Why is Amgen reporting non-GAAP financial measures?

Amgen reports non-GAAP financial measures to provide investors with supplementary information that they believe offers a clearer view of the company's underlying business performance. These measures exclude certain items such as stock option expenses, restructuring costs, acquisition-related amortization, and specific tax adjustments, which can fluctuate or are not directly related to ongoing operations, allowing for better period-over-period comparisons.

What types of expenses are being excluded in the non-GAAP results?

The expenses being excluded in the non-GAAP results are diverse and include: the impact of expensing stock options, costs associated with restructuring plans and cost-saving initiatives (severance, asset impairments, integration costs), amortization of acquired intangible assets from past acquisitions (Avidia, Abgenix, Immunex), accruals for legal settlements, non-cash interest expense from convertible notes, and various tax-related adjustments (income tax benefits/expenses from transfer pricing, state tax adjustments). Inventory charges and merger retention expenses are also noted for prior periods.

How should investors interpret these non-GAAP figures in relation to GAAP figures?

Investors should view non-GAAP financial measures as supplemental to, and not a substitute for, measures prepared in accordance with U.S. GAAP. Amgen believes these non-GAAP figures facilitate additional analysis by providing a view of operational profitability that excludes items they deem less reflective of core business trends or that are non-recurring. It is crucial for investors to review the reconciliations provided in the press release (Exhibit 99.1) to understand the precise differences between GAAP and non-GAAP reporting.

Does this filing provide specific earnings per share (EPS) figures?

While the filing announces the release of financial results and details the adjustments made to calculate non-GAAP earnings per share, it does not explicitly state the final EPS figures within the 8-K text itself. The detailed EPS numbers, both GAAP and non-GAAP, are contained within the press release dated October 21, 2009, which is attached as Exhibit 99.1 to this 8-K filing.

AMGN 8-K: Earnings & Results

Summary

This 8-K filing from Amgen Inc. (AMGN) on October 21, 2009, primarily serves to announce the company's unaudited financial results for the third quarter and the first nine months of 2009. The report details the company's performance in comparison to the same periods in 2008 and highlights the use of non-GAAP financial measures. Amgen emphasizes that these non-GAAP measures are intended to provide supplementary insights to investors and facilitate a clearer understanding of underlying business performance by excluding certain items like stock option expenses, restructuring costs, acquisition-related amortization, legal accruals, and specific tax adjustments. Investors should note the significant adjustments made to GAAP figures, which are extensively detailed. These adjustments aim to present a more consistent view of operational profitability, particularly concerning the impact of past acquisitions, ongoing restructuring efforts, and legal settlements. The company explicitly states its belief that these non-GAAP metrics offer valuable context for evaluating trends and comparing performance across different periods, especially as the company navigates these significant corporate activities.

Key Highlights

1Amgen Inc. reported its unaudited financial results for the three and nine months ended September 30, 2009.
2The company utilized and disclosed non-GAAP financial measures, presenting them as supplementary information to U.S. GAAP.
3Key adjustments to GAAP figures include the exclusion of stock option expensing, restructuring charges, acquisition-related amortization (Avidia, Abgenix, Immunex), legal accruals, and specific tax impacts.
4The non-GAAP measures are intended to provide investors with a clearer view of ongoing operational performance by removing the impact of certain non-recurring or non-cash items.
5The report details adjustments made to Cost of Sales, R&D expense, SG&A expense, Interest Expense, and diluted shares for both 2009 and 2008 periods.
6A non-GAAP measure for total outstanding debt was also reported, excluding the impact of a new accounting standard for convertible debt.
7The press release, filed as Exhibit 99.1, contains the full details of these financial results and non-GAAP reconciliations.

AMGEN INC 8-K Report, Financial Results (Oct 21, 2009)

Summary

Key Highlights

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