Addendum to Genentech Announces Fourth Quarter and Full Year 2004
Results (FINANCIAL TABLES) SOUTH SAN FRANCISCO, Calif., Jan. 10
/PRNewswire-FirstCall/ -- GENENTECH, INC. CONDENSED CONSOLIDATED
STATEMENTS OF INCOME (in thousands, except per share amounts)
(unaudited) Three Months Ended December 31, 2004 GAAP(1) Difference
Non-GAAP(2) Revenues: Product sales $1,066,302 $1,066,302 Royalties
181,220 181,220 Contract revenue 67,778 67,778 Total operating
revenues 1,315,300 1,315,300 Costs and expenses: Cost of sales
205,373 205,373 Research and development 310,196 310,196 Marketing,
general and administrative 299,495 299,495 Collaboration profit
sharing 170,070 170,070 Recurring charges related to redemption
34,534 $(34,534) (3) -- Special items: litigation-related (3,189)
3,189 (4) -- Total costs and expenses 1,016,479 (31,345) 985,134
Operating margin 298,821 31,345 330,166 Other income, net (5)
21,323 21,323 Income before taxes 320,144 31,345 351,489 Income tax
provision 113,560 12,540 126,100 Net income $206,584 $18,805
$225,389 Earnings per share:(6) Basic $0.20 $0.01 $0.21 Diluted
$0.19 $0.02 $0.21 Weighted average shares used to compute earnings
per share:(6) Basic 1,049,700 1,049,700 Diluted 1,070,708 1,070,708
(1) Reflects operating results in accordance with U.S. generally
accepted accounting principles (or GAAP). (2) Non-GAAP amounts
exclude litigation-related special items, recurring charges related
to the 1999 redemption of Genentech's Special Common Stock, net of
tax effects. (3) Represents the amortization of other intangible
assets related to the 1999 redemption of Genentech's Special Common
Stock. (4) Represents released accrual on a litigation matter;
amounts received in Q4 2003 related to the Bayer litigation
settlement; and also includes accrued interest and bond costs for
Q4 2004 and 2003 related to the City of Hope trial judgment. (5)
"Other income, net" includes realized gains and losses from the
sale of certain biotechnology equity securities and write-downs for
other-than- temporary declines in the fair value of certain
biotechnology debt and equity securities. In addition, "other
income, net" includes interest income and interest expense. For
further detail, refer to our web site at http://www.gene.com/. (6)
All share and per share amounts reflect the May 2004 two-for-one
stock split of our Common Stock. 2005 Reconciliation of GAAP and
Non-GAAP EPS Our 2005 GAAP EPS is not estimable at this time. The
2005 GAAP EPS would include recurring charges related to the 1999
redemption of our stock by Roche, which are estimated to be
approximately $123 million on a pretax basis in 2005. In addition,
the 2005 GAAP EPS would include litigation-related special charges
for accrued interest and associated bond costs on the City of Hope
judgment, which are currently estimated to be approximately $14
million on a pretax basis in 2005. The 2005 non-GAAP EPS estimate
does not include the redemption related recurring charges and the
litigation-related special charges or any other potential special
charges related to existing or future litigation or its resolution,
or changes in accounting principles, all of which may be
significant. Three Months Ended December 31, 2003 GAAP(1)
Difference Non-GAAP(2) Revenues: Product sales $723,736 $723,736
Royalties 148,307 148,307 Contract revenue 61,856 61,856 Total
operating revenues 933,899 933,899 Costs and expenses: Cost of
sales 126,202 126,202 Research and development 215,627 215,627
Marketing, general and administrative 263,505 263,505 Collaboration
profit sharing 133,927 133,927 Recurring charges related to
redemption 38,586 $(38,586)(3) -- Special items: litigation-related
(8,119) 8,119(4) -- Total costs and expenses 769,728 (30,467)
739,261 Operating margin 164,171 30,467 194,638 Other income,
net(5) 20,334 20,334 Income before taxes 184,505 30,467 214,972
Income tax provision 57,774 12,170 69,944 Net income $126,731
$18,297 $145,028 Earnings per share:(6) Basic $0.12 $0.02 $0.14
Diluted $0.12 $0.02 $0.14 Weighted average shares used to compute
earnings per share:(6) Basic 1,047,391 1,047,391 Diluted 1,071,529
1,071,529 GENENTECH, INC. CONDENSED CONSOLIDATED STATEMENTS OF
INCOME (in thousands, except per share amounts) (unaudited) Year
Ended December 31, 2004 GAAP(1) Difference Non-GAAP(2) Revenues:
Product sales $3,748,879 $3,748,879 Royalties 641,119 641,119
Contract revenue 231,159 231,159 Total operating revenues 4,621,157
4,621,157 Costs and expenses: Cost of sales 672,526 672,526
Research and development 947,513 947,513 Marketing, general and
administrative 1,088,111 1,088,111 Collaboration profit sharing
593,616 593,616(3) Recurring charges related to redemption 145,485
$(145,485) (3) -- Special items: litigation-related 37,087 (37,087)
(4) -- Total costs and expenses 3,484,338 (182,572) 3,301,766
Operating margin 1,136,819 182,572 1,319,391 Other income, net (5)
82,597 82,597 Income before taxes and cumulative effect of
accounting change 1,219,416 182,572 1,401,988 Income tax provision
434,600 73,031 507,631 Income before cumulative effect of
accounting change 784,816 109,541 894,357 Cumulative effect of
accounting change, net of tax -- -- -- Net income $784,816 $109,541
$894,357 Earnings per share (7): Basic: Earnings before cumulative
effect of accounting change $0.74 $0.11 $0.85 Cumulative effect of
accounting change, net of tax -- -- -- Net earnings per share $0.74
$0.11 $0.85 Diluted: Earnings before cumulative effect of
accounting change $0.73 $0.10 $0.83 Cumulative effect of accounting
change, net of tax -- -- -- Net earnings per share $0.73 $0.10
$0.83 Weighted average shares used to compute earnings per share:
Basic 1,055,165 1,055,165 Diluted 1,079,209 1,079,209 (1) Reflects
operating results in accordance with U.S. generally accepted
accounting principles (or GAAP). (2) Non-GAAP amounts exclude
litigation-related special items, recurring charges related to the
1999 redemption of Genentech's Special Common Stock, and the
cumulative effect of a change in accounting principle related to
our adoption of Financial Accounting Standards Board Interpretation
No. 46, "Consolidation of Variable Interest Entities," (or FIN 46),
net of tax effects. (3) Represents the amortization of other
intangible assets related to the 1999 redemption of Genentech's
Special Common Stock. (4) Represents released accrual on a
litigation matter; amounts received in 2003 related to the Amgen
and Bayer litigation settlements; and also includes accrued
interest and bond costs for 2004 and 2003 related to the City of
Hope trial judgment. (5) "Other income, net" includes realized
gains and losses from the sale of certain biotechnology equity
securities and write-downs for other-than- temporary declines in
the fair value of certain biotechnology debt and equity securities.
In addition, "other income, net" includes interest income and
interest expense. For further detail, refer to our web site at
http://www.gene.com/. (6) Amount represents the cumulative effect
of the accounting change, net of tax, related to our adoption of
FIN 46 on July, 1 2003. (7) All share and per share amounts reflect
the May 2004 two-for-one stock split of our Common Stock. Year
Ended December 31, 2003 GAAP(1) Difference Non-GAAP(2) Revenues
Product sales $2,621,490 $2,621,490 Royalties 500,903 500,903
Contract revenue 177,934 177,934 Total operating revenues 3,300,327
3,300,327 Costs and expenses: Cost of sales 480,123 480,123
Research and development 721,970 721,970 Marketing, general and
administrative 794,845 794,845 Collaboration profit sharing 457,457
457,457 Recurring charges related to redemption 154,344
$(154,344)(3) -- Special items: litigation-related (113,127)
113,127(4) -- Total costs and expenses 2,495,612 (41,217) 2,454,395
Operating margin 804,715 41,217 845,932 Other income, net 92,791
92,791 Income before taxes and cumulative effect of accounting
change 897,506 41,217 938,723 Income tax provision 287,324 16,366
303,690 Income before cumulative effect of accounting change
610,182 24,851 635,033 Cumulative effect of accounting change, net
of tax (47,655) 47,655 (6) -- Net income $562,527 $72,506 $635,033
Earnings per share: (7) Basic: Earnings before cumulative effect of
accounting change $ 0.59 $ 0.02 $ 0.61 Cumulative effect of
accounting change, net of tax (0.05) 0.05 -- Net earnings per share
$0.54 $0.07 $0.61 Diluted: Earnings before cumulative effect of
accounting change 0.58 $0.02 $0.60 Cumulative effect of accounting
change, net of tax (0.05) 0.05 -- Net earnings per share $0.53
$0.07 $0.60 Weighted average shares used to compute earnings per
share(7): Basic 1,034,480 1,034,480 Diluted 1,057,620 1,057,620
GENENTECH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in
thousands) (unaudited) December 31, 2004 2003 Selected balance
sheet data: Cash, cash equivalents and short-term investments
$1,665,105 $1,511,772 Accounts receivable - product sales, net
627,353 315,097 Accounts receivable - royalties, net 217,482
184,163 Accounts receivable - other, net 77,743 74,831 Inventories
590,343 469,640 Restricted cash 682,000(4) -- Deferred tax asset
402,130(4) 121,885 Long-term marketable securities and other
1,115,327 1,422,886 Property, plant and equipment, net 2,091,404
1,617,912 Goodwill 1,315,019 1,315,019 Other intangible assets
668,391 810,810 Other long-term assets 88,156 812,714(4) Total
assets 9,602,020 8,736,171 Total current liabilities 1,834,512(4)
873,031 Total liabilities 2,819,831 2,215,873 Total stockholders'
equity 6,782,189 6,520,298 Year-to-date: Capital expenditures
$649,858 $321,955 Total GAAP(1) depreciation and amortization
expense 353,221 295,449 Less: redemption related amortization
expense(3) (145,485) (154,344) Non-GAAP(2) depreciation and
amortization expense $207,736 $141,105 (1) In accordance with U.S.
generally accepted accounting principles (or AAP). (2) Non-GAAP
amounts exclude amortization of other intangible assets elated to
the 1999 redemption of Genentech's Special Common Stock. (3)
Represents the amortization of other intangible assets related to
the 999 redemption of Genentech's Special Common Stock. (4)
Includes approximately $626 million in current liabilities, the
elated deferred tax asset and restricted cash of $682 million in
2004 and 630 million in 2003 pledged to secure a bond for the City
of Hope trial udgment, which was reclassified to current
liabilities and assets, espectively. DATASOURCE: Genentech, Inc.
CONTACT: Media, Debra Charlesworth, +1-650-225-2742, or Caroline
Pecquet, +1-650-467-7078, or investor, Kathee Littrell,
+1-650-225-1034, all of Genentech, Inc.
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