Fourth Quarter 2009 Revenue Increased 2 Percent to $3.8 Billion;
Full Year 2009 Revenue Decreased 2 Percent to $14.6 Billion Fourth
Quarter 2009 GAAP Earnings Per Share Increased 6 Percent to $0.92;
Full Year 2009 GAAP Earnings Per Share Increased 20 Percent to
$4.51 2010 Total Revenue Expected to be in the Range of $15.1
Billion to $15.5 Billion 2010 Adjusted Earnings Per Share Expected
to be in the Range of $5.05 to $5.25 THOUSAND OAKS, Calif., Jan. 25
/PRNewswire-FirstCall/ -- Amgen (NASDAQ: AMGN) reported adjusted
earnings per share (EPS) of $1.05 for the fourth quarter of 2009, a
decrease of 1 percent compared to $1.06 for the fourth quarter of
2008. Adjusted net income decreased 5 percent to $1,065 million in
the fourth quarter of 2009 compared to $1,124 million in the fourth
quarter of 2008. Full year 2009 adjusted EPS were $4.91 versus
$4.55 in 2008, an 8 percent increase. Full year 2009 adjusted net
income was $5,014 million versus $4,885 million in 2008, a 3
percent increase. Total revenue increased 2 percent during the
fourth quarter of 2009 to $3,809 million versus $3,751 million in
the fourth quarter of 2008. For the full year 2009, total revenue
decreased 2 percent to $14,642 million from $15,003 million in
2008. "We delivered solid performance in 2009 and look forward to
growing our top and bottom line meaningfully in 2010," said Kevin
Sharer, Chairman and CEO. "We are ready and look forward to
launching denosumab worldwide this year." Adjusted EPS and adjusted
net income for the fourth quarter and full year 2009 and 2008
exclude, for the applicable periods, stock option expense, certain
expenses related to acquisitions, restructuring and legal
settlements, the resolution of certain transfer pricing issues with
the Internal Revenue Service (IRS) and certain other items. In
addition, adjusted EPS and adjusted net income for the fourth
quarter and full year 2009 and 2008 exclude the incremental
non-cash interest expense resulting from a change in accounting for
convertible debt as discussed below. These expenses and other items
are itemized on the attached reconciliation tables. On a reported
basis and calculated in accordance with United States (U.S.)
Generally Accepted Accounting Principles (GAAP), Amgen's GAAP EPS
were $0.92 in the fourth quarter of 2009, an increase of 6 percent
compared to $0.87 in the same quarter last year. GAAP net income of
$931 million in the fourth quarter of 2009 increased 1 percent from
$925 million in the fourth quarter of 2008. For the full year 2009,
Amgen's reported GAAP EPS were $4.51, an increase of 20 percent
compared to $3.77 for the full year 2008. For the full year 2009,
GAAP net income was $4,605 million, an increase of 14 percent
compared to $4,052 million for the full year 2008. GAAP net income
for the full year 2009 was positively impacted by favorable tax
settlements aggregating approximately $220 million. In addition,
GAAP net income for the full year 2008 was negatively impacted by
accruals for legal settlements of $288 million. Effective Jan. 1,
2009, Amgen adopted a new accounting standard which changed the
method of accounting for the Company's convertible notes. In
addition, as required, the Company also revised its previously
reported financial statements to apply this change in accounting to
prior periods. Under this new accounting method, the Company's GAAP
EPS and net income have been reduced as a result of recognizing
incremental non-cash interest expense. In connection with adopting
this new accounting standard, Amgen recorded additional non-cash
interest expense of $64 million and $61 million in the fourth
quarter of 2009 and 2008, respectively, and $250 million and $235
million in the full year 2009 and 2008, respectively. In addition,
the Company's previously reported GAAP EPS for the fourth quarter
of 2008 and full year 2008 have been reduced by $0.04 per share to
$0.87 per share and $0.13 per share to $3.77 per share,
respectively, as a result of adopting this new accounting method.
Product Sales Performance During the fourth quarter of 2009, total
product sales increased 2 percent to $3,743 million from $3,674
million in the fourth quarter of 2008. Sales in the U.S. totaled
$2,882 million, a decrease of 1 percent versus $2,900 million in
the fourth quarter of 2008. International sales increased 11
percent to $861 million versus $774 million for the fourth quarter
of 2008. Changes in foreign exchange positively impacted fourth
quarter 2009 sales by $35 million. Excluding the impact of foreign
exchange, total product sales increased 1 percent and international
product sales increased 7 percent. For the full year, total product
sales were $14,351 million in 2009 versus $14,687 million in 2008,
a 2 percent decrease. U.S. sales for the full year totaled $11,135
million, a decrease of 3 percent versus $11,460 million in the
prior year. International sales for the full year were relatively
unchanged at $3,216 million versus $3,227 million in the prior
year. Changes in foreign exchange negatively impacted full year
sales by $213 million. Excluding the impact of foreign exchange,
total product sales decreased 1 percent and international sales
increased 6 percent. Worldwide sales of Aranesp® (darbepoetin alfa)
decreased 8 percent to $648 million in the fourth quarter of 2009
versus $706 million during the fourth quarter of 2008. In the U.S.,
Aranesp sales decreased 20 percent to $288 million in the fourth
quarter of 2009 versus $361 million in the fourth quarter of 2008.
This decrease in U.S. sales in the fourth quarter of 2009 primarily
reflects a decline in demand and unfavorable changes in wholesaler
inventories. The decline in demand reflects the negative impact,
primarily in the supportive cancer care setting, of a product label
change which occurred in August 2008, and a decrease in average net
sales price. International Aranesp sales increased 4 percent to
$360 million versus $345 million in the fourth quarter of 2008 due
to changes in foreign exchange which positively impacted fourth
quarter 2009 sales by approximately $15 million. Excluding the
impact of foreign exchange, worldwide product sales decreased 10
percent and international product sales were unchanged. For the
full year, worldwide Aranesp sales were $2,652 million in 2009
versus $3,137 million in 2008, a 15 percent decrease. This decrease
in sales was primarily due to a decline in U.S. demand reflecting
the product label change noted above, and to a lesser extent,
changes in accounting estimates, primarily related to product sales
return reserves that positively impacted 2008, and the negative
impact of foreign exchange. Sales of EPOGEN® (Epoetin alfa)
increased 9 percent to $703 million in the fourth quarter of 2009
versus $646 million in the fourth quarter of 2008 primarily due to
an increase in demand. The increase in demand is principally due to
patient population growth, increased dose utilization and an
increase in average net sales price. For the full year, EPOGEN
sales were $2,569 million in 2009 versus $2,456 million in 2008, a
5 percent increase. This increase in sales is principally due to
demand. Combined worldwide sales of Neulasta® (pegfilgrastim) and
NEUPOGEN® (Filgrastim) increased 2 percent to $1,202 million in the
fourth quarter of 2009 versus $1,180 million for the fourth quarter
of 2008, driven primarily by increased demand for Neulasta.
Combined sales of Neulasta and NEUPOGEN in the U.S. were $880
million in the fourth quarter of 2009 versus $884 million in the
fourth quarter of 2008, relatively unchanged due to a mid-single
digit increase in demand offset by unfavorable changes in
wholesaler inventories. The increase in demand was driven by an
increase in average net sales price and an increase in units sold.
Combined international sales increased 9 percent to $322 million in
the fourth quarter of 2009 versus $296 million for the same quarter
in the prior year. This growth reflects increased demand, driven by
the continued conversion from NEUPOGEN to Neulasta and expansion
into newer territories, and changes in foreign exchange which
positively impacted fourth quarter sales by approximately $12
million. Excluding the impact of foreign exchange, combined
worldwide product sales increased 1 percent and international
product sales increased 5 percent. For the full year, worldwide
combined sales of Neulasta and NEUPOGEN were relatively unchanged
at $4,643 million in 2009 versus $4,659 million in 2008. Increased
demand for Neulasta was offset by the negative impact of changes in
foreign exchange and unfavorable changes in wholesaler inventories.
Sales of Enbrel® (etanercept) were relatively unchanged in the
fourth quarter of 2009 at $912 million versus $913 million during
the same period in 2008. ENBREL sales in the fourth quarter were
affected by a low single digit decline in units sold due to
increased competitive activity in dermatology, offset by an
increase in average net sales price. For the full year, ENBREL
sales decreased 3 percent to $3,493 million in 2009 versus $3,598
million in 2008. This decrease reflects the unfavorable change in
wholesaler inventory resulting from the 2008 wholesaler inventory
build related to the shift of ENBREL to a wholesaler distribution
model, partially offset by an increase in demand. ENBREL continues
to maintain a leading position in both the rheumatology and
dermatology segments. Worldwide sales of Sensipar® (cinacalcet)
increased 12 percent to $171 million in the fourth quarter of 2009
versus $153 million during the fourth quarter of 2008. For the full
year, Sensipar sales were $651 million in 2009 versus $597 million
in 2008, a 9 percent increase. The growth in the fourth quarter and
full year was principally driven by international demand. Vectibix®
(panitumumab) sales for the fourth quarter of 2009 were $66 million
as compared to $46 million in the fourth quarter of 2008. Sales
growth for the fourth quarter was driven by international demand as
a result of recent launches of Vectibix in Europe. For the full
year, worldwide Vectibix sales were $233 million in 2009 versus
$153 million in 2008, a 52 percent increase. This increase was
driven by international demand, partially offset by lower U.S.
sales driven by a decrease in units sold. Operating Expense
Analysis on an Adjusted Basis: Cost of sales decreased 3 percent to
$535 million in the fourth quarter of 2009 versus $549 million in
the fourth quarter of 2008. This decrease was primarily driven by
lower excess capacity charges and lower excess inventory write-offs
which were partially offset by less favorable product mix and
higher sales volume. For the full year, cost of sales was $2,078
million in 2009 versus $2,193 million in 2008, a decrease of 5
percent. This decrease was due to lower excess capacity charges,
lower sales volume, lower royalty expenses, and lower excess
inventory write-offs. These reductions were partially offset by
less favorable product mix and higher fill and finish costs
resulting from lower utilization at our manufacturing facility in
Puerto Rico. Research & Development (R&D) expenses
increased 12 percent to $864 million in the fourth quarter of 2009
versus $770 million in the fourth quarter of 2008. This increase
was primarily due to higher licensing fees of $60 million
associated with the Array BioPharma agreement, higher staff related
costs, and costs associated with on-going collaborations in the
early and mid-stage pipeline. For the full year, R&D expenses
were $2,739 million in 2009 versus $2,910 million in 2008, a
decrease of 6 percent. The full year decrease was due to lower
clinical trial costs primarily for our denosumab and Vectibix
registrational studies and lower staff related costs. Selling,
General & Administrative (SG&A) expenses increased 9
percent to $1,159 million in the fourth quarter of 2009 versus
$1,062 million in the fourth quarter of 2008. This increase was due
to increased spending for activities in anticipation of the
approval and launch of Prolia(TM) (denosumab) and higher staff
related costs partially offset by expense recoveries associated
with the GlaxoSmithKline collaboration agreement for Prolia in
postmenopausal osteoporosis (PMO) in Europe, Australia, New
Zealand, and Mexico. Excluding expenses associated with the Pfizer
profit share of $308 million and $309 million in the fourth quarter
of 2009 and 2008, respectively, adjusted SG&A expenses in the
fourth quarter of 2009 increased 13 percent versus the same quarter
last year. For the full year, SG&A expenses increased 1 percent
to $3,737 million in 2009 versus $3,708 million in 2008. This
increase was primarily driven by increased spending for activities
in preparation and anticipation of approval and launch of Prolia
and increased promotional expenses for marketed products. These
increases were partially offset by lower litigation expenses, lower
enterprise resource planning (ERP) system related expenses, lower
staff related costs, lower expenses associated with the Pfizer
profit share, and expense recoveries associated with the
GlaxoSmithKline collaboration agreement for Prolia. Excluding
Pfizer profit share expenses of $1,163 and $1,195 in 2009 and 2008,
respectively, adjusted SG&A expenses for the full year 2009
increased 2 percent versus the full year 2008. The adjusted tax
rate in the fourth quarter of 2009 was 15.9 percent compared to
19.0 percent in the fourth quarter of 2008. The decrease in the
adjusted tax rate is primarily due to increased bulk manufacturing
and profits in Puerto Rico, and the favorable tax impact of changes
in revenue and expense mix, partially offset by the benefit of the
extension of the Federal R&D tax credit in the fourth quarter
of 2008. For the full year 2009, the adjusted tax rate was 16.9
percent compared to 21.7 percent for the full year 2008. The
decrease in the full year adjusted tax rate is primarily due to
increased bulk manufacturing and profits in Puerto Rico, the
favorable tax impact of changes in revenue and expense mix, and the
favorable impact of settling IRS and California tax audits for
prior years, the impact of which is specific to 2009. During the
fourth quarter of 2009, Amgen repurchased approximately 22 million
shares of common stock at a total cost of $1.2 billion. For the
full year 2009, Amgen repurchased approximately 59 million shares
of common stock at a total cost of $3.2 billion. The Company
currently has $6 billion remaining under its authorized stock
repurchase program. Average diluted shares for adjusted EPS in the
fourth quarter of 2009 were 1,012 million versus 1,061 million in
the fourth quarter of 2008 and 1,021 million in the full year 2009
versus 1,074 million in the full year 2008. Capital expenditures
for the fourth quarter of 2009 were approximately $144 million
versus $178 million in the fourth quarter of 2008. For the full
year 2009, capital expenditures were $530 million versus $672
million in the full year 2008. Operating cash flow for 2009
increased 6 percent to approximately $6.3 billion versus
approximately $6.0 billion in 2008. Worldwide cash and marketable
securities were $13.4 billion and adjusted outstanding debt was
$11.2 billion as of Dec. 31, 2009. The Company's adjusted
outstanding debt excludes the impact of adopting a new accounting
standard on the carrying values of its convertible debt. The
Company's outstanding debt presented in accordance with GAAP was
$10.6 billion as of Dec. 31, 2009. 2010 Guidance The Company
expects total revenue for 2010 to be in the range of $15.1 billion
to $15.5 billion. Amgen expects 2010 adjusted EPS to be in the
range of $5.05 to $5.25, excluding stock option expense, certain
expenses related to prior acquisitions and the non-cash interest
expense resulting from a change in accounting for our convertible
debt. With respect to other guidance, Amgen's expectation for the
2010 adjusted tax rate is that it will be in the range of 20
percent to 21 percent. The Company expects 2010 capital
expenditures to be approximately $600 million. Fourth Quarter
Product and Pipeline Update The Company provided updates on
selected products and clinical programs. Denosumab: The Company
announced that it has submitted the information requested by the
FDA in the Prolia Complete Response Letter for PMO. The Company
also announced that results from the prostate skeletal related
events (SREs) study ('103) are expected in the first quarter of
2010. The Company discussed the worldwide submission of a
Biological License Application (BLA) later this year for the
treatment of SREs in advanced cancer patients. The BLA submission
will contain data from three Phase 3 SRE studies. In addition, the
Company announced that it anticipates data from the Phase 3 bone
metastasis prevention study in prostate cancer ('147) in the second
half of 2010. Sensipar/Mimpara: Based on current event rates, the
Company announced that it anticipates completion of the Phase 3
Evaluation of Cinacalcet Therapy to Lower Cardiovascular Events
(EVOLVE) study in dialysis patients in 2011. Motesanib: The Company
announced that enrollment is nearly complete in the Phase 3
1st-line non-small cell lung cancer study (MONET1). Based on
current event rates, the Company anticipates completion of the
study in 2011. AMG 386: The Company announced that it plans to
initiate a Phase 3 program in ovarian cancer. Non-GAAP Financial
Measures Management has presented its operating results in
accordance with GAAP and on an "adjusted" (or non-GAAP) basis for
the three and twelve months ended Dec. 31, 2009 and 2008. In
addition, management has presented its outstanding debt in
accordance with GAAP and on an "adjusted" (or non-GAAP) basis as of
Dec. 31, 2009. The Company believes that the presentation of
non-GAAP financial measures provides useful supplementary
information to and facilitates additional analysis by investors.
The Company uses these non-GAAP financial measures in connection
with its own budgeting and financial planning. These non-GAAP
financial measures are in addition to, not a substitute for, or
superior to, measures of financial performance prepared in
conformity with GAAP. Further, our reconciliations of GAAP to
"adjusted" operating results, which are included on the attached
tables, are presented in the format of condensed consolidated
statements of income solely to facilitate a reader's understanding
of the impact of the various adjustments to our GAAP operating
results, individually and in the aggregate, and are not intended to
place any undue prominence on our adjusted operating results.
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 Dec. 31, 2008, and in
our periodic reports on Form 10-Q and Form 8-K. 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. 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 Amgen discovers, develops,
manufactures and delivers innovative human therapeutics. A
biotechnology pioneer since 1980, Amgen was one of the first
companies to realize the new science's promise by bringing safe and
effective medicines from lab, to manufacturing plant, to patient.
Amgen therapeutics have changed the practice of medicine, helping
millions of people around the world in the fight against cancer,
kidney disease, rheumatoid arthritis and other serious illnesses.
With a deep and broad pipeline of potential new medicines, Amgen
remains committed to advancing science to dramatically improve
people's lives. To learn more about our pioneering science and our
vital medicines, visit http://www.amgen.com/. Amgen Inc. Condensed
Consolidated Statements of Income and Reconciliation of GAAP
Earnings to "Adjusted" Earnings (In millions, except per share
data) (Unaudited) Three Months Ended December 31, 2009
----------------- GAAP Adjustments "Adjusted" ---- -----------
---------- Revenues: Product sales $3,743 $- $3,743 Other revenues
66 - 66 --- --- --- Total revenues 3,809 - 3,809 ----- --- -----
Cost of sales (excludes amortization of certain acquired intangible
assets presented below) 538 (3) (b) 535 Research and development
891 (9) (b) 864 (18) (d) Selling, general and administrative 1,180
(15) (b) 1,159 (6) (c) Amortization of certain acquired intangible
assets 73 (73) (e) - Other charges 4 1 (c) - (5) (f) --- --- ---
--- Total operating expenses 2,686 (128) 2,558 ----- ---- -----
Operating income 1,123 128 1,251 Interest expense, net 142 (64) (g)
78 Interest and other income, net 94 94 --- --- Income before
income taxes 1,075 192 1,267 Provision for income taxes 144 58 (j)
202 --- --- --- Net income $931 $134 $1,065 ==== ==== ======
Earnings per share: Basic $0.93 $1.06 Diluted (o) $0.92 $1.05 (b)
Average shares used in calculation of earnings per share: Basic
1,006 1,006 Diluted (o) 1,011 1,012 (b) Three Months Ended December
31, 2008 ----------------- GAAP (a) Adjustments "Adjusted" --------
----------- ---------- Revenues: Product sales $3,674 $- $3,674
Other revenues 77 - 77 --- --- --- Total revenues 3,751 - 3,751
----- --- ----- Cost of sales (excludes amortization of certain
acquired intangible assets presented below) 558 (4) (b) 549 (5) (c)
Research and development 798 (11) (b) 770 (17) (d) Selling, general
and administrative 1,111 (11) (b) 1,062 (38) (c) Amortization of
certain acquired intangible assets 73 (73) (e) - Other charges 74
(53) (c) - (21) (f) --- --- --- --- Total operating expenses 2,614
(233) 2,381 ----- ---- ----- Operating income 1,137 233 1,370
Interest expense, net 132 (61) (g) 71 Interest and other income,
net 88 1 (c) 89 --- --- --- Income before income taxes 1,093 295
1,388 Provision for income taxes 168 96 (n) 264 --- --- --- Net
income $925 $199 $1,124 ==== ==== ====== Earnings per share: Basic
$0.88 $1.07 Diluted (o) $0.87 $1.06 (b) Average shares used in
calculation of earnings per share: Basic 1,055 1,055 Diluted (o)
1,061 1,061 (b) (a) -(o) See explanatory notes on the following
pages, which includes a discussion in note (a) of the
retrospectively applied change in method of accounting for our
convertible notes. Amgen Inc. Condensed Consolidated Statements of
Income and Reconciliation of GAAP Earnings to "Adjusted" Earnings
(In millions, except per share data) (Unaudited) Year ended
December 31, 2009 ----------------- GAAP Adjustments "Adjusted"
---- ----------- ---------- Revenues: Product sales $14,351 $-
$14,351 Other revenues 291 - 291 --- --- --- Total revenues 14,642
- 14,642 ------ --- ------ Cost of sales (excludes amortization of
certain acquired intangible assets presented below) 2,091 (12) (b)
2,078 (1) (c) Research and development 2,864 (49) (b) 2,739 (6) (c)
(70) (d) Selling, general and administrative 3,820 (54) (b) 3,737
(29) (c) Amortization of certain acquired intangible assets 294
(294) (e) - Other charges 67 (34) (c) - (33) (f) --- Total
operating expenses 9,136 (582) 8,554 ----- ---- ----- Operating
income 5,506 582 6,088 Interest expense, net 578 (250) (g) 328
Interest and other income, net 276 276 --- --- Income before income
taxes 5,204 832 6,036 Provision for income taxes 599 293 (j) 1,022
87 (k) 25 (l) 18 (m) --- Net income $4,605 $409 $5,014 ====== ====
====== Earnings per share: Basic $4.53 $4.94 Diluted (o) $4.51
$4.91 (b) Average shares used in calculation of earnings per share:
Basic 1,016 1,016 Diluted (o) 1,021 1,021 (b) Year ended December
31, 2008 ----------------- GAAP (a) Adjustments "Adjusted" --------
----------- ---------- Revenues: Product sales $14,687 $- $14,687
Other revenues 316 - 316 --- --- --- Total revenues 15,003 - 15,003
------ --- ------ Cost of sales (excludes amortization of certain
acquired intangible assets presented below) 2,296 (13) (b) 2,193
(6) (c) (84) (h) Research and development 3,030 (46) (b) 2,910 (3)
(c) (70) (d) (1) (i) Selling, general and administrative 3,789 (44)
(b) 3,708 (37) (c) Amortization of certain acquired intangible
assets 294 (294) (e) - Other charges 380 (92) (c) - (288) (f) ----
Total operating expenses 9,789 (978) 8,811 ----- ---- -----
Operating income 5,214 978 6,192 Interest expense, net 551 (235)
(g) 316 Interest and other income, net 352 10 (c) 362 --- --- ---
Income before income taxes 5,015 1,223 6,238 Provision for income
taxes 963 390 (n) 1,353 Net income $4,052 $833 $4,885 ====== ====
====== Earnings per share: Basic $3.79 $4.57 Diluted (o) $3.77
$4.55 (b) Average shares used in calculation of earnings per share:
Basic 1,070 1,070 Diluted (o) 1,075 1,074 (b) (a) - (o) See
explanatory notes on the following pages, which includes a
discussion in note (a) of the retrospectively applied change in
method of accounting for our convertible notes. 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 a new accounting standard that changed the
method of accounting for convertible debt that may be partially or
wholly settled in cash, which includes 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 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 $61 million and $235 million of additional non-cash
interest expense in the three and twelve months ended December 31,
2008, respectively. As a result, our previously reported results of
operations calculated in accordance with GAAP have been revised for
the three and twelve months ended December 31, 2008, as follows:
Three months ended December 31, 2008 Effect of the As originally
accounting reported standard Operating income $1,137 $- Interest
expense, net 71 61 Interest and other income, net 88 --- --- Income
before income taxes 1,154 (61) Provision for income taxes 193 (25)
--- --- Net income $961 $(36) ==== ==== Earnings per share: Basic
$0.91 $(0.03) Diluted $0.91 $(0.04) Three months ended December 31,
2008 "Revised" Operating income $1,137 Interest expense, net 132
Interest and other income, net 88 --- Income before income taxes
1,093 Provision for income taxes 168 --- Net income $925 ====
Earnings per share: Basic $0.88 Diluted $0.87 Year ended December
31, 2008 ----------------- Effect of the As originally accounting
reported standard -------------- -------------- Operating income
$5,214 $- Interest expense, net 316 235 Interest and other income,
net 352 - --- --- Income before income taxes 5,250 (235) Provision
for income taxes 1,054 (91) ----- --- Net income $4,196 $(144)
====== ===== Earnings per share: Basic $3.92 $(0.13) Diluted $3.90
$(0.13) Year ended December 31, 2008 ----------------- "Revised"
--------- Operating income $5,214 Interest expense, net 551
Interest and other income, net 352 --- Income before income taxes
5,015 Provision for income taxes 963 --- Net income $4,052 ======
Earnings per share: Basic $3.79 Diluted $3.77 (b) To exclude the
impact of stock option expense. For the three and twelve months
ended December 31, 2009 and 2008, the total pre-tax expense for
employee stock options was $27 million and $115 million,
respectively, and $26 million and $103 million, respectively.
"Adjusted" diluted EPS including the impact of stock option expense
for the three and twelve months ended December 31, 2009 and 2008
was as follows: Three months ended December 31, ------------ 2009
2008 ---- ---- "Adjusted" diluted EPS, excluding stock option
expense $1.05 $1.06 Impact of stock option expense (net of tax)
(0.02) (0.02) ----- ----- "Adjusted" diluted EPS, including stock
option expense $1.03 $1.04 ===== ===== Year ended December 31, 2009
2008 ---- ---- "Adjusted" diluted EPS, excluding stock option
expense $4.91 $4.55 Impact of stock option expense (net of tax)
(0.08) (0.07) ----- ----- "Adjusted" diluted EPS, including stock
option expense $4.83 $4.48 ===== ===== (c) To exclude the following
(expenses)/recoveries associated with our restructuring plan
announced in August 2007 and certain additional cost savings
initiatives subsequently identified, as follows: Asset Separation
impairment costs (1) (2) --------- --- Three months ended December
31, 2009 Selling, general and administrative (SG&A) $- $- Other
charges 1 --- $1 $- === === Three months ended December 31, 2008
Cost of sales (excludes amortization of certain acquired intangible
assets) $- $(5) SG&A (17) Other charges (3) (21) Interest and
other income, net --- --- $(3) $(43) === ==== Year ended December
31, 2009 Cost of sales (excludes amortization of certain acquired
intangible assets) $- $(1) Research and development (R&D) 3 (8)
SG&A 2 Other charges (30) - --- $(25) $(9) ==== === Year ended
December 31, 2008 Cost of sales (excludes amortization of certain
acquired intangible assets) $- $(6) R&D (3) SG&A (17) Other
charges (7) (36) Interest and other income, net --- --- $(10) $(59)
==== ==== Other (3) Total --------- ----- Three months ended
December 31, 2009 Selling, general and administrative (SG&A)
$(6) $(6) Other charges 1 --- $(6) $(5) === === Three months ended
December 31, 2008 Cost of sales (excludes amortization of certain
acquired intangible assets) $- $(5) SG&A (21) (38) Other
charges (29) (53) Interest and other income, net (1) (1) $(51)
$(97) ==== ==== Year ended December 31, 2009 Cost of sales
(excludes amortization of certain acquired intangible assets) $-
$(1) Research and development (R&D) (1) (6) SG&A (31) (29)
Other charges (4) (34) --- $(36) $(70) ==== ==== Year ended
December 31, 2008 Cost of sales (excludes amortization of certain
acquired intangible assets) $- $(6) R&D (3) SG&A (20) (37)
Other charges (49) (92) Interest and other income, net (10) (10)
--- --- $(79) $(148) ==== ===== (1) Severance and other separation
costs partially offset in 2009 by the reversal of previously
accrued expenses for bonuses and stock-based compensation awards,
which will be forfeited as a result of the employees' termination.
(2) For 2008, 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 and 2008, primarily integration costs
associated with certain cost saving initiatives, (ii) from Other
charges in 2009 and 2008, loss accruals for leases principally
related to certain facilities that will not be used in our business
and (iii) from Interest and other income, net in 2008, loss accrual
on the sale of certain less significant marketed products and
related assets. (d) 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"). (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
loss accruals for settlements of certain legal proceedings. (g) To
exclude the incremental non-cash interest expense resulting from
our adoption of a new accounting standard for our convertible notes
(see (a) above). (h)To exclude the write-off of inventory resulting
from a strategic decision to change manufacturing processes. (i) To
exclude merger related expenses incurred due to the Alantos
Pharmaceutical Holding, Inc. acquisition, primarily related to
incremental costs associated with retention. (j) To reflect the tax
effect of the above adjustments for 2009, excluding certain of the
loss accruals for settlements of legal proceedings (see (f) above).
(k) To exclude the income tax benefit (expense) recognized as the
result of resolving certain transfer pricing issues with the
Internal Revenue Service ("IRS") for prior periods. (l) 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. (m) To exclude the tax benefit
principally related to certain prior period charges excluded from
"Adjusted" earnings. (n) To reflect the tax effect of the above
adjustments for 2008, excluding (i) certain of the restructuring
charges (see (c) above), (ii) certain of the loss accruals for
settlements of legal proceedings (see (f) above) and (iii) certain
components of the write-off of inventory (see (h) above). (o) 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 December 31, 2009 GAAP
"Adjusted" Income (Numerator): Net income for basic and diluted EPS
$931 $1,065 Shares (Denominator): Weighted-average shares for basic
EPS 1,006 1,006 Effect of dilutive securities 5 6 (*)
Weighted-average shares for diluted EPS 1,011 1,012 Diluted
earnings per share $0.92 $1.05 Three months ended December 31, 2008
GAAP "Adjusted" Income (Numerator): Net income for basic and
diluted EPS $925 $1,124 Shares (Denominator): Weighted-average
shares for basic EPS 1,055 1,055 Effect of dilutive securities 6 6
(*) Weighted-average shares for diluted EPS 1,061 1,061 Diluted
earnings per share $0.87 $1.06 Year ended December 31, 2009 GAAP
"Adjusted" Income (Numerator): Net income for basic and diluted EPS
$4,605 $5,014 Shares (Denominator): Weighted-average shares for
basic EPS 1,016 1,016 Effect of dilutive securities 5 5 (*)
Weighted-average shares for diluted EPS 1,021 1,021 Diluted
earnings per share $4.51 $4.91 Year ended December 31, 2008 GAAP
"Adjusted" Income (Numerator): Net income for basic and diluted EPS
$4,052 $4,885 Shares (Denominator): Weighted-average shares for
basic EPS 1,070 1,070 Effect of dilutive securities 5 4 (*)
Weighted-average shares for diluted EPS 1,075 1,074 Diluted
earnings per share $3.77 $4.55 (*) Dilutive securities used to
compute "Adjusted" diluted earnings per share for the three and
twelve months ended December 31, 2009 and 2008 were computed under
the treasury stock method assuming that we do not expense stock
options. Amgen Inc. Product Sales Detail by Product and Geographic
Region (In millions) (Unaudited) Three months ended Year ended
December 31, December 31, ------------ ------------ 2009 2008 2009
2008 ---- ---- ---- ---- Aranesp(R) - U.S. $288 $361 $1,251 $1,651
Aranesp(R) - International 360 345 1,401 1,486 EPOGEN(R) - U.S. 703
646 2,569 2,456 Neulasta(R) - U.S. 651 655 2,527 2,505 NEUPOGEN(R)
- U.S. 229 229 901 896 Neulasta(R) - International 225 193 828 813
NEUPOGEN(R) - International 97 103 387 445 Enbrel(R) - U.S. 853 858
3,283 3,389 Enbrel(R) - Canada 59 55 210 209 Sensipar(R) - U.S. 109
106 429 412 Sensipar(R) - International 62 47 222 185 Vectibix(R) -
U.S. 25 25 97 108 Vectibix(R) - International 41 21 136 45 Other
product sales - U.S. 24 20 78 43 Other product sales -
International 17 10 32 44 --- --- --- --- Total product sales
$3,743 $3,674 $14,351 $14,687 ====== ====== ======= ======= U.S.
$2,882 $2,900 $11,135 $11,460 International 861 774 3,216 3,227 ---
--- ----- ----- Total product sales $3,743 $3,674 $14,351 $14,687
====== ====== ======= ======= Amgen Inc. Condensed Consolidated
Balance Sheets - GAAP (In millions) (Unaudited) December 31,
December 31, 2009 2008 (a) ---- -------- Assets Current assets:
Cash, cash equivalents and marketable securities $13,442 $9,552
Trade receivables, net 2,109 2,073 Inventories 2,220 2,075 Other
current assets 1,161 1,521 ----- ----- Total current assets 18,932
15,221 Property, plant and equipment, net 5,738 5,879 Intangible
assets, net 2,567 2,988 Goodwill 11,335 11,339 Other assets 1,057
1,000 ----- ----- Total assets $39,629 $36,427 ======= =======
Liabilities and Stockholders' Equity Current liabilities: Accounts
payable and accrued liabilities $3,873 $3,886 Current portion of
other long-term debt - 1,000 --- ----- Total current liabilities
3,873 4,886 Convertible notes 4,512 4,257 Other long-term debt
6,089 4,095 Other non-current liabilities 2,488 2,304 Stockholders'
equity 22,667 20,885 ------ ------ Total liabilities and
stockholders' equity $39,629 $36,427 ======= ======= Shares
outstanding 995 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 a new accounting
standard, 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
----------------- "Revised" --------- Other non-current assets
$1,000 Convertible notes 4,257 Other non-current liabilities 2,304
Stockholders' equity 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 GAAP Debt
Outstanding to "Adjusted" Debt Outstanding (In billions)
(Unaudited) December 31, 2009 ----------------- Adjustments for the
accounting GAAP standard "Adjusted" ---- --------------- ----------
Total debt outstanding $10.6 $0.6 (a) $11.2 (a) To exclude the
impact of the adoption of a new accounting standard which changed
the method of accounting for our convertible notes, as discussed on
the preceding pages. Amgen Inc. Reconciliation of GAAP Earnings Per
Share Guidance to "Adjusted" Earnings Per Share Guidance for the
Year Ending December 31, 2010 (Unaudited) 2010 ---- GAAP earnings
per share (diluted) guidance $4.56 - $4.78 Known adjustments to
arrive at "Adjusted" earnings*: Amortization of acquired intangible
assets, product technology rights (a) 0.19 Incremental non-cash
interest expense (b) 0.17 Stock option expense (c) 0.07 - 0.09
Amortization of acquired intangible assets, R&D technology
rights (d) 0.04 ---- "Adjusted" earnings per share (diluted)
guidance $5.05 - $5.25 ===== === ===== * The following known
adjustments are presented net of their related tax impact of
approximately $0.27 to $0.28 per share. (a) To exclude the ongoing,
non-cash amortization of acquired product technology rights,
primarily ENBREL, related to the Immunex acquisition. (b) To
exclude the incremental non-cash interest expense resulting from
our adoption of a new accounting standard related to our
convertible debt. (c) To exclude stock option expense. (d) To
exclude the ongoing, non-cash amortization of the R&D
technology intangible assets acquired with the Abgenix and Avidia
acquisitions. Amgen Inc. Reconciliation of GAAP Tax Rate Guidance
to "Adjusted" Tax Rate Guidance for the Year Ending December 31,
2010 (Unaudited) 2010 ---- GAAP tax rate guidance 17.7% - 19.0% Tax
rate effect of known adjustments discussed above 2.0% - 2.3% ---
--- --- "Adjusted" tax rate guidance 20.0% - 21.0% ==== === ====
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)
http://www.newscom.com/cgi-bin/prnh/20081015/AMGENLOGO
http://photoarchive.ap.org/ DATASOURCE: Amgen CONTACT: media, David
Polk, +1-805-447-4613, or investors, Arvind Sood, +1-805-447-1060,
both of Amgen, Thousand Oaks Web Site: http://www.amgen.com/
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