Genentech: Investors: 11-Year Financial Summary

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

2008-2005

2004-2001

2000-1998

2008-2005

Years Ended December 31,			2008	2007	2006	2005
TOTAL OPERATING REVENUE			$13,418	$11,724	$9,284	$6,633
	Product sales		10,531	9,443	7,640	5,488
	Royalties⁽¹⁾		2,539	1,984	1,354	935
	Contract revenue		348	297	290	210

TOTAL COSTS AND EXPENSES			$8,089	$7,495	$6,132	$4,712
	Cost of sales		1,744	1,571	1,181	1,011
	Research and development		2,800	2,446	1,773	1,262
	Marketing, general and administrative		2,405	2,256	2,014	1,435
	Collaboration profit sharing		1,228	1,080	1,005	823
	Write-off of in-process research and development related to acquisition⁽¹⁾		-	77	-	-
	Gain on acquisition⁽¹⁾		-	(121)	-	-
	Recurring amortization charges related to redemption and acquisition⁽²⁾		172	132	105	123
	Special items		(260)⁽¹⁶⁾	54⁽¹⁶⁾	54⁽¹⁶⁾	58⁽¹⁶⁾

Other income, net			$ 102	$ 197	$ 251	$ 92

INCOME (LOSS) DATA
	Income (loss) before taxes and cumulative effect of accounting change		$5,431	$4,426	$3,403	$2,013
	Income tax provision (benefit)		2,004	1,657	1,290	734
	Income (loss) before cumulative effect of accounting change		3,427	2,769	2,113	1,279
	Cumulative effect of accounting change, net of tax		-	-	-	-
	Net income (loss)		3,427	2,769	2,113	1,279

EARNINGS (LOSS) PER SHARE:
	Basic:	Earnings before cumulative effect of accounting change	$ 3.25	$ 2.63	$ 2.01	$ 1.21
		Cumulative effect of accounting change, net of tax	-	-	-	-
		Net earnings per share	$ 3.25	$ 2.63	$ 2.01	$ 1.21
	Diluted:	Earnings before cumulative effect of accounting change	$ 3.21	$ 2.59	$ 1.97	$ 1.18
		Cumulative effect of accounting change, net of tax	-	-	-	-
		Net earnings per share	$ 3.21	$ 2.59	$ 1.97	$ 1.18

SELECTED BALANCE SHEET DATA
	Cash, cash equivalents, short-term investments, and long-term marketable debt and equity securities		$9,545	$6,065	$4,325	$3,814
	Accounts receivable		1,941	1,766	1,666	1,050
	Inventories		1,299	1,493	1,178	703
	Property, plant and equipment, net		5,404	4,986	4,173	3,349
	Goodwill		1,590	1,577	1,315	1,315
	Other intangible assets		1,008	1,168	476	574
	Other long-term assets		365	366⁽¹⁵⁾	1,342⁽¹⁵⁾	1,074⁽¹⁵⁾
	Total assets		21,787	18,940	14,842	12,147
	Commercial paper		500⁽²⁰⁾	599⁽²⁰⁾	-	-
	Total current liabilities		3,095	3,918	2,010	1,660
	Long-term debt		2,329^{(18), (19)}	2,402^{(18), (19)}	2,204^{(18), (19)}	2,083^{(18), (19)}
	Total liabilities		6,116	7,035	5,364	4,677
	Total stockholders' equity		15,671	11,905	9,478	7,470

OTHER DATA
	Depreciation and amortization expense		$ 592	$ 492	$ 407	$ 370
	Capital expenditures		751⁽¹⁹⁾	977⁽¹⁹⁾	1,214⁽¹⁹⁾	1,400⁽¹⁹⁾

SHARE INFORMATION
	Shares used to compute basic earnings per share		1,053	1,053	1,053	1,055
	Shares used to compute diluted earnings per share		1,067	1,069	1,073	1,081
	Shares outstanding at year-end		1,053	1,052	1,053	1,054

PER SHARE DATA
	Market price:	High	$ 99.14	$ 89.73	$ 95.16	$ 100.20
		Low	$ 65.60	$ 65.35	$ 75.58	$ 43.90
	Book value		$ 14.88	$ 11.32	$ 9.00	$ 7.09

NUMBER OF EMPLOYEES AT YEAR-END			11,186	11,174	10,533	9,563

(Table Continued below)

2004-2001

Years Ended December 31,			2004	2003	2002	2001
TOTAL OPERATING REVENUE			$4,621	$3,300	$2,584	$2,044
	Product sales		3,749	2,621	2,164	1,743
	Royalties⁽¹⁾		641	501	366	264
	Contract revenue		231	178	54	37

TOTAL COSTS AND EXPENSES			$3,485	$2,495	$2,662	$1,896
	Cost of sales		673	480	442	354
	Research and development		948	722	623	526
	Marketing, general and administrative		1,088	795	546	447
	Collaboration profit sharing		594	457	351	247
	Write-off of in-process research and development related to acquisition⁽¹⁾		-	-	-	-
	Gain on acquisition⁽¹⁾		-	-	-	-
	Recurring amortization charges related to redemption and acquisition⁽²⁾		145	154	156⁽¹³⁾	322
	Special items		37⁽¹⁶⁾	(113)⁽¹⁶⁾	544⁽¹⁴⁾	-

Other income, net			$ 84	$ 92	$ 108	$135⁽¹¹⁾

INCOME (LOSS) DATA
	Income (loss) before taxes and cumulative effect of accounting change		$1,220	$ 897	$ 30	$ 283
	Income tax provision (benefit)		435	287	(34)	127
	Income (loss) before cumulative effect of accounting change		785	610	64	156
	Cumulative effect of accounting change, net of tax		-	(47)⁽¹⁷⁾	-	(6)⁽¹¹⁾
	Net income (loss)		785	563	64⁽¹³⁾	150

EARNINGS (LOSS) PER SHARE:
	Basic:	Earnings before cumulative effect of accounting change	$ 0.74	$ 0.59	$ 0.06	$ 0.15
		Cumulative effect of accounting change, net of tax	-	(0.05)	-	(0.01)
		Net earnings per share	$ 0.74	$ 0.54	$ 0.06	$ 0.14
	Diluted:	Earnings before cumulative effect of accounting change	$ 0.73	$ 0.58	$ 0.06	$ 0.15
		Cumulative effect of accounting change, net of tax	-	(0.05)	-	(0.01)
		Net earnings per share	$ 0.73	$ 0.53	$ 0.06	$ 0.14

SELECTED BALANCE SHEET DATA
	Cash, cash equivalents, short-term investments, and long-term marketable debt and equity securities		$2,780	$2,935	$1,602	$2,865
	Accounts receivable		941	588	432	321
	Inventories		590	470	394	357
	Property, plant and equipment, net		2,091	1,618⁽¹⁷⁾	1,069	866
	Goodwill		1,315	1,315	1,315	1,303
	Other intangible assets		668	811	928	1,113
	Other long-term assets		807⁽¹⁵⁾	822⁽¹⁵⁾	801⁽¹⁵⁾	136
	Total assets		9,403	8,759	6,776	7,162
	Commercial paper		-	-	-	-
	Total current liabilities		1,238	893	661	677⁽¹²⁾
	Long-term debt		412	412⁽¹⁷⁾	-	-
	Total liabilities		2,621	2,239	1,437	1,242
	Total stockholders' equity		6,782	6,520	5,339	5,920

OTHER DATA
	Depreciation and amortization expense		$ 353	$ 295	$275⁽¹³⁾	$ 428
	Capital expenditures		650	322	323	213

SHARE INFORMATION
	Shares used to compute basic earnings per share		1,055	1,035	1,038	1,054
	Shares used to compute diluted earnings per share		1,079	1,058	1,049	1,071
	Shares outstanding at year-end		1,047	1,049	1,026	1,057

PER SHARE DATA
	Market price:	High	$ 68.25	$ 47.68	$ 27.58	$ 42.00
		Low	$ 41.00	$ 15.77	$ 12.55	$ 19.00
	Book value		$ 6.48	$ 6.21	$ 5.21	$ 5.60

NUMBER OF EMPLOYEES AT YEAR-END			7,646	6,226	5,252	4,950

(Table Continued below)

2000-1998

Years Ended December 31,			2000	1999⁽⁶⁾	1998
TOTAL OPERATING REVENUE			$1,514	$1,292	$1,053
	Product sales		1,278	1,039	718
	Royalties⁽¹⁾		207	189	230
	Contract revenue		29⁽¹⁰⁾	64	105

TOTAL COSTS AND EXPENSES			$1,726	$2,730	$ 874
	Cost of sales		365⁽⁷⁾	286⁽⁷⁾	139
	Research and development		490	367	396
	Marketing, general and administrative		367	367	299
	Collaboration profit sharing		129	74	40
	Write-off of in-process research and development related to acquisition⁽¹⁾		-	-	-
	Gain on acquisition⁽¹⁾		-	-	-
	Recurring amortization charges related to redemption and acquisition⁽²⁾		375	198	-
	Special items		-	1,438⁽⁸⁾	-

Other income, net			$ 216	$ 78	$ 74

INCOME (LOSS) DATA
	Income (loss) before taxes and cumulative effect of accounting change		$ 4	$(1,360)	$ 253
	Income tax provision (benefit)		20	(203)	71
	Income (loss) before cumulative effect of accounting change		(16)	(1,157)	182
	Cumulative effect of accounting change, net of tax		(58)⁽¹⁰⁾	-	-
	Net income (loss)		(74)	(1,157)	182

EARNINGS (LOSS) PER SHARE:
	Basic:	Earnings before cumulative effect of accounting change	$ (0.02)	$ (1.13)	$ 0.18
		Cumulative effect of accounting change, net of tax	(0.05)	-	-
		Net earnings per share	$ (0.07)	$ (1.13)	$ 0.18
	Diluted:	Earnings before cumulative effect of accounting change	$ (0.02)	$ (1.13)	$ 0.18
		Cumulative effect of accounting change, net of tax	(0.05)	-	-
		Net earnings per share	$ (0.07)	$ (1.13)	$ 0.18

SELECTED BALANCE SHEET DATA
	Cash, cash equivalents, short-term investments, and long-term marketable debt and equity securities		$2,459	$1,957	$1,605
	Accounts receivable		278	233	158
	Inventories		266	275	149
	Property, plant and equipment, net		753	730	700
	Goodwill		1,456	1,609	-
	Other intangible assets		1,280	1,453	65
	Other long-term assets		175	206	135
	Total assets		6,739	6,561	2,868
	Commercial paper		-	-	-
	Total current liabilities		475	503	303
	Long-term debt		150	150	150
	Total liabilities		1,065	1,291	524
	Total stockholders' equity		5,674	5,270⁽⁹⁾	2,344

OTHER DATA
	Depreciation and amortization expense		$ 463	$ 281	$ 78
	Capital expenditures		113	95	88

SHARE INFORMATION
	Shares used to compute basic earnings per share		1,044	1,026	1,007
	Shares used to compute diluted earnings per share		1,044	1,026	1,039
	Shares outstanding at year-end		1,051	1,032	1,017

PER SHARE DATA
	Market price:	High	$ 61.25	$ 11.25	$ 9.97
				$35.75*
		Low	$ 21.13	$ 9.32	$ 7.41
				$12.13*
	Book value		$ 5.40	$ 5.10	$ 2.30

NUMBER OF EMPLOYEES AT YEAR-END			4,459	3,883	3,389

Reconciliation of GAAP to Non-GAAP Net Income (Unaudited)
(In millions, except per share amounts)

Years Ended December 31,	2008	2007	2006	2005	2004
GAAP net income (loss)	$3,427	$2,769	$2,113	$1,279	$785
Royalty revenue⁽¹⁾	(15)	(6)	-	-	-
Employee stock-based compensation expense⁽³⁾ under FAS 123R included in the following operating expenses:
Cost of sales	82	71	-	-	-
Research and development	152	153	140	-	-
Marketing, general and administrative	165	179	169	-	-
Asset impairment charges⁽¹⁾	15	-	-	-	-
Roche Proposal-related fees incurred on behalf of the Special Committee⁽⁴⁾	14	-	-	-	-
Write-off of in-process research and development related to acquisition⁽¹⁾	-	77	-	-	-
Gain on acquisition⁽¹⁾	-	(121)	-	-	-
Recurring amortization charges related to redemption and acquisition⁽²⁾	172	132	105	123	145
Special items	(260)⁽¹⁶⁾	54⁽¹⁶⁾	54⁽¹⁶⁾	58⁽¹⁶⁾	37⁽¹⁶⁾
Other Non-GAAP reconciling items	-	-	-	-	-
Income tax effect⁽⁵⁾	(109)	(166)	(191)	(73)	(73)
Income before cumulative effect of accounting change	3,643	3,142	2,390	1,387	894
Cumulative effect of accounting change, net of tax	-	-	-	-	-
Non-GAAP net income	$ 3,643	$ 3,142	$ 2,390	$ 1,387	$ 894
Non-GAAP earnings per share:
Diluted	$ 3.42	$ 2.94	$ 2.23	$ 1.28	$ 0.83
Non-GAAP weighted average shares used to compute earnings per share:
Diluted	1,065⁽²¹⁾	1,068⁽²¹⁾	1,074⁽²¹⁾	1,081	1,079

(Table Continued below)

Years Ended December 31,	2003	2002	2001	2000	1999
GAAP net income (loss)	$563	$64	$150	$(74)	$(1,157)
Royalty revenue⁽¹⁾	-	-	-	-	-
Employee stock-based compensation expense⁽³⁾ under FAS 123R included in the following operating expenses:
Cost of sales	-	-	-	-	-
Research and development	-	-	-	-	-
Marketing, general and administrative	-	-	-	-	-
Asset impairment charges⁽¹⁾	-	-	-	-	-
Roche Proposal-related fees incurred on behalf of the Special Committee⁽⁴⁾	-	-	-	-	-
Write-off of in-process research and development related to acquisition⁽¹⁾	-	-	-	-	-
Gain on acquisition⁽¹⁾	-	-	-	-	-
Recurring amortization charges related to redemption and acquisition⁽²⁾	154	156⁽¹³⁾	322	375	198
Special items	(113)⁽¹⁶⁾	544⁽¹⁴⁾	-	-	1,438⁽⁸⁾
Other Non-GAAP reconciling items	-	-	(10)⁽¹¹⁾	93⁽⁷⁾	93⁽⁷⁾
Income tax effect⁽⁵⁾	(16)	(280)	(64)	(127)	(325)
Income before cumulative effect of accounting change	588	484	398	267	247
Cumulative effect of accounting change, net of tax	47⁽¹⁷⁾	-	6⁽¹¹⁾	58⁽¹⁰⁾	-
Non-GAAP net income	$ 635	$ 484	$ 404	$ 325	$ 247
Non-GAAP earnings per share:
Diluted	$ 0.60	$ 0.46	$ 0.38	$ 0.30	$ 0.23
Non-GAAP weighted average shares used to compute earnings per share:
Diluted	1,058	1,049	1,071	1,072	1,059

11-Year Financial Summary Footnotes

We have paid no dividends. We currently intend to retain all future income for use in the operation of our business and for future stock repurchases and, therefore, do not anticipate paying any cash dividends in the foreseeable future.

Certain reclassifications of prior year amounts have been made to conform to the current year presentation.

All share and per share amounts reflect two-for-one stock splits of our Common Stock that were effected in 2004, 2000 and 1999.

Common Stock began trading July 20, 1999; prior to that date, shares were Special Common Stock. On June 30, 1999, we redeemed all of our outstanding Special Common Stock held by stockholders other than Roche (also known as the Redemption). Roche's percentage ownership of our outstanding equity increased from 65 percent to 100 percent. On July 23, 1999, October 26, 1999, and March 29, 2000, Roche completed public offerings of our Common Stock. At December 31, 2008, Roche's ownership percentage was 55.8 percent.

(1) Represents recurring recognition of deferred royalty revenue, non-recurring asset impairment charges in 2008, and non-recurring items in 2007 related to our acquisition of Tanox in 2007.

(2) Primarily reflects amortization of other intangible assets in 1999 through 2008 and goodwill amortization in 1999 through 2001 related to the Redemption and pushdown accounting, and the acquisition of Tanox in 2007.

(3) Represents employee stock-based compensation expense associated with our adoption of FAS 123R on January 1, 2006. No employee stock-based expense was recognized in GAAP-reported cost of sales in any period ending prior to January 1, 2007.

(4) Represents costs incurred by the company on behalf of the Special Committee in connection with its review of the Roche Proposal, as well as legal costs incurred in defense of the Special Committee and/or its individual members in shareholder lawsuits filed in connection with the Roche Proposal.

(5) Reflects the income tax benefit on employee stock-based compensation expense under FAS 123R, recurring charges related to the Redemption, litigation-related and similar special items, items related to our acquisition of Tanox, costs related to the Roche Proposal, and other non-GAAP reconciling items.

(6) GAAP 1999 results reflect the Redemption and push-down accounting and include the combined new basis and old basis periods presented in the 1999 Consolidated Statements of Operations and Consolidated Statements of Cash Flows. Refer to our 2001 Form 10-K (Part II, Item 8) on file with the SEC.

(7) Includes costs related to the sale of inventory that was written up at the Redemption due to push-down accounting.

(8) Charges related to the Redemption and push-down accounting ($1,208) million and legal settlements ($230) million.

(9) Reflects the effect of the Redemption and related push-down accounting of $5,202 million of excess purchase price over net book value, net of charges and accumulated amortization of goodwill and other intangible assets.

(10) Reflects the impact of the adoption of Staff Accounting Bulletin No. 101, "Revenue Recognition," effective January 1, 2000.

(11) Reflects the effect of the adoption of FAS 133, "Accounting for Derivative Instruments and Hedging Activities."

(12) The $150 million long-term debt in 2000 was reclassified to current liabilities to reflect the March 27, 2002 maturity.

(13) We adopted FAS 141, "Business Combinations" (FAS 141), and FAS 142, "Goodwill and other Intangible Assets" (FAS 142), on January 1, 2002. In accordance with FAS 141 and FAS 142, we discontinued the amortization of goodwill and our trained and assembled workforce intangible asset, which resulted in an increase in reported net income by approximately $158 million (or $0.15 per share) in 2002, as compared to the accounting prior to the adoption of FAS 141 and FAS 142.

(14) Amount includes litigation-related special charges which comprised the COH litigation judgment in the second quarter of 2002, including accrued interest and costs related to obtaining a surety bond, and certain other litigation-related matters. For further information on these charges, 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 2002 Form 10-K on file with the SEC.

(15) Includes approximately $788 million at December 31, 2006, $735 million at December 31, 2005, $682 million at December 31, 2004 and $630 million at each of December 31, 2003 and 2002 of restricted cash pledged to secure a bond for the COH judgment. In 2007, the restricted cash balance of $788 million was reclassified as a short-term asset. As a result of the California Supreme Court ruling in April 2008, we paid $476 million to COH in the second quarter of 2008, reflecting the amount of compensatory damages awarded plus interest thereon from the date of the original decision, June 10, 2002. The restrictions were lifted from the restricted cash and investments accounts in the third quarter of 2008, which consisted of available-for-sale investments, and the funds became available for use in our operations. For further information on the COH judgment, see Note 9, "Leases, Commitments, and Contingencies" in Part II, Item 8 of our 2008 Form 10-K on file with the SEC.

(16) Litigation-related special items in 2008 comprised the net settlement of ($300) million related to the COH trial judgment and additional costs accrued of $40 million related to the COH contract dispute based on the status of negotiations between the parties on amounts owed for periods subsequent to the original court judgment rendered in 2002, in 2007 and 2006 comprised accrued interest and bond costs related to the COH judgment, in 2005 comprised accrued interest and bond costs related to the COH judgment and net amounts paid related to other litigation settlements, in 2004 comprised accrued interest and bond costs related to the COH judgment (net of a released accrual on a separate litigation matter), and in 2003 comprised Amgen and Bayer litigation settlements (net of accrued interest and bond costs related to the COH litigation).

(17) Reflects the impact of the adoption of the Financial Accounting Standards Board Interpretation No. 46, "Consolidation of Variable Interest Entities." For more information, 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 2003 Form 10-K on file with the SEC.

(18) Long-term debt in 2008, 2007, 2006 and 2005 includes approximately $2 billion related to our debt issuance in July 2005. For further information, see Note 8, "Debt," in Part II, Item 8 of our 2008 Form 10-K on file with the SEC. Long-term debt in 2008 was reduced by a $200 million financing payment related to the construction of a manufacturing facility in Singapore. Long-term debt in 2005 was also reduced by the repayment of $425 million to extinguish the consolidated debt and noncontrolling interest related to a synthetic lease obligation. For further information, see Note 9, "Leases, Commitments, and Contingencies" in Part II, Item 8 of our 2008 Form 10-K on file with the SEC and Note 7, "Leases, Commitments, and Contingencies" in Part II, Item 8 of our 2005 Form 10-K on file with the SEC.

(19) We capitalized costs in property, plant and equipment of approximately $117 million in 2008, $203 million in 2007, $104 million in 2006 and $94 million in 2005 related to our accounting for construction projects for which we are considered to be the owner of the buildings during the construction period. These costs have been excluded from 2008, 2007, 2006 and 2005 capital expenditures. We have also recognized $306 million, $399 million, $216 million and $94 million as construction financing obligations in long-term debt as of December 31, 2008, 2007, 2006 and 2005, respectively, related to these projects. Capital expenditures for 2008 also exclude a $200 million financing payment related to the construction of a manufacturing facility in Singapore that reduced our long-term debt balance as of December 31, 2008. For further information, see Note 9, "Leases, Commitments, and Contingencies" in Part II, Item 8 of our 2008 Form 10-K on file with the SEC.

(20) Represents amount outstanding under our commercial paper program.

(21) Weighted average shares used to compute non-GAAP diluted earnings per share were computed exclusive of the methodology used to determine dilutive securities under FAS 123R.

For further information on the non-GAAP reconciling items presented above, 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 Form 10-K for the respective years on file with the SEC.

11-Year Financial Summary

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