10-QPeriod: Q1 FY2012

AMGEN INC Quarterly Report for Q1 Ended Mar 31, 2012

Filed May 8, 2012For Securities:AMGN

Summary

Amgen Inc. reported solid financial results for the first quarter of 2012, demonstrating revenue growth and improved profitability. Total revenues increased by 9% year-over-year to $4.05 billion, driven by an 8% rise in product sales, primarily from key products like Neulasta®/NEUPOGEN® and ENBREL®. Operating income saw a significant 14% increase, leading to a 5% rise in net income to $1.18 billion. Diluted Earnings Per Share (EPS) also showed strong growth, increasing by 23% to $1.48, largely due to the company's effective stock repurchase program which reduced the share count. Strategically, Amgen made a significant move by acquiring Micromet, Inc. in March 2012 to bolster its oncology pipeline, and also entered into a key collaboration with AstraZeneca for the development of monoclonal antibodies in inflammation. While the company faces ongoing challenges such as the decline in sales for its erythropoiesis-stimulating agents (ESAs) like Aranesp® and EPOGEN®, and the increasing cost of sales due to the Puerto Rico excise tax, the overall performance indicates a resilient business with a focused approach on strategic growth and innovation.

Financial Highlights

53 data points
Beta

Revenue

$4.05B

77.8% Gross Margin

Net Income

$1.18B

29.2% Net Margin

EPS (Diluted)

$1.48

Total Assets

$49.25B

Cash & Equivalents

$4.21B

Free Cash Flow

$828.00M

Financial Statements
Beta
Revenue$4.05B
Cost of Revenue$750.00M
Gross Profit$3.15B
SG&A Expenses$1.08B
Operating Expenses$2.57B
Operating Income$1.48B
Interest Expense$235.00M
Net Income$1.18B
EPS (Basic)$1.50
EPS (Diluted)$1.48
Shares Outstanding (Basic)791.00M
Shares Outstanding (Diluted)800.00M

Key Highlights

  • 1Total revenues increased 9% to $4.05 billion, with product sales up 8% to $3.90 billion.
  • 2Operating income grew 14% to $1.48 billion, demonstrating operational efficiency.
  • 3Net income rose 5% to $1.18 billion, resulting in diluted EPS of $1.48, a 23% increase.
  • 4Acquisition of Micromet, Inc. in March 2012 for $1.15 billion, aimed at strengthening the oncology pipeline.
  • 5Collaboration agreement with AstraZeneca Plc. for the joint development and commercialization of monoclonal antibodies in inflammation.
  • 6Significant stock repurchases totaling $1.4 billion in the quarter, contributing to the strong EPS growth.
  • 7Declines noted in Aranesp® and EPOGEN® sales, impacted by market and reimbursement changes, and the introduction of new competition for EPOGEN®.

Frequently Asked Questions

Revenue growth was primarily driven by an 8% increase in product sales, totaling $3.90 billion. Key products like Neulasta®/NEUPOGEN® and ENBREL® showed solid performance, contributing to the overall increase. Other revenues also saw a significant jump of 67% due to milestone payments from collaborations and a marketing approval in Japan.

Amgen acquired Micromet, Inc. for $1.15 billion in cash. This acquisition is expected to expand Amgen's oncology pipeline. The transaction resulted in an increase in goodwill by $368 million and intangible assets, including $440 million for in-process research and development (IPR&D) related to blinatumomab.

The Puerto Rico excise tax, which commenced in January 2011, is treated as a manufacturing cost. For the three months ended March 31, 2012, it increased cost of sales by $81 million. However, it also generated significant foreign tax credits, decreasing the provision for income taxes by $87 million. This tax has a significant adverse impact on cost of sales and a favorable impact on income taxes, leading to variability in the effective tax rate.

Amgen is committed to returning capital to stockholders through share repurchases and cash dividends. In the first quarter of 2012, the company repurchased $1.4 billion of its common stock and paid a quarterly dividend of $0.36 per share. A substantial amount, $3.6 billion, remained available under its stock repurchase program.