| Editorial | Financials |
Horizon 2010 Report Card Our Horizon 2010 vision and goals will help ensure that we are solidly positioned to continue our 32-year mission of discovering, developing, manufacturing and commercializing life-enhancing and life-extending medicines for patients with unmet medical needs. Originally announced in March 2004, we provided an update to our Horizon 2010 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 Toward Our Goals
Goal: To bring at least 20 new molecules into clinical development.
Status: We added 15 new molecular entities into development from January 1, 2006 through December 31, 2007. In March 2007, we announced that we plan to add a total of 30 new molecular entities into clinical development by the end of 2010.
Goal: To bring at least 15 major new products or indications onto the market.
Status: We received approval for one new product and 10 additional indications for existing products through February 2008.
Goal: To achieve a compound annual non-GAAP earnings per share growth rate of 25 percent.¹
Status: Our non-GAAP earnings per share compound annual growth rate was 52 percent through 2007.¹
Goal: To achieve cumulative free cash flow of $12 billion.²
Status: Our cumulative free cash flow was approximately $3.6 billion from January 1, 2006 through December 31, 2007.²
Goal: To become the number one U.S. oncology company in sales.
Status: We have been number one in U.S. oncology sales since the first quarter of 2006.
¹ The non-GAAP EPS goal for 2006 through 2010 excludes the effects of redemption-related charges, litigation-related and similar special items, employee stock-based compensation expense, and certain items associated with the acquisition of Tanox, Inc., including an in-process research and development charge (a non-recurring charge in the third quarter of 2007), recurring recognition of deferred royalty revenue, recurring amortization of intangible assets, and a gain on acquisition pursuant to EITF 04-1 (a non-recurring item in the third quarter of 2007), together with the related tax benefits of excluding such items, as well as potential and similar special items related to existing or future litigation or its resolution or changes in or adoption of accounting principles, any of which may be significant. GAAP EPS for 2006 through 2010 would include the items described above. GAAP EPS growth rate (CAGR) from January 1, 2006 through December 31, 2007 was 48%. Our 2007 non-GAAP financial measures exclude the effects of: (i) recurring amortization charges related to the Redemption of our common stock by Roche Holdings, Inc. and our acquisition of Tanox, Inc. in the third quarter of 2007 of $132 million on a pretax basis, (ii) litigation-related and similar special items for accrued interest and associated bond costs on the City of Hope judgment of $54 million on a pretax basis, (iii) employee stock-based compensation expense of $403 million on a pretax basis, (iv) a non-recurring charge of $77 million related to the acquisition of Tanox, Inc. on a pretax basis (v) a non-recurring gain pursuant to application of EITF 04-1 to our acquisition of Tanox, Inc. of $121 million on a pretax basis, (vi) recognition of deferred royalty revenue of $6 million on a pretax basis resulting from our acquisition of Tanox, Inc. and (vii) the related net income tax effects of excluding these items of $166 million. Our 2006 non-GAAP financial measures exclude the effects of: (i) recurring amortization charges related to the Redemption of $105 million on a pretax basis, (ii) litigation-related and similar special items for accrued interest and associated bond costs on the City of Hope judgment of $54 million on a pretax basis, (iii) employee stock-based compensation expense of $309 million on a pretax basis, and (iv) the related income tax benefit on these items of $191 million.
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 amount may 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 items, any of which may be significant. In 2007 and 2006, cash from ongoing operations represents net cash provided by operating activities, excluding the effect of changes in the trading portfolio of $360 million and $29 million, respectively.