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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 Δ


FY'18


FY'17


YOY Δ

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 Δ



US


ROW


TOTAL


TOTAL


TOTAL

Repatha®


$

104



$

55



$

159



$

98



62%

BLINCYTO®


37



26



63



46



37%

XGEVA®


344



112



456



391



17%

Prolia®


430



225



655



574



14%

KYPROLIS®


153



98



251



227



11%

Nplate®


112



70



182



165



10%

Sensipar®/Mimpara®


367



81



448



413



8%

Vectibix®


74



94



168



159



6%

Neulasta®


1,012



157



1,169



1,114



5%

Parsabiv®


108



12



120



3



*

Aimovig®


95





95





*

Biosimilars**




34



34





*

EPOGEN®


264





264



270



(2%)

Aranesp®


228



246



474



491



(3%)

Enbrel®


1,263



52



1,315



1,423



(8%)

NEUPOGEN®


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™ and AMGEVITA™.

*** Other includes Bergamo, MN Pharma, IMLYGIC® and Corlanor®.

KANJINTI™ trade name is provisionally approved by the FDA.

 

$Millions, except percentages


FY'18


FY'17


YOY Δ



US


ROW


TOTAL


TOTAL


TOTAL

Repatha®


$

358



$

192



$

550



$

319



72%

BLINCYTO®


134



96



230



175



31%

Prolia®


1,500



791



2,291



1,968



16%

KYPROLIS®


583



385



968



835



16%

XGEVA®


1,338



448



1,786



1,575



13%

Nplate®


438



279



717



642



12%

Vectibix®


288



403



691



642



8%

Sensipar®/Mimpara®


1,436



338



1,774



1,718



3%

Parsabiv®


302



34



336



5



*

Aimovig®


119





119





*

Biosimilars**




55



55





*

Neulasta®


3,866



609



4,475



4,534



(1%)

Enbrel®


4,807



207



5,014



5,433



(8%)

EPOGEN®


1,010





1,010



1,096



(8%)

Aranesp®


942



935



1,877



2,053



(9%)

NEUPOGEN®


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™ and AMGEVITA™.

*** Other includes Bergamo, MN Pharma, IMLYGIC® and Corlanor®.

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 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 Δ


Q4'18


Q4'17


YOY Δ

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 Δ


FY'18


FY'17


YOY Δ

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 Δ


FY'18


FY'17


YOY Δ

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.

EVENITYTM (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™ (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
December 31,


Years ended
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
December 31,


Years ended
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
December 31, 2018


Three months ended
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
December 31, 2018


Year ended
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
December 31,


Years ended
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
December 31,


Years ended
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%

 

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SOURCE Amgen