UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37702

Amgen Inc.

(Exact name of registrant as specified in its charter)

Delaware	95-3540776
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Amgen Center Drive	91320-1799
Thousand Oaks
California
(Address of principal executive offices)	(Zip Code)

(805) 447-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value	AMGN	The Nasdaq Stock Market LLC
2.00% Senior Notes due 2026	AMGN26	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☑	Accelerated filer	☐	Non-accelerated filer	☐
Smaller reporting company	☐	Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

Yes ☐ No ☑

As of August 1, 2022, the registrant had 534,930,850 shares of common stock, $0.0001 par value, outstanding.

AMGEN INC.

INDEX

		Page No.
	DEFINED TERMS AND PRODUCTS	ii
PART I - FINANCIAL INFORMATION		1
Item 1.	FINANCIAL STATEMENTS	1
	CONDENSED CONSOLIDATED STATEMENTS OF INCOME	1
	CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME	2
	CONDENSED CONSOLIDATED BALANCE SHEETS	3
	CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY	4
	CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS	6
	NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS	7
Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	29
Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41
Item 4.	CONTROLS AND PROCEDURES	42
PART II - OTHER INFORMATION		43
Item 1.	LEGAL PROCEEDINGS	43
Item 1A.	RISK FACTORS	43
Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	49
Item 6.	EXHIBITS	50
INDEX TO EXHIBITS		51
SIGNATURES		57

i

Defined Terms and Products

Defined terms

We use several terms in this Form 10-Q, including but not limited to those that are finance, regulation and disease-state related as well as names of other companies, which are given below.

Term	Description
2017 Tax Act	Tax Cuts and Jobs Act of 2017
ANDA	Abbreviated New Drug Application
AOCI	accumulated other comprehensive income (loss)
ASR	accelerated share repurchase
BeiGene	BeiGene, Ltd.
Bergamo	Laboratorio Quimico Farmaceutico Bergamo Ltda
ChemoCentryx	ChemoCentryx, Inc.
CMS	Centers for Medicare & Medicaid Services
COVID-19	coronavirus disease 2019
Eczacıbaşı	EIS Eczacıbaşı İlaç, Sınai ve Finansal Yatırımlar Sanayi ve Ticaret A.Ş.
EMA	European Medicines Agency
EPS	earnings per share
FASB	Financial Accounting Standards Board
FDA	U.S. Food and Drug Administration
Fitch	Fitch Ratings, Inc.
Five Prime	Five Prime Therapeutics, Inc.
FTC	Federal Trade Commission
GAAP	U.S. generally accepted accounting principles
Gensenta	Gensenta İlaç Sanayi ve Ticaret A.Ş.
HHS	U.S. Department of Health & Human Services
IPR&D	in-process research and development
IRP	international reference pricing
IRS	Internal Revenue Service
LIBOR	London Interbank Offered Rate
Lp(a)	lipoprotein(a)
MD&A	management’s discussion and analysis
MFN	most-favored nation
Moody’s	Moody’s Investors Service, Inc.
Neumora	Neumora Therapeutics, Inc.
OECD	Organisation for Economic Co-operation and Development
PBM	pharmacy benefit manager
PTAB	Patent Trial and Appeal Board
R&D	research and development
RAR	Revenue Agent Report
ROW	rest of world
S&P	Standard & Poor’s Financial Services LLC
SEC	U.S. Securities and Exchange Commission
SG&A	selling, general and administrative
Teneobio	Teneobio, Inc.
U.S. Treasury	U.S. Department of Treasury
USPTO	U.S. Patent and Trademark Office
UTB	unrecognized tax benefit

ii

Products

The brand names of our products, our delivery devices and certain of our product candidates and their associated generic names are given below.

Term	Description
Aimovig	Aimovig® (erenumab-aooe)
AMGEVITA	AMGEVITA™ (adalimumab)
Aranesp	Aranesp® (darbepoetin alfa)
AVSOLA	AVSOLA® (infliximab-axxq)
BLINCYTO	BLINCYTO® (blinatumomab)
Corlanor	Corlanor® (ivabradine)
ENBREL	Enbrel® (etanercept)
EPOGEN	EPOGEN® (epoetin alfa)
EVENITY	EVENITY® (romosozumab-aqqg)
IMLYGIC	IMLYGIC® (talimogene laherparepvec)
KANJINTI	KANJINTI® (trastuzumab-anns)
KYPROLIS	KYPROLIS® (carfilzomib)
LUMAKRAS/LUMYKRAS	LUMAKRAS® / LUMYKRAS™ (sotorasib)
MVASI	MVASI® (bevacizumab-awwb)
Neulasta	Neulasta® (pegfilgrastim)
NEUPOGEN	NEUPOGEN® (filgrastim)
Nplate	Nplate® (romiplostim)
Olpasiran	Olpasiran (formerly AMG 890)
Onpro	Onpro®
Otezla	Otezla® (apremilast)
Parsabiv	Parsabiv® (etelcalcetide)
Prolia	Prolia® (denosumab)
Repatha	Repatha® (evolocumab)
RIABNI	RIABNI™ (rituximab-arrx)
Sensipar/Mimpara	Sensipar®/Mimpara™ (cinacalcet)
TEZSPIRE	TEZSPIRE® (tezepelumab-ekko)
Vectibix	Vectibix® (panitumumab)
XGEVA	XGEVA® (denosumab)

iii

PART I — FINANCIAL INFORMATION 

Item 1. FINANCIAL STATEMENTS

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per-share data)

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Revenues:
Product sales	$	6,281	$	6,114	$	12,012	$	11,706
Other revenues	313		412		820		721
Total revenues	6,594		6,526		12,832		12,427
Operating expenses:
Cost of sales	1,510		1,637		3,071		3,127
Research and development	1,039		1,082		1,998		2,049
Acquired in-process research and development	—		1,505		—		1,505
Selling, general and administrative	1,327		1,384		2,555		2,638
Other	542		90		532		151
Total operating expenses	4,418		5,698		8,156		9,470
Operating income	2,176		828		4,676		2,957
Other income (expense):
Interest expense, net	(328)		(281)		(623)		(566)
Other (expense) income, net	(317)		11		(847)		24
Income before income taxes	1,531		558		3,206		2,415
Provision for income taxes	214		94		413		305
Net income	$	1,317	$	464	$	2,793	$	2,110
Earnings per share:
Basic	$	2.46	$	0.81	$	5.16	$	3.67
Diluted	$	2.45	$	0.81	$	5.13	$	3.65
Shares used in calculation of earnings per share:
Basic	535		573		541		575
Diluted	537		576		544		578

See accompanying notes.

1

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net income	$	1,317	$	464	$	2,793	$	2,110
Other comprehensive income (loss), net of reclassification adjustments and taxes:
Foreign currency translation	(65)		14		(116)		(25)
Cash flow hedges	156		(48)		240		142
Other	—		(1)		—		—
Other comprehensive income (loss), net of reclassification adjustments and taxes	91		(35)		124		117
Comprehensive income	$	1,408	$	429	$	2,917	$	2,227

See accompanying notes.

2

AMGEN INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except per-share data)

	June 30, 2022		December 31, 2021
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	5,203	$	7,989
Marketable securities	1,980		48
Trade receivables, net	5,327		4,895
Inventories	4,554		4,086
Other current assets	2,258		2,367
Total current assets	19,322		19,385
Property, plant and equipment, net	5,158		5,184
Intangible assets, net	13,927		15,182
Goodwill	14,865		14,890
Other noncurrent assets	6,022		6,524
Total assets	$	59,294	$	61,165
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,256	$	1,366
Accrued liabilities	10,545		10,731
Current portion of long-term debt	817		87
Total current liabilities	12,618		12,184
Long-term debt	35,705		33,222
Long-term tax liabilities	5,603		6,594
Other noncurrent liabilities	2,949		2,465
Contingencies and commitments
Stockholders’ equity:
Common stock and additional paid-in capital; $0.0001 par value; 2,750.0 shares authorized; outstanding—534.9 shares in 2022 and 558.3 shares in 2021	31,343		32,096
Accumulated deficit	(28,252)		(24,600)
Accumulated other comprehensive loss	(672)		(796)
Total stockholders’ equity	2,419		6,700
Total liabilities and stockholders’ equity	$	59,294	$	61,165

See accompanying notes.

3

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions, except per-share data)

(Unaudited)

	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2021	558.3	$	32,096	$	(24,600)	$	(796)	$	6,700
Net income	—	—		1,476		—		1,476
Other comprehensive income, net of taxes	—	—		—		33		33
Dividends declared on common stock ($1.94 per share)	—	—		(1,034)		—		(1,034)
Issuance of common stock in connection with the Company’s equity award programs	0.5	18		—		—		18
Stock-based compensation expense	—	78		—		—		78
Tax impact related to employee stock-based compensation expense	—	(45)		—		—		(45)
Repurchases of common stock (Note 10)	(24.6)	(900)		(5,410)		—		(6,310)
Balance as of March 31, 2022	534.2	31,247		(29,568)		(763)		916
Net income	—	—		1,317		—		1,317
Other comprehensive income, net of taxes	—	—		—		91		91
Issuance of common stock in connection with the Company’s equity award programs	0.7	45		—		—		45
Stock-based compensation expense	—	120		—		—		120
Tax impact related to employee stock-based compensation expense	—	(69)		—		—		(69)
Other	—	—		(1)		—		(1)
Balance as of June 30, 2022	534.9	$	31,343	$	(28,252)	$	(672)	$	2,419

4

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (continued)

(In millions, except per-share data)

(Unaudited)

	Number of shares of common stock	Common stock and additional paid-in capital		Accumulated deficit		Accumulated other comprehensive loss		Total
Balance as of December 31, 2020	578.3	$	31,802	$	(21,408)	$	(985)	$	9,409
Net income	—	—		1,646		—		1,646
Other comprehensive income, net of taxes	—	—		—		152		152
Dividends declared on common stock ($1.76 per share)	—	—		(1,012)		—		(1,012)
Issuance of common stock in connection with the Company’s equity award programs	0.7	6		—		—		6
Stock-based compensation expense	—	57		—		—		57
Tax impact related to employee stock-based compensation expense	—	(59)		—		—		(59)
Repurchases of common stock	(3.7)	—		(865)		—		(865)
Balance as of March 31, 2021	575.3	31,806		(21,639)		(833)		9,334
Net income	—	—		464		—		464
Other comprehensive loss, net of taxes	—	—		—		(35)		(35)
Issuance of common stock in connection with the Company’s equity award programs	0.8	47		—		—		47
Stock-based compensation expense	—	100		—		—		100
Tax impact related to employee stock-based compensation expense	—	(76)		—		—		(76)
Repurchases of common stock	(6.5)	—		(1,592)		—		(1,592)
Other	—	—		5		—		5
Balance as of June 30, 2021	569.6	$	31,877	$	(22,762)	$	(868)	$	8,247

See accompanying notes.

5

AMGEN INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

	Six months ended June 30,
	2022		2021
Cash flows from operating activities:
Net income	$	2,793	$	2,110
Depreciation, amortization and other	1,669		1,696
Deferred income taxes	(514)		(137)
Acquired in-process research and development	—		1,505
Adjustments for equity method investments	497		(36)
Loss on divestiture	560		—
Other items, net	436		206
Changes in operating assets and liabilities, net of acquisitions:
Trade receivables, net	(504)		35
Inventories	(410)		(167)
Other assets	198		(258)
Accounts payable	(98)		(156)
Accrued income taxes, net	(685)		(930)
Long-term tax liabilities	108		47
Other liabilities	44		120
Net cash provided by operating activities	4,094		4,035
Cash flows from investing activities:
Purchases of marketable securities	(1,976)		(8,000)
Proceeds from sales of marketable securities	—		4,404
Proceeds from maturities of marketable securities	47		6,528
Purchases of property, plant and equipment	(436)		(351)
Cash paid for acquisitions, net of cash acquired	—		(1,626)
Other	61		(65)
Net cash (used in) provided by investing activities	(2,304)		890
Cash flows from financing activities:
Net proceeds from issuance of debt	3,954		—
Repurchases of common stock (Note 10)	(6,360)		(2,452)
Dividends paid	(2,118)		(2,024)
Other	(52)		(85)
Net cash used in financing activities	(4,576)		(4,561)
(Decrease) increase in cash and cash equivalents	(2,786)		364
Cash and cash equivalents at beginning of period	7,989		6,266
Cash and cash equivalents at end of period	$	5,203	$	6,630

See accompanying notes.

6

AMGEN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

(Unaudited)

1. Summary of significant accounting policies

Business

Amgen Inc. (including its subsidiaries, referred to as “Amgen,” “the Company,” “we,” “our” or “us”) is a global biotechnology pioneer that discovers, develops, manufactures and delivers innovative human therapeutics. We operate in one business segment: human therapeutics.

Basis of presentation

The financial information for the three and six months ended June 30, 2022 and 2021, is unaudited but includes all adjustments (consisting of only normal, recurring adjustments unless otherwise indicated), which Amgen considers necessary for a fair presentation of its condensed consolidated results of operations for those periods. Interim results are not necessarily indicative of results for the full fiscal year.

The condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021, and with our condensed consolidated financial statements and the notes thereto contained in our Quarterly Report on Form 10-Q for the period ended March 31, 2022.

Principles of consolidation

The condensed consolidated financial statements include the accounts of Amgen as well as its majority-owned subsidiaries. In determining whether we are the primary beneficiary of a variable interest entity, we consider whether we have both the power to direct activities of the entity that most significantly impact the entity’s economic performance and the obligation to absorb losses of or the right to receive benefits from the entity that could potentially be significant to that entity. We do not have any significant interests in any variable interest entities of which we are the primary beneficiary. All material intercompany transactions and balances have been eliminated in consolidation.

Use of estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates.

Property, plant and equipment, net

Property, plant and equipment is recorded at historical cost, net of accumulated depreciation and amortization, of $9.0 billion and $8.8 billion as of June 30, 2022 and December 31, 2021, respectively.

Recent accounting pronouncements

In March 2020, the FASB issued a new accounting standard to ease the financial reporting burdens caused by the expected market transition from LIBOR and other interbank offered rates to alternative reference rates, commonly referred to as reference rate reform. The new standard provides temporary optional expedients and exceptions to current GAAP guidance on contract modifications and hedge accounting. Specifically, a modification to transition to an alternative reference rate is treated as an event that does not require contract remeasurement or reassessment of a previous accounting treatment. Moreover, for all types of hedging relationships, an entity is permitted to change the reference rate without having to dedesignate the hedging relationship. The standard is generally effective for all contract modifications made and hedging relationships evaluated through December 31, 2022. In January 2021, the FASB issued a new accounting standard that expanded the scope of the original March 2020 standard to include derivative instruments on discounting transactions. We do not expect the two standards to have a material impact on our condensed consolidated financial statements.

7

In November 2021, the FASB issued a new accounting standard around the recognition and measurement of contract assets and contract liabilities from revenue contracts with customers acquired in a business combination. The new standard clarifies that contract assets and contract liabilities acquired in a business combination from an acquiree should initially be recognized by applying revenue recognition principles and not at fair value. The standard is effective for interim and annual periods beginning on January 1, 2023, and early adoption is permitted. The impact of this standard will depend on the facts and circumstances of future transactions.

2. Acquisitions and divestitures

Acquisition of Teneobio, Inc.

On October 19, 2021, we acquired all of the outstanding stock of Teneobio, a privately held, clinical-stage biotechnology company developing a new class of biologics called human heavy-chain antibodies, which are single-chain antibodies composed of the human heavy-chain domain. The transaction, which was accounted for as a business combination, includes Teneobio’s proprietary bispecific and multispecific antibody technologies, which complement Amgen’s existing antibody capabilities and bispecific T-cell engager (BiTE®) platform and will enable significant acceleration and efficiency in the discovery and development of new molecules to treat diseases across Amgen’s core therapeutic areas. Upon its acquisition, Teneobio became a wholly owned subsidiary of Amgen, and its operations have been included in our condensed consolidated financial statements commencing on the acquisition date.

Measurement period adjustments for the six months ended June 30, 2022, included changes to the purchase price allocation and total consideration, resulting in a net increase of $22 million to goodwill. The measurement period adjustments resulted primarily from valuation inputs pertaining to certain acquired assets based on facts and circumstances that existed as of the acquisition date and did not result from events subsequent to the acquisition date. These adjustments did not have a significant impact on Amgen’s results of operations during the six months ended June 30, 2022, and would not have had a significant impact on prior-period results if these adjustments had been made as of the acquisition date. The following table summarizes the total consideration and allocated acquisition date fair values of assets acquired and liabilities assumed, inclusive of measurement period adjustments (in millions):

	Amounts
Cash purchase price	$	993
Contingent consideration	299
Total consideration	$	1,292
Cash and cash equivalents	$	100
In-process research and development	991
Finite-lived intangible asset – research and development technology rights	115
Finite-lived intangible assets – licensing rights	41
Goodwill	273
Other assets, net	16
Deferred tax liability	(244)
Total assets acquired, net	$	1,292

Consideration for this transaction comprised (i) an upfront cash payment of $993 million, which included a working-capital adjustment, and (ii) future contingent milestone payments to Teneobio’s former equity holders of up to $1.6 billion in cash, based on the achievement of various development and regulatory milestones with regard to the leading asset (AMG 340, formerly TNB-585) and to various development milestones for other drug candidates. The estimated fair values of the contingent consideration obligations aggregated $299 million as of the acquisition date and were determined using a probability-weighted expected return methodology. The assumptions in this method include the probability of achieving the milestones and the expected payment dates, with such amounts discounted to present value based on our pretax cost of debt. See Note 11, Fair value measurement, for information regarding the estimated fair value of these obligations as of June 30, 2022.

8

The estimated fair values of acquired IPR&D assets totaled $991 million, of which $784 million relates to AMG 340, that is in a phase 1 clinical trial for the treatment of metastatic castration-resistant prostate cancer (mCRPC), and the balance relates to four separate preclinical oncology programs. The R&D technology rights of $115 million relate to Teneobio’s proprietary bispecific and multispecific antibody technologies; the amount is being amortized over 10 years by using the straight-line method. Teneobio has also licensed its technology and certain identified targets to various third parties, representing contractual agreements valued at $41 million. The estimated fair values for these intangible assets were determined using a multi-period excess earnings income approach that discounts expected future cash flows to present value by applying a discount rate that represents the estimated rate that market participants would use to value the intangible assets. The projected cash flows were based on certain assumptions attributable to the respective intangible asset, including estimates of future revenues and expenses, the time and resources needed to complete development and the probabilities of obtaining marketing approval from the FDA and other regulatory agencies.

A deferred tax liability of $244 million was recognized on temporary differences related to the book bases and tax bases of the acquired identifiable assets and assumed liabilities, primarily driven by the intangible assets acquired.

The excess of the acquisition date consideration over the fair values assigned to the assets acquired and the liabilities assumed of $273 million was recorded as goodwill, which is not deductible for tax purposes. The goodwill value represents expected synergies from both AMG 340 and the technologies acquired.

Our accounting for this acquisition is preliminary and will be finalized upon completion of our analysis of certain tax-related items as we obtain additional information during the measurement period of up to one year from the acquisition date.

Acquisition of Five Prime Therapeutics, Inc.

On April 16, 2021, Amgen completed its acquisition of Five Prime for a total cash consideration of $1.6 billion, net of cash acquired. The purchase price was funded with cash on hand. This transaction was accounted for as an asset acquisition because substantially all the value of the assets acquired was concentrated in the intellectual property rights of bemarituzumab, a phase 3 trial-ready, first-in-class program for gastric cancer. Five Prime’s operations have been included in our condensed consolidated financial statements commencing after the acquisition date.

We allocated the consideration to acquire Five Prime to: the bemarituzumab IPR&D program of $1.5 billion, which was expensed immediately in Acquired IPR&D expense in the Condensed Consolidated Statements of Income; deferred tax assets of $177 million; and other net liabilities of $47 million. The Acquired IPR&D expense was not tax deductible.

Divestiture of Gensenta İlaç Sanayi ve Ticaret A.Ş.

On June 28, 2022, we entered into a share purchase agreement with Eczacıbaşı under which Eczacıbaşı will acquire all of our shares in Gensenta—a subsidiary in Turkey. Net assets related to Gensenta of $80 million met the criteria to be classified as held-for-sale and did not meet the criteria to be classified as discontinued operations. Upon closing of the transaction, we expect to receive $135 million in cash. The transaction is expected to close in the third quarter of 2022 upon approval by the Turkish Competition Authority.

As of June 30, 2022, held-for-sale assets and liabilities of $100 million and $20 million were included in Other current assets and Accrued liabilities, respectively, in the Condensed Consolidated Balance Sheets. During the three months ended June 30, 2022, we recognized a loss of $560 million recorded to Other operating expenses in the Condensed Consolidated Statements of Income, primarily due to the impact of the cumulative foreign currency translation loss, with valuation allowances to Other current assets and Accrued liabilities in the Condensed Consolidated Balance Sheets.

9

3. Revenues

We operate in one business segment: human therapeutics. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting, consistent with internal management reporting. Revenues by product and by geographic area, based on customers’ locations, are presented below. The majority of ROW revenues relates to products sold in Europe.

Revenues were as follows (in millions):

	Three months ended June 30,
	2022						2021
	U.S.		ROW		Total		U.S.		ROW		Total
ENBREL	$	1,036	$	15	$	1,051	$	1,113	$	31	$	1,144
Prolia	611		311		922		538		276		814
Otezla	487		107		594		423		111		534
XGEVA	391		142		533		355		133		488
Aranesp	132		225		357		135		232		367
Neulasta	263		47		310		434		52		486
Repatha	154		171		325		143		143		286
KYPROLIS	213		104		317		190		90		280
Nplate	156		128		284		136		109		245
Other products	1,003		585		1,588		907		563		1,470
Total product sales(1)	$	4,446	$	1,835	6,281		$	4,374	$	1,740	6,114
Other revenues					313						412
Total revenues					$	6,594					$	6,526
	Six months ended June 30,
	2022						2021
	U.S.		ROW		Total		U.S.		ROW		Total
ENBREL	$	1,879	$	34	$	1,913	$	2,007	$	61	$	2,068
Prolia	1,193		581		1,774		1,039		533		1,572
Otezla	837		208		1,045		789		221		1,010
XGEVA	759		276		1,035		689		267		956
Aranesp	269		446		715		260		462		722
Neulasta	567		91		658		855		113		968
Repatha	319		335		654		282		290		572
KYPROLIS	409		195		604		349		182		531
Nplate	312		238		550		248		224		472
Other products	1,939		1,125		3,064		1,759		1,076		2,835
Total product sales(1)	$	8,483	$	3,529	12,012		$	8,277	$	3,429	11,706
Other revenues					820						721
Total revenues					$	12,832					$	12,427

____________

(1)    Hedging gains and losses, which are included in product sales, were not material for the three and six months ended June 30, 2022 and 2021.

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4. Income taxes

The effective tax rates for the three and six months ended June 30, 2022, were 14.0% and 12.9%, respectively, compared with 16.8% and 12.6%, respectively, for the corresponding periods of the prior year.

The decrease in our effective tax rate for the three months ended June 30, 2022, was primarily due to the prior year nondeductible IPR&D expense arising from the acquisition of Five Prime, partially offset by current year unfavorable items including a loss on a nonstrategic divestiture. The increase in our effective tax rate for the six months ended June 30, 2022, was primarily due to current year unfavorable items compared to last year including a loss on a nonstrategic divestiture, partially offset by the prior year nondeductible IPR&D expense arising from the acquisition of Five Prime and changes in earnings mix. The effective tax rates differ from the federal statutory rate primarily as a result of foreign earnings from the Company’s operations conducted in Puerto Rico, a territory of the United States treated as a foreign jurisdiction for U.S. tax purposes, that are currently subject to a tax incentive grant through 2035. In addition, the Company’s operations conducted in Singapore are subject to a tax incentive grant through 2034. These foreign earnings are also subject to U.S. tax at a reduced rate of 10.5%. See Note 2, Acquisitions and divestitures.

The U.S. territory of Puerto Rico imposes a 4% excise tax on the gross intercompany purchase price of goods and services from our manufacturer in Puerto Rico. We account for the excise tax as a manufacturing cost that is capitalized in Inventories and expensed in Cost of sales when the related products are sold. For U.S. income tax purposes, in 2022, the excise tax results in foreign tax credits that are generally recognized in our provision for income taxes when the excise tax is incurred.

One or more of our legal entities file income tax returns in the U.S. federal jurisdiction, various U.S. state jurisdictions and certain foreign jurisdictions. Our income tax returns are routinely examined by tax authorities in those jurisdictions. Significant disputes can and have arisen with tax authorities involving issues regarding the timing and amount of deductions, the use of tax credits and allocations of income and expenses among various tax jurisdictions because of differing interpretations of tax laws, regulations and relevant facts. Tax authorities, including the IRS, are becoming more aggressive and are particularly focused on such matters.

In 2017, we received an RAR and a modified RAR from the IRS for the years 2010–2012, proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2021, we filed a petition in the U.S. Tax Court to contest two duplicate Statutory Notices of Deficiency (Notices) for the years 2010–2012 that we received in May and July 2021, which seek to increase our U.S. taxable income for the years 2010–2012 by an amount that would result in additional federal tax of approximately $3.6 billion plus interest. Any additional tax that could be imposed for the years 2010–2012 would be reduced by up to approximately $900 million of repatriation tax previously accrued on our foreign earnings.

In 2020, we received an RAR and a modified RAR from the IRS for the years 2013–2015, also proposing significant adjustments that primarily relate to the allocation of profits between certain of our entities in the United States and the U.S. territory of Puerto Rico similar to those proposed for the years 2010–2012. We disagreed with the proposed adjustments and calculations and pursued resolution with the IRS appeals office but were unable to reach resolution. In July 2022, we filed a petition in the U.S. Tax Court to contest a Notice for the years 2013–2015 that we previously reported receiving in April 2022 that seeks to increase our U.S. taxable income for the years 2013–2015 by an amount that would result in additional federal tax of approximately $5.1 billion, plus interest. In addition, the Notice asserts penalties of approximately $2.0 billion. Any additional tax that could be imposed for the years 2013–2015 would be reduced by up to approximately $2.2 billion of repatriation tax previously accrued on our foreign earnings.

We firmly believe that the IRS positions set forth in the 2010–2012 and 2013–2015 Notices are without merit. We are contesting the 2010–2012 and 2013–2015 Notices through the judicial process, and we will seek consolidation of the two periods into one case in the U.S. Tax Court.

We are currently under examination by the IRS for the years 2016–2018 with respect to issues similar to those for the 2010 through 2015 period. In addition, we have examinations by a number of state and foreign tax jurisdictions.

Final resolution of these complex matters is not likely within the next 12 months. We believe our accrual for income tax liabilities is appropriate based on past experience, interpretations of tax law, application of the tax law to our facts and judgments about potential actions by tax authorities; however, due to the complexity of the provision for income taxes and uncertain resolution of these matters, the ultimate outcome of any tax matters may result in payments substantially greater than amounts accrued and could have a material adverse impact on our condensed consolidated financial statements.

We are no longer subject to U.S. federal income tax examinations for years ended on or before December 31, 2009.

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See Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations, Income Taxes, for further discussion and Part II, Item 1A, Risk Factors—The adoption and interpretation of new tax legislation or exposure to additional tax liabilities could affect our profitability.

During the three and six months ended June 30, 2022, the gross amounts of our UTBs increased by $50 million and $95 million, respectively, as a result of tax positions taken during the current year. Substantially all of the UTBs as of June 30, 2022, if recognized, would affect our effective tax rate.

5. Earnings per share

The computation of basic EPS is based on the weighted-average number of our common shares outstanding. The computation of diluted EPS is based on the weighted-average number of our common shares outstanding and dilutive potential common shares, which pr