GENENTECH, INC. |
CONSOLIDATED STATEMENTS OF INCOME |
(In millions, except per share amounts) |
(Unaudited) |
Three Months Ended March 31, | |||||||
2006 | 2005 | ||||||
Revenues: | |||||||
Product sales | $ | 1,644 | $ | 1,186 | |||
Royalties | 286 | 232 | |||||
Contract revenue and other | 56 | 44 | |||||
Total operating revenues | 1,986 | 1,462 | |||||
Costs and expenses: | |||||||
Cost of sales | 262 | 256 | |||||
Research and development (includes employee stock-based compensation expense under FAS 123R: 2006-$33; 2005-$0) | 374 | 243 | |||||
Marketing, general and administrative (includes employee stock-based compensation expense under FAS 123R: 2006-$41; 2005-$0) | 441 | 310 | |||||
Collaboration profit sharing | 226 | 176 | |||||
Recurring charges related to redemption | 26 | 35 | |||||
Special items: litigation-related | 13 | 11 | |||||
Total costs and expenses | 1,342 | 1,031 | |||||
Operating income | 644 | 431 | |||||
Other income (expense): | |||||||
Interest and other income, net(1) | 53 | 18 | |||||
Interest expense | (19 | ) | (3 | ) | |||
Total other income, net | 34 | 15 | |||||
Income before taxes | 678 | 446 | |||||
Income tax provision | 257 | 162 | |||||
Net income | $ | 421 | $ | 284 | |||
Earnings per share: | |||||||
Basic | $ | 0.40 | $ | 0.27 | |||
Diluted | $ | 0.39 | $ | 0.27 | |||
Weighted average shares used to compute earnings per share: | |||||||
Basic | 1,054 | 1,047 | |||||
Diluted | 1,075 | 1,067 |
(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 first quarter of 2006 includes employee stock-based compensation expense of $47 million, net of tax, 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 prior period. 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 March 31, 2005), pro forma employee stock-based compensation expense in the first quarter of 2005 was $40 million, net of tax, (or $0.05 per diluted share), and the resulting pro forma GAAP diluted earnings per share was $0.22. |
-1-
GENENTECH, INC. |
CONSOLIDATED BALANCE SHEETS DATA |
(In millions) |
(Unaudited) |
March 31, 2006 | December 31, 2005 | ||||||
Selected financial data: | |||||||
Cash, cash equivalents and short-term investments | $ | 2,284 | $ | 2,365 | |||
Accounts receivable - product sales, net | 615 | 554 | |||||
Accounts receivable - royalties, net | 332 | 297 | |||||
Accounts receivable - other, net(1) | 187 | 199 | |||||
Inventories | 804 | 703 | |||||
Long-term marketable debt and equity securities | 1,658 | 1,449 | |||||
Property, plant and equipment, net | 3,565 | 3,349 | |||||
Goodwill | 1,315 | 1,315 | |||||
Other intangible assets | 548 | 574 | |||||
Other long-term assets(1) | 1,093 | 1,074 | |||||
Total assets | 12,712 | 12,147 | |||||
Total current liabilities | 1,750 | 1,660 | |||||
Long-term debt(2) | 2,103 | 2,083 | |||||
Total liabilities | 4,818 | 4,677 | |||||
Total stockholders’ equity | 7,894 | 7,470 | |||||
Year-to-date: | |||||||
Capital expenditures(2) | $ | 253 | $ | 1,400 | |||
Total depreciation and amortization expense | 96 | 370 |
(1) | Certain reclassifications have been made at December 31, 2005 to conform to the presentation at March 31, 2006. | |||
(2) | Capital expenditures exclude approximately $27 million at March 31, 2006 and $94 million at December 31, 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 related amounts as a construction financing obligation in long-term debt. |
-2-
GENENTECH, INC. |
NET PRODUCT SALES DETAIL |
(In millions) |
(Unaudited) |
Three Months Ended March 31, | |||||||
2006 | 2005 | ||||||
Net U.S. Product Sales | |||||||
Rituxan | $ | 477 | $ | 440 | |||
Avastin | 398 | 203 | |||||
Herceptin | 290 | 130 | |||||
Tarceva | 93 | 48 | |||||
Nutropin products | 87 | 90 | |||||
Xolair | 95 | 65 | |||||
Thrombolytics | 59 | 50 | |||||
Pulmozyme | 49 | 44 | |||||
Raptiva | 21 | 17 | |||||
Total U.S. product sales | $ | 1,569 | $ | 1,087 | |||
Net product sales to collaborators | 75 | 99 | |||||
Total Product Sales | $ | 1,644 | $ | 1,186 |
-3-