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Financials Financial Highlights Marketed Products 11-Year Financial Summary Stockholder Information Form 10-K (601K/PDF)

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

% Change from Preceding Year Years ended December 31, 2007 2006 2005  2007/2006  2006/2005             Product sales $9,443 $7,640 $5,488 24% 39%             Total operating revenue(1) 11,724 9,284 6,633 26    40                Cost of sales(2) 1,571 1,181 1,011 33    17                 COS as a % of sales 17% 15% 18%                     Research and development expenses(2) 2,446 1,773 1,262 38    40                 R&D as a % of revenues 21% 19% 19%                   Marketing, general and administrative expenses(2) 2,256 2,014 1,435 12    40                 MG&A as a % of revenues 19% 22% 22%                    Collaboration profit sharing 1,080 1,005 823 7    22                Write-off of in-process research and    development related to acquisition(3) 77 - - -    -                Gain on acquisition(3) (121) - - -    -                Recurring charges related to redemption    and acquisition(4) 132 105 123 26   (15)               Special items: litigation-related(5) 54 54 58 -   (7)               Pretax operating income 4,229 3,152 1,921 34   64                Pretax operating margin 36% 34% 29%                   Net income 2,769 2,113 1,279 31   65               Diluted earnings per share 2.59 1.97 1.18 31   67               Non-GAAP net income(6) $3,142 $2,390 $1,387 31% 72%             Non-GAAP net income as a % of revenue(6) 27% 26% 21%                   Non-GAAP diluted earnings per share(6) 2.94 2.23 1.28 32   74               Shares used to compute diluted earnings per share 1,069 1,073 1,081 (0)   (1)               Shares outstanding at year-end 1,052 1,053 1,054 (0)   (0)               Stock price at year-end $67.07 $81.13 $92.50 (17)   (12)               No cash dividends were paid                 Cash, cash equivalents, short-term investments, long-term marketable debt and equity securities and equity hedge instruments $6,089 $4,375 $3,887 39   13               Property, plant and equipment, net 4,986 4,173 3,349 19   25               Total assets 18,940 14,842 12,147 28   22               Long-term debt(7),(8) 2,402 2,204 2,083 9   6               Total liabilities 7,035 5,364 4,677 31   15               Total stockholders' equity 11,905 9,478 7,470 26   27               Capital expenditures(8) 977 1,214 1,400 (20)   (13)               Number of employees at year-end 11,174 10,533 9,563 6   10

(1) Amount in 2007 includes recognition of deferred royalty revenue of $6 million related to our acquisition of Tanox, Inc. in 2007.

(2) Amounts in 2007 and 2006 include employee stock-based compensation expense due to our adoption of FAS 123R on January 1, 2006. In 2007, cost of sales, research and development, and marketing, general and administrative expenses include employee stock-based compensation expense of $71 million, $153 million and $179 million, respectively. In 2006, research and development, and marketing, general and administrative expenses include employee stock-based compensation expense of $140 million and $169 million, respectively. No employee stock-based compensation expense was recognized in cost of sales in any period ending prior to January 1, 2007.

(3) Represents non-recurring items related to our acquisition of Tanox, Inc. in 2007.

(4) Represents the amortization of other intangible assets in 2007, 2006 and 2005, related to the Redemption and the effects of push-down accounting, and our acquisition of Tanox, Inc. in 2007.

(5) Amounts in 2007 and 2006 include accrued interest and bond costs related to the City of Hope (COH) trial judgment. Amount in 2005 includes accrued interest and bond costs related to the COH trial judgment and net amounts paid related to other litigation settlements. 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," in Part II of our 2007 Form 10-K on file with the Securities and Exchange Commission (SEC).

(6) Non-GAAP amounts exclude recurring charges related to the Redemption, litigation-related and similar special items, employee stock-based compensation expense recognized under FAS 123R in 2007 and 2006, and certain items associated with the acquisition of Tanox, Inc. in 2007, including in-process research and development expenses (a nonrecurring expense in the third quarter of 2007), recurring recognition of deferred royalty revenue, recurring amortization of intangible assets, and a gain pursuant to EITF 04-1 (a non-recurring gain in the third quarter of 2007), and all related tax effects. GAAP net income as a percentage of operating revenues was 24 percent in 2007, 23 percent in 2006 and 19 percent in 2005. See pages 26-27 for the full reconciliation between our non-GAAP and GAAP amounts. 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," in Part II of our 2007 Form 10-K on file with the SEC.

(7) Includes approximately $2 billion related to our debt issuance in July 2005. For further information, see Note 8, "Leases, Commitments and Contingencies" in Part II, Item 8 of our 2007 Form 10-K on file with the SEC.

(8) Capital expenditures exclude approximately $203 million in 2007, $104 million in 2006 and $94 million in 2005 of capitalized costs related to our accounting for construction projects of which we are considered to be the owner during the construction period. We have recognized $399 million in 2007, $216 million in 2006 and $94 million in 2005 as a construction financing obligation in long-term debt.

 

(Unaudited)
(In millions, except per share)

(1) 2007 non-GAAP operating revenue is $11,718 million, which excludes recognition of deferred royalty revenue of $6 million related to our acquisition of Tanox, Inc. in 2007.

(2) Non-GAAP earnings per share and non-GAAP net income exclude recurring charges related to the Redemption, litigation-related and similar special items, employee stock-based compensation expense recognized under FAS 123R in 2007 and 2006, and certain items related to the acquisition of Tanox, Inc. in 2007, including in-process research and development expenses (a non-recurring expense in the third quarter of 2007), recurring recognition of deferred royalty revenue, recurring amortization of intangible assets, and a gain pursuant to EITF 04-1 (a non-recurring gain in the third quarter of 2007), and all related tax effects. See pages 26-27 for the full reconciliation between our non-GAAP and GAAP amounts.