The Board of Directors and Stockholders of Genentech, Inc.
We have audited the accompanying consolidated balance sheets of Genentech, Inc. as of December 31, 2000 and 1999, and the related consolidated statements of operations, stockholders' equity and cash flows for the year ended December 31, 2000, and for the period from June 30, 1999 to December 31, 1999 (all "New Basis"). We have also audited the related consolidated statements of operations, stockholders' equity and cash flows for the period from January 1, 1999 to June 30, 1999, and for the year ended December 31, 1998 (all "Old Basis"). These financial statements are the responsibility of Genentech, Inc.'s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Genentech, Inc. at December 31, 2000 and 1999, and the consolidated results of its operations and its cash flows for the year ended December 31, 2000, the period from June 30, 1999 to December 31, 1999, the period from January 1, 1999 to June 30, 1999, and for the year ended December 31, 1998 in conformity with accounting principles generally accepted in the United States.
As discussed in the notes to the consolidated financial statements, the balance sheet as of December 31, 1999, and the statements of operations, stockholders' equity and cash flows for the periods in the year ended December 31, 1999 have been restated. In addition, in 2000 the Company changed its method of accounting for revenue recognition.
Palo Alto, California
January 17, 2001