Amgen Reports Fourth Quarter And Full Year 2018 Financial Results
THOUSAND OAKS, Calif., Jan. 29, 2019 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the fourth quarter and full year 2018 in comparison to comparable periods in 2017. Key results include:
-- For the fourth quarter, total revenues increased 7 percent to $6.2
billion.
-- Product sales grew 8 percent globally. New and recently launched
products including Repatha(®) (evolocumab), Prolia(®) (denosumab),
KYPROLIS(®) (carfilzomib) and XGEVA(® )(denosumab) showed
double-digit growth.
-- For the full year, total revenues increased 4 percent to $23.7 billion,
with 3 percent product sales growth.
-- GAAP earnings per share (EPS) increased to $3.01 in the fourth quarter
and to $12.62 for the full year driven by higher total revenues, a lower
tax rate as the prior year was impacted by U.S. tax reform and lower
weighted-average shares outstanding.
-- For the fourth quarter, GAAP operating income increased 6 percent to
$2.4 billion and GAAP operating margin decreased 0.6 percentage
points to 39.7 percent. For the full year, GAAP operating income
increased 3 percent to $10.3 billion and GAAP operating margin
decreased 0.3 percentage points to 45.5 percent.
-- Non-GAAP EPS increased 18 percent in the fourth quarter to $3.42 and 14
percent for the full year to $14.40 driven by higher total revenues, a
lower tax rate and lower weighted-average shares outstanding.
-- For the fourth quarter, non-GAAP operating income increased 6
percent to $2.7 billion and non-GAAP operating margin decreased 0.6
percentage points to 45.3 percent. For the full year, non-GAAP
operating income increased 2 percent to $11.9 billion and non-GAAP
operating margin decreased 0.9 percentage points to 52.6 percent.
-- The Company generated $10.6 billion of free cash flow for the full year
versus $10.5 billion in 2017.
-- 2019 total revenues guidance of $21.8-$22.9 billion; EPS guidance of
$11.55-$12.75 on a GAAP basis and $13.10-$14.30 on a non-GAAP basis.
"Through our continued solid operating performance in 2018, we met and exceeded our long-term financial commitments," said Robert A. Bradway, chairman and chief executive officer. "Looking to the future, we are encouraged by our long-term growth prospects driven by our portfolio of newer products, pipeline and ongoing success in international expansion."
$Millions, except EPS and percentages Q4'18 Q4'17 YOY FY'18 FY'17 YOY
Total Revenues $
6,230 $
5,802 7% $
23,747 $
22,849 4%
GAAP Operating Income $
2,382 $
2,245 6% $
10,263 $
9,973 3%
GAAP Net Income (Loss) $
1,928 $
(4,264)
* $
8,394 $
1,979
*
GAAP Earnings (Loss) Per Share $
3.01 $
(5.89)
* $
12.62 $
2.69
*
Non-GAAP Operating Income $
2,717 $
2,555 6% $
11,857 $
11,658 2%
Non-GAAP Net Income $
2,186 $
2,104 4% $
9,573 $
9,246 4%
Non-GAAP EPS $
3.42 $
2.89 18% $
14.40 $
12.58 14%
* Change in excess of 100%
---
References in this release to "non-GAAP"
measures, measures presented "on a non-
GAAP basis" and to "free cash flow"
(computed by subtracting capital
expenditures from operating cash flow)
refer to non-GAAP financial measures.
Adjustments to the most directly
comparable GAAP financial measures and
other items are presented on the
attached reconciliations.
Product Sales Performance
-- Total product sales increased 8 percent for the fourth quarter of 2018
versus the fourth quarter of 2017. Product sales grew 3 percent for the
full year.
-- Repatha sales increased 62 percent for the fourth quarter and 72 percent
for the full year driven by higher unit demand, offset partially by
lower net selling price.
-- BLINCYTO(®) (blinatumomab) sales increased 37 percent for the fourth
quarter and 31 percent for the full year driven by higher unit demand.
-- XGEVA sales increased 17 percent for the fourth quarter and 13 percent
for the full year driven primarily by higher unit demand.
-- Prolia sales increased 14 percent for the fourth quarter and 16 percent
for the full year driven primarily by higher unit demand.
-- KYPROLIS sales increased 11 percent for the fourth quarter and 16
percent for the full year driven by higher unit demand, offset partially
by net selling price.
-- Nplate(®) (romiplostim) sales increased 10 percent for the fourth
quarter and 12 percent for the full year driven by higher unit demand.
-- Sensipar/Mimpara(®) (cinacalcet) increased 8 percent for the fourth
quarter driven by favorable changes in accounting estimates related to
prior periods and higher net selling price, offset partially by lower
unit demand. Sales increased 3 percent for the full year driven
primarily by higher net selling price, offset partially by lower unit
demand.
-- Vectibix(®) (panitumumab) sales increased 6 percent for the fourth
quarter and 8 percent for the full year driven by higher unit demand.
-- Neulasta(®) (pegfilgrastim) sales increased 5 percent for the fourth
quarter driven by higher unit demand due primarily to an order from the
U.S. government, offset partially by lower net selling price. Sales
decreased 1 percent for the full year driven by favorable changes in
accounting estimates in the prior year, offset partially by favorable
changes in inventory.
-- Parsabiv(® )(etelcalcetide) was launched in the U.S. in the first
quarter of 2018 and sales grew 18 percent sequentially in the fourth
quarter.
-- Aimovig(® )(erenumab-aooe) was launched in the U.S. in the second
quarter of 2018 and generated $95 million in sales in the fourth
quarter.
-- EPOGEN(®) (epoetin alfa) sales decreased 2 percent for the fourth
quarter driven by lower net selling price, offset partially by higher
unit demand. Sales decreased 8 percent for the full year driven
primarily by lower net selling price.
-- Aranesp(®) (darbepoetin alfa) sales decreased 3 percent for the fourth
quarter driven primarily by unfavorable changes in inventory levels and
lower net selling price. Sales decreased 9 percent for the full year
driven by lower unit demand.
-- Enbrel(®) (etanercept) sales decreased 8 percent for the fourth quarter
and the full year driven by lower unit demand and lower net selling
price.
-- NEUPOGEN(®) (filgrastim) sales decreased 40 percent for the fourth
quarter driven by lower net selling price and lower unit demand. Sales
decreased 34 percent for the full year driven by lower unit demand and
lower net selling price.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages
Q4'18 Q4'17 YOY
US ROW TOTAL TOTAL TOTAL
Repatha(R) $
104 $
55 $
159 $
98 62%
BLINCYTO(R) 37 26 63 46 37%
XGEVA(R) 344 112 456 391 17%
Prolia(R) 430 225 655 574 14%
KYPROLIS(R) 153 98 251 227 11%
Nplate(R) 112 70 182 165 10%
Sensipar(R)/Mimpara(R) 367 81 448 413 8%
Vectibix(R) 74 94 168 159 6%
Neulasta(R) 1,012 157 1,169 1,114 5%
Parsabiv(R) 108 12 120 3
*
Aimovig(R) 95 95
*
Biosimilars** 34 34
*
EPOGEN(R) 264 264 270 (2%)
Aranesp(R) 228 246 474 491 (3%)
Enbrel(R) 1,263 52 1,315 1,423 (8%)
NEUPOGEN(R) 43 32 75 126 (40%)
Other*** 21 52 73 69 6%
Total product sales $
4,655 $
1,346 $
6,001 $
5,569 8%
* Change in excess of 100%
** Biosimilars includes KANJINTI(TM) and AMGEVITA(TM).
*** Other includes Bergamo, MN Pharma, IMLYGIC(R) and Corlanor(R).
KANJINTI(TM) trade name is provisionally approved by the FDA.
---
$Millions, except percentages
FY'18 FY'17 YOY
US ROW TOTAL TOTAL TOTAL
Repatha(R) $
358 $
192 $
550 $
319 72%
BLINCYTO(R) 134 96 230 175 31%
Prolia(R) 1,500 791 2,291 1,968 16%
KYPROLIS(R) 583 385 968 835 16%
XGEVA(R) 1,338 448 1,786 1,575 13%
Nplate(R) 438 279 717 642 12%
Vectibix(R) 288 403 691 642 8%
Sensipar(R)/Mimpara(R) 1,436 338 1,774 1,718 3%
Parsabiv(R) 302 34 336 5
*
Aimovig(R) 119 119
*
Biosimilars** 55 55
*
Neulasta(R) 3,866 609 4,475 4,534 (1%)
Enbrel(R) 4,807 207 5,014 5,433 (8%)
EPOGEN(R) 1,010 1,010 1,096 (8%)
Aranesp(R) 942 935 1,877 2,053 (9%)
NEUPOGEN(R) 223 142 365 549 (34%)
Other*** 85 190 275 251 10%
Total product sales $
17,429 $
5,104 $
22,533 $
21,795 3%
* Change in excess of 100%
** Biosimilars includes KANJINTI(TM) and AMGEVITA(TM).
*** Other includes Bergamo, MN Pharma, IMLYGIC(R) and Corlanor(R).
KANJINTI(TM) trade name is provisionally approved by the FDA.
---
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
-- Total Operating Expenses increased 8 percent in the fourth quarter and 5
percent for the full year. All expense categories benefited from
savings from our transformation and process improvement efforts. Cost of
Sales margin decreased 0.7 points in the fourth quarter due to lower
royalty cost and the impact of Hurricane Maria charges in Q4 2017,
offset partially by higher cost of manufacturing and higher
acquisition-related intangibles amortization. For the full year, Cost of
Sales margin decreased 0.5 points due to lower royalty cost, the
favorable comparison to Hurricane Maria-related charges in 2017 and
lower acquisition-related intangibles amortization, offset partially by
higher cost of manufacturing. Research & Development (R&D) expenses
increased 13 percent in the fourth quarter driven by higher spending on
business development, our early oncology pipeline and late-stage
development, offset partially by lower spending to support marketed
products. For the full year, R&D expenses increased 5 percent driven by
higher spending on our early pipeline, late-stage development and
business development, offset partially by lower spending to support
marketed products. Selling, General & Administrative (SG&A) expenses
increased 9 percent in the fourth quarter due primarily to investments
in product launches and marketed product support, offset partially by
the favorable comparison to Hurricane Maria-related charges in Q4 2017.
For the full year, SG&A expenses increased 9 percent due primarily to
investments in product launches and marketed product support.
-- Operating Margin decreased 0.6 percentage points in the fourth quarter
to 39.7 percent, and decreased 0.3 percentage points for the full year
to 45.5 percent.
-- Tax Rate decreased in the fourth quarter and the full year due to the
impacts of U.S. corporate tax reform.
On a non-GAAP basis:
-- Total Operating Expenses increased 8 percent in the fourth quarter and 6
percent for the full year. All expense categories benefited from savings
from our transformation and process improvement efforts. Cost of Sales
margin decreased 1.1 points in the fourth quarter due to lower royalty
cost and the impact of Hurricane Maria charges in Q4 2017, offset
partially by higher cost of manufacturing. For the full year, Cost of
Sales margin decreased 0.2 points due to lower royalty cost and the
favorable comparison to Hurricane Maria-related charges in 2017, offset
partially by higher cost of manufacturing. R&D expenses increased 13
percent in the fourth quarter driven by higher spending on business
development, our early oncology pipeline and late-stage development,
offset partially by lower spending to support marketed products. For
the full year, R&D expenses increased 5 percent driven by higher
spending on our early pipeline, late-stage development and business
development, offset partially by lower spending to support marketed
products. SG&A expenses increased 9 percent in the fourth quarter
primarily due to investments in product launches and marketed product
support, offset partially by the favorable comparison of Hurricane
Maria-related charges in Q4 2017. For the full year, SG&A expenses
increased 10 percent due primarily to investments in product launches
and marketed product support.
-- Operating Margin decreased 0.6 percentage points in the fourth quarter
to 45.3 percent, and decreased by 0.9 percentage points for the full
year to 52.6 percent.
-- Tax Rate decreased 3.3 percentage points in the fourth quarter and 4.5
percentage points for the full year primarily due to the impacts of U.S.
corporate tax reform.
$Millions, except percentages
GAAP
Non-GAAP
Q4'18 Q4'17
YOY Q4'18 Q4'17 YOY
Cost of Sales $1,096 $1,059 3% $819 $816 -%
% of product sales 18.3% 19.0%
(0.7) pts. 13.6% 14.7%
(1.1) pts.
Research & Development $1,182 $1,043 13% $1,162 $1,025 13%
% of product sales 19.7% 18.7%
1.0 pts. 19.4% 18.4%
1.0 pts.
Selling, General & Administrative $1,559 $1,427 9% $1,532 $1,406 9%
% of product sales 26.0% 25.6%
0.4 pts. 25.5% 25.2%
0.3 pts.
Other $11 $28 (61%)
$-
$-
NM
TOTAL Operating Expenses $3,848 $3,557 8% $3,513 $3,247 8%
Operating Margin
operating income as % of product sales 39.7% 40.3%
(0.6) pts. 45.3% 45.9%
(0.6) pts.
Tax Rate 11.8% 292.6% (280.8) pts. 13.3% 16.6% (3.3) pts.
NM: Not Meaningful
pts: percentage points
---
$Millions, except percentages
GAAP
Non-GAAP
FY'18 FY'17 YOY FY'18 FY'17 YOY
Cost of Sales $4,101 $4,069 1% $3,001 $2,943 2%
% of product sales 18.2% 18.7%
(0.5) pts. 13.3% 13.5%
(0.2) pts.
Research & Development $3,737 $3,562 5% $3,657 $3,482 5%
% of product sales 16.6% 16.3%
0.3 pts. 16.2% 16.0%
0.2 pts.
Selling, General & Administrative $5,332 $4,870 9% $5,232 $4,766 10%
% of product sales 23.7% 22.3%
1.4 pts. 23.2% 21.9%
1.3 pts.
Other $314 $375 (16%)
$-
$-
NM
TOTAL Operating Expenses $13,484 $12,876 5% $11,890 $11,191 6%
Operating Margin
operating income as % of product sales 45.5% 45.8%
(0.3) pts. 52.6% 53.5%
(0.9) pts.
Tax Rate 12.1% 79.4% (67.3) pts. 13.5% 18.0% (4.5) pts.
NM: Not Meaningful
pts: percentage points
---
Cash Flow and Balance Sheet
-- The Company generated $3.0 billion of free cash flow in the fourth
quarter of 2018 versus $2.9 billion in the fourth quarter of 2017. The
Company generated $10.6 billion of free cash flow for the full year 2018
versus $10.5 billion in 2017 due primarily to improvements in working
capital, offset partially by higher tax payments.
-- The Company's fourth quarter 2018 dividend of $1.32 per share was paid
on Dec. 7, 2018, representing a 15 percent increase versus the fourth
quarter of 2017. The Company's first quarter 2019 dividend of $1.45 per
share declared on Dec. 7, 2018, will be paid on March 8, 2019, to all
stockholders of record as of Feb. 15, 2019, representing a 10 percent
increase from that paid in each of the previous four quarters.
-- During the fourth quarter, the Company repurchased 11.1 million shares
of common stock at a total cost of $2.2 billion. For the full year, the
Company repurchased 94.5 million shares of common stock at a total cost
of $17.9 billion. At the end of the fourth quarter, the Company had $5.1
billion remaining under its stock repurchase authorization.
$Billions, except shares Q4'18 Q4'17 YOY FY'18 FY'17 YOY
Operating Cash Flow $
3.2 $
3.0 $
0.2 $
11.3 $
11.2 $
0.1
Capital Expenditures 0.2 0.2 0.1 0.7 0.7 0.1
Free Cash Flow 3.0 2.9 0.1 10.6 10.5 0.0
Dividends Paid 0.8 0.8 0.0 3.5 3.4 0.1
Share Repurchase 2.2 0.8 1.4 17.9 3.1 14.7
Avg. GAAP Diluted Shares
(millions) 640 724 (84) 665 735 (70)
Avg. non-GAAP Diluted
Shares (millions) 640 729 (89) 665 735 (70)
Cash and Investments 29.3 41.7 (12.4) 29.3 41.7 (12.4)
Debt Outstanding 33.9 35.3 (1.4) 33.9 35.3 (1.4)
Stockholders' Equity 12.5 25.2 (12.7) 12.5 25.2 (12.7)
Note: Numbers may not add due to rounding
---
2019 Guidance
For the full year 2019, the Company expects:
-- Total revenues in the range of $21.8 billion to $22.9 billion.
-- On a GAAP basis, EPS in the range of $11.55 to $12.75 and a tax rate in
the range of 12.5 percent to 13.5 percent.
-- On a non-GAAP basis, EPS in the range of $13.10 to $14.30 and a tax rate
in the range of 14.0 percent to 15.0 percent.
-- Capital expenditures to be approximately $700 million.
Fourth Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
BLINCYTO
-- In January, the European Commission approved an expanded current
indication to include adult patients with Philadelphia chromosome
negative CD19 positive B-cell precursor acute lymphoblastic leukemia in
first or second complete remission with minimal residual disease (MRD).
Nplate
-- In December, the Company submitted a supplemental Biologics License
Application (sBLA) to the U.S. Food and Drug Administration (FDA) to
include the treatment of adult patients with immune thrombocytopenia
(ITP) who have had ITP for 12 months or less and an insufficient
response to corticosteroids, immunoglobulins or splenectomy.
-- In December, the FDA approved the sBLA for the treatment of pediatric
patients one year of age and older with ITP for at least six months who
have had an insufficient response to corticosteroids, immunoglobulins or
splenectomy.
Repatha
-- In January, the National Medical Products Administration approved a new
indication for Repatha as the first PCSK9 inhibitor in China for adults
with established atherosclerotic cardiovascular disease to reduce the
risk of myocardial infarction, stroke and coronary revascularization.
EVENITY(TM) (romosozumab)
-- In January, the Japanese Ministry of Health, Labor and Welfare granted a
marketing authorization for the treatment of osteoporosis in men and
postmenopausal women at high risk of fracture.
-- In January, the FDA Bone, Reproductive and Urologic Drugs Advisory
Committee voted in favor of approval for the treatment of osteoporosis
in postmenopausal women at high risk for fracture.
KANJINTI(TM) (ABP 980)
-- In December, a Biologics License Application (BLA) for KANJINTI, a
biosimilar Herceptin (trastuzumab), was resubmitted to the FDA.
ABP 710
-- In December and January, the Company submitted a BLA to the FDA, and a
Marketing Authorization Application to the EMA, respectively, for ABP
710, a biosimilar candidate to REMICADE(®) (infliximab).
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
EVENITY and KANJINTI trade names provisionally approved by the FDA
Herceptin is a registered trademark of Genentech
Remicade is a registered trademark of Johnson and Johnson
Non-GAAP Financial Measures
In this news release, management has presented its operating results for the fourth quarters and full years of 2018 and 2017, in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and on a non-GAAP basis. In addition, management has presented its full year 2019 EPS and tax rate guidance in accordance with GAAP and on a non-GAAP basis. These non-GAAP financial measures are computed by excluding certain items related to acquisitions, restructuring and certain other items, including the repatriation tax on accumulated foreign earnings and other impacts of U.S. corporate tax reform, from the related GAAP financial measures. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the news release. Management has also presented Free Cash Flow (FCF), which is a non-GAAP financial measure, for the fourth quarters and full years of 2018 and 2017. FCF is computed by subtracting capital expenditures from operating cash flow, each as determined in accordance with GAAP.
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 ongoing business activities by facilitating comparisons of results of ongoing business operations among current, past and future periods. 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 internally to evaluate the performance of the business, including to allocate resources and to evaluate results relative to incentive compensation targets. 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 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 are based on the current expectations and beliefs of Amgen. All statements, other than statements of historical fact, are statements that could be deemed forward-looking statements, including estimates of revenues, operating margins, capital expenditures, cash, other financial metrics, expected legal, arbitration, political, regulatory or clinical results or practices, customer and prescriber patterns or practices, reimbursement activities and outcomes and other such estimates and results. Forward-looking statements involve significant risks and uncertainties, including those discussed below and more fully described in the Securities and Exchange Commission reports filed by Amgen, including our most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K. Unless otherwise noted, Amgen is providing this information as of the date of this news release and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise.
No forward-looking statement can be guaranteed and actual results may differ materially from those we project. Our results may be affected by our ability to successfully market both new and existing products domestically and internationally, clinical and regulatory developments involving current and future products, sales growth of recently launched products, competition from other products including biosimilars, difficulties or delays in manufacturing our products and global economic conditions. In addition, sales of our products are affected by pricing pressure, political and public scrutiny and reimbursement policies imposed by third-party payers, 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. 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, including our devices, after they are on the market. Our business may be impacted by government investigations, litigation and product liability claims. In addition, our business may be impacted by the adoption of new tax legislation or exposure to additional tax liabilities. 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, or we may fail to prevail in present and future intellectual property litigation. We perform a substantial amount of our commercial manufacturing activities at a few key facilities, including in Puerto Rico, and also depend on third parties for a portion of our manufacturing activities, and limits on supply may constrain sales of certain of our current products and product candidate development. We rely on collaborations with third parties for the development of some of our product candidates and for the commercialization and sales of some of our commercial products. In addition, we compete with other companies with respect to many of our marketed products as well as for the discovery and development of new products. Discovery or identification of new product candidates or development of new indications for existing products cannot be guaranteed and movement from concept to product is uncertain; consequently, there can be no guarantee that any particular product candidate or development of new indications for existing products 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. Certain of our distributors, customers and payers have substantial purchasing leverage in their dealings with us. The discovery of significant problems with a product similar to one of our products that implicate an entire class of products could have a material adverse effect on sales of the affected products and on our business and results of operations. Our efforts to acquire other companies or products and to integrate the operations of companies we have acquired may not be successful. A breakdown, cyberattack or information security breach could compromise the confidentiality, integrity and availability of our systems and our data. Our stock price is volatile and may be affected by a number of events. 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. We may not be able to access the capital and credit markets on terms that are favorable to us, or at all.
CONTACT: Amgen, Thousand Oaks
Trish Hawkins, 805-447-5631 (media)
Arvind Sood, 805-447-1060 (investors)
Amgen Inc.
Consolidated Statements of Income - GAAP
(In millions, except per-share data)
(Unaudited)
Three months ended
Years ended
December 31, December 31,
2018 2017 2018 2017
---
Revenues:
Product sales $
6,001 $
5,569 $
22,533 $
21,795
Other revenues 229 233 1,214 1,054
Total revenues 6,230 5,802 23,747 22,849
Operating expenses:
Cost of sales 1,096 1,059 4,101 4,069
Research and
development 1,182 1,043 3,737 3,562
Selling, general and
administrative 1,559 1,427 5,332 4,870
Other 11 28 314 375
Total operating
expenses 3,848 3,557 13,484 12,876
Operating income 2,382 2,245 10,263 9,973
Interest expense, net 352 332 1,392 1,304
Interest and other
income, net 155 301 674 928
Income before income
taxes 2,185 2,214 9,545 9,597
Provision for income
taxes 257 6,478 1,151 7,618
Net income (loss) $
1,928 $
(4,264) $
8,394 $
1,979
Earnings (loss) per share:
Basic $
3.04 $
(5.89) $
12.70 $
2.71
Diluted $
3.01 $
(5.89) $
12.62 $
2.69
Weighted-average shares used in
calculation of earnings per share:
Basic 635 724 661 731
Diluted 640 724 665 735
Amgen Inc.
Consolidated Balance Sheets - GAAP
(In millions)
December 31,
2018 2017
---
(Unaudited)
Assets
Current assets:
Cash, cash
equivalents and
marketable
securities $
29,304 $
41,678
Trade receivables,
net 3,580 3,237
Inventories 2,940 2,834
Other current
assets 1,794 1,727
Total current
assets 37,618 49,476
Property, plant
and equipment,
net 4,958 4,989
Intangible assets,
net 7,443 8,609
Goodwill 14,699 14,761
Other assets 1,698 2,119
Total assets $
66,416 $
79,954
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable
and accrued
liabilities $
9,069 $
7,868
Current portion of
long-term debt 4,419 1,152
Total current
liabilities 13,488 9,020
Long-term debt 29,510 34,190
Long-term
deferred tax
liabilities 864 1,166
Long-term tax
liabilities 8,770 9,099
Other noncurrent
liabilities 1,284 1,238
Total
stockholders'
equity 12,500 25,241
Total liabilities
and stockholders'
equity $
66,416 $
79,954
Shares outstanding 630 722
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(Dollars in millions)
(Unaudited)
Three months ended Years ended
December 31, December 31,
2018 2017 2018 2017
---
GAAP cost of sales $
1,096 $
1,059 $
4,101 $
4,069
Adjustments to cost of sales:
Acquisition-related expenses
(a) (276) (243) (1,099) (1,126)
Certain net charges pursuant to
our restructuring initiative (1) (1)
---
Total adjustments to cost of
sales (277) (243) (1,100) (1,126)
---
Non-GAAP cost of sales $
819 $
816 $
3,001 $
2,943
===
GAAP cost of sales as a
percentage of product sales 18.3% 19.0% 18.2% 18.7%
Acquisition-related expenses
(a) -4.7 -4.3 -4.9 -5.2
Certain net charges pursuant to
our restructuring initiative 0.0 0.0 0.0 0.0
---
Non-GAAP cost of sales as a
percentage of product sales 13.6% 14.7% 13.3% 13.5%
===
GAAP research and development
expenses $
1,182 $
1,043 $
3,737 $
3,562
Adjustments to research and development
expenses:
Acquisition-related expenses
(a) (19) (20) (78) (77)
Certain net charges pursuant to
our restructuring initiative (1) 2 (2) (3)
---
Total adjustments to research
and development expenses (20) (18) (80) (80)
---
Non-GAAP research and
development expenses $
1,162 $
1,025 $
3,657 $
3,482
===
GAAP research and development
expenses as a percentage of
product sales 19.7% 18.7% 16.6% 16.3%
Acquisition-related expenses
(a) -0.3 -0.3 -0.4 -0.3
Certain net charges pursuant to
our restructuring initiative 0.0 0.0 0.0 0.0
---
Non-GAAP research and
development expenses as a
percentage of product sales 19.4% 18.4% 16.2% 16.0%
===
GAAP selling, general and
administrative expenses $
1,559 $
1,427 $
5,332 $
4,870
Adjustments to selling, general and
administrative expenses:
Acquisition-related expenses
(a) (19) (20) (84) (99)
Certain net charges pursuant to
our restructuring initiative (8) (1) (16) (2)
Other - (3)
---
Total adjustments to selling,
general and administrative
expenses (27) (21) (100) (104)
---
Non-GAAP selling, general and
administrative expenses $
1,532 $
1,406 $
5,232 $
4,766
===
GAAP selling, general and
administrative expenses as a
percentage of product sales 26.0% 25.6% 23.7% 22.3%
Acquisition-related expenses
(a) -0.3 -0.4 -0.4 -0.4
Certain net charges pursuant to
our restructuring initiative -0.2 0.0 -0.1 0.0
Other 0.0 0.0 0.0 0.0
---
Non-GAAP selling, general and
administrative expenses as a
percentage of product sales 25.5% 25.2% 23.2% 21.9%
===
GAAP operating expenses $
3,848 $
3,557 $
13,484 $
12,876
Adjustments to operating expenses:
Adjustments to cost of sales (277) (243) (1,100) (1,126)
Adjustments to research and
development expenses (20) (18) (80) (80)
Adjustments to selling, general
and administrative expenses (27) (21) (100) (104)
Certain net charges pursuant to
our restructuring initiative
(b) (1) (27) 7 (83)
Certain other expenses - (25)
Acquisition-related
adjustments (c) (10) (1) (296) (292)
Total adjustments to operating
expenses (335) (310) (1,594) (1,685)
Non-GAAP operating expenses $
3,513 $
3,247 $
11,890 $
11,191
===
GAAP operating income $
2,382 $
2,245 $
10,263 $
9,973
Adjustments to operating
expenses 335 310 1,594 1,685
Non-GAAP operating income $
2,717 $
2,555 $
11,857 $
11,658
===
GAAP operating income as a
percentage of product sales 39.7% 40.3% 45.5% 45.8%
Adjustments to cost of sales 4.7 4.3 4.9 5.2
Adjustments to research and
development expenses 0.3 0.3 0.4 0.3
Adjustments to selling, general
and administrative expenses 0.5 0.4 0.5 0.4
Certain net charges pursuant to
our restructuring initiative
(b) 0.0 0.6 0.0 0.4
Certain other expenses 0.0 0.0 0.0 0.0
Acquisition-related
adjustments (c) 0.1 0.0 1.3 1.4
---
Non-GAAP operating income as a
percentage of product sales 45.3% 45.9% 52.6% 53.5%
===
GAAP interest and other income,
net $
155 $
301 $
674 $
928
Adjustments to other income (d) - (68)
---
Non-GAAP interest and other
income, net $
155 $
301 $
606 $
928
===
GAAP income before income taxes $
2,185 $
2,214 $
9,545 $
9,597
Adjustments to operating
expenses 335 310 1,594 1,685
Adjustments to other income (d) - (68)
---
Non-GAAP income before income
taxes $
2,520 $
2,524 $
11,071 $
11,282
===
GAAP provision for income taxes $
257 $
6,478 $
1,151 $
7,618
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (e) 77 98 362 538
Other income tax adjustments
(f) - (6,156) (15) (6,120)
---
Total adjustments to provision
for income taxes 77 (6,058) 347 (5,582)
Non-GAAP provision for income
taxes $
334 $
420 $
1,498 $
2,036
===
GAAP tax as a percentage of
income before taxes 11.8% 292.6% 12.1% 79.4%
Adjustments to provision for income taxes:
Income tax effect of the above
adjustments (e) 1.5 -32.1 1.6 -7.1
Other income tax adjustments
(f) 0.0 -243.9 -0.2 -54.3
---
Total adjustments to provision
for income taxes 1.5 -276.0 1.4 -61.4
Non-GAAP tax as a percentage
of income before taxes 13.3% 16.6% 13.5% 18.0%
===
GAAP net income (loss) $
1,928 $
(4,264) $
8,394 $
1,979
Adjustments to net income (loss):
Adjustments to income before
income taxes, net of the
income tax effect 258 212 1,164 1,147
Other income tax adjustments
(f) - 6,156 15 6,120
Total adjustments to net income
(loss) 258 6,368 1,179 7,267
Non-GAAP net income $
2,186 $
2,104 $
9,573 $
9,246
===
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(In millions, except per-share data)
(Unaudited)
The following table presents the computations for GAAP and non-GAAP diluted earnings (loss) per share:
Three months ended Three months ended
December 31, 2018 December 31, 2017
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
1,928 $
2,186 $
(4,264) $
2,104
Shares
Weighted-
average
shares for
basic EPS 635 635 724 724
Effect of
dilutive
shares 5 5 5
Weighted-
average
shares for
diluted EPS 640 640 724 729
Diluted EPS $
3.01 $
3.42 $
(5.89) $
2.89
Year ended
Year ended
December 31, 2018 December 31, 2017
GAAP Non-GAAP GAAP Non-GAAP
---
Net income $
8,394 $
9,573 $
1,979 $
9,246
Shares
Weighted-
average
shares for
basic EPS 661 661 731 731
Effect of
dilutive
shares 4 4 4 4
Weighted-
average
shares for
diluted EPS 665 665 735 735
Diluted EPS $
12.62 $
14.40 $
2.69 $
12.58
(a) The adjustments related primarily to
noncash amortization of intangible
assets acquired in business
combinations.
(b) For the three months and year ended
December 31, 2017, the adjustments
related primarily to severance
expenses associated with our
restructuring initiative.
(c) For the years ended December 31, 2018
and 2017, the adjustments related
primarily to impairments of
intangible assets acquired in
business combinations.
(d) For the year ended December 31, 2018,
the adjustment related to the net
gain associated with the Kirin-Amgen
share acquisition.
(e) 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 months and year ended December
31, 2018, were 23.0% and 23.7%,
compared with 31.6% and 31.9% for the
corresponding periods of the prior
year.
(f) For the three months and year ended
December 31, 2017, the adjustments
related primarily to the impact of
U.S. Corporate tax reform, including
the repatriation tax on accumulated
foreign earnings and the
remeasurement of certain net deferred
and other tax liabilities.
(g) During periods of net loss, diluted
loss per share is equal to basic loss
per share because the antidilutive
effect of potential common shares is
disregarded.
Amgen Inc.
Reconciliations of Cash Flows
(In millions)
(Unaudited)
Three months ended
Years ended
December 31, December 31,
2018 2017 2018 2017
Net cash provided
by operating
activities $
3,194 $
3,012 $
11,296 $
11,177
Net cash (used
in) provided by
investing
activities (4,637) (78) 14,339 (4,024)
Net cash used in
financing
activities (3,568) (2,134) (22,490) (6,594)
(Decrease)
increase in cash
and cash
equivalents (5,011) 800 3,145 559
Cash and cash
equivalents at
beginning of
period 11,956 3,000 3,800 3,241
Cash and cash
equivalents at
end of period $
6,945 $
3,800 $
6,945 $
3,800
Three months ended
Years ended
December 31, December 31,
2018 2017 2018 2017
---
Net cash provided
by operating
activities $
3,194 $
3,012 $
11,296 $
11,177
Capital
expenditures (225) (153) (738) (664)
Free cash flow $
2,969 $
2,859 $
10,558 $
10,513
Reconciliation of GAAP EPS Guidance to Non-GAAP
EPS Guidance for the Year Ending December 31, 2019
(Unaudited)
GAAP diluted EPS guidance $
11.55 $
12.75
Known adjustment to arrive
at non-GAAP*:
Acquisition-related
expenses (a) 1.55
Non-GAAP diluted EPS
guidance $
13.10 $
14.30
* The known adjustments are presented
net of their related tax impact,
which amount to approximately
$0.43 per share.
(a) The adjustments relate primarily to
non-cash amortization of
intangible assets acquired in
business combinations.
Our GAAP diluted EPS guidance does not include
the effect of GAAP adjustments triggered by
events that may occur subsequent to this press
release such as acquisitions, asset
impairments, litigation and changes in the
fair value or our contingent consideration.
Reconciliation of GAAP Tax Rate Guidance to Non-GAAP
Tax Rate Guidance for the Year Ending December 31, 2019
(Unaudited)
GAAP tax rate guidance 12.5% 13.5%
Tax rate of known adjustments
discussed above 1.5%
Non-GAAP diluted EPS guidance 14.0% 15.0%
View original content to download multimedia:http://www.prnewswire.com/news-releases/amgen-reports-fourth-quarter-and-full-year-2018-financial-results-300786243.html
SOURCE Amgen
