| Editorial | Financials |
Horizon 2010 Report Card We developed our Horizon 2010 vision and goals to help ensure that we are solidly positioned to fulfill our mission of discovering, developing, manufacturing and commercializing life-enhancing and life-extending medicines for patients with unmet medical needs. The Horizon 2010 goals started in 2006 and continue through the end of 2010. Originally announced in March 2004, we provided an update to the goals in March 2006.
Our Vision Utilize the science of biotechnology to become a leader in revolutionizing the treatment of patients with cancer, immunological diseases and angiogenic disorders.
Progress Towards Our Goals
Goal: To bring at least 20 new molecules into clinical development.
Status: We added seven new molecular entities into early-stage development in 2006, including three small molecules via collaborations.
Goal: To bring at least 15 major new products or indications onto the market.
Status: We received approval for one new product and seven additional indications for existing products in 2006.
Goal: To achieve a compound annual non-GAAP earnings per share growth rate of 25 percent.¹
Status: Our non-GAAP earnings per share growth rate for 2006 was 74 percent.¹
Goal: To achieve cumulative free cash flow of $12 billion.²
Status: Our free cash flow as of December 31, 2006 was nearly $1 billion.²
Goal: To become the number one U.S. oncology company in sales.
Status: We achieved the ranking of number one in U.S. oncology sales in the first quarter of 2006 and will strive to maintain
this ranking in the future.
¹ Our GAAP earnings per share growth rate for 2006 was 67 percent. The non-GAAP EPS goal for 2006 through 2010 excludes the after-tax effects of the following items: employee stock-based compensation expense associated with our adoption of FAS 123R, recurring charges related to the redemption of our Special Common Stock by Roche, litigation-related special charges for accrued interest and associated bond costs on the City of Hope judgment, the cumulative effect of an accounting change related to sabbatical leave, the effect of any in-process R&D charge and amortization of intangible assets that would result if Genentech acquires Tanox, Inc., and other potential special charges related to existing or future litigation or its resolution, and changes in accounting principles, all of which may be significant. GAAP EPS for 2006 through 2010 would include the items described above. See pages 26-27 for the full reconciliation between our non-GAAP and GAAP numbers.
² Our free cash flow measure is defined as cash from ongoing operations less gross capital expenditures. Cash from ongoing operations is derived from the "net cash provided by operating activities" line in our consolidated statements of cash flows excluding the effect of changes in the trading portfolio, but this number could be adjusted for items that would allow the measure to better reflect our operational performance. These adjustments include, for example, cash receipts or payments related to litigation settlements, investments in trading securities and other potential items, any of which may be significant. For 2006, cash from ongoing operations represents net cash provided by operating activities, excluding the effect of changes in the trading portfolio.