Amgen's First Quarter 2009 Adjusted Earnings Per Share Decreased 4 Percent to $1.08
04.23.2009
|
First Quarter 2009 Revenue Decreased 8 Percent to
First Quarter 2009 GAAP Earnings Per Share Decreased 3 Percent to
2009 Total Revenue Guidance Range Lowered from
2009 Adjusted Earnings Per Share Guidance Range Maintained at $4.55 to $4.75
THOUSAND OAKS, Calif.,
Total revenue decreased 8 percent during the first quarter of 2009 to
Adjusted EPS and adjusted net income for the first quarter of 2009 and
2008 exclude, for the applicable periods, stock option expense, certain
expenses related to acquisitions, restructuring charges and certain other
items. In addition, adjusted EPS and adjusted net income for the three months
ended
On a reported basis and calculated in accordance with
"Our first quarter sales were affected by the continued deterioration of
the global economy which has led to changes in patient and physician
behavior," said
Product Sales Performance
During the first quarter, total product sales decreased 8 percent to
Worldwide sales of Aranesp(R) (darbepoetin alfa) decreased 18 percent to
Sales of EPOGEN(R) (Epoetin alfa) increased 2 percent to
Combined worldwide sales of Neulasta(R) (pegfilgrastim) and NEUPOGEN(R)
(Filgrastim) decreased 1 percent to
Sales of Enbrel(R) (etanercept) decreased 20 percent in the first quarter
to
Worldwide sales of Sensipar(R) (cinacalcet) increased 11 percent to
Vectibix(R) (panitumumab) sales for the first quarter were
Operating Expense Analysis on an Adjusted Basis:
Cost of sales decreased 13 percent to
Research & Development (R&D) expenses were
Selling, General & Administrative (SG&A) expenses decreased 10 percent to
The adjusted tax rate in the first quarter of 2009 was 21.5 percent compared to 22.4 percent in the first quarter of 2008. The decrease in the adjusted tax rate is primarily due to the fact that the Federal R&D tax credit had not yet been extended in the first quarter of 2008.
During the first quarter of 2009,
Average diluted shares for adjusted EPS in the first quarter of 2009 were 1,037 million versus 1,091 million in the first quarter of 2008.
Capital expenditures for the first quarter of 2009 were approximately
2009 Guidance Update
The Company now expects total revenue for 2009 to be in the range of
The Company now expects 2009 capital expenditures to be approximately
First Quarter Product and Pipeline Update
The Company provided updates on selected products and clinical programs.
Aranesp: The Company discussed the Aranesp pharmacovigilance study ('782 study), a randomized double-blind, placebo-controlled, Phase 3 non-inferiority study evaluating overall survival when comparing advanced NSCLC patients on Aranesp to patients receiving placebo. Investigator recruitment is in progress.
Motesanib: The Company indicated that the FDA has agreed with the revised
study protocol for the Phase 3 MONET1 trial evaluating motesanib in
combination with paclitaxel and carboplatin for the first-line treatment of
advanced NSCLC. The Company is preparing to reinitiate enrollment. Motesanib
is part of a broad co-development program between
The Company also announced that Phase 2 programs in NSCLC in metastatic breast cancer have been completed. The results support continued development. The company will present detailed information in an appropriate scientific forum.
Vectibix: The Company updated the status of the randomized, multicenter, Phase 3 study to compare the efficacy of panitumumab in combination with Oxaliplatin/ 5-Fluorouracil/Leucovorin to the efficacy of Oxaliplatin/ 5-Fluorouracil/Leucovorin alone in patients with previously untreated metastatic colorectal cancer ('203 study). The review of the blinded data available to date indicated that there had not been sufficient progression events to meet the minimum number as outlined in the statistical analysis plan. Therefore, the company elected to accrue additional data and now anticipates the '203 study results in the third quarter. The company also anticipates results in the third quarter from a Phase 3 study comparing the efficacy of panitumumab in combination with Irinotecan/ 5-Fluorouracil/Leucovorin to the efficacy of Irinotecan/ 5-Fluorouracil/Leucovorin alone in patients with previously treated metastatic colorectal cancer ('181 study). In addition, a Phase 3 study to compare efficacy of panitumumab in combination with chemotherapy versus chemotherapy alone as first line therapy for metastatic and/or recurrent squamous cell carcinoma of the head and neck has completed enrollment.
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 months ended
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.
About
Amgen Inc.
Condensed Consolidated Statements of Income and
Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
Three Months Three Months
Ended Ended
March 31, 2009 March 31, 2008
-------------------------- ----------------------------
GAAP
"Revised"
GAAP Adjustments "Adjusted" (a) Adjustments "Adjusted"
-------------------------- ----------------------------
Revenues:
Product sales $3,238 $- $3,238 $3,537 $- $3,537
Other
revenues 70 - 70 76 - 76
--- --- --- --- --- ---
Total
revenues 3,308 - 3,308 3,613 - 3,613
----- --- ----- ----- --- -----
Operating
expenses:
Cost of sales
(excludes
amortization
of acquired
intangible
assets
presented
below) 477 (3)(b) 474 546 (3)(b) 542
(1)(d)
Research and
development 633 (11)(b) 605 694 (12)(b) 661
(17)(c) (18)(c)
(2)(d)
(1)(g)
Selling,
general and
administrative 798 (10)(b) 774 874 (13)(b) 862
(14)(d) 1 (d)
Amortization
of
intangible
assets 74 (74)(e) - 74 (74)(e) -
Other charges 5 (5)(d) - 10 (10)(d) -
--- ----- --- --- ----- ---
Total
operating
expenses 1,987 (134) 1,853 2,198 (133) 2,065
Operating
income 1,321 134 1,455 1,415 133 1,548
Interest and
other
income
(expense),
net (89) 61(f) (28) (35) 57(f) 22
--- --- --- --- --- ---
Income
before
income
taxes 1,232 195 1,427 1,380 190 1,570
Provision
for income
taxes 213 69(h) 307 280 72(j) 352
25(i)
--- --- --- --- --- ---
Net income $1,019 $101 $1,120 $1,100 $118 $1,218
====== ==== ====== ====== ==== ======
Earnings per
share:
Basic $0.99 $1.09 $1.01 $1.12
Diluted (k) $0.98 $1.08(b) $1.01 $1.12(b)
Average
shares used
in calculation
of earnings
per share:
Basic 1,032 1,032 1,089 1,089
Diluted (k) 1,037 1,037(b) 1,092 1,091(b)
(a)-(k) See explanatory notes on the following pages, which includes
in note (a) a discussion of the retrospectively applied change in
method of accounting for our convertible notes under Financial
Accounting Standards Board's Staff Position No. APB 14-1,
"Accounting for Convertible Debt Instruments That May Be Settled
in Cash upon Conversion (Including Partial Cash Settlement)"
("FSP APB 14-1").
Amgen Inc.
Notes to Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data)
(Unaudited)
(a) Effective January 1, 2009 , we adopted FSP APB 14-1, which changed
the method of accounting for our convertible notes. In addition, as
required, we revised our previously reported financial statements to
retrospectively apply this change in accounting to prior periods.
Under this new method of accounting, the debt and equity components
of our convertible notes are bifurcated and accounted for separately.
The equity components of our convertible notes are included in
Stockholders' equity in our Condensed Consolidated Balance Sheets
with a corresponding reduction in the carrying values of our
convertible notes as of the date of issuance or modification, as
applicable. The reduced carrying values of our convertible notes
are being accreted back to their principal amounts through the
recognition of non-cash interest expense. This results in recognizing
interest expense on these borrowings at effective rates approximating
what we would have incurred had we issued nonconvertible debt with
otherwise similar terms.
In connection with applying this new accounting to prior periods, we
recorded $57 million of additional non-cash interest expense in the
three months ended March 31, 2008 . As a result, our previously
reported results of operations calculated in accordance with GAAP
have been revised for the three months ended March 31, 2008 , as
follows:
Three months ended
March 31, 2008
---------------------------------------
As originally Effect of FSP
reported APB 14-1 "Revised"
---------------------------------------
Operating income $1,415 $- $1,415
Interest and other income
(expense), net 22 (57) (35)
--- --- ---
Income before income taxes 1,437 (57) 1,380
Provision for
income taxes 301 (21) 280
--- --- ---
Net income $1,136 $(36) $1,100
====== ==== ======
Earnings per share:
Basic $1.04 $(0.03) $1.01
Diluted $1.04 $(0.03) $1.01
(b) To exclude the impact of stock option expense recorded in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 123R.
For the three months ended March 31, 2009 and 2008, the total pre-tax
expense for employee stock options in accordance with SFAS No. 123R
was $24 million and $28 million , respectively.
"Adjusted" diluted EPS including the impact of stock option expense
for the three months ended March 31, 2009 and 2008 was as follows:
Three months ended
March 31,
------------------
2009 2008
------------------
"Adjusted" diluted EPS, excluding stock
option expense $1.08 $1.12
Impact of stock option expense
(net of tax) (0.01) (0.02)
----- -----
"Adjusted" diluted EPS, including stock
option expense $1.07 $1.10
===== =====
(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 following restructuring (expenses)/recoveries
associated with our restructuring plan announced in August 2007 and
the additional cost saving initiatives announced in 2008, as follows:
Asset
Separation impairment
costs (1) (2) Other (3) Total
---------- ---------- -------- -----
Three months ended
March 31, 2009
------------------
Selling, general and
administrative (SG&A) $- $- $(14) $(14)
Other charges (5) - - (5)
--- --- --- ---
$(5) $- $(14) $(19)
=== === ==== ====
Three months ended
March 31, 2008
------------------
Cost of sales (excluding
amortization of
intangible assets) $- $(1) $- $(1)
Research and
development (R&D) (2) - - (2)
SG&A - - 1 1
Other charges (4) (2) (4) (10)
--- --- --- ---
$(6) $(3) $(3) $(12)
=== === === ====
(1) Severance and other separation costs.
(2) Asset impairment charges principally incurred in connection with the
rationalization of our worldwide manufacturing operations in order to
gain cost efficiencies.
(3) To exclude (i) from SG&A in 2009, integration costs associated with
certain cost saving initiatives and (ii) from Other charges in 2008,
loss accruals for leases principally related to certain facilities
that will not be used in our business.
(e) To exclude the ongoing, non-cash amortization of acquired product
technology rights, primarily ENBREL, related to the Immunex
Corporation ("Immunex ") acquisition.
(f) To exclude the incremental non-cash interest expense resulting from
our adoption of FSP APB 14-1 (see (a) above).
(g) To exclude merger related expenses incurred due to the Alantos
Pharmaceutical Holding, Inc. acquisition, primarily related to
incremental costs associated with retention.
(h) To reflect the tax effect of the above adjustments for 2009.
(i) To exclude the net tax benefit resulting from adjustments to
previously established deferred taxes, primarily related to prior
acquisitions and stock option expense, due to changes in California
tax law effective for future periods.
(j) To reflect the tax effect of the above adjustments for 2008,
excluding certain of the restructuring charges (see (d) above).
(k) 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
March 31, 2009 March 31, 2008
------------------ ------------------
GAAP
GAAP "Adjusted" "Revised" "Adjusted"
------------------ ------------------
Income
(Numerator):
Net income for
basic and diluted
EPS $1,019 $1,120 $1,100 $1,218
====== ====== ====== ======
Shares
(Denominator):
Weighted-average
shares for basic
EPS 1,032 1,032 1,089 1,089
Effect of dilutive
securities 5 5(*) 3 2(*)
--- --- --- ---
Weighted-average
shares for diluted
EPS 1,037 1,037 1,092 1,091
===== ===== ===== =====
Diluted earnings
per share $0.98 $1.08 $1.01 $1.12
===== ===== ===== =====
(*) Dilutive securities used to compute "Adjusted" diluted earnings per
share for the three months ended March 31, 2009 and 2008 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
March 31,
-----------------------
2009 2008
-----------------------
Aranesp(R) - U.S. $292 $405
Aranesp(R) - International 334 356
EPOGEN(R) - U.S. 565 554
Neulasta(R) - U.S. 594 569
NEUPOGEN(R) - U.S. 202 223
Neulasta(R) - International 183 187
NEUPOGEN(R) - International 94 107
Enbrel(R) - U.S. 712 904
Enbrel(R) - International 46 47
Sensipar(R) - U.S. 99 93
Sensipar(R) - International 49 40
Vectibix(R) - U.S. 25 32
Vectibix(R) - International 28 2
Other product sales - U.S. 13 8
Other product sales - International 2 10
--- ---
Total product sales $3,238 $3,537
====== ======
U.S. $2,502 $2,788
International 736 749
--- ---
Total product sales $3,238 $3,537
====== ======
Amgen Inc.
Condensed Consolidated Balance Sheets - GAAP
(In millions)
(Unaudited)
December 31,
March 31, 2008
2009 "Revised" (a)
-------- -------------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $10,378 $9,552
Trade receivables, net 2,009 2,073
Inventories 2,080 2,075
Other current assets 1,609 1,521
----- -----
Total current assets 16,076 15,221
Property, plant and equipment, net 5,804 5,879
Intangible assets, net 2,882 2,988
Goodwill 11,336 11,339
Other assets 1,282 1,000
----- -----
Total assets $37,380 $36,427
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $3,673 $3,886
Current portion of other long-term debt 1,000 1,000
----- -----
Total current liabilities 4,673 4,886
Convertible notes 4,320 4,257
Other long-term debt 6,088 4,095
Other non-current liabilities 2,332 2,304
Stockholders' equity 19,967 20,885
------ ------
Total liabilities and stockholders'
equity $37,380 $36,427
======= =======
Shares outstanding 1,011 1,047
(a) As discussed in more detail above in the notes to the Reconciliation
of GAAP Earnings to "Adjusted" Earnings, effective January 1, 2009 ,
we adopted FSP APB 14-1, which changed the method of accounting for
our convertible notes. In addition, as required, we revised our
previously reported financial statements to retrospectively apply
this change in accounting to prior periods. As a result, our
previously reported Consolidated Balance Sheet as of December 31,
2008 has been revised as follows:
December 31, 2008
------------------------------------------
As originally Effect of FSP
reported APB 14-1 "Revised"
------------------------------------------
Other non-current
assets $1,016 $(16) $1,000
Convertible notes 5,081 (824)(1) 4,257
Other non-current
liabilities 1,995 309(2) 2,304
Stockholders' equity 20,386 499(3) 20,885
(1) The reduction in Convertible notes reflects the bifurcation of the
equity components of our convertible notes partially offset
by the accretion of the reduced carrying values resulting from the
recognition of non-cash interest expense through December 31, 2008 .
(2) The increase in Other non-current liabilities reflects the impact of
deferred income taxes.
(3) The increase in Stockholders' equity reflects the addition of the
equity components of our convertible notes, partially offset
by (i) non-cash interest expense recognized through December 31, 2008
related to the accretion of the reduced carrying values of our
convertible notes and (ii) the impact of deferred income taxes.
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 (a) $4.55 - $4.75
Known adjustments to arrive at GAAP earnings:
Amortization of acquired intangible
assets, product technology rights (b) (0.18)
Incremental non-cash interest expense (c) (0.15) - (0.16)
Stock option expense (d) (0.06) - (0.08)
Restructuring costs (e) (0.04) - (0.06)
Amortization of acquired intangible
assets, R&D technology rights (f) (0.04)
California tax law change (g) 0.02
---------------
GAAP earnings per share guidance $4.05 - $4.30
===============
(a) On April 23, 2009 , the Company reaffirmed its 2009 adjusted earnings
per share guidance.
(b) To exclude the ongoing, non-cash amortization of acquired product
technology rights, primarily ENBREL, related to the Immunex
acquisition.
(c) To exclude the incremental non-cash interest expense resulting from
our adoption of FSP APB 14-1.
(d) To exclude stock option expense associated with SFAS No. 123R.
(e) To exclude restructuring related costs.
(f) To exclude the ongoing, non-cash amortization of the R&D technology
intangible assets acquired with the Abgenix and Avidia acquisitions.
(g) To exclude the net tax benefit resulting from adjustments to
previously established deferred taxes, primarily related to prior
acquisitions and stock option expense, due to changes in California
tax law effective for future periods.
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)
SOURCEAmgen