Genentech: Investors: 11-Year Financial Summary

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

2007-2004

2003-2000

1999-1997

2007-2004

Years Ended December 31,			2007	2006	2005	2004
TOTAL OPERATING REVENUE			$11,724	$9,284	$6,633	$4,621
	Product sales		9,443	7,640	5,488	3,749
	Royalties⁽¹⁾		1,984	1,354	935	641
	Contract revenue		297	290	210	231

TOTAL COSTS AND EXPENSES			$7,495	$6,132	$4,712	$3,485
	Cost of sales		1,571	1,181	1,011	673
	Research and development		2,446	1,773	1,262	948
	Marketing, general and administrative		2,256	2,014	1,435	1,088
	Collaboration profit sharing		1,080	1,005	823	594
	Write-off of in-process research and development related to acquisition⁽¹⁾		77	-	-	-
	Gain on acquisition⁽¹⁾		(121)	-	-	-
	Recurring charges related to redemption and acquisition⁽²⁾		132	105	123	145
	Special items		54⁽¹⁵⁾	54⁽¹⁵⁾	58⁽¹⁵⁾	37⁽¹⁵⁾

Other income, net			$ 197	$ 251	$ 92	$ 84

INCOME (LOSS) DATA
	Income (loss) before taxes and cumulative effect of accounting change		$4,426	$3,403	$2,013	$1,220
	Income tax (benefit) provision		1,657	1,290	734	435
	Income (loss) before cumulative effect of accounting change		2,769	2,113	1,279	785
	Cumulative effect of accounting change, net of tax		-	-	-	-
	Net income (loss)		2,769	2,113	1,279	785

EARNINGS (LOSS) PER SHARE:
	Basic:	Earnings before cumulative effect of accounting change	$ 2.63	$ 2.01	$ 1.21	$ 0.74
		Cumulative effect of accounting change, net of tax	-	-	-	-
		Net earnings per share	$ 2.63	$ 2.01	$ 1.21	$ 0.74
	Diluted:	Earnings before cumulative effect of accounting change	$ 2.59	$ 1.97	$ 1.18	$ 0.73
		Cumulative effect of accounting change, net of tax	-	-	-	-
		Net earnings per share	$ 2.59	$ 1.97	$ 1.18	$ 0.73

SELECTED BALANCE SHEET DATA
	Cash, cash equivalents, short-term investments, and long-term marketable debt and equity securities		$6,065	$4,325	$3,814	$2,780
	Accounts receivable		1,766	1,666	1,050	941
	Inventories		1,493	1,178	703	590
	Property, plant and equipment, net		4,986	4,173	3,349	2,091
	Goodwill		1,577	1,315	1,315	1,315
	Other intangible assets		1,168	476	574	668
	Other long-term assets		366⁽¹⁴⁾	1,342⁽¹⁴⁾	1,074⁽¹⁴⁾	807⁽¹⁴⁾
	Total assets		18,940	14,842	12,147	9,403
	Commercial paper		599⁽¹⁹⁾	-	-	-
	Total current liabilities		3,918	2,010	1,660	1,238
	Long-term debt		2,402^{(17), (18)}	2,204^{(17), (18)}	2,083^{(17), (18)}	412
	Total liabilities		7,035	5,364	4,677	2,621
	Total stockholders' equity		11,905	9,478	7,470	6,782

OTHER DATA
	Depreciation and amortization expense		$ 492	$ 407	$ 370	$ 353
	Capital expenditures		977⁽¹⁸⁾	1,214⁽¹⁸⁾	1,400⁽¹⁸⁾	650

SHARE INFORMATION
	Shares used to compute basic earnings per share		1,053	1,053	1,055	1,055
	Shares used to compute diluted earnings per share		1,069	1,073	1,081	1,079
	Shares outstanding at year-end		1,052	1,053	1,054	1,047

PER SHARE DATA
	Market price:	High	$ 89.73	$ 95.16	$ 100.20	$ 68.25
		Low	$ 65.35	$ 75.58	$ 43.90	$ 41.00
	Book value		$ 11.32	$ 9.00	$ 7.09	$ 6.48

NUMBER OF EMPLOYEES AT YEAR-END			11,174	10,533	9,563	7,646

(Table Continued below)

2003-2000

Years Ended December 31,			2003	2002	2001	2000
TOTAL OPERATING REVENUE			$3,300	$2,584	$2,044	$1,514
	Product sales		2,621	2,164	1,743	1,278
	Royalties⁽¹⁾		501	366	264	207
	Contract revenue		178	54	37	29⁽⁹⁾

TOTAL COSTS AND EXPENSES			$2,495	$2,662	$1,896	$1,726
	Cost of sales		480	442	354	365⁽⁶⁾
	Research and development		722	623	526	490
	Marketing, general and administrative		795	546	447	367
	Collaboration profit sharing		457	351	247	129
	Write-off of in-process research and development related to acquisition⁽¹⁾		-	-	-	-
	Gain on acquisition⁽¹⁾		-	-	-	-
	Recurring charges related to redemption and acquisition⁽²⁾		154	156⁽¹²⁾	322	375
	Special items		(113)⁽¹⁵⁾	544⁽¹³⁾	-	-

Other income, net			$ 92	$ 108	$135⁽¹⁰⁾	$ 216

INCOME (LOSS) DATA
	Income (loss) before taxes and cumulative effect of accounting change		$ 897	$ 30	$ 283	$ 4
	Income tax (benefit) provision		287	(34)	127	20
	Income (loss) before cumulative effect of accounting change		610	64	156	(16)
	Cumulative effect of accounting change, net of tax		(47)⁽¹⁶⁾	-	(6)⁽¹⁰⁾	(58)⁽⁹⁾
	Net income (loss)		563	64⁽¹²⁾	150	(74)

EARNINGS (LOSS) PER SHARE:
	Basic:	Earnings before cumulative effect of accounting change	$ 0.59	$ 0.06	$ 0.15	$ (0.02)
		Cumulative effect of accounting change, net of tax	(0.05)	-	(0.01)	(0.05)
		Net earnings per share	$ 0.54	$ 0.06	$ 0.14	$ (0.07)
	Diluted:	Earnings before cumulative effect of accounting change	$ 0.58	$ 0.06	$ 0.15	$ (0.02)
		Cumulative effect of accounting change, net of tax	(0.05)	-	(0.01)	(0.05)
		Net earnings per share	$ 0.53	$ 0.06	$ 0.14	$ (0.07)

SELECTED BALANCE SHEET DATA
	Cash, cash equivalents, short-term investments, and long-term marketable debt and equity securities		$2,935	$1,602	$2,865	$2,459
	Accounts receivable		588	432	321	278
	Inventories		470	394	357	266
	Property, plant and equipment, net		1,618⁽¹⁶⁾	1,069	866	753
	Goodwill		1,315	1,315	1,303	1,456
	Other intangible assets		811	928	1,113	1,280
	Other long-term assets		822⁽¹⁴⁾	801⁽¹⁴⁾	136	175
	Total assets		8,759	6,776	7,162	6,739
	Commercial paper		-	-	-	-
	Total current liabilities		893	661	677⁽¹¹⁾	475
	Long-term debt		412⁽¹⁶⁾	-	-	150
	Total liabilities		2,239	1,437	1,242	1,065
	Total stockholders' equity		6,520	5,339	5,920	5,674

OTHER DATA
	Depreciation and amortization expense		$ 295	$275⁽¹²⁾	$ 428	$ 463
	Capital expenditures		322	323	213	113

SHARE INFORMATION
	Shares used to compute basic earnings per share		1,035	1,038	1,054	1,044
	Shares used to compute diluted earnings per share		1,058	1,049	1,071	1,044
	Shares outstanding at year-end		1,049	1,026	1,057	1,051

PER SHARE DATA
	Market price:	High	$ 47.68	$ 27.58	$ 42.00	$ 61.25
		Low	$ 15.77	$ 12.55	$ 19.00	$ 21.13
	Book value		$ 6.21	$ 5.21	$ 5.60	$ 5.40

NUMBER OF EMPLOYEES AT YEAR-END			6,226	5,252	4,950	4,459

(Table Continued below)

1999-1997

Years Ended December 31,			1999	1998	1997
TOTAL OPERATING REVENUE			$1,292	$1,053	$936
	Product sales		1,039	718	585
	Royalties⁽¹⁾		189	230	241
	Contract revenue		64	105	110

TOTAL COSTS AND EXPENSES			$2,730	$ 874	$ 840
	Cost of sales		286⁽⁶⁾	139	103
	Research and development		367	396	471
	Marketing, general and administrative		367	299	266
	Collaboration profit sharing		74	40	-
	Write-off of in-process research and development related to acquisition⁽¹⁾		-	-	-
	Gain on acquisition⁽¹⁾		-	-	-
	Recurring charges related to redemption and acquisition⁽²⁾		198	-	-
	Special items		1,438⁽⁷⁾	-	-

Other income, net			$ 78	$ 74	$ 74

INCOME (LOSS) DATA
	Income (loss) before taxes and cumulative effect of accounting change		$(1,360)	$ 253	$ 170
	Income tax (benefit) provision		(203)	71	41
	Income (loss) before cumulative effect of accounting change		(1,157)	182	129
	Cumulative effect of accounting change, net of tax		-	-	-
	Net income (loss)		(1,157)	182	129

EARNINGS (LOSS) PER SHARE:
	Basic:	Earnings before cumulative effect of accounting change	$ (1.13)	$ 0.18	$ 0.13
		Cumulative effect of accounting change, net of tax	-	-	-
		Net earnings per share	$ (1.13)	$ 0.18	$ 0.13
	Diluted:	Earnings before cumulative effect of accounting change	$ (1.13)	$ 0.18	$ 0.13
		Cumulative effect of accounting change, net of tax	-	-	-
		Net earnings per share	$ (1.13)	$ 0.18	$ 0.13

SELECTED BALANCE SHEET DATA
	Cash, cash equivalents, short-term investments, and long-term marketable debt and equity securities		$1,957	$1,605	$1,287
	Accounts receivable		233	158	184
	Inventories		275	149	116
	Property, plant and equipment, net		730	700	683
	Goodwill		1,609	-	-
	Other intangible assets		1,453	65	55
	Other long-term assets		206	135	128
	Total assets		6,561	2,868	2,507
	Commercial paper		-	-	-
	Total current liabilities		503	303	289
	Long-term debt		150	150	150
	Total liabilities		1,291	524	476
	Total stockholders' equity		5,270⁽⁸⁾	2,344	2,031

OTHER DATA
	Depreciation and amortization expense		$ 281	$ 78	$ 66
	Capital expenditures		95	88	155

SHARE INFORMATION
	Shares used to compute basic earnings per share		1,026	1,007	984
	Shares used to compute diluted earnings per share		1,026	1,039	1,011
	Shares outstanding at year-end		1,032	1,017	994

PER SHARE DATA
	Market price:	High	$ 11.25	$ 9.97	$ 7.58
			$35.75*
		Low	$ 9.32	$ 7.41	$ 6.66
			$12.13*
	Book value		$ 5.10	$ 2.30	$ 2.04

NUMBER OF EMPLOYEES AT YEAR-END			3,883	3,389	3,242

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

Years Ended December 31,	2007	2006	2005	2004
GAAP net income (loss)	$2,769	$2,113	$1,279	$785
Royalty revenue⁽¹⁾	(6)	-	-	-
Employee stock-based compensation expense⁽³⁾ under FAS 123R included in the following operating expenses:
Cost of sales	71	-	-	-
Research and development	153	140	-	-
Marketing, general and administrative	179	169	-	-
Write-off of in-process research and development related to acquisition⁽¹⁾	77	-	-	-
Gain on acquisition⁽¹⁾	(121)	-	-	-
Recurring charges related to redemption and acquisition⁽²⁾	132	105	123	145
Special items	54⁽¹⁵⁾	54⁽¹⁵⁾	58⁽¹⁵⁾	37⁽¹⁵⁾
Other Non-GAAP reconciling items	-	-	-	-
Income tax effect⁽⁴⁾	(166)	(191)	(73)	(73)
Income before cumulative effect of accounting change	3,142	2,390	1,387	894
Cumulative effect of accounting change, net of tax	-	-	-	-
Non-GAAP net income	$ 3,142	$ 2,390	$ 1,387	$ 894
Non-GAAP earnings per share:
Diluted	$ 2.94	$ 2.23	$ 1.28	$ 0.83
Non-GAAP weighted average shares used to compute earnings per share:
Diluted	1,068⁽²⁰⁾	1,074⁽²⁰⁾	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	-	-	-	-	-
Write-off of in-process research and development related to acquisition⁽¹⁾	-	-	-	-	-
Gain on acquisition⁽¹⁾	-	-	-	-	-
Recurring charges related to redemption and acquisition⁽²⁾	154	156⁽¹²⁾	322	375	198
Special items	(113)⁽¹⁵⁾	544⁽¹³⁾	-	-	1,438⁽⁷⁾
Other Non-GAAP reconciling items	-	-	(10)⁽¹⁰⁾	93⁽⁶⁾	93⁽⁶⁾
Income tax effect⁽⁴⁾	(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⁽¹⁶⁾	-	6⁽¹⁰⁾	58⁽⁹⁾	-
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, 2007, Roche's ownership percentage was 55.8 percent.

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

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

(3) Represents employee stock-based compensation expense associated with Genentech's 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) Reflects the income tax benefit on employee stock-based compensation expense under FAS 123R, recurring charges related to the Redemption, litigation-related and similar speci