Amgen's Fourth Quarter 2008 Adjusted Earnings Per Share Increased 6 Percent to $1.06; Full Year 2008 Adjusted Earnings Per Share Increased 6 Percent to $4.55
01.26.2009
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Full Year 2008 Revenue Increased 2 Percent to
Full Year 2008 GAAP Earnings Per Share Increased 38 Percent to
2009 Total Revenue Expected to be in the Range of
2009 Adjusted Earnings Per Share Expected to be in the Range of $4.55 to $4.75
THOUSAND OAKS, Calif.,
Full year 2008 adjusted EPS, excluding stock option expense and certain
other expenses, were
Total revenue of
Adjusted EPS and adjusted net income for the fourth quarter and full year 2008 and 2007 exclude, for the applicable periods, stock option expense, certain expenses related to acquisitions, restructuring charges and certain other items. These expenses and other items are set forth on the attached reconciliation tables. Adjusted EPS including the impact of stock option expense are also set forth in the notes to the attached reconciliation tables.
Calculated in accordance with
"I am proud of
Product Sales Performance
During the fourth quarter, total product sales increased 2 percent to
Worldwide sales of Aranesp(R) (darbepoetin alfa) decreased 15 percent to
Sales of EPOGEN(R) (Epoetin alfa) increased 1 percent to
Combined worldwide sales of Neulasta(R) (pegfilgrastim) and NEUPOGEN(R)
(Filgrastim) increased 6 percent to
Sales of Enbrel(R) (etanercept) increased 7 percent in the fourth quarter
to
Worldwide sales of Sensipar(R) (cinacalcet) increased 20 percent to
Vectibix(R) (panitumumab) sales for the fourth quarter were
Operating Expense Analysis on an Adjusted Basis:
Cost of sales decreased 3 percent to
For the full year, cost of sales was
Research & Development (R&D) expenses were
For the full year, R&D expenses were
Selling, General & Administrative (SG&A) expenses increased 7 percent to
For the full year, SG&A expenses were
The tax rate in the fourth quarter of 2008 benefited from the retroactive extension of the R&D tax credit. For the full year the 2008 adjusted tax rate is slightly higher than the 2007 tax rate primarily due to a change in the mix of revenues and expenses and increased accruals for state taxes in 2008.
During the fourth quarter of 2008,
Average diluted shares for adjusted EPS in the fourth quarter of 2008 were 1,061 million versus 1,091 million in the fourth quarter of 2007 and 1,074 million in the full year 2008 versus 1,121 million in the full year 2007.
Capital expenditures for the fourth quarter of 2008 were approximately
2009 Guidance
The Company expects total revenue for 2009 to be in the range of
In addition, the 2009 adjusted EPS guidance excludes the impact of the
incremental non-cash interest expense related to our outstanding convertible
debt resulting from our adoption on
The company expects 2009 capital expenditures to be approximately
Fourth Quarter Product and Pipeline Update
The Company provided updates on selected products and clinical programs.
Denosumab: The Company discussed the submission of a Biologics License
Application (BLA) with the
In the
Motesanib: The Company discussed the ongoing MONET1 trial evaluating
motesanib (AMG 706) in combination with paclitaxel and carboplatin for the
first-line treatment of advanced non-small cell lung cancer (NSCLC). This
trial was temporarily suspended following a planned safety data review of 600
patients by the study's independent Data Monitoring Committee (DMC). The DMC
also recommended that patients with squamous NSCLC immediately discontinue
motesanib therapy but did not recommend discontinuation of motesanib therapy
for patients with non-squamous NSCLC. Motesanib is part of a broad
co-development program between
AMG 223: The Company discussed results for AMG 223 from its recently completed Phase 1 study in normal healthy patients and Phase 2 study in subjects with chronic kidney disease on hemodialysis with hyperphosphatemia. AMG 223 appeared to be well tolerated and showed a statistically significant reduction in serum phosphorus compared with placebo. While these results were consistent with what is required for registration of a phosphate-binding therapy, in the context of our overall development portfolio, the company will be reviewing other options for the commercialization of this investigational product. AMG 223 is a non-absorbed, metal-free polymer that binds phosphorus in the gastrointestinal tract.
For more product information or the full prescribing information, please refer to the Amgen Web site at www.amgen.com.
As previously announced, the Company has posted in the Investors section
of the Company's Web site (www.amgen.com/investors) a slide presentation
related to its fourth quarter and 2008 full year financial results conference
call, scheduled for
Non-GAAP Financial Measures
Management has presented its operating results in accordance with GAAP and
on an "adjusted" (or non-GAAP basis) for the three and twelve months ended
About
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
No forward-looking statement can be guaranteed and actual results may differ materially from those we project. The Company's 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 health care 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. 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.
CONTACT: Amgen, Thousand Oaks
David Polk, 805-447-4613 (media)
Arvind Sood, 805-447-1060 (investors)
(Logo: http://www.newscom.com/cgi-bin/prnh/20081015/AMGENLOGO)
Amgen Inc.
Condensed Consolidated Statements of Income and
Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
December 31, 2008 December 31, 2007
----------------- -----------------
GAAP Adjustments "Adjusted" GAAP Adjustments "Adjusted"
---- ----------- ---------- ---- ----------- ----------
Revenues:
Product
sales $3,674 $- $3,674 $3,618 $- $3,618
Other
revenues 77 - 77 127 - 127
-- --- -- --- --- ---
Total
revenues 3,751 - 3,751 3,745 - 3,745
----- --- ----- ----- --- -----
Operating
expenses:
Cost of sales
(excludes
amortization
of acquired
intangible
assets
presented
below) 558 (4) (a) 549 606 (4) (a) 565
(5) (b) (37) (b)
Research and
development 798 (11) (a) 770 822 (15) (a) 785
(17) (c) (17) (c)
(4) (f)
(1) (b)
Selling,
general and
administr-
ative 1,111 (11) (a) 1,062 1,001 (22) (a) 990
(38) (b) 32 (b)
(21) (g)
Amortization
of intangible
assets 73 (73) (d) - 74 (74) (d) -
Other
charges 74 (53) (b) - 185 (151) (b) -
(21) (e) (34) (e)
----- --- --- --- --- ---
Total
operating
expenses 2,614 (233) 2,381 2,688 (348) 2,340
Operating
income 1,137 233 1,370 1,057 348 1,405
Interest and
other income
and (expense),
net 17 1 (b) 18 1 - 1
-- --- -- --- --- ---
Income before
income taxes 1,154 234 1,388 1,058 348 1,406
Provision for
income taxes 193 71 (o) 264 223 95 (q) 318
--- -- --- --- -- ---
Net income $961 $163 $1,124 $835 $253 $1,088
==== ==== ====== ==== ==== ======
Earnings
per share:
Basic $0.91 $1.07 $0.77 $1.00
Diluted (r) $0.91 $1.06(a) $0.76 $1.00(a)
Average
shares used
in calculation
of earnings
per share:
Basic 1,055 1,055 1,087 1,087
Diluted (r) 1,061 1,061(a) 1,092 1,091(a)
(a) - (r) See explanatory notes on the following pages.
Amgen Inc.
Condensed Consolidated Statements of Income and
Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
Year ended Year ended
December 31, 2008 December 31, 2007
----------------- -----------------
GAAP Adjustments "Adjusted" GAAP Adjustments "Adjusted"
---- ----------- ---------- ---- ----------- ----------
Revenues:
Product
sales $14,687 $- $14,687 $14,311 $- $14,311
Other
revenues 316 - 316 460 - 460
--- --- --- --- --- ---
Total
revenues 15,003 - 15,003 14,771 - 14,771
Operating
expenses:
Cost of
sales
(excludes
amortization
of acquired
intangible
assets
presented
below) 2,296 (13) (a) 2,193 2,548 (16) (a) 2,255
(84) (h) (150) (b)
(6) (b) (90) (i)
(7) (j)
(30) (k)
Research and
development 3,030 (46) (a) 2,910 3,266 (83) (a) 3,064
(70) (c) (71) (c)
(3) (b) (29) (f)
(1) (f) (19) (b)
Selling,
general and
administr-
ative 3,789 (44) (a) 3,708 3,361 (82) (a) 3,382
(37) (b) 124 (b)
(21) (g)
Write-off of
acquired
in-process
R&D - - - 590 (590) (l) -
Amortization of
intangible
assets 294 (294) (d) - 298 (295) (d) -
(3) (m)
Other
charges 380 (92) (b) - 728 (694) (b) -
(288) (e) (34) (e)
--- ---- --- --- --- ---
Total
operating
expenses 9,789 (978) 8,811 10,791 (2,090) 8,701
Operating
income 5,214 978 6,192 3,980 2,090 6,070
Interest and
other income
and (expense),
net 36 10 (b) 46 (19) 51 (n) 32
-- -- -- --- -- --
Income before
income taxes 5,250 988 6,238 3,961 2,141 6,102
Provision for
income taxes 1,054 299 (o) 1,353 795 92 (p) 1,298
411 (q)
----- --- ----- --- --- -----
Net income $4,196 $689 $4,885 $3,166 $1,638 $4,804
====== ==== ====== ====== ====== ======
Earnings per
share:
Basic $3.92 $4.57 $2.83 $4.30
Diluted (r) $3.90 $4.55(a) $2.82 $4.29(a)
Average shares
used in
calculation
of earnings
per share:
Basic 1,070 1,070 1,117 1,117
Diluted (r) 1,075 1,074(a) 1,123 1,121(a)
(a) - (r) See explanatory notes on the following pages.
Amgen Inc.
Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
(a) To exclude the impact of stock option expense recorded in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 123R. For
the three and twelve months ended December 31, 2008 and 2007, the total
pre-tax expense for employee stock options in accordance with SFAS No.
123R was $26 million and $103 million , respectively, and $41 million and
$181 million , respectively.
"Adjusted" diluted EPS including the impact of stock option expense for
the three and twelve months ended December 31, 2008 and 2007 was
as follows:
Three
months ended Year ended
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
"Adjusted" diluted EPS,
excluding stock option
expense $1.06 $1.00 $4.55 $4.29
Impact of stock
option expense
(net of tax) (0.02) (0.03) (0.07) (0.12)
----- ----- ----- -----
"Adjusted" diluted EPS,
including stock option
expense $1.04 $0.97 $4.48 $4.17
===== ===== ===== =====
(b) To exclude the following restructuring (expenses)/recoveries
associated with our restructuring plan announced in August 2007 , as
follows:
Separ- Asset
ation impair- Accelerated
costs ment depreciation
(1) (2) (3) Other (4) Total
Three months ------ ------- ------------ --------- -----
ended December
31, 2008
---------------
Cost of sales
(excluding
amortization
of intangible
assets) $- $(5) $- $- $(5)
Selling,
general and
administrative
(SG&A) - (17) - (21) (38)
Other charges (3) (21) - (29) (53)
Interest and
other income
and (expense),
net - - - (1) (1)
--- --- --- -- --
$(3) $(43) $- $(51) $(97)
=== ==== == ==== ====
Three months
ended December
31, 2007
---------------
Cost of sales
(excluding
amortization
of intangible
assets) $- $- $(37) $- $(37)
Research and
development
(R&D) 2 (3) - - (1)
SG&A 2 - (1) 31 32
Other charges (102) (9) - (40) (151)
---- -- --- --- ----
$(98) $(12) $(38) $(9) $(157)
==== ==== ==== === =====
Year ended
December 31,
2008
-------------
Cost of sales
(excluding
amortization
of intangible
assets) $- $(6) $- $- $(6)
R&D (3) - - - (3)
SG&A - (17) - (20) (37)
Other charges (7) (36) - (49) (92)
Interest and
other income
and (expense),
net - - - (10) (10)
--- --- --- --- ---
$(10) $(59) $- $(79) $(148)
==== ==== === ==== =====
Year ended
December 31,
2007
-------------
Cost of sales
(excluding
amortization
of intangible
assets) $1 $(4) $(147) $- $(150)
R&D 19 (38) - - (19)
SG&A 11 - (1) 114 124
Other charges (209) (366) - (119) (694)
---- ---- --- ---- ----
$(178) $(408) $(148) $(5) $(739)
===== ===== ===== === =====
(1) Severance and other separation costs, partially offset in 2007 by
the reversal of previously accrued expenses for bonuses and stock-based
compensation awards, which were forfeited as a result of the employees'
termination.
(2) Asset impairment charges principally incurred in connection with
the rationalization of our worldwide manufacturing operations in order
to gain cost efficiencies and, to a lesser degree in 2007, the
moderation of the expansion of our R&D facilities.
(3) Accelerated depreciation resulting from our decision to accelerate
the closure of one of our ENBREL commercial bulk production operations
in connection with the rationalization of our worldwide network of
manufacturing facilities. The amount included above represents the
excess of accelerated depreciation expense over the depreciation that
would otherwise have been recorded if there were no plans to accelerate
the closure of this manufacturing operation.
(4) To exclude (i) from SG&A and Other charges, loss accruals for
leases principally related to certain facilities that will not be used
in our business, (ii) from SG&A in 2008, integration costs associated
with certain restructuring initiatives, (iii) from Interest and other
income and (expense), net, in 2008, the loss accrual on the disposal of
certain less significant marketed products and related assets,
including primarily inventory, and (iv) from SG&A in 2007, the cost
recoveries for certain restructuring expenses, principally with respect
to accelerated depreciation in connection with our co-promotion
agreement with Wyeth .
(c) To exclude the ongoing, non-cash amortization of the R&D technology
intangible assets acquired with the acquisitions of Abgenix, Inc.
("Abgenix") and Avidia, Inc. ("Avidia").
(d) To exclude the ongoing, non-cash amortization of acquired product
technology rights, primarily ENBREL, related to the Immunex Corporation
("Immunex ") acquisition.
(e) To exclude loss accruals for settlements of certain commercial legal
proceedings.
(f) To exclude, for the applicable periods, merger related expenses
incurred due to the Alantos Pharmaceutical Holding, Inc. ("Alantos"),
Ilypsa, Inc. ("Ilypsa"), and Tularik Inc. acquisitions, primarily related
to incremental costs associated with retention.
(g) To exclude severance related expenses incurred in connection with our
acquisition of the remaining 51 percent ownership interest of Dompe
Biotec, S.p.A. ("Dompe").
(h) To exclude the write-off of inventory resulting from a strategic
decision to change manufacturing processes.
(i) To exclude the write-off of inventory principally due to changing
regulatory and reimbursement environments.
(j) To exclude merger related expenses incurred due to the Abgenix
acquisition, primarily related to incremental costs associated with
recording inventory acquired at fair value which is in excess of our
manufacturing cost.
(k) To exclude the impact of writing-off the cost of a semi-completed
manufacturing asset that will not be used due to a change in manufacturing
strategy.
(l) To exclude the non-cash expense associated with writing-off the
acquired in-process research and development ("IPR&D") related to the
acquisitions of Alantos and Ilypsa.
(m) To exclude the impairment of a non-ENBREL related intangible asset
previously acquired in the Immunex acquisition.
(n) To exclude the pro rata portion of the deferred financing and related
costs that were immediately charged to interest expense as a result of
certain holders of our convertible notes due in 2032 exercising their
March 1, 2007 put option and the related convertible notes being repaid in
cash.
(o) To reflect the tax effect of the above adjustments for 2008, excluding
(1) certain components of the write-off of inventory (see (h) above), (2)
certain of the restructuring charges (see (b) above) and (3) certain of
the loss accruals for settlements of commercial legal proceedings (see (e)
above).
(p) To exclude the income tax benefit recognized as the result of
resolving certain non-routine transfer pricing issues with the Internal
Revenue Service ("IRS") for prior periods.
(q) To reflect the tax effect of the above adjustments for 2007, excluding
(1) certain of the restructuring charges (see (b) above), (2) certain
components of the write-off of inventory (see (i) above), (3) the write-
off of the acquired IPR&D related to the Alantos and Ilypsa acquisitions
(see (l) above), (4) the write-off of the cost of a semi-completed
manufacturing asset (see (k) above), and (5) the tax benefit recognized as
a result of resolving certain non-routine transfer pricing issues with the
IRS (see (p) above).
(r) The following table presents the computations for GAAP and "Adjusted"
diluted earnings per share, computed under the treasury stock method.
"Adjusted" earnings per share presented below excludes stock option
expense:
Three months ended Three months ended
December 31, 2008 December 31, 2007
----------------- -----------------
GAAP "Adjusted" GAAP "Adjusted"
---- ---------- ---- ----------
Income (Numerator):
Net income for
basic and diluted
EPS $961 $1,124 $835 $1,088
==== ====== ==== ======
Shares (Denominator):
Weighted-average
shares for basic
EPS 1,055 1,055 1,087 1,087
Effect of dilutive
securities 6 6 (*) 5 4 (*)
--- --- --- ---
Weighted-average
shares for diluted
EPS 1,061 1,061 1,092 1,091
===== ===== ===== =====
Diluted earnings per
share $0.91 $1.06 $0.76 $1.00
===== ===== ===== =====
Year ended Year ended
December 31, 2008 December 31, 2007
----------------- -----------------
GAAP "Adjusted" GAAP "Adjusted"
---- ---------- ---- ----------
Income (Numerator):
Net income for
basic and diluted
EPS $4,196 $4,885 $3,166 $4,804
====== ====== ====== ======
Shares (Denominator):
Weighted-average
shares for basic
EPS 1,070 1,070 1,117 1,117
Effect of dilutive
securities 5 4 (*) 6 4 (*)
--- --- --- ---
Weighted-average
shares for diluted
EPS 1,075 1,074 1,123 1,121
===== ===== ===== =====
Diluted earnings per
share $3.90 $4.55 $2.82 $4.29
===== ===== ===== =====
(*) Dilutive securities used to compute "Adjusted" diluted earnings per
share for the three and twelve months ended December 31, 2008 and 2007
were computed exclusive of the methodology used to determine dilutive
securities under SFAS No. 123R.
Amgen Inc.
Product Sales Detail by Product and Geographic Region
(In millions)
(Unaudited)
Three months
ended Year ended
December 31, December 31,
------------ ------------
2008 2007 2008 2007
---- ---- ---- ----
Aranesp(R) - U.S. $361 $462 $1,651 $2,154
Aranesp(R) - International 345 365 1,486 1,460
EPOGEN(R) - U.S. 646 638 2,456 2,489
Neulasta(R) - U.S. 655 607 2,505 2,351
NEUPOGEN(R) - U.S. 229 225 896 861
Neulasta(R) - International 193 177 813 649
NEUPOGEN(R) - International 103 109 445 416
Enbrel(R) - U.S. 858 805 3,389 3,052
Enbrel(R) - International 55 51 209 178
Sensipar(R) - U.S. 106 92 412 333
Sensipar(R) - International 47 36 185 130
Vectibix(R) - U.S. 25 33 108 170
Vectibix(R) - International 21 - 45 -
Other product sales - U.S. 20 9 43 33
Other product sales - International 10 9 44 35
-- --- -- --
Total product sales $3,674 $3,618 $14,687 $14,311
====== ====== ======= =======
U.S. $2,900 $2,871 $11,460 $11,443
International 774 747 3,227 2,868
--- --- ----- -----
Total product sales $3,674 $3,618 $14,687 $14,311
====== ====== ======= =======
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
December 31, December 31,
2008 2007
---- ----
Assets
Current assets:
Cash, cash equivalents and marketable
securities $9,552 $7,151
Trade receivables, net 2,073 2,101
Inventories 2,075 2,091
Other current assets 1,521 1,698
----- -----
Total current assets 15,221 13,041
Property, plant and equipment,
net 5,879 5,941
Intangible assets, net 2,988 3,332
Goodwill 11,339 11,240
Other assets 1,016 1,085
----- -----
Total assets $36,443 $34,639
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $3,886 $4,179
Current portion of other long-term debt 1,000 2,000
----- -----
Total current liabilities 4,886 6,179
Deferred tax liabilities 230 480
Convertible notes 5,081 5,080
Other long-term debt 4,095 4,097
Other non-current liabilities 1,765 934
Stockholders' equity 20,386 17,869
------ ------
Total liabilities and stockholders'
equity $36,443 $34,639
======= =======
Shares outstanding 1,047 1,087
Amgen Inc.
Reconciliation of "Adjusted" Earnings Per Share Guidance to GAAP
Earnings Per Share Guidance for the Year Ending December 31, 2009
(Unaudited)
2009
----
"Adjusted" earnings per share guidance $4.55 - $4.75
Known adjustments to arrive at GAAP earnings:
Amortization of acquired intangible assets,
product technology rights (a) (0.17)
Incremental non-cash interest expense (b) (0.14) - (0.16)
Stock option expense (c) (0.06) - (0.08)
Restructuring costs (d) (0.03) - (0.06)
Amortization of acquired intangible assets,
R&D technology rights (e) (0.04)
----- -----
GAAP earnings per share guidance $4.04 - $4.31
===== =====
(a) To exclude the ongoing, non-cash amortization of acquired product
technology rights, primarily ENBREL, related to the Immunex acquisition.
(b) To exclude the estimated impact of the incremental non-cash interest
expense related to our outstanding convertible debt resulting from our
adoption on January 1, 2009 of FSP APB 14-1 "Accounting for convertible
debt instruments that may be settled in cash upon conversion (including
partial cash settlement)."
(c) To exclude stock option expense associated with SFAS No. 123R.
(d) To exclude restructuring related costs.
(e) To exclude the ongoing, non-cash amortization of the R&D technology
intangible assets acquired with the Abgenix and Avidia acquisitions.
SOURCE