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Amgen Reports Third Quarter 2018 Financial Results

THOUSAND OAKS, Calif., Oct. 30, 2018 /PRNewswire/ -- Amgen (NASDAQ:AMGN) today announced financial results for the third quarter of 2018. Key results include:

  • Total revenues increased 2 percent versus the third quarter of 2017 to $5.9 billion.
    • Product sales grew 1 percent globally. New and recently launched products including Repatha® (evolocumab), Prolia® (denosumab), KYPROLIS® (carfilzomib) and XGEVA® (denosumab) showed double-digit growth.
  • GAAP earnings per share (EPS) increased 4 percent to $2.86 driven by higher total revenues, a lower tax rate and lower weighted-average shares outstanding.
    • GAAP operating income decreased 5 percent to $2.3 billion and GAAP operating margin decreased 2.5 percentage points to 42.2 percent.
  • Non-GAAP EPS increased 13 percent to $3.69 driven by higher total revenues, a lower tax rate and lower weighted-average shares outstanding.
    • Non-GAAP operating income decreased 2 percent to $3.0 billion and non-GAAP operating margin decreased 1.7 percentage points to 53.9 percent.
  • 2018 EPS guidance revised to $12.23-$12.55 on a GAAP basis and $14.00-$14.25 on a non-GAAP basis; total revenues guidance revised to $23.2-$23.5 billion.
  • The Company generated $3.1 billion of free cash flow in the third quarter of 2018 versus $3.3 billion in the third quarter of 2017.

"We are in the early stages of launching several new products that offer innovative solutions for patients suffering from serious diseases," said Robert A. Bradway, chairman and chief executive officer. "Our newer products continue to deliver strong growth in unit volumes."

$Millions, except EPS and percentages


Q3'18


Q3'17


YOY Δ








Total Revenues


$   5,904


$  5,773


2%

GAAP Operating Income


$   2,323


$  2,439


(5%)

GAAP Net Income


$   1,859


$  2,021


(8%)

GAAP Earnings Per Share


$     2.86


$    2.76


4%

Non-GAAP Operating Income


$   2,971


$  3,033


(2%)

Non-GAAP Net Income


$   2,392


$  2,399


-%

Non-GAAP EPS


$     3.69


$    3.27


13%









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 1 percent for the third quarter of 2018 versus the third quarter of 2017.
  • Repatha sales increased 35 percent driven primarily by higher unit demand, offset partially by lower net selling price.
  • Prolia sales increased 15 percent driven by higher unit demand.
  • KYPROLIS sales increased 12 percent driven by higher unit demand, offset partially by lower net selling price.
  • XGEVA sales increased 12 percent driven by higher unit demand.
  • BLINCYTO® (blinatumomab) sales increased 12 percent driven by higher unit demand.
  • Nplate® (romiplostim) sales increased 11 percent driven by higher unit demand.
  • Vectibix® (panitumumab) sales increased 8 percent driven by higher unit demand, offset partially by lower net selling price.
  • Parsabiv® (etelcalcetide) was launched in the U.S. in the first quarter of 2018 and sales grew 40 percent sequentially in the third quarter.
  • Aimovig® (erenumab-aooe) was launched in the U.S. in the second quarter of 2018 and generated $22 million in sales in the third quarter.
  • EPOGEN® (epoetin alfa) sales decreased 5 percent driven by lower net selling price.
  • Enbrel® (etanercept) sales decreased 5 percent driven by lower unit demand and, to a lesser extent, lower net selling price, offset partially by favorable changes in accounting estimates.
  • Neulasta® (pegfilgrastim) sales decreased 6 percent driven by lower net selling price, lower unit demand and favorable prior-period changes in accounting estimates.
  • Aranesp® (darbepoetin alfa) sales decreased 8 percent driven primarily by the impact of competition on unit demand.
  • Sensipar/Mimpara® (cinacalcet) sales decreased 11 percent driven primarily by lower unit demand, which was due to continued adoption of Parsabiv in the U.S.
  • NEUPOGEN® (filgrastim) sales decreased 38 percent driven by lower unit demand and, to a lesser extent, lower net selling price, which the Company believes is a function of competition.

Product Sales Detail by Product and Geographic Region 

$Millions, except percentages


Q3'18


Q3'17


YOY Δ



US

ROW

TOTAL


TOTAL


TOTAL










Repatha®

$72

$48

$120


$89


35%

Prolia®


354

178

532


464


15%

KYPROLIS®


142

90

232


207


12%

XGEVA®


323

110

433


387


12%

BLINCYTO®

33

25

58


52


12%

Nplate®


107

70

177


159


11%

Vectibix®


71

110

181


168


8%

Parsabiv®


92

10

102


2


*  

Aimovig®


22

-

22


-


*  

EPOGEN®


252

-

252


264


(5%)

Enbrel®


1,242

50

1,292


1,363


(5%)

Neulasta®


897

154

1,051


1,123


(6%)

Aranesp®


248

229

477


516


(8%)

Sensipar® / Mimpara®


330

79

409


457


(11%)

NEUPOGEN®


52

33

85


138


(38%)

Other**


23

64

87


64


36%

Total product sales


$4,260

$1,250

$5,510


$5,453


1%










* Change in excess of 100%





** Other includes Bergamo, MN Pharma, IMLYGIC®, Corlanor®, and KANJINTI™




KANJINTI™ trade name is provisionally approved by the FDA.


Operating Expense, Operating Margin and Tax Rate Analysis

On a GAAP basis:

  • Total Operating Expenses increased 7 percent. All expense categories reflect savings from our transformation and process improvement efforts. Cost of Sales margin increased by 0.6 points due to higher manufacturing costs and higher acquisition-related intangibles amortization, offset partially by lower royalty cost and the favorable comparison to Hurricane Maria-related charges in Q3 2017. Research & Development (R&D) increased 6 percent driven by spending in late and early-stage programs, offset partially by decreased spending to support marketed products. Selling, General & Administrative (SG&A) expenses increased 11 percent due to investments in product launches and marketed product support. Other operating expenses increased primarily due to higher impairment-related charges associated with intangible assets acquired in business combinations.
  • Operating Margin decreased by 2.5 percentage points to 42.2 percent.
  • Tax Rate decreased by 3.9 percentage points due to the impacts of U.S. corporate tax reform.

On a non-GAAP basis:

  • Total Operating Expenses increased 7 percent. All expense categories reflect savings from our transformation and process improvement efforts. Cost of Sales margin increased by 0.3 points due to higher manufacturing cost, offset partially by lower royalty cost and the favorable comparison to Hurricane Maria-related charges in Q3 2017. R&D increased 6 percent driven by spending in late and early-stage programs, offset partially by decreased spending to support marketed products. SG&A expenses increased 11 percent due to investments in product launches and marketed product support.
  • Operating Margin decreased by 1.7 percentage points to 53.9 percent.
  • Tax Rate decreased by 6.4 percentage points due to the impacts of U.S. corporate tax reform.

 

$Millions, except percentages


GAAP


Non-GAAP


Q3'18


Q3'17


YOY Δ


Q3'18


Q3'17


YOY Δ













Cost of Sales

$1,037


$990


5%


$759


$735


3%


% of product sales

18.8%


18.2%


0.6 pts.


13.8%


13.5%


0.3 pts.

Research & Development

$926


$877


6%


$906


$858


6%


% of product sales

16.8%


16.1%


0.7 pts.


16.4%


15.7%


0.7 pts.

Selling, General & Administrative

$1,293


$1,170


11%


$1,268


$1,147


11%


% of product sales

23.5%


21.5%


2 pts.


23.0%


21.0%


2 pts.

Other

$325


$297


9%


$-


$-


NM

TOTAL Operating Expenses

$3,581


$3,334


7%


$2,933


$2,740


7%














Operating Margin













operating income as a % of product sales

42.2%


44.7%


(2.5) pts.


53.9%


55.6%


(1.7) pts.














Tax Rate

11.2%


15.1%


(3.9) pts.


13.0%


19.4%


(6.4) pts.













NM: Not Meaningful

pts: percentage points

Cash Flow and Balance Sheet

  • The Company generated $3.1 billion of free cash flow in the third quarter of 2018 versus $3.3 billion in the third quarter of 2017 with the decrease driven by timing of tax payments.
  • The Company's third quarter 2018 dividend of $1.32 per share was declared on July 31, 2018, was paid on Sept. 7, 2018, to all stockholders of record as of Aug. 17, 2018.
  • During the third quarter, the Company repurchased 8.7 million shares of common stock at a total cost of $1.7 billion. At the end of the third quarter, the Company had $3.7 billion remaining under its stock repurchase authorization.

 

$Billions, except shares

Q3'18


Q3'17


YOY Δ







Operating Cash Flow

$3.3


$3.5


$(0.2)

Capital Expenditures

0.2


0.2


0.0

Free Cash Flow

3.1


3.3


(0.2)

Dividends Paid

0.9


0.8


0.0

Share Repurchase

1.7


0.8


0.9

Average Diluted Shares (millions)

649


733


(84)







Cash and Investments

29.9


41.4


(11.4)

Debt Outstanding

34.4


35.8


(1.3)

Stockholders' Equity

14.3


32.2


(17.9)








Note: Numbers may not add due to rounding






2018 Guidance

For the full year 2018, the Company now expects:

  • Total revenues in the range of $23.2 billion to $23.5 billion.
    • Previously, the Company expected total revenues in the range of $22.5 billion to $23.2 billion.
  • On a GAAP basis, EPS in the range of $12.23 to $12.55 and a tax rate in the range of 12.5 percent to 13.5 percent.
    • Previously, the Company expected GAAP EPS in the range of $11.83 to $12.62. Tax rate guidance is unchanged.
  • On a non-GAAP basis, EPS in the range of $14.00 to $14.25 and a tax rate in the range of 13.5 percent to 14.5 percent.
    • Previously, the Company expected non-GAAP EPS in the range of $13.30 to $14.00. Tax rate guidance is unchanged.
  • Capital expenditures to be approximately $700 million.

Third Quarter Product and Pipeline Update

The Company provided the following updates on selected product and pipeline programs:

KYPROLIS

  • In October, the U.S. Food and Drug Administration (FDA) approved the supplemental New Drug Application to expand the Prescribing Information to include a once-weekly dosing option for KYPROLIS (20/70 mg/m2) in combination with dexamethasone for patients with relapsed or refractory multiple myeloma.

BLINCYTO

  • In September, the Japanese Ministry of Health, Labour and Welfare granted marketing approval for the treatment of relapsed or refractory B-cell acute lymphoblastic leukemia (ALL).
  • In August, the European Commission (EC) approved an expanded indication for BLINCYTO as monotherapy for the treatment of pediatric patients aged one year or older with Philadelphia chromosome-negative CD19 positive B-cell precursor ALL, which is refractory or in relapse after receiving at least two prior therapies or in relapse after receiving prior allogeneic hematopoietic stem cell transplantation.

Aimovig

  • In July, the EC approved Aimovig for the prevention of migraine in adults experiencing four or more migraine days per month.

Repatha

  • In July, the National Drug Administration of China approved Repatha for the treatment of adults and adolescents over 12 years old with homozygous familial hypercholesterolemia.

Tezepelumab

  • In September, the FDA granted Breakthrough Therapy Designation for tezepelumab in patients with severe asthma without an eosinophilic phenotype.

Aimovig is developed in collaboration with Novartis.
Tezepelumab is developed in collaboration with AstraZeneca.

Non-GAAP Financial Measures
In this news release, management has presented its operating results for the third quarters 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 2018 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 third quarters 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. 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. 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 may be 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.

Amgen Inc.

Consolidated Statements of Income - GAAP

(In millions, except per-share data)

(Unaudited)














Three months ended


Nine months ended




September 30,


September 30,




2018


2017


2018


2017

Revenues:









Product sales

$ 5,510


$ 5,453


$ 16,532


$ 16,226


Other revenues

394


320


985


821



Total revenues

5,904


5,773


17,517


17,047











Operating expenses:









Cost of sales

1,037


990


3,005


3,010


Research and development

926


877


2,555


2,519


Selling, general and administrative

1,293


1,170


3,773


3,443


Other

325


297


303


347



Total operating expenses

3,581


3,334


9,636


9,319











Operating income

2,323


2,439


7,881


7,728











Interest expense, net

355


325


1,040


972

Interest and other income, net

126


267


519


627











Income before income taxes

2,094


2,381


7,360


7,383











Provision for income taxes

235


360


894


1,140











Net income

$ 1,859


$ 2,021


$   6,466


$   6,243











Earnings per share:









Basic

$   2.88


$   2.78


$     9.67


$     8.52


Diluted

$   2.86


$   2.76


$     9.61


$     8.46











Weighted-average shares used in calculation of earnings per share:









Basic

645


728


669


733


Diluted

649


733


673


738

 

Amgen Inc.

Consolidated Balance Sheets - GAAP

(In millions)





September 30,


December 31,




2018


2017




(Unaudited)



Assets




Current assets:





Cash, cash equivalents and marketable securities

$             29,921


$           41,678


Trade receivables, net

3,441


3,237


Inventories

3,017


2,834


Other current assets

1,941


1,727



Total current assets

38,320


49,476

Property, plant and equipment, net

4,899


4,989

Intangible assets, net

7,782


8,609

Goodwill

14,684


14,761

Other assets

1,648


2,119

Total assets

$             67,333


$           79,954


Liabilities and Stockholders' Equity




Current liabilities:





Accounts payable and accrued liabilities

$               7,355


$             7,868


Current portion of long-term debt

5,077


1,152



Total current liabilities

12,432


9,020

Long-term debt

29,350


34,190

Long-term deferred tax liabilities

978


1,166

Long-term tax liabilities

8,832


9,099

Other noncurrent liabilities

1,392


1,238

Stockholders' equity

14,349


25,241

Total liabilities and stockholders' equity

$             67,333


$           79,954


Shares outstanding

640


722

 

Amgen Inc.

GAAP to Non-GAAP Reconciliations

(Dollars in millions)

(Unaudited)












Three months ended


Nine months ended



September 30,


September 30,



2018


2017


2018


2017











GAAP cost of sales

$ 1,037


$        990


$ 3,005


$     3,010


Adjustments to cost of sales:









Acquisition-related expenses(a)

(278)


(255)


(823)


(883)


Total adjustments to cost of sales

(278)


(255)


(823)


(883)


Non-GAAP cost of sales

$    759


$        735


$ 2,182


$     2,127











GAAP cost of sales as a percentage of product sales

18.8%


18.2%


18.2%


18.6%


Acquisition-related expenses(a)

-5.0


-4.7


-5.0


-5.5


Non-GAAP cost of sales as a percentage of product sales

13.8%


13.5%


13.2%


13.1%











GAAP research and development expenses

$    926


$        877


$ 2,555


$     2,519


Adjustments to research and development expenses:









Acquisition-related expenses (a)

(19)


(19)


(59)


(57)


Certain net charges pursuant to our restructuring initiative

(1)


-


(1)


(5)


Total adjustments to research and development expenses

(20)


(19)


(60)


(62)


Non-GAAP research and development expenses

$    906


$        858


$ 2,495


$     2,457











GAAP research and development expenses as a percentage of product sales

16.8%


16.1%


15.5%


15.5%


Acquisition-related expenses (a)

-0.4


-0.4


-0.4


-0.4


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

16.4%


15.7%


15.1%


15.1%











GAAP selling, general and administrative expenses

$ 1,293


$     1,170


$ 3,773


$     3,443


Adjustments to selling, general and administrative expenses:









Acquisition-related expenses (a)

(20)


(22)


(65)


(79)


Certain net charges pursuant to our restructuring initiative

(5)


(1)


(8)


(1)


Other

-


-


-


(3)


Total adjustments to selling, general and administrative expenses

(25)


(23)


(73)


(83)


Non-GAAP selling, general and administrative expenses

$ 1,268


$     1,147


$ 3,700


$     3,360











GAAP selling, general and administrative expenses as a percentage of product sales

23.5%


21.5%


22.8%


21.2%


Acquisition-related expenses (a)

-0.4


-0.5


-0.4


-0.5


Certain net charges pursuant to our restructuring initiative

-0.1


0.0


0.0


0.0


Other

0.0


0.0


0.0


0.0


Non-GAAP selling, general and administrative expenses as a percentage of product sales

23.0%


21.0%


22.4%


20.7%











GAAP operating expenses

$ 3,581


$     3,334


$ 9,636


$     9,319


Adjustments to operating expenses:









Adjustments to cost of sales

(278)


(255)


(823)


(883)


Adjustments to research and development expenses

(20)


(19)


(60)


(62)


Adjustments to selling, general and administrative expenses

(25)


(23)


(73)


(83)


Certain net charges pursuant to our restructuring initiative (b)

2


(10)


8


(56)


Certain other expenses

-


-


(25)


-


Acquisition-related adjustments (c)

(327)


(287)


(286)


(291)


Total adjustments to operating expenses

(648)


(594)


(1,259)


(1,375)


Non-GAAP operating expenses

$ 2,933


$     2,740


$ 8,377


$     7,944











GAAP operating income

$ 2,323


$     2,439


$ 7,881


$     7,728


Adjustments to operating expenses

648


594


1,259


1,375


Non-GAAP operating income

$ 2,971


$     3,033


$ 9,140


$     9,103











GAAP operating income as a percentage of product sales

42.2%


44.7%


47.7%


47.6%


Adjustments to cost of sales

5.0


4.7


5.0


5.5


Adjustments to research and development expenses

0.4


0.4


0.4


0.4


Adjustments to selling, general and administrative expenses

0.5


0.5


0.4


0.5


Certain net charges pursuant to our restructuring initiative (b)

-0.1


0.1


0.0


0.3


Certain other expenses

0.0


0.0


0.1


0.0


Acquisition-related adjustments (c)

5.9


5.2


1.7


1.8


Non-GAAP operating income as a percentage of product sales

53.9%


55.6%


55.3%


56.1%











GAAP interest and other income, net

$    126


$        267


$    519


$        627


Adjustments to other income(d)

7


-


(68)


-


Non-GAAP interest and other income, net

$    133


$        267


$    451


$        627











GAAP income before income taxes

$ 2,094


$     2,381


$ 7,360


$     7,383


Adjustments to operating expenses

648


594


1,259


1,375


Adjustments to other income(d)

7


-


(68)


-


Non-GAAP income before income taxes

$ 2,749


$     2,975


$ 8,551


$     8,758











GAAP provision for income taxes

$    235


$        360


$    894


$     1,140


Adjustments to provision for income taxes:









Income tax effect of the above adjustments (e)

147


204


285


440


Other income tax adjustments (f)

(25)


12


(15)


36


Total adjustments to provision for income taxes

122


216


270


476


Non-GAAP provision for income taxes

$    357


$        576


$ 1,164


$     1,616











GAAP tax as a percentage of income before taxes

11.2%


15.1%


12.1%


15.4%


Adjustments to provision for income taxes:









Income tax effect of the above adjustments (e)

2.7


3.9


1.7


2.6


Other income tax adjustments (f)

-0.9


0.4


-0.2


0.5


Total adjustments to provision for income taxes

1.8


4.3


1.5


3.1


Non-GAAP tax as a percentage of income before taxes

13.0%


19.4%


13.6%


18.5%











GAAP net income

$ 1,859


$     2,021


$ 6,466


$     6,243


Adjustments to net income:









Adjustments to income before income taxes, net of the income tax effect

508


390


906


935


Other income tax adjustments (f)

25


(12)


15


(36)


Total adjustments to net income

533


378


921


899


Non-GAAP net income

$ 2,392


$     2,399


$ 7,387


$     7,142



















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 EPS












Three months ended


Three months ended



September 30, 2018


September 30, 2017



GAAP


Non-GAAP


GAAP


Non-GAAP











Net income

$ 1,859


$     2,392


$ 2,021


$     2,399


Weighted-average shares for diluted EPS

649


649


733


733


Diluted EPS

$   2.86


$       3.69


$   2.76


$       3.27












Nine months ended


Nine months ended



September 30, 2018


September 30, 2017



GAAP


Non-GAAP


GAAP


Non-GAAP











Net income

$ 6,466


$     7,387


$ 6,243


$     7,142


Weighted-average shares for diluted EPS

673


673


738


738


Diluted EPS

$   9.61


$     10.98


$   8.46


$       9.68



(a)

The adjustments related primarily to non-cash amortization of intangible assets acquired in business combinations.



(b)

For the nine months ended September 30, 2017, the adjustment related primarily to severance expenses associated with our restructuring initiative.



(c)

The adjustments related primarily to impairments of intangible assets acquired in business combinations. 



(d)

For the nine months ended September 30, 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 and nine months ended September 30, 2018, were 22.4% and 23.9%, compared with 34.3% and 32.0% for the corresponding periods of the prior year.



(f)

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


Nine months ended



September 30,


September 30,



2018


2017


2018


2017


Net cash provided by operating activities

$   3,273


$ 3,454


$   8,102


$ 8,165


Net cash provided by (used in) investing activities

1,132


(1,976)


18,976


(3,946)


Net cash used in financing activities

(2,580)


(1,107)


(18,922)


(4,460)


Increase (decrease) in cash and cash equivalents

1,825


371


8,156


(241)


Cash and cash equivalents at beginning of period

10,131


2,629


3,800


3,241


Cash and cash equivalents at end of period

$  11,956


$ 3,000


$  11,956


$ 3,000







Three months ended


Nine months ended



September 30,


September 30,



2018


2017


2018


2017


Net cash provided by operating activities

$   3,273


$ 3,454


$   8,102


$ 8,165


Capital expenditures

(171)


(158)


(513)


(511)


Free cash flow

$   3,102


$ 3,296


$   7,589


$ 7,654

 

Reconciliation of GAAP EPS Guidance to Non-GAAP

EPS Guidance for the Year Ending December 31, 2018

(Unaudited)











GAAP diluted EPS guidance

$ 12.23

-

$ 12.55






Known adjustments to arrive at non-GAAP*:





Acquisition-related expenses (a)


1.69



Restructuring charges

0.00

-

0.07


Certain other expenses


0.03



Tax adjustments (b)


(0.02)


Non-GAAP diluted EPS guidance

$ 14.00

-

$ 14.25






*

The known adjustments are presented net of their related tax impact, which amount to approximately $0.55 per share, in the aggregate.



(a)

The adjustments relate primarily to non-cash amortization of intangible assets acquired in business combinations.






(b)

The adjustments relate primarily to certain acquisition items and prior period items excluded from GAAP earnings.







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 of our contingent consideration.






Reconciliation of GAAP Tax Rate Guidance to Non-GAAP

Tax Rate Guidance for the Year Ending December 31, 2018

(Unaudited)
















GAAP tax rate guidance

12.5%

-

13.5%







Tax rate effect of known adjustments discussed above


1.0%







Non-GAAP tax rate guidance

13.5%

-

14.5%

CONTACT: Amgen, Thousand Oaks
Trish Hawkins, 805-447-5631 (media)
Arvind Sood, 805-447-1060 (investors)

Amgen Logo. (PRNewsFoto/Amgen) (PRNewsFoto/)

 

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SOURCE Amgen