     539         0         539         525         3 % 

Aranesp®

     206         273         479         470         2 % 

Sensipar® / Mimpara®

      229         88         317         307         3 % 

Vectibix®

     49         83         132         102         29 % 

Nplate®

     67         52         119         120         (1 %) 

Kyprolis®

     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 r  
     US      ROW      TOTAL      TOTAL      TOTAL  

Neulasta®/ NEUPOGEN®

    $ 4,488       $ 1,267       $ 5,755       $ 5,790         (1 %) 

Neulasta®

     3,649         947         4,596         4,392         5 % 

NEUPOGEN®

     839         320         1,159         1,398         (17 %) 

Enbrel®

     4,404         284         4,688         4,551         3 % 

XGEVA®/ Prolia®

      1,482         769         2,251         1,763         28 % 

XGEVA®

     857         364         1,221         1,019         20 % 

Prolia®

     625         405         1,030         744         38 % 

EPOGEN®

     2,031         0         2,031         1,953         4 % 

Aranesp®

     794         1,136         1,930         1,911         1 % 

Sensipar® / Mimpara®

      796         362         1,158         1,089         6 % 

Vectibix®

     168         337         505         389         30 % 

Nplate®

     260         209         469         427         10 % 

Kyprolis®

     306         25         331         73         *   

Other

      3         206         209         246         (15 %) 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

Total product sales

    $ 14,732       $ 4,595       $ 19,327       $ 18,192         6 % 
  

 

 

     

 

 

     

 

 

     

 

 

     

 

 

  

 

* Not meaningful

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 4

 

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.

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 5

 

$Millions, except percentages                                 
On an Adjusted Basis    Q4 ‘14     Q4 ‘13     YOY r   FY ‘14     FY ‘13     YOY r

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 r     FY ‘14      FY ‘13      YOY r  

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

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 6

 

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

   

Indication

   

Milestone

Repatha™ (evolocumab)

    Dyslipidemia    Global regulatory reviews

Corlanor® (ivabradine)

    Chronic heart failure    US regulatory review

Kyprolis

    Relapsed multiple myeloma    Global regulatory reviews

Talimogene laherparepvec

    Metastatic melanoma    Global regulatory reviews

Brodalumab*

   

Asthma

Moderate-to-severe plaque

psoriasis

   

Phase 2b data

 

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:

BLINCYTOTM (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.

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 7

 

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.

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 8

 

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

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 9

 

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.

###

CONTACT: Amgen, Thousand Oaks

Cuyler Mayer, 805-447-6332 (media)

Trish Hawkins, 805-447-5631 (media)

Arvind Sood, 805-447-1060 (investors)

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 10

 

Amgen Inc.

Condensed Consolidated Statements of Income - GAAP

(In millions, except per share data)

(Unaudited)

 

     Three months ended
December 31,		     Years ended
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   

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 11

 

Amgen Inc.

Condensed Consolidated Balance Sheets - GAAP

(In millions)

(Unaudited)

 

     December 31,
2014		      December 31,
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   

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 12

 

Amgen Inc.

GAAP to Adjusted Reconciliations

(In millions)

(Unaudited)

 

     Three months ended
December 31,		     Years ended
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   
  

 

 

    

 

 

    

 

 

    

 

 

  

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 13

 

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
December 31, 2014		      Three months ended
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
December 31, 2014		      Year ended
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.

2014 Revenues Increased 7 Percent to $20.1 Billion and Adjusted Earnings Per Share Increased 14 Percent to $8.70

Page 14

 

Amgen Inc.

Reconciliations of Free Cash Flow

(In millions)

(Unaudited)

 

     Three months ended
December 31,		     Years ended
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 % 
  

 

 

  
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