Amgen Reports Second Quarter 2019 Financial Results
THOUSAND OAKS, Calif., July 30, 2019 /PRNewswire/ -- Amgen (NASDAQ: AMGN) today announced financial results for the second quarter of 2019. Key results include:
-- 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.
"With our newer products generating strong volume gains globally and many first-in-class medicines advancing through our pipeline, we are well positioned to serve patients and deliver long-term growth for our shareholders," said Robert A. Bradway, chairman and chief executive officer.
$Millions, except EPS and percentages Q2'19 Q2'18 YOY
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%
---
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 decreased 2% for the second quarter of 2019 versus
the second quarter of 2018.
-- Prolia sales increased 14% driven by higher unit demand.
-- EVENITY((TM) )(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.
Product Sales Detail by Product and Geographic Region
$Millions, except percentages
Q2'19 Q2'18 YOY
US ROW TOTAL TOTAL TOTAL
Prolia(R) $
458 $
240 $
698 $
610 14%
EVENITY(TM) 3 25 28
*
Repatha(R) 91 61 152 148 3%
Aimovig(R) 83 83 2
*
Parsabiv(R) 148 20 168 73
*
KYPROLIS(R) 166 101 267 263 2%
XGEVA(R) 379 120 499 452 10%
Vectibix(R) 79 117 196 173 13%
Nplate(R) 122 79 201 179 12%
BLINCYTO(R) 39 39 78 60 30%
Biosimilars** 82 82 2
*
Enbrel(R) 1,315 48 1,363 1,302 5%
Neulasta(R) 719 105 824 1,100 (25%)
NEUPOGEN(R) 55 20 75 102 (26%)
EPOGEN(R) 223 223 250 (11%)
Aranesp(R) 192 244 436 472 (8%)
Sensipar(R)/Mimpara(R) 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(TM) and KANJINTI(TM).
*** Other includes Bergamo, MN Pharma, IMLYGIC(R) and Corlanor(R).
---
Operating Expense, Operating Margin and Tax Rate Analysis
On a GAAP basis:
-- 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.
On a non-GAAP basis:
-- 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 Q2'19 Q2'18 YOY
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
---
Cash Flow and Balance Sheet
-- 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
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
---
2019 Guidance
For the full year 2019, the Company now expects:
-- 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.
Second Quarter Product and Pipeline Update
The Company provided the following updates on selected product and pipeline programs:
Research
-- 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.
Omecamtiv mecarbil
-- In July, the Phase 3 GALACTIC-HF cardiovascular outcomes clinical trial
completed enrollment.
EVENITY
-- 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.
Aimovig
-- The Company discussed long-term efficacy and safety data recently
presented at the meetings of the American Academy of Neurology and
American Headache Society.
AMG 510
-- 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.
ABP 798 (biosimilar rituximab)
-- 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.
ABP 710 (biosimilar infliximab)
-- 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).
Omecamtiv mecarbil is being developed under a collaboration between Amgen and Cytokinetics, with funding and strategic support from Servier
EVENITY is developed in collaboration with UCB globally, as well as our joint venture partner Astellas in Japan
Aimovig is developed in collaboration with Novartis
Rituxan 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 second quarters of 2019 and 2018, 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 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 second quarters of 2019 and 2018. 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. 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, 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 a new indication for an existing product 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 Six months ended
June 30,
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
Amgen Inc.
Consolidated Balance Sheets - GAAP
(In millions)
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
Amgen Inc.
GAAP to Non-GAAP Reconciliations
(Dollars in millions)
(Unaudited)
Three months ended Six months ended
June 30,
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 18.2 18.0 19.0 17.9
percentage of product sales % % % %
Acquisition-related expenses
(a) -5.0 -4.9 -5.0 -5.0
Non-GAAP cost of sales as a 13.2 13.1 14.0 12.9
percentage of product sales % % % %
===
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 48.0 49.9 47.4 50.4
percentage of product sales % % % %
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 53.3 55.1 52.9 56.0
a percentage of product sales % % % %
===
Three months ended Six months ended
June 30, 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 15.0 13.3 14.5 12.5
income before taxes % % % %
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 15.3 14.2 15.0 13.9
of income before taxes % % % %
===
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
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 per share:
Three months ended Three months ended
June 30, 2019
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 Six months ended
June 30, 2019
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.
Amgen Inc.
Reconciliations of Cash Flows
(In millions)
(Unaudited)
Three months ended Six months ended
June 30,
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 Six months ended
June 30,
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
Reconciliation of GAAP EPS Guidance to Non-GAAP
EPS Guidance for the Year Ending December 31, 2019
(Unaudited)
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
* The known adjustments are
presented net of their related tax
impact, which amount to
approximately $0.38 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 13% 14%
Tax rate of known adjustments discussed above 1%
Non-GAAP diluted EPS guidance 14% 15%
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SOURCE Amgen
