Financial Highlights (Unaudited)
(In millions, except per share, stock price and employee data)

% Change from Preceding Year Years ended December 31, 2005 2004 2003  2005/2004  2004/2003             Product sales $5,488 $3,749 $2,621 46% 43%             Total operating revenues 6,633 4,621 3,300 44    40                Cost of sales 1,011 673 480 50    40                 COS as a % of sales 18% 18% 18%                     Research and development expenses 1,262 948 722 33    31                 R&D as a % of revenues 19% 21% 22%                   Marketing, general and administrative expenses 1,435 1,088 795 32    37                 MG&A as a % of revenues 22% 24% 24%                     Collaboration profit sharing 823 594 458 39    30                Recurring charges related to redemption(1) 123 146 154 (16)   (6)               Special items: litigation-related(2) 58 37 (113) 56    *                Pretax operating income 1,922 1,137 805 69    41                 Pretax operating margin 29% 25% 24%                     Net income 1,279 785 563 63    40                Diluted earnings per share 1.18 0.73 0.53 62    38                Non-GAAP net income(3) $   1,387 $   894 $   635 55% 41%             Non-GAAP net income as a % of revenues(3) 21% 19% 19%                     Non-GAAP diluted EPS(3) 1.28 0.83 0.60 54    38                Shares used to compute diluted earnings per share 1,081 1,079 1,058 0    2                Actual shares at year-end 1,054 1,047 1,049 1    (0)                Stock price at year-end $92.50 $54.44 $46.78 70    16                No cash dividends were paid                 Cash, cash equivalents, short-term investments, long-term marketable debt and equity securities, and equity hedge instruments $3,887 $2,802 $3,057 39   (8)                Property, plant and equipment, net 3,349 2,091 1,618 60    29                Total assets 12,147 9,403 8,736 29    8                Total stockholders' equity 7,470 6,782 6,520 10    4                Capital expenditures(4) 1,400 650 322 115    102                Number of employees at year-end 9,563 7,646 6,226 25    23

(1) Represents the amortization of other intangible assets in 2005, 2004 and 2003, related to the June 30, 1999 redemption of our Special Common Stock (Redemption) and the effects of push-down accounting.

(2) Amount in 2005 includes accrued interest and bond costs related to the City of Hope (COH) trial judgment and net amount paid related to other litigation settlements. Amount in 2004 includes accrued interest and bond costs related to the COH trial judgment, net of a released accrual on a separate litigation matter. Amount in 2003 is comprised of Amgen and Bayer litigation settlements, net of COH litigation-related charges in 2003. For further information on these items, see the "Results of Operations" section of Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of Part II of our 2005 Form 10-K on file with the Securities and Exchange Commission (SEC).

(3) Non-GAAP amounts exclude the recurring charges related to the Redemption and litigation-related special items and all related tax effects, and the cumulative effect of an accounting change in 2003. GAAP net income as a percentage of total operating revenues was 19 percent in 2005 and 17 percent in 2004 and 2003. See pages 20-23 for the full reconciliation between our non-GAAP and GAAP numbers. For further information on these items, see the "Results of Operations" section of Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," of Part II of our 2005 Form 10-K on file with the SEC.

(4) Excludes approximately $94 million in 2005 of 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 corresponding amount as a construction financing obligation in long-term debt.

The values and percent change from preceding year shown above are exact, which may lead to the appearance of rounding errors.

* Calculation not meaningful.

(Unaudited)
(In millions, except per share)

Total Operating Revenues	Net Income	Diluted Earnings Per Share
Contract Revenue Royalties Product Sales	Non-GAAP(1) GAAP	Non-GAAP(1) GAAP

(1) Non-GAAP diluted earnings per share and non-GAAP net income exclude recurring charges related to the 1999 Redemption and litigation-related special items, and all related tax effects, and the cumulative effect of the change in an accounting principle in 2003. See pages 20-23 for the full reconciliation between our non-GAAP and GAAP numbers. All share and per share amounts reflect the May 2004 two-for-one split of Genentech Common Stock.