EXHIBIT 99.2
GENENTECH, INC. |
CONSOLIDATED STATEMENTS OF INCOME |
(In millions, except per share amounts) |
(Unaudited) |
Three Months | Six Months | ||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Revenues: | |||||||||||||
Product sales | $ | 1,810 | $ | 1,274 | $ | 3,454 | $ | 2,460 | |||||
Royalties | 316 | 200 | 602 | 432 | |||||||||
Contract revenue | 73 | 53 | 129 | 96 | |||||||||
Total operating revenues | 2,199 | 1,527 | 4,185 | 2,988 | |||||||||
Costs and expenses: | |||||||||||||
Cost of sales | 284 | 274 | 546 | 530 | |||||||||
Research and development (includes employee stock-based compensation expense under FAS 123R: three months-2006-$34; 2005-$0; six months-2006-$67; 2005-$0) | 390 | 278 | 764 | 521 | |||||||||
Marketing, general and administrative (includes employee stock-based compensation expense under FAS 123R: three months-2006-$41; 2005-$0; six months-2006-$82; 2005-$0) | 471 | 352 | 912 | 663 | |||||||||
Collaboration profit sharing | 259 | 199 | 485 | 375 | |||||||||
Recurring charges related to redemption | 26 | 34 | 52 | 69 | |||||||||
Special items: litigation-related | 14 | 20 | 27 | 31 | |||||||||
Total costs and expenses | 1,444 | 1,157 | 2,786 | 2,189 | |||||||||
Operating income | 755 | 370 | 1,399 | 799 | |||||||||
Other income (expense): | |||||||||||||
Interest and other income, net(1) | 121 | 35 | 174 | 55 | |||||||||
Interest expense | (18 | ) | (4 | ) | (37 | ) | (7 | ) | |||||
Total other income, net | 103 | 31 | 137 | 48 | |||||||||
Income before taxes | 858 | 401 | 1,536 | 847 | |||||||||
Income tax provision | 327 | 105 | 584 | 267 | |||||||||
Net income | $ | 531 | $ | 296 | $ | 952 | $ | 580 | |||||
Earnings per share: | |||||||||||||
Basic | $ | 0.50 | $ | 0.28 | $ | 0.90 | $ | 0.55 | |||||
Diluted | $ | 0.49 | $ | 0.27 | $ | 0.89 | $ | 0.54 | |||||
Weighted average shares used to compute earnings per share: | |||||||||||||
Basic | 1,053 | 1,058 | 1,054 | 1,052 | |||||||||
Diluted | 1,073 | 1,084 | 1,074 | 1,077 |
The values shown above are exact, which may lead to the appearance of rounding errors. | ||||||||
(1) | “Interest and other income, net” includes interest income, net realized gains from the sale of certain biotechnology equity securities and write-downs for other-than-temporary impairments in the fair value of certain biotechnology debt and equity securities. For further detail, refer to our web site at www.gene.com. | |||||||
Net income in the three and six months ended June 30, 2006 includes employee stock-based compensation expense of $47 million and $95 million, net of tax, respectively, due to our adoption of Statement of Financial Accounting Standards No. 123® (or “FAS 123R”) on a modified prospective basis on January 1, 2006. No employee stock-based compensation expense was recognized in GAAP-reported amounts in any period prior to January 1, 2006. Based on the pro forma application of FAS 123 for the calculation of employee stock-based compensation prior to January 1, 2006 (as previously disclosed in our financial statement footnotes of our Form 10-Q for the quarter ended June 30, 2005), pro forma employee stock-based compensation expense in the second quarter of 2005 was $41 million, net of tax, (or $0.04 per diluted share), and the resulting pro forma GAAP net income was $255 million (or $0.23 per diluted share), and pro forma employee stock-based compensation expense in the six months ended June 30, 2005 was $81 million, net of tax, (or $0.09 per diluted share), and the resulting net income was $499 million (or $0.45 per diluted share). |
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GENENTECH, INC. |
SELECTED CONSOLIDATED FINANCIAL DATA |
(In millions) |
(Unaudited) |
June 30, 2006 | December 31, 2005 | ||||||
Selected consolidated balance sheet data: | |||||||
Cash, cash equivalents and short-term investments | $ | 2,193 | $ | 2,365 | |||
Accounts receivable - product sales, net | 663 | 554 | |||||
Accounts receivable - royalties, net | 386 | 297 | |||||
Accounts receivable - other, net(1) | 177 | 199 | |||||
Inventories | 909 | 703 | |||||
Long-term marketable debt and equity securities | 1,734 | 1,449 | |||||
Property, plant and equipment, net | 3,760 | 3,349 | |||||
Goodwill | 1,315 | 1,315 | |||||
Other intangible assets | 523 | 574 | |||||
Other long-term assets(1) | 1,241 | 1,074 | |||||
Total assets | 13,184 | 12,147 | |||||
Total current liabilities | 1,779 | 1,660 | |||||
Long-term debt(2) | 2,132 | 2,083 | |||||
Total liabilities | 4,904 | 4,677 | |||||
Total stockholders’ equity | 8,280 | 7,470 |
Six Months Ended June 30, | |||||||
2006 | 2005 | ||||||
Selected consolidated cash flow data: | |||||||
Capital expenditures(2) | $ | 538 | $ | 730 | |||
Total depreciation and amortization expense | 199 | 181 |
(1) | Certain reclassifications have been made at December 31, 2005 to conform to the presentation at June 30, 2006. |
(2) | Capital expenditures exclude approximately $61 million at June 30, 2006 and $73 million at June 30, 2005 in capitalized costs related to our accounting for a construction project of which we are considered to be the owner during the construction period. We have recognized a related amount as a construction financing obligation in long-term debt. |
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GENENTECH, INC. |
NET PRODUCT SALES DETAIL |
(In millions) |
(Unaudited) |
Three Months | Six Months | ||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Net U.S. Product Sales | |||||||||||||
Rituxan | $ | 526 | $ | 450 | $ | 1,003 | $ | 890 | |||||
Avastin | 423 | 246 | 821 | 449 | |||||||||
Herceptin | 320 | 152 | 610 | 282 | |||||||||
Tarceva | 103 | 70 | 196 | 118 | |||||||||
Nutropin products | 98 | 97 | 185 | 187 | |||||||||
Xolair | 105 | 80 | 200 | 145 | |||||||||
Thrombolytics | 62 | 52 | 121 | 102 | |||||||||
Pulmozyme | 47 | 48 | 96 | 92 | |||||||||
Raptiva | 22 | 21 | 43 | 38 | |||||||||
Lucentis | 10 | - | 10 | - | |||||||||
Total U.S. product sales | $ | 1,716 | $ | 1,216 | $ | 3,285 | $ | 2,303 | |||||
Net product sales to collaborators | 94 | 58 | 169 | 157 | |||||||||
Total Product Sales | $ | 1,810 | $ | 1,274 | $ | 3,454 | $ | 2,460 |
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