What are Non-GAAP Financial Measures?

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Amgen is a biotechnology firm that develops and manufactures human therapeutics that fight cancer, kidney disease, rheumatoid arthritis and other serious illnesses. As part of its 2008 financial report, the Company issued non-GAAP financial measures to facilitate additional analysis by investors.

QUESTIONS:

  • In one paragraph, briefly describe non-GAAP financial measures and how they differ from GAAP.
  • Does the SEC allow non-GAAP financial measures?
  • What non-GAAP financial measures did Amgen report? Explain some of specific issues they addressed in this supplemental information.

SOURCES:

PR Newswire. (2009). Amgen’s Fourth Quarter 2008 Adjusted Earnings Per Share Increased 6 Percent to $1.06; Full Year 2008 Adjusted Earnings Per Share, Fierce BioTech (Retrievable online at http://www.fiercebiotech.com/press-releases/amgens-fourth-quarter-2008-adjusted-earnings-share-increased-6-percent-1-06-full-year#ixzz0Yk4GRVCZ)

U.S. Securities and Exchange Commission. (2002). Final Rule: Conditions for Use of Non-GAAP Financial Measures, Release No. 33-8176; 34-47226; FR-65; FILE NO. S7-43-02 (Retrievable online at http://www.sec.gov/rules/final/33-8176.htm)