GENENTECH, INC. |
CONSOLIDATED STATEMENTS OF INCOME |
(In millions, except per share amounts) |
(Unaudited) |
Three Months | Year | ||||||||||||
Ended December 31, | Ended December 31, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Revenues: | |||||||||||||
Product sales | $ | 2,244 | $ | 1,577 | $ | 7,640 | $ | 5,488 | |||||
Royalties | 389 | 265 | 1,354 | 935 | |||||||||
Contract revenue | 81 | 51 | 290 | 210 | |||||||||
Total operating revenues | 2,714 | 1,893 | 9,284 | 6,633 | |||||||||
Costs and expenses: | |||||||||||||
Cost of sales | 338 | 245 | 1,181 | 1,011 | |||||||||
Research and development (includes employee stock-based compensation expense: three months-2006-$38; 2005-$0; full year 2006-$140; 2005-$0) | 555 | 412 | 1,773 | 1,262 | |||||||||
Marketing, general and administrative (includes employee stock-based compensation expense: three months-2006-$45; 2005-$0; full year 2006-$169; 2005-$0) | 600 | 429 | 2,014 | 1,435 | |||||||||
Collaboration profit sharing | 270 | 228 | 1,005 | 823 | |||||||||
Recurring charges related to redemption | 26 | 27 | 105 | 123 | |||||||||
Special items: litigation-related | 14 | 13 | 54 | 58 | |||||||||
Total costs and expenses | 1,803 | 1,354 | 6,132 | 4,712 | |||||||||
Operating income | 911 | 539 | 3,152 | 1,921 | |||||||||
Other income (expense): | |||||||||||||
Interest and other income, net(1) | 77 | 43 | 325 | 142 | |||||||||
Interest expense | (18 | ) | (23 | ) | (74 | ) | (50 | ) | |||||
Total other income, net | 59 | 20 | 251 | 92 | |||||||||
Income before taxes | 970 | 559 | 3,403 | 2,013 | |||||||||
Income tax provision | 376 | 220 | 1,290 | 734 | |||||||||
Net income | $ | 594 | $ | 339 | $ | 2,113 | $ | 1,279 | |||||
Earnings per share: | |||||||||||||
Basic | $ | 0.56 | $ | 0.32 | $ | 2.01 | $ | 1.21 | |||||
Diluted | $ | 0.55 | $ | 0.31 | $ | 1.97 | $ | 1.18 | |||||
Weighted average shares used to compute earnings per share: | |||||||||||||
Basic | 1,054 | 1,055 | 1,053 | 1,055 | |||||||||
Diluted | 1,072 | 1,080 | 1,073 | 1,081 |
(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 months and year ended December 31, 2006 includes employee stock-based compensation expense of $41 million and $182 million, net of tax, respectively, due to our adoption of Statement of Financial Accounting Standards No. 123(R) (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 (based upon the amounts previously reported in Genentech's financial statement footnotes), pro forma employee stock-based compensation expense in the fourth quarter of 2005 was $49 million, net of tax, (or $0.05 per diluted share), and the resulting pro forma GAAP net income was $290 million (or $0.27 per diluted share). Pro forma employee stock-based compensation expense for the full year of 2005 was $175 million, net of tax, (or $0.16 per diluted share), and the resulting pro forma GAAP net income was $1.1 billion (or $1.02 per diluted share). |
GENENTECH, INC. |
SELECTED CONSOLIDATED FINANCIAL DATA |
(In millions) |
(Unaudited) |
December 31, 2006 | December 31, 2005 | ||||||
Selected consolidated balance sheet data: | |||||||
Cash, cash equivalents and short-term investments | $ | 2,493 | $ | 2,365 | |||
Accounts receivable - product sales, net | 965 | 554 | |||||
Accounts receivable - royalties, net | 453 | 297 | |||||
Accounts receivable - other, net(1) | 248 | 199 | |||||
Inventories | 1,178 | 703 | |||||
Long-term marketable debt and equity securities | 1,832 | 1,449 | |||||
Property, plant and equipment, net | 4,173 | 3,349 | |||||
Goodwill | 1,315 | 1,315 | |||||
Other intangible assets | 476 | 574 | |||||
Other long-term assets(1) | 1,342 | 1,074 | |||||
Total assets | 14,842 | 12,147 | |||||
Total current liabilities | 2,157 | 1,660 | |||||
Long-term debt(2) | 2,204 | 2,083 | |||||
Total liabilities | 5,364 | 4,677 | |||||
Total stockholders’ equity | 9,478 | 7,470 |
Year | |||||||
Ended December 31, | |||||||
2006 | 2005 | ||||||
Selected consolidated cash flow data: | |||||||
Capital expenditures(2) | $ | 1,214 | $ | 1,400 | |||
Total depreciation and amortization expense | 407 | 370 |
(1) | Certain reclassifications have been made at December 31, 2005 to conform to the December 31, 2006 presentation. |
(2) | Capital expenditures exclude approximately $104 million at December 31, 2006, and $94 million at December 31, 2005 in capitalized costs related to our accounting for construction projects 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. |