| Three Months | Nine Months | |||||||||||||||
| Ended September 30, | Ended September 30, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Revenues: | ||||||||||||||||
| Product sales | $ | 2,634 | $ | 2,321 | $ | 7,549 | $ | 7,094 | ||||||||
| Royalties | 687 | 524 | 1,932 | 1,427 | ||||||||||||
| Contract revenue | 91 | 63 | 230 | 234 | ||||||||||||
| Total operating revenues | 3,412 | 2,908 | 9,711 | 8,755 | ||||||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of sales (includes employee stock-based compensation expense: three months–2008–$20; 2007–$16; nine months–2008–$62; 2007–$49) | 409 | 406 | 1,240 | 1,227 | ||||||||||||
| Research and development (includes employee stock-based compensation expense: three months–2008–$39; 2007–$37; nine months–2008–$119; 2007–$114) | 777 | 615 | 2,043 | 1,828 | ||||||||||||
| Marketing, general and administrative (includes employee stock-based compensation expense: three months–2008–$44; 2007–$44; nine months–2008–$130; 2007–$137) | 611 | 541 | 1,687 | 1,564 | ||||||||||||
| Collaboration profit sharing | 315 | 276 | 907 | 805 | ||||||||||||
Write-off of in-process research and development related to acquisition(1) | - | 77 | - | 77 | ||||||||||||
Gain on acquisition(1) | - | (121 | ) | - | (121 | ) | ||||||||||
Recurring amortization charges related to redemption and acquisition(2) | 43 | 38 | 129 | 90 | ||||||||||||
| Special items: litigation-related | 40 | 14 | (260 | ) | 41 | |||||||||||
| Total costs and expenses | 2,195 | 1,846 | 5,746 | 5,511 | ||||||||||||
| Operating income | 1,217 | 1,062 | 3,965 | 3,244 | ||||||||||||
| Other income (expense): | ||||||||||||||||
Interest and other income (expense), net(3) | (33 | ) | 84 | 133 | 233 | |||||||||||
| Interest expense | (25 | ) | (18 | ) | (57 | ) | (53 | ) | ||||||||
| Total other income (expense), net | (58 | ) | 66 | 76 | 180 | |||||||||||
| Income before taxes | 1,159 | 1,128 | 4,041 | 3,424 | ||||||||||||
| Income tax provision | 428 | 443 | 1,546 | 1,286 | ||||||||||||
| Net income | $ | 731 | $ | 685 | $ | 2,495 | $ | 2,138 | ||||||||
| Earnings per share: | ||||||||||||||||
| Basic | $ | 0.69 | $ | 0.65 | $ | 2.37 | $ | 2.03 | ||||||||
| Diluted | $ | 0.68 | $ | 0.64 | $ | 2.34 | $ | 2.00 | ||||||||
| Weighted average shares used to compute earnings per share: | ||||||||||||||||
| Basic | 1,055 | 1,053 | 1,053 | 1,053 | ||||||||||||
| Diluted | 1,071 | 1,069 | 1,067 | 1,070 | ||||||||||||
| (1) | Represents non-recurring items related to our 2007 acquisition of Tanox, Inc. |
| (2) | Represents the amortization of intangible assets related to the 1999 redemption of our common stock by Roche Holdings, Inc. and our 2007 acquisition of Tanox, Inc. |
| (3) | "Interest and other income (expense), net" includes interest income, realized gains and losses from the sale of debt and equity securities, write-downs for other-than-temporary impairments in the fair value of certain debt and equity securities and mark-to-market valuation adjustments for various securities. For further detail, refer to our web site at www.gene.com. |
| September 30, | December 31, | |||||||
| 2008 | 2007 | |||||||
| Selected consolidated balance sheet data: | ||||||||
| Cash, cash equivalents and short-term investments | $ | 5,932 | $ | 3,975 | ||||
| Accounts receivable - product sales, net | 862 | 847 | ||||||
| Accounts receivable - royalties, net | 734 | 620 | ||||||
| Accounts receivable - other, net | 232 | 299 | ||||||
| Inventories | 1,408 | 1,493 | ||||||
| Long-term marketable debt and equity securities | 2,606 | 2,090 | ||||||
| Property, plant and equipment, net | 5,320 | 4,986 | ||||||
| Goodwill | 1,590 | 1,577 | ||||||
| Other intangible assets | 1,046 | 1,168 | ||||||
| Other long-term assets | 358 | 366 | ||||||
| Total assets | 20,611 | 18,940 | ||||||
| Commercial paper | 536 | 599 | ||||||
| Total current liabilities | 2,836 | 3,918 | ||||||
Long-term debt(1) | 2,504 | 2,402 | ||||||
| Total liabilities | 5,985 | 7,035 | ||||||
| Total stockholders' equity | 14,626 | 11,905 | ||||||
| Nine Months Ended September 30, | ||||||||
| 2008 | 2007 | |||||||
| Selected consolidated cash flow data: | ||||||||
Capital expenditures(1) | $ | 569 | $ | 692 | ||||
| Total depreciation and amortization expense | 433 | 345 | ||||||
| (1) | Capital expenditures exclude approximately $104 million for the nine months ended September 30, 2008 and $156 million for the nine months ended September 30, 2007 in capitalized costs related to our accounting for construction projects for which we are considered to be the owner during the construction period. We have recognized related amounts as a construction financing obligation in long-term debt. The balances in long-term debt related to the construction financing obligation are $495 million at September 30, 2008 and $399 million at December 31, 2007. |
