MIME-Version: 1.0 X-Document-Type: Workbook Content-Type: multipart/related; boundary="----=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877" This document is a Single File Web Page, also known as a Web Archive file. If you are seeing this message, your browser or editor doesn't support Web Archive files. Please download a browser that supports Web Archive, such as Microsoft Internet Explorer. ------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Workbook.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"

This page should be opened with Microsoft Excel XP or newer.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet01.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Document and Entity Information (USD  $)
12 Months Ended
Dec. 31, 2010
Feb. 18, 2011
Jun. 30, 2010
Document and Entity Information
Document Type 10-K
Amendment Flag false
Document Period End Date Dec 31, 2010
Document Fiscal Year Focus 2010
Document Fiscal Period Focus FY
Trading Symbol gild
Entity Registrant Name GILEAD SCIENCES INC
Entity Central Index Key 0000882095
Current Fiscal Year End Date --12-31
Entity Filer Category Large Accelerated Filer
Entity Well-known Seasoned Issuer Yes
Entity Voluntary Filers No
Entity Current Reporting Status Yes
Entity Public Float  $ 25,450,411,375
Entity Common Stock, Shares Outstanding 795,264,644
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet02.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Consolidated Balance Sheets (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Assets
Cash and cash equivalents  $ 907,879  $ 1,272,958
Short-term marketable securities 1,190,789 384,017
Accounts receivable, net of allowances of  $150,942 at December 31, 2010 and  $132,810 at December 31, 2009 1,621,966 1,389,534
Inventories 1,203,809 1,051,771
Deferred tax assets 279,339 295,080
Prepaid taxes 320,424 274,196
Prepaid expenses 67,632 78,111
Other current assets 116,244 66,891
Total current assets 5,708,082 4,812,558
Property, plant and equipment, net 701,235 699,970
Noncurrent portion of prepaid royalties 203,790 226,250
Noncurrent deferred tax assets 153,379 101,498
Long-term marketable securities 3,219,403 2,247,871
Intangible assets 1,425,592 1,524,777
Other noncurrent assets 181,149 85,635
Total assets 11,592,630 9,698,559
Liabilities and Stockholders' Equity
Accounts payable 803,025 810,544
Accrued government rebates 325,018 248,660
Accrued compensation and employee benefits 147,632 132,481
Income taxes payable 1,862 167,623
Other accrued liabilities 437,893 384,015
Deferred revenues 103,175 122,721
Current portion of convertible senior notes, net and other long-term obligations 646,345 5,587
Total current liabilities 2,464,950 1,871,631
Long-term deferred revenues 32,844 43,026
Convertible senior notes, net 2,838,573 1,155,443
Long-term income taxes payable 107,025 87,383
Other long-term obligations 27,401 35,918
Commitments and contingencies (Note 12)    
Stockholders' equity:
Preferred stock, par value  $0.001 per share; 5,000 shares authorized; none outstanding    
Common stock, par value  $0.001 per share; 2,800,000 shares authorized; 801,998 and 899,753 shares issued and outstanding at December 31, 2010 and 2009, respectively 802 900
Additional paid-in capital 4,648,286 4,376,651
Accumulated other comprehensive income (loss) 30,911 (5,758)
Retained earnings 1,183,730 1,995,272
Total Gilead stockholders' equity 5,863,729 6,367,065
Noncontrolling interest 258,108 138,093
Total stockholders' equity 6,121,837 6,505,158
Total liabilities and stockholders' equity  $ 11,592,630  $ 9,698,559
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet03.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Consolidated Balance Sheets (Parenthetical) (USD  $)
In Thousands, except Share data
Dec. 31, 2010
Dec. 31, 2009
Consolidated Balance Sheets
Accounts receivable, allowances  $ 150,942  $ 132,810
Preferred stock, par value  $ 0.001  $ 0.001
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, shares outstanding 0 0
Common stock, par value  $ 0.001  $ 0.001
Common stock, shares authorized 2,800,000,000 2,800,000,000
Common stock, shares issued 801,998,000 899,753,000
Common stock, shares outstanding 801,998,000 899,753,000
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet04.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Consolidated Statements of Income (USD  $)
In Thousands, except Per Share data
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Revenues:
Product sales  $ 7,389,921  $ 6,469,311  $ 5,084,796
Royalty revenues 545,970 491,818 218,180
Contract and other revenues 13,529 50,254 32,774
Total revenues 7,949,420 7,011,383 5,335,750
Costs and expenses:
Cost of goods sold 1,869,876 1,595,558 1,127,246
Research and development 1,072,930 939,918 721,768
Selling, general and administrative 1,044,392 946,686 797,344
Purchased in-process research and development   10,851
Total costs and expenses 3,987,198 3,482,162 2,657,209
Income from operations 3,962,222 3,529,221 2,678,541
Interest and other income, net 60,287 42,397 59,401
Interest expense (108,961) (69,662) (65,244)
Income before provision for income taxes 3,913,548 3,501,956 2,672,698
Provision for income taxes 1,023,799 876,364 702,363
Net income 2,889,749 2,625,592 1,970,335
Net loss attributable to noncontrolling interest 11,508 10,163 8,564
Net income attributable to Gilead  $ 2,901,257  $ 2,635,755  $ 1,978,899
Net income per share attributable to Gilead common stockholders - basic  $ 3.39  $ 2.91  $ 2.15
Shares used in per share calculation - basic 856,060 904,604 920,693
Net income per share attributable to Gilead common stockholders - diluted  $ 3.32  $ 2.82  $ 2.06
Shares used in per share calculation - diluted 873,396 934,109 958,825
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet05.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Consolidated Statements of Stockholders' Equity (USD  $)
In Thousands, except Share data
Common Stock [Member]
Additional Paid-In Capital [Member]
Accumulated Other Comprehensive Income (Loss) [Member]
Retained Earnings [Member]
Noncontrolling Interest [Member]
Total
Balance, shares at Dec. 31, 2007 932,484,000
Balance, value at Dec. 31, 2007  $ 932  $ 3,416,987  $ (4,363)  $ 198,775  $ 140,299  $ 3,752,630
Distributions to (from) noncontrolling interest 61,275 61,275
Net income (loss) 1,978,899 (8,564) 1,970,335
Unrealized gain (loss) on available-for-sale securities, net of tax (15,316) (15,316)
Foreign currency translation adjustment (21,149) (21,149)
Unrealized gain (loss) on cash flow hedges, net of tax 82,068 82,068
Comprehensive income 2,015,938
Issuances under employee stock purchase plan, shares 960,000
Issuances under employee stock purchase plan, value 1 30,385 30,386
Stock option exercises, net, shares 15,443,000
Stock option exercises, net, value 15 215,724 215,739
Tax benefits from employee stock plans 209,519 209,519
Stock-based compensation, shares 191,000
Stock-based compensation, value 153,269 153,269
Repurchases of common stock, shares (39,259,000)
Repurchases of common stock, value (38) (95,775) (1,877,360) (1,973,173)
Balance, shares at Dec. 31, 2008 909,819,000
Balance, value at Dec. 31, 2008 910 3,930,109 41,240 300,314 193,010 4,465,583
Distributions to (from) noncontrolling interest (44,754) (44,754)
Net income (loss) 2,635,755 (10,163) 2,625,592
Unrealized gain (loss) on available-for-sale securities, net of tax 15,868 15,868
Foreign currency translation adjustment 8,459 8,459
Unrealized gain (loss) on cash flow hedges, net of tax (71,325) (71,325)
Comprehensive income 2,578,594
Issuances under employee stock purchase plan, shares 932,000
Issuances under employee stock purchase plan, value 1 34,872 34,873
Stock option exercises, net, shares 12,067,000
Stock option exercises, net, value 12 187,843 187,855
Tax benefits from employee stock plans 88,368 88,368
Stock-based compensation, shares 227,000
Stock-based compensation, value 181,530 181,530
Assumption of stock options in connection with acquisition 15,655 15,655
Repurchases of common stock, shares (23,292,000)
Repurchases of common stock, value (23) (61,726) (940,797) (1,002,546)
Balance, shares at Dec. 31, 2009 899,753,000 899,753,000
Balance, value at Dec. 31, 2009 900 4,376,651 (5,758) 1,995,272 138,093 6,505,158
Distributions to (from) noncontrolling interest 131,523 131,523
Net income (loss) 2,901,257 (11,508) 2,889,749
Unrealized gain (loss) on available-for-sale securities, net of tax 7,020 7,020
Foreign currency translation adjustment (8,416) (8,416)
Unrealized gain (loss) on cash flow hedges, net of tax 38,065 38,065
Comprehensive income 2,926,418
Issuances under employee stock purchase plan, shares 1,110,000          
Issuances under employee stock purchase plan, value 1 32,306 32,307
Stock option exercises, net, shares 10,671,000          
Stock option exercises, net, value 11 188,906 188,917
Tax benefits from employee stock plans 82,086 82,086
Stock-based compensation, shares 461,000          
Stock-based compensation, value 200,595 200,595
Purchases of convertible note hedges (362,622) (362,622)
Sale of warrants 155,425 155,425
Deferred tax assets on convertible note hedges 39,093 39,093
Equity portion of convertible notes, net of issuance costs of  $4,018 255,517 255,517
Repurchases of common stock, shares (109,997,000)          
Repurchases of common stock, value (110) (319,671) (3,712,799) (4,032,580)
Balance, shares at Dec. 31, 2010 801,998,000 801,998,000
Balance, value at Dec. 31, 2010  $ 802  $ 4,648,286  $ 30,911  $ 1,183,730  $ 258,108  $ 6,121,837
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet06.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Consolidated Statements of Stockholders' Equity (Parenthetical) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Consolidated Statements of Stockholders' Equity
Equity portion of convertible notes, issuance costs  $ 4,018
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet07.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Consolidated Statements of Cash Flows (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Operating activities:
Net income  $ 2,889,749  $ 2,625,592  $ 1,970,335
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense 67,240 64,560 51,722
Amortization expense 198,237 148,384 103,888
Purchased in-process research and development expense   10,851
Stock-based compensation expenses 200,041 180,684 153,364
In-process research and development impairment 136,000
Excess tax benefits from stock-based compensation (81,620) (80,186) (191,939)
Tax benefits from employee stock plans 82,086 88,368 209,519
Deferred income taxes 12,152 (42,013) (24,969)
Other non-cash transactions 10,408 64,456 (11,257)
Changes in operating assets and liabilities:
Accounts receivable, net (348,875) (356,462) (257,161)
Inventories (161,190) (75,266) (330,726)
Prepaid expenses and other assets (70,466) (65,667) 9,719
Accounts payable (4,453) 203,641 312,568
Income taxes payable (185,733) 166,334 (23,887)
Accrued liabilities 120,065 109,026 136,276
Deferred revenues (29,728) 48,603 25,081
Net cash provided by operating activities 2,833,913 3,080,054 2,143,384
Investing activities:
Purchases of marketable securities (5,502,687) (2,614,046) (3,273,112)
Proceeds from sales of marketable securities 3,033,893 1,440,509 3,026,459
Proceeds from maturities of marketable securities 683,927 435,510 193,690
Acquisitions, net of cash acquired (91,000) (1,247,816) (10,851)
Capital expenditures and other (61,884) (230,057) (115,005)
Net cash used in investing activities (1,937,751) (2,215,900) (178,819)
Financing activities:
Proceeds from issuances of convertible notes, net of issuance costs 2,462,500
Proceeds from sale of warrants 155,425
Purchases of convertible note hedges (362,622)
Proceeds from credit facility 500,000 400,000
Repayments of credit facility (500,000) (400,000)
Proceeds from issuances of common stock 221,223 222,728 246,125
Repurchases of common stock (4,022,593) (998,495) (1,969,582)
Extinguishment of long-term debt   (305,455)
Repayments of long-term obligations (5,786) (5,648) (4,326)
Excess tax benefits from stock-based compensation 81,620 80,186 191,939
Distributions from (to) noncontrolling interest 131,523 (44,754) 61,275
Net cash used in financing activities (1,338,710) (1,051,438) (1,474,569)
Effect of exchange rate changes on cash 77,469 940 1,220
Net change in cash and cash equivalents (365,079) (186,344) 491,216
Cash and cash equivalents at beginning of period 1,272,958 1,459,302 968,086
Cash and cash equivalents at end of period 907,879 1,272,958 1,459,302
Supplemental disclosure of cash flow information:
Interest paid 15,748 8,990 7,388
Income taxes paid  $ 1,129,577  $ 746,224  $ 495,544
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet08.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Organization and Summary of Significant Accounting Policies
12 Months Ended
Dec. 31, 2010
Organization and Summary of Significant Accounting Policies
Organization and Summary of Significant Accounting Policies
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Overview

Gilead Sciences, Inc. (Gilead, we, us or our), incorporated in Delaware on June 22, 1987, is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. Our mission is to advance the care of patients suffering from life threatening diseases worldwide. Headquartered in Foster City, California, we have operations in North America, Europe and Asia Pacific. We market products in the HIV/AIDS, liver disease, respiratory and cardiovascular/metabolic therapeutic areas. Our product portfolio is comprised of Atripla® (efavirenz 600 mg/emtricitabine 200 mg/tenofovir disoproxil fumarate 300 mg), Truvada® (emtricitabine and tenofovir disoproxil fumarate), Viread® (tenofovir disoproxil fumarate) and Emtriva® (emtricitabine) for the treatment of human immunodeficiency virus (HIV) infection; Hepsera® (adefovir dipivoxil) and Viread for the treatment of chronic hepatitis B; AmBisome® (amphotericin B liposome for injection) for the treatment of severe fungal infections; Letairis® (ambrisentan) for the treatment of pulmonary arterial hypertension (PAH); Ranexa® (ranolazine) for the treatment of chronic angina; Vistide® (cidofovir injection) for the treatment of cytomegalovirus infection and Cayston® (aztreonam for inhalation solution) as a treatment to improve respiratory symptoms in cystic fibrosis (CF) patients with Pseudomonas aeruginosa (P. aeruginosa).

In addition, we also sell and distribute certain products through our corporate partners under royalty-paying collaborative agreements. For example, F. Hoffmann-La Roche Ltd (together with Hoffmann-La Roche Inc., Roche) markets Tamiflu® (oseltamivir phosphate) for the treatment and prevention of influenza; GlaxoSmithKline Inc. (GSK) markets Hepsera and Viread for the treatment of chronic hepatitis B in certain territories outside of the United States; GSK also markets Volibris® (ambrisentan) outside of the United States for the treatment of PAH; Astellas Pharma US, Inc. markets AmBisome for the treatment of severe fungal infections in the United States and Canada; Astellas US LLC markets Lexiscan® (regadenoson) injection in the United States for use as a pharmacologic stress agent in radionuclide myocardial perfusion imaging (MPI); Rapidscan Pharma Solutions, Inc. markets Rapiscan (regadenoson) in certain territories outside of the United States for the inducement of pharmacological stress and/or vasodilation of the coronary vasculature strictly for purposes of diagnosing cardiovascular disease; Menarini International Operations Luxembourg SA markets Ranexa in certain territories outside of the United States for the treatment of chronic angina; and Japan Tobacco Inc. (Japan Tobacco) markets Truvada, Viread and Emtriva in Japan.

Shipping and Handling Costs

Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of goods sold in our Consolidated Statements of Income.

 

Accounts Receivable

Trade accounts receivable are recorded net of allowances for wholesaler chargebacks related to government rebate programs, cash discounts for prompt payment, doubtful accounts and sales returns. Estimates for wholesaler chargebacks for government rebates, cash discounts and sales returns are based on contractual terms, historical trends and our expectations regarding the utilization rates for these programs. Estimates for our allowance for doubtful accounts is determined based on existing contractual payment terms, historical payment patterns of our customers and individual customer circumstances, an analysis of days sales outstanding by geographic region and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Historically, the amounts of uncollectible accounts receivable that have been written off have been insignificant and consistent with management's expectations.

 

Inventories

Inventories are recorded at the lower of cost or market, with cost determined on a first-in, first-out basis. We periodically review the composition of our inventories in order to identify obsolete, slow-moving or otherwise unsaleable items. If unsaleable items are observed and there are no alternate uses for the inventory, we will record a write-down to net realizable value in the period that the impairment is first recognized.

Foreign Currency Translation, Transactions and Contracts

Adjustments resulting from translating the financial statements of our foreign subsidiaries into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income (loss) as a separate component of stockholders' equity. Net foreign currency exchange transaction gains or losses are included in interest and other income, net, on our Consolidated Statements of Income. Net transaction losses totaled  $3.7 million,  $16.4 million and  $36.5 million in 2010, 2009 and 2008, respectively.

 

We hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward and option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we limit the risk that counterparties to these contracts may be unable to perform. We also limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrecognized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes, nor do we hedge our net investment in any of our foreign subsidiaries.

Fair Value of Financial Instruments

Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts receivable, foreign currency exchange forward and option contracts, accounts payable, and short-term and long-term debt. Cash and cash equivalents, marketable securities and foreign currency exchange contracts that hedge accounts receivable and forecasted sales are reported at their respective fair values on our Consolidated Balance Sheets. The carrying value and fair value of the Notes were  $3.48 billion and  $3.97 billion, respectively, as of December 31, 2010. The carrying value and fair value of the Notes were  $1.16 billion and  $1.58 billion, respectively as of December 31, 2009. The fair value of the Notes was based on their quoted market values. The remaining financial instruments are reported on our Consolidated Balance Sheets at amounts that approximate current fair values.

 

Recent Accounting Pronouncements

 

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet09.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Fair Value Measurements
12 Months Ended
Dec. 31, 2010
Fair Value Measurements
Fair Value Measurements
2. FAIR VALUE MEASUREMENTS

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy, which establishes three levels of inputs that may be used to measure fair value, as follows:

Level 1 inputs which include quoted prices in active markets for identical assets or liabilities;

Level 2 inputs which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

Level 3 inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies or similar valuation techniques, as well as significant management judgment or estimation.

 

Certain amounts within debt securities have been re-categorized in the accompanying tables to conform to the current presentation. The following table summarizes, for assets or liabilities recorded at fair value, the respective fair value and the classification by level of input within the fair value hierarchy defined above (in thousands):

 

    December 31, 2010     December 31, 2009  
    Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3     Total  

Assets:

               

Debt securities:

               

U.S. treasury securities

   $ 1,355,437       $ —         $ —         $ 1,355,437       $ 289,790       $ —         $ —         $ 289,790   

U.S.government agencies and FDIC guaranteed securities

    —          1,296,110        —          1,296,110        —          1,086,082        —          1,086,082   

Municipal debt securities

    —          17,625        —          17,625        —          433,474        —          433,474   

Non-U.S. government securities

    —          278,610        9,594        288,204        —          75,524        —          75,524   

Corporate debt securities

    —          1,119,254        —          1,119,254        —          566,176        —          566,176   

Residential mortgage and asset-backed securities

    —          277,043        —          277,043        —          120,407        839        121,246   

Student loan-backed securities

    —          —          70,771        70,771        —          —          104,823        104,823   
                                                               

Total debt securities

    1,355,437        2,988,642        80,365        4,424,444        289,790        2,281,663        105,662        2,677,115   

Equity securities

    4,631        —          —          4,631        3,470        —          —          3,470   

Derivatives

    —          64,461        —          64,461        —          26,198        —          26,198   
                                                               
   $ 1,360,068       $ 3,053,103       $ 80,365       $ 4,493,536       $ 293,260       $ 2,307,861       $ 105,662       $ 2,706,783   
                                                               

Liabilities:

               

Contingent consideration

    —          —          11,100        11,100        —          —          —          —     

Derivatives

    —          38,553        —          38,553        —          47,688        —          47,688   
   $ —         $ 38,553       $ 11,100       $ 49,653       $ —         $ 47,688       $ —         $ 47,688   
                                                               

Marketable securities, measured at fair value using Level 2 inputs, are primarily comprised of U.S. government agencies and FDIC guaranteed securities and corporate debt securities. We review trading activity and pricing for these investments as of the measurement date. When sufficient quoted pricing for identical securities is not available, we use market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data. This approach results in the Level 2 classification of these securities within the fair value hierarchy.

 

The following table is a reconciliation of marketable securities measured at fair value using significant unobservable inputs (Level 3) (in thousands):

 

     Year Ended December 31,  
     2010     2009  

Balance, beginning of period

    $ 105,662       $ 102,633   

Total realized and unrealized gains (losses) included in:

    

Interest and other income, net

     115        (29

Other comprehensive income, net

     5,026        10,332   

Sales of marketable securities

     (40,032     (7,274

Transfers into Level 3

     9,594        —     
                

Balance, end of period

    $ 80,365       $ 105,662   
                

Total losses included in interest and other income, net attributable to the change in unrealized losses relating to assets still held at the reporting date

    $ —         $ (29
                

Our policy is to recognize transfers into or out of Level 3 classification as of the actual date of the event or change in circumstances that caused the transfer. Marketable securities, measured at fair value using Level 3 inputs, are substantially comprised of auction rate securities within our available-for-sale investment portfolio. The underlying assets of our auction rate securities consist of student loans. Although auction rate securities would typically be measured using Level 2 inputs, the failure of auctions and the lack of market activity and liquidity experienced since the beginning of 2008 required that these securities be measured using Level 3 inputs. The fair value of our auction rate securities was determined using a discounted cash flow model that considered projected cash flows for the issuing trusts, underlying collateral and expected yields. Projected cash flows were estimated based on the underlying loan principal, bonds outstanding and payout formulas. The weighted-average life over which the cash flows were projected considered the collateral composition of the securities and related historical and projected prepayments. The underlying student loans have a weighted-average expected life of four to eight years. The discount rates used in our discounted cash flow model were based on market conditions for comparable or similar term asset-backed and other fixed income securities, adjusted for an illiquidity discount. This resulted in an annual discount rate of 2.12%. Our auction rate securities reset every seven to 14 days with maturity dates ranging from 2025 through 2040 and have annual interest rates ranging from 0.43% to 1.19%. As of December 31, 2010, our auction rate securities continued to earn interest.

Our auction rate securities were recorded in long-term marketable securities on our Consolidated Balance Sheets at December 31, 2010 and 2009. Although there continued to be failed auctions as well as lack of market activity and liquidity in 2010, we believe we had no other-than-temporary impairments on these securities as of December 31, 2010 because we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost basis.

 

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet10.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities
12 Months Ended
Dec. 31, 2010
Available-For-Sale Securities
Available-For-Sale Securities
3. AVAILABLE-FOR-SALE SECURITIES

The following table is a summary of available-for-sale debt and equity securities recorded in cash equivalents or marketable securities in our Consolidated Balance Sheets. Estimated fair values of available-for-sale securities are generally based on prices obtained from commercial pricing services (in thousands):

 

     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Estimated
Fair Value
 

December 31, 2010

          

Debt securities:

          

U.S. treasury securities

    $ 1,349,348        $ 7,109        $ (1,020    $ 1,355,437   

U.S. government agencies and FDIC guaranteed securities

     1,284,654         11,919         (463     1,296,110   

Municipal debt securities

     17,543         103         (21     17,625   

Non-U.S. government securities

     286,410         1,880         (86     288,204   

Corporate debt securities

     1,112,976         8,040         (1,762     1,119,254   

Residential mortgage and asset-backed securities

     277,359         923         (1,239     277,043   

Student loan-backed securities

     75,900         —           (5,129     70,771   
                                  

Total debt securities

     4,404,190         29,974         (9,720     4,424,444   

Equity securities

     1,451         3,180         —          4,631   
                                  

Total

    $ 4,405,641        $ 33,154        $ (9,720    $ 4,429,075   
                                  

December 31, 2009

          

Debt securities:

          

U.S. treasury securities

    $ 289,055        $ 844        $ (109    $ 289,790   

U.S. government agencies and FDIC guaranteed securities

     1,077,910         9,116         (944     1,086,082   

Municipal debt securities

     429,583         3,986         (95     433,474   

Non-U.S. government securities

     74,756         874         (106     75,524   

Corporate debt securities

     557,116         9,563         (503     566,176   

Residential mortgage and asset-backed securities

     119,308         2,048         (110     121,246   

Student loan-backed securities

     115,400         —           (10,577     104,823   
                                  

Total debt securities

     2,663,128         26,431         (12,444     2,677,115   

Equity securities

     1,451         2,019         —          3,470   
                                  

Total

    $ 2,664,579        $ 28,450        $ (12,444    $ 2,680,585   
                                  

The following table summarizes the classification of the available-for-sale debt and equity securities on our Consolidated Balance Sheets (in thousands):

 

     December 31, 2010      December 31, 2009  

Cash and cash equivalents

    $ 18,883        $ 48,697   

Short-term marketable securities

     1,190,789         384,017   

Long-term marketable securities

     3,219,403         2,247,871   
                 

Total

    $ 4,429,075        $ 2,680,585   
                 

 

The following table summarizes our portfolio of available-for-sale debt securities by contractual maturity (in thousands):

 

     December 31, 2010      December 31, 2009  
     Amortized
Cost
     Fair Value      Amortized
Cost
     Fair Value  

Less than one year

    $ 1,206,032        $ 1,209,672        $ 429,980        $ 432,714   

Greater than one year but less than five years

     3,022,744         3,044,114         1,878,589         1,898,183   

Greater than five years but less than ten years

     33,076         33,580         56,895         57,585   

Greater than ten years

     142,338         137,078         297,664         288,633   
                                   

Total

    $ 4,404,190        $ 4,424,444        $ 2,663,128        $ 2,677,115   
                                   

The following table summarizes the gross realized gains and losses related to sales of marketable securities (in thousands):

 

     Year Ended December 31,  
     2010     2009     2008  

Gross realized gains on sales

    $ 13,254       $ 10,373       $ 28,368   

Gross realized losses on sales

    $ (3,657    $ (1,405    $ (18,732

The cost of securities sold was determined based on the specific identification method.

 

The following table summarizes our available-for-sale debt securities that were in a continuous unrealized loss position, but were not deemed to be other-than-temporarily impaired (in thousands):

 

     Less Than 12 Months      12 Months or Greater      Total  
     Gross
Unrealized
Losses
    Estimated
Fair Value
     Gross
Unrealized
Losses
    Estimated
Fair Value
     Gross
Unrealized
Losses
    Estimated
Fair Value
 
              
              

December 31, 2010

              

Debt securities:

              

U.S. treasury securities

    $ (1,020    $ 531,184        $ —         $ —          $ (1,020    $ 531,184   

U.S. government agencies and FDIC guaranteed securities

     (463     226,176         —          —           (463     226,176   

Municipal debt securities

     (21     4,688         —          —           (21     4,688   

Non-U.S. government securities

     (86     44,317         —          —           (86     44,317   

Corporate debt securities

     (1,762     459,412         —          —           (1,762     459,412   

Residential mortgage and asset-backed securities

     (1,239     197,330         —          —           (1,239     197,330   

Student loan-backed securities

     —          —           (5,129     70,771         (5,129     70,771   
                                                  

Total

    $ (4,591    $ 1,463,107        $ (5,129    $ 70,771        $ (9,720    $ 1,533,878   
                                                  

December 31, 2009

              

Debt securities:

              

U.S. treasury securities

    $ (109    $ 97,871        $ —         $ —          $ (109    $ 97,871   

U.S. government agencies and FDIC guaranteed securities

     (944     223,901         —          —           (944     223,901   

Municipal debt securities

     (95     65,377         —          —           (95     65,377   

Non-U.S. government securities

     (106     30,924         —          —           (106     30,924   

Corporate debt securities

     (503     126,410         —          —           (503     126,410   

Residential mortgage and asset-backed securities

     (110     36,446         —          —           (110     36,446   

Student loan-backed securities

     —          —           (10,577     104,823         (10,577     104,823   
                                                  

Total

    $ (1,867    $ 580,929        $ (10,577    $ 104,823        $ (12,444    $ 685,752   
                                                  

As of December 31, 2010 and 2009, approximately 34% and 32%, respectively, of the total number of securities were in an unrealized loss position. The gross unrealized losses for auction rate securities were caused by a higher discount rate used in the valuation of these securities as compared to the coupon rates of these securities. The gross unrealized losses for the other securities were primarily the result of an increase in the yield-to-maturity of the underlying securities. No significant facts or circumstances have arisen to indicate that there has been any deterioration in the creditworthiness of the issuers of these securities. Based on our review of these securities, we believe we had no other-than-temporary impairments on these securities as of December 31, 2010 and 2009 because we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before the recovery of their amortized cost basis.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet11.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Derivative Financial Instruments
12 Months Ended
Dec. 31, 2010
Derivative Financial Instruments
Derivative Financial Instruments
4. DERIVATIVE FINANCIAL INSTRUMENTS

We operate in foreign countries, which exposes us to market risk associated with foreign currency exchange rate fluctuations between the U.S. dollar and various foreign currencies, the most significant of which is the Euro. In order to manage this risk, we hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward and option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we limit the risk that counterparties to these contracts may be unable to perform. We also limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrecognized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes, nor do we hedge our net investment in any of our foreign subsidiaries.

We hedge our exposure to foreign currency exchange rate fluctuations for certain monetary assets and liabilities of our foreign subsidiaries that are denominated in a non-functional currency. The derivative instruments we use to hedge this exposure are not designated as hedges, and as a result, changes in their fair value are recorded in interest and other income, net on our Consolidated Statements of Income.

We hedge our exposure to foreign currency exchange rate fluctuations for forecasted product sales that are denominated in a non-functional currency. The derivative instruments we use to hedge this exposure are designated as cash flow hedges and have maturity dates of 18 months or less. Upon executing a hedging contract and quarterly thereafter, we assess prospective hedge effectiveness using a regression analysis which calculates the change in cash flow as a result of the hedge instrument. On a monthly basis, we assess retrospective hedge effectiveness using a dollar offset approach. We exclude time value from our effectiveness testing and recognize changes in the time value of the hedge in interest and other income, net. The effective component of our hedge is recorded as an unrealized gain or loss on the hedging instrument in accumulated other comprehensive income (OCI) within stockholders' equity. When the hedged forecasted transaction occurs, the hedge is de-designated and the unrealized gains or losses are reclassified into product sales. The majority of gains and losses related to the hedged forecasted transactions reported in accumulated OCI at December 31, 2010 will be reclassified to product sales within 12 months.

We had notional amounts on foreign currency exchange contracts outstanding of  $3.55 billion and  $3.45 billion at December 31, 2010 and 2009, respectively.

 

The following table summarizes information about the fair values of derivative instruments on our Consolidated Balance Sheets (in thousands):

 

     As of December 31, 2010  
     Asset Derivatives      Liability Derivatives  
     Location      Fair Value      Location      Fair Value  

Derivatives designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
    $ 59,276        
 
Other accrued
liabilities
  
  
    $ 36,493   

Foreign currency exchange contracts

    
 
Other noncurrent
assets
  
  
     5,089        
 
Other long-term
obligations
  
  
     2,022   
                       

Total derivatives designated as hedges

        64,365            38,515   
                       

Derivatives not designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
     96        
 
Other accrued
liabilities
  
  
     38   
                       

Total derivatives not designated as hedges

        96            38   
                       

Total derivatives

       $ 64,461           $ 38,553   
                       
     As of December 31, 2009  
     Asset Derivatives      Liability Derivatives  
     Location      Fair Value      Location      Fair Value  

Derivatives designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
    $ 16,183        
 
Other accrued
liabilities
  
  
    $ 45,482   

Foreign currency exchange contracts

    
 
Other noncurrent
assets
  
  
     10,010        
 
Other long-term
obligations
  
  
     2,180   
                       

Total derivatives designated as hedges

        26,193            47,662   
                       

Derivatives not designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
     5        
 
Other accrued
liabilities
  
  
     26   
                       

Total derivatives not designated as hedges

        5            26   
                       

Total derivatives

       $ 26,198           $ 47,688   
                       

The following table summarizes the effect of our foreign currency exchange contracts on our Consolidated Statements of Income (in thousands):

 

     Year Ended December 31  
     2010      2009  

Derivatives designated as hedges:

     

Net gains (losses) recognized in OCI (effective portion)

    $ 115,073        $ (29,698

Net gains reclassified from accumulated OCI into product sales (effective portion)

    $ 73,720        $ 81,694   

Net gains (losses) recognized in interest and other income, net (ineffective portion and amounts excluded from effectiveness testing)

    $ 887        $ (14,493

Derivatives not designated as hedges:

     

Net gains (losses) recognized in interest and other income, net

    $ 66,639        $ (11,981

 

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet12.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Acquisitions
12 Months Ended
Dec. 31, 2010
Acquisitions
Acquisitions
5. ACQUISITIONS

On January 1, 2009, we adopted guidance for recognizing and measuring assets acquired, liabilities assumed and any noncontrolling interests in the acquiree in a business combination. The guidance requires, for example, that IPR&D be capitalized at fair value as intangible assets at the time of acquisition and acquisition-related expenses and restructuring costs be recognized separately from the business combination. We adopted the provisions of this guidance on a prospective basis and applied it to our acquisitions of CGI in 2010 and CV Therapeutics in 2009, as discussed below.

CGI Pharmaceuticals, Inc.

In June 2010, we entered into an agreement to acquire CGI for up to  $120.0 million in cash, consisting of  $91.0 million as an upfront payment and up to  $29.0 million of contingent consideration payable based on the achievement of clinical development milestones. This transaction closed on July 8, 2010, at which time CGI became a wholly-owned subsidiary. CGI was a privately-held development stage pharmaceutical company based in Branford, Connecticut, primarily focused on small molecule chemistry and protein kinase biology. The lead preclinical compound from CGI's library of proprietary small molecule kinase inhibitors targets spleen tyrosine kinase (Syk) and could have unique applications for the treatment of serious inflammatory diseases, including rheumatoid arthritis. We believe the acquisition provides us with an opportunity to expand our research efforts in an interesting and promising area of drug discovery.

The CGI acquisition was accounted for as a business combination. The results of operations of CGI since July 8, 2010 have been included in our Consolidated Statements of Income and were not significant.

The acquisition-date fair value of the total consideration transferred to acquire CGI was  $102.1 million, and consisted of cash paid at or prior to closing of  $91.0 million and contingent consideration of  $11.1 million.

The following table summarizes the fair value of the assets acquired and liabilities assumed at July 8, 2010 (in thousands):

 

Intangible assets—IPR&D

    $ 26,630   

Goodwill

     70,111   

Deferred tax assets

     12,656   

Deferred tax liabilities

     (6,313

Other net liabilities assumed

     (984
        

Total consideration transferred

    $ 102,100   
        

Intangible Assets

Intangible assets associated with in-process research and development (IPR&D) projects relate to the preclinical Syk product candidate. Management estimated the acquisition-date fair value of intangible assets related to IPR&D to be  $26.6 million. The estimated fair value was determined using the income approach, which discounts expected future cash flows to present value. We estimated the fair value using a present value discount rate of 18%, which is based on the estimated weighted-average cost of capital for companies with profiles substantially similar to that of CGI. This is comparable to the estimated internal rate of return for CGI's operations and represents the rate that market participants would use to value the intangible assets. The projected cash flows from the IPR&D project was based on key assumptions such as: estimates of revenues and operating profits related to the project considering its stage of development; the time and resources needed to complete the development and approval of the product candidate; the life of the potential commercialized product and associated risks, including the inherent difficulties and uncertainties in developing a drug compound such as obtaining marketing approval from the FDA and other regulatory agencies; and risks related to the viability of and potential alternative treatments in any future target markets. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis as well as between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. If and when development is complete, which generally occurs if and when regulatory approval to market a product is obtained, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

Goodwill

The excess of the consideration transferred over the fair values assigned to the assets acquired and liabilities assumed is  $70.1 million, which represents the goodwill amount resulting from the CGI acquisition. Management believes that the goodwill mainly represents the synergies expected from combining our research and development operations as well as acquiring CGI's assembled workforce and other intangible assets that do not qualify for separate recognition. We recorded the goodwill as an intangible asset in our Consolidated Balance Sheet as of the acquisition date. Goodwill is tested for impairment on an annual basis as well as between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the goodwill below its carrying amount. As we have elected to treat the CGI acquisition as an asset acquisition for California state tax purposes, the goodwill resulting from the acquisition is deductible for California state income tax purposes, although such amounts are not deductible for federal income tax purposes.

We do not consider the CGI acquisition to be a material business combination and therefore have not disclosed the pro forma results of operations as required for material business combinations.

CV Therapeutics, Inc.

On April 15, 2009, we acquired CV Therapeutics through a cash tender offer under the terms of an agreement and plan of merger entered into in March 2009. CV Therapeutics was a publicly-held biopharmaceutical company based in Palo Alto, California, primarily focused on the discovery, development and commercialization of small molecule drugs for the treatment of cardiovascular, metabolic and pulmonary diseases. CV Therapeutics had two marketed products, Ranexa for the treatment of chronic angina and Lexiscan injection for use as a pharmacologic stress agent in radionuclide MPI in patients unable to undergo adequate exercise stress. CV Therapeutics also had several product candidates in clinical development for the treatment of cardiovascular, metabolic and pulmonary diseases.

The CV Therapeutics acquisition was accounted for as a business combination. The results of operations of CV Therapeutics since April 15, 2009 have been included in our Consolidated Statements of Income. The acquisition date was determined to be April 15, 2009 as that is the date on which we acquired approximately 89% of the outstanding shares of common stock of CV Therapeutics and obtained effective control of the company. The acquisition was completed two days later on April 17, 2009, at which time CV Therapeutics became a wholly-owned subsidiary.

The aggregate consideration transferred to acquire CV Therapeutics was  $1.39 billion, and consisted of cash paid for common stock and other equity instruments at or prior to closing of  $1.38 billion and the fair value of vested stock options assumed of  $15.7 million.

 

In accordance with the merger agreement, the number of Gilead stock options and restricted stock units into which assumed CV Therapeutics' stock options and restricted stock units were converted was determined based on an option conversion ratio. This conversion ratio was calculated by taking the per share acquisition price of  $20.00 and dividing it by the average closing price of our common stock for the five consecutive trading days immediately preceding (but not including) the closing date of April 17, 2009, which was  $46.24 per share. The fair value of stock options assumed was calculated using a Black-Scholes valuation model with the following assumptions: market price of  $44.54 per share, which was the closing price of our common stock on the acquisition date; expected term ranging from 0.1 to 5.2 years; risk-free interest rate ranging from 0.1% to 1.7%; expected volatility ranging from 37.4% to 43.2%; and no dividend yield. The fair value of restricted stock units assumed was calculated using the acquisition-date closing price of  $44.54 per share for our common stock.

 

We included the fair value of vested stock options assumed by us of  $15.7 million in the consideration transferred for the acquisition. We did not assume any vested restricted stock units. The estimated fair value of unvested stock options and restricted stock units assumed by us of  $11.2 million was not included in the consideration transferred and is being recognized as stock-based compensation expenses over the remaining future vesting period of the awards.

The following table summarizes the assets acquired and liabilities assumed at April 15, 2009 (in thousands):

 

Intangible assets—marketed products

    $ 951,200   

Intangible assets—IPR&D

     138,900   

Goodwill

     341,910   

Deferred tax assets

     413,816   

Deferred tax liabilities

     (426,861

Other assets/liabilities

  

Cash and cash equivalents

     129,087   

Marketable securities

     116,363   

Accounts receivable

     9,136   

Inventories

     50,455   

Prepaids and other current assets

     60,671   

Property, plant and equipment

     11,672   

Other assets

     20,162   

Accounts payable

     (5,089

Accrued and other current liabilities

     (87,898

Convertible senior notes

     (303,060

Other liabilities

     (27,906
        

Total other net liabilities

     (26,407
        

Total consideration transferred

    $ 1,392,558   
        

Intangible Assets

A substantial portion of the assets acquired consisted of intangible assets related to CV Therapeutics' two marketed products, Ranexa and Lexiscan, and CV Therapeutics' IPR&D projects. Management determined that the estimated acquisition-date fair values of the intangible assets related to the marketed products and IPR&D projects were  $951.2 million and  $138.9 million, respectively.

 

Of the  $951.2 million of intangible assets related to the marketed products,  $688.4 million related to Ranexa and  $262.8 million related to Lexiscan. We have determined that these intangible assets have finite useful lives and will be amortized over their respective useful lives, which we estimated to be the periods over which the associated product patents will expire as those are the periods over which the intangible assets are expected to contribute to the future cash flows of the related products.

We are amortizing the intangible asset related to Ranexa over its estimated useful life using an amortization rate derived from our forecasted future product sales for Ranexa. We are amortizing the intangible asset related to Lexiscan over its estimated useful life on a straight-line basis. Given that current Lexiscan revenues consist of royalties received from a collaboration partner and our lack of ongoing access and visibility into that partner's future sales forecasts, we cannot make a reasonable estimate of the amortization rate using a forecasted product sales approach. The weighted-average amortization period for these intangible assets is approximately ten years.

Of the  $138.9 million of intangible assets related to the IPR&D projects,  $93.4 million related to GS 9667 (formerly CVT-3619), a product candidate that was in Phase 1 clinical studies for the treatment of diabetes and hypertriglyceridemia. The remaining balance of the intangible assets related to IPR&D projects represented various other in-process projects with no single project comprising a significant portion of the total value. Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the associated R&D efforts. During the period the assets are considered indefinite-lived, they will not be amortized but will be tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the IPR&D projects below their respective carrying amounts. During the fourth quarter of 2010, we recorded  $136.0 million of impairment charges related to certain IPR&D assets acquired from CV Therapeutics which we had no future plans to develop and which were deemed to have no future use to us or other market participants. These charges related to the GS 9667, Adentri and tecadenoson programs and were recorded in R&D expense. The majority of the impairment charge related to our GS 9667 program, which was terminated in the fourth quarter of 2010 due to unfavorable results from pharmacokinetics and pharmacodynamics tests that demonstrated limited effectiveness of the compound in patients. Given these results, we do not believe it has alternative future uses for us or other market participants. As of December 31, 2010, we had  $2.9 million of IPR&D assets acquired from CV Therapeutics remaining on our Consolidated Balance Sheet.

Deferred Tax Assets and Deferred Tax Liabilities

The  $413.8 million of deferred tax assets resulting from the acquisition was primarily related to federal and state net operating loss and tax credit carryforwards. The  $426.9 million of deferred tax liabilities resulting from the acquisition was primarily related to the difference between the book basis and tax basis of the intangible assets related to the marketed products and IPR&D projects. We have concluded that it is more likely than not that we will not realize the benefit from deferred tax assets related to certain state net operating loss carryforwards. As a result, a valuation allowance of  $15.1 million was recorded related to those deferred tax assets. For presentation purposes, the  $426.9 million of deferred tax liabilities, all of which is of a noncurrent nature, has been netted against noncurrent deferred tax assets on our Consolidated Balance Sheet. As a result of the impairment charges recorded in the fourth quarter of 2010, we reduced the deferred tax liabilities related to IPR&D projects by  $49.7 million.

Convertible Senior Notes

As a result of the acquisition, we assumed convertible notes from CV Therapeutics consisting of 2.75% senior subordinated convertible notes due 2012, 3.25% senior subordinated convertible notes due 2013 and 2.0% senior subordinated convertible debentures due 2023. All of these convertible notes were recognized at their fair values at the acquisition date. In May 2009, we offered to repurchase these convertible notes in consideration for their par value plus accrued interest, as required under the terms of the respective convertible note agreements following the occurrence of a change in control or fundamental change as defined in the agreements. As of December 31, 2010, all of these convertible notes have been extinguished.

Goodwill

The excess of the consideration transferred over the fair values assigned to the assets acquired and liabilities assumed was  $341.9 million, which represents the goodwill amount resulting from the acquisition. Management believes that the goodwill mainly represents the synergies and economies of scale expected from combining our operations with CV Therapeutics. None of the goodwill is expected to be deductible for income tax purposes. We recorded the goodwill as an intangible asset in our Consolidated Balance Sheet as of the acquisition date. Goodwill is tested for impairment on an annual basis and between annual tests if we become aware of any events occurring or changes in circumstances that would indicate a reduction in the fair value of the goodwill below its carrying amount.

Navitas Assets, LLC

In May 2008, we executed an asset purchase agreement with Navitas Assets, LLC (Navitas) to acquire all of the assets related to its cicletanine business. We acquired the exclusive rights to regulatory data and filings for development of cicletanine as a monotherapy for PAH and for other indications in the United States. We are evaluating cicletanine, currently in Phase 2 clinical trials, as a potential treatment of PAH.

The aggregate consideration transferred for the acquisition was  $10.9 million, and consisted primarily of cash paid. In addition, Navitas is entitled to potential additional purchase consideration, including payments contingent on future achievement of certain development and regulatory milestones. These amounts will be recorded when and if the related contingencies are resolved. The consideration transferred was allocated to IPR&D which represents the purchased IPR&D program for cicletanine that had not yet reached technological feasibility and had no alternative future uses as of the acquisition date, and therefore, was expensed upon acquisition within our Consolidated Statement of Income.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet13.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Restructuring
12 Months Ended
Dec. 31, 2010
Restructuring
Restructuring
6. RESTRUCTURING

During the second quarter of 2010, we implemented a plan to close our research operations in Durham, North Carolina and consolidate our liver disease research activities in Foster City, California. The restructuring plan includes consolidation of the liver disease R&D organization and our exit from certain facilities. During the year, we recorded a total of  $14.6 million and  $10.4 million in SG&A expenses and R&D expenses, respectively, related to employee severance and facilities-related expenses under this plan. In December 2010, we closed our operations in Durham. We do not expect to incur any additional significant costs in connection with this plan.

During the second quarter of 2009, we approved a plan to realize certain synergies as a result of the CV Therapeutics acquisition by re-aligning our cardiovascular operations and eliminating redundancies. The restructuring plan included consolidation and re-alignment of the cardiovascular R&D organization, our exit from certain facilities and the termination of certain contractual obligations. In 2010, we recorded  $10.6 million and  $3.4 million of restructuring expenses in SG&A and R&D expenses, respectively. Comparatively, in 2009, we recorded  $26.2 million and  $25.7 million in SG&A and R&D expenses, respectively. In both years, the expenses primarily related to employee severance, relocation, lease termination costs and other facilities-related expenses. Total costs incurred under this plan were  $36.8 million and  $29.1 million in SG&A and R&D expenses, respectively. We do not expect to incur any additional costs in connection with this plan.

The following table summarizes the restructuring liabilities accrued for and changes in those amounts during the period for the restructuring plan related to our cardiovascular operations (in thousands):

 

     Employee
Severance
and
Termination
Benefits
    Facilities-
Related
Costs
 

Balance at December 31, 2008

    $ —         $ —     

Costs incurred during the period

     33,797        9,880   

Costs paid or settled during the period

     (24,108     (545
                

Balance at December 31, 2009

    $ 9,689       $ 9,335   

Costs incurred during the period

     2,190        9,727   

Costs paid or settled during the period

     (11,445     (4,529
                

Balance at December 31, 2010

    $ 434       $ 14,533   
              
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet14.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Inventories
12 Months Ended
Dec. 31, 2010
Inventories
Inventories
7. INVENTORIES

Inventories are summarized as follows (in thousands):

 

     December 31,  
     2010      2009  

Raw materials

    $ 408,015        $ 333,582   

Work in process

     454,652         392,042   

Finished goods

     341,142         326,147   
                 

Total inventories

    $ 1,203,809        $ 1,051,771   
                 

As of December 31, 2010 and 2009, the joint ventures formed by Gilead and BMS (see Note 10), which are included in our Consolidated Financial Statements, held  $811.9 million and  $667.8 million in inventory, respectively, of efavirenz active pharmaceutical ingredient purchased from BMS at BMS' estimated net selling price of efavirenz.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet15.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Property, Plant and Equipment
12 Months Ended
Dec. 31, 2010
Property, Plant and Equipment
Property, Plant and Equipment
8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are summarized as follows (in thousands):

 

     December 31,  
     2010     2009  

Property, plant and equipment, net:

    

Buildings and improvements (including leasehold improvements)

    $ 501,401       $ 490,632   

Laboratory and manufacturing equipment

     168,711        176,362   

Office and computer equipment

     116,479        126,375   

Capitalized leased equipment

     10,865        15,232   

Construction in progress

     82,334        58,448   
                

Subtotal

     879,790        867,049   

Less accumulated depreciation and amortization (including  $10,451 and  $14,999 relating to capitalized leased equipment for 2010 and 2009, respectively)

     (316,367     (304,888
                

Subtotal

     563,423        562,161   

Land

     137,812        137,809   
                

Total

    $ 701,235       $ 699,970   
                

In January 2009, we completed the purchase of an office building and approximately 30 acres of land located in Foster City, California, for an aggregate purchase price of  $140.1 million. Based on the estimated relative fair values, the purchase price was allocated primarily to land of  $71.6 million, building of  $64.3 million, land improvements of  $2.7 million and office furniture and equipment of  $1.1 million.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet16.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets
12 Months Ended
Dec. 31, 2010
Intangible Assets
Intangible Assets
9. INTANGIBLE ASSETS

The following table summarizes the carrying amount of our intangible assets (in thousands):

 

     December 31,  
     2010      2009  

Goodwill

    $ 532,669        $ 462,558   

Finite lived intangible assets

     863,393         923,319   

Indefinite lived intangible assets

     29,530         138,900   
                 

Total

    $ 1,425,592        $ 1,524,777   
                 

 

The following table summarizes the changes in the carrying amount of goodwill (in thousands):

 

Balance at December 31, 2009

    $ 462,558   

Goodwill resulting from the acquisition of CGI

     70,111   
        

Balance at December 31, 2010

    $ 532,669   
        

 

The following table summarizes our finite-lived intangible assets (in thousands):

 

     December 31, 2010      December 31, 2009  
     Gross Carrying
Amount
     Accumulated
Amortization
     Gross Carrying
Amount
     Accumulated
Amortization
 

Intangible asset—Ranexa

    $ 688,400        $ 54,795        $ 688,400        $ 21,889   

Intangible asset—Lexiscan

     262,800         43,979         262,800         18,235   

Other

     22,095         11,128         22,095         9,852   
                                   

Total

    $ 973,295        $ 109,902        $ 973,295        $ 49,976   
                                   

Amortization expense related to intangible assets was  $59.9 million for the year ended December 31, 2010, and was recorded in cost of goods sold in our Consolidated Statement of Income. Amortization expense related to intangible assets was  $43.4 million for the year ended December 31, 2009 and was recorded primarily in cost of goods sold in our Consolidated Statement of Income. Amortization expense related to intangible assets was  $2.8 million for the year ended December 31, 2008 and was recorded primarily in SG&A expenses in our Consolidated Statement of Income. The weighted-average amortization period for these intangible assets is approximately ten years.

As of December 31, 2010, the estimated future amortization expense associated with our intangible assets for each of the five succeeding fiscal years is as follows (in thousands):

 

Fiscal Year

   Amount  

2011

    $ 69,324   

2012

     75,776   

2013

     82,086   

2014

     90,940   

2015

     100,647   
        

Total

    $ 418,773   
        

As of December 31, 2010, we had indefinite-lived intangible assets of  $29.5 million, which consisted of  $26.6 million and  $2.9 million of purchased IPR&D from our acquisitions of CGI and CV Therapeutics, respectively. During the fourth quarter of 2010, we recorded  $136.0 million of impairment charges related to certain IPR&D assets acquired from CV Therapeutics which we had no future plans to develop and which were deemed to have no future use to us or other market participants. These charges related to the GS 9667, Adentri and tecadenoson programs and were recorded in R&D expense. The majority of the impairment charge related to our GS 9667 program, a product candidate that was in Phase 1 clinical studies for the treatment of diabetes and hypertriglyceridemia, which was terminated in the fourth quarter of 2010 due to unfavorable results from pharmacokinetics and pharmacodynamics tests that demonstrated limited effectiveness of the compound in patients. Given these results, we do not believe it has alternative future uses for us or other market participants. As of December 31, 2009, we had indefinite-lived intangible assets of  $138.9 million related to purchased IPR&D from our acquisition of CV Therapeutics.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet17.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Collaborative Arrangements
12 Months Ended
Dec. 31, 2010
Collaborative Arrangements
Collaborative Arrangements
10. COLLABORATIVE ARRANGEMENTS

As a result of entering into strategic collaborations from time to time, we may hold investments in non-public companies. We review our interests in our investee companies for consolidation and/or appropriate disclosure based on applicable guidance. As disclosed in Note 1, we determined that certain of our investee companies are variable interest entities; however, other than with respect to our joint ventures with BMS, we are not the primary beneficiary and therefore do not consolidate these investees.

Bristol-Myers Squibb Company

North America

In December 2004, we entered into a collaboration arrangement with BMS in the United States to develop and commercialize a single tablet regimen containing our Truvada and BMS's Sustiva (efavirenz), which we sell as Atripla. The collaboration is structured as a joint venture and operates as a limited liability company named Bristol-Myers Squibb & Gilead Sciences, LLC, which we consolidate. The ownership interests of the joint venture and thus the sharing of product revenue and costs reflect the respective economic interests of BMS and Gilead and are based on the proportions of the net selling price of Atripla attributable to efavirenz and Truvada. Since the net selling price for Truvada may change over time relative to the net selling price of efavirenz, both BMS's and our respective economic interests in the joint venture may vary annually.

We share marketing and sales efforts with BMS and both parties are obligated to provide equivalent sales force efforts for a minimum number of years. Starting in the second quarter of 2011, except for a limited number of activities that will be jointly managed, the parties will no longer coordinate detailing and promotional activities in the United States. The parties will continue to collaborate on activities such as manufacturing, regulatory, compliance and pharmacovigilance. We are responsible for accounting, financial reporting, tax reporting, manufacturing and product distribution for the joint venture. Both parties provide their respective bulk active pharmaceutical ingredients to the joint venture at their approximate market values. In July 2006, the joint venture received approval from the FDA to sell Atripla in the United States. In September 2006, we and BMS amended the joint venture's collaboration agreement to allow the joint venture to sell Atripla into Canada and in October 2007, the joint venture received approval from Health Canada to sell Atripla in Canada. As December 31, 2010 and 2009, the joint venture held efavirenz active pharmaceutical ingredient which it purchased from BMS at BMS's estimated net selling price of efavirenz in the U.S. market. These amounts are included in inventories on our Consolidated Balance Sheets. As of December 31, 2010 and 2009, total assets held by the joint venture were  $1.45 billion and  $1.40 billion, respectively, and consisted primarily of cash and cash equivalents, accounts receivable (including intercompany receivables with Gilead) and inventories. As of December 31, 2010 and 2009, total liabilities held by the joint venture were  $759.5 million and  $1.03 billion, respectively, and consisted primarily of accounts payable (including intercompany payables with Gilead) and other accrued expenses. These asset and liability amounts do not reflect the impact of intercompany eliminations that are included in our Consolidated Balance Sheets. Although we are the primary beneficiary of the joint venture, the legal structure of the joint venture limits the recourse that its creditors will have over our general credit or assets.

Europe

In December 2007, Gilead Sciences Limited (GSL), a wholly-owned subsidiary in Ireland, and BMS entered into a collaboration arrangement to commercialize and distribute Atripla in the European Union, Iceland, Liechtenstein, Norway and Switzerland (collectively, the European Territory). The parties formed a limited liability company which we consolidate, to manufacture Atripla for distribution in the European Territory using efavirenz that it purchases from BMS at BMS's estimated net selling price of efavirenz in the European Territory. We are responsible for product distribution, inventory management and warehousing. Through our local subsidiaries, we have primary responsibility for order fulfillment, collection of receivables, customer relations and handling of sales returns in all the territories where we co-promote Atripla with BMS. We are also responsible for accounting, financial reporting and tax reporting for the collaboration. In December 2007, the European Commission approved Atripla for sale in the European Union. As of December 31, 2010 and 2009, efavirenz purchased from BMS at BMS's estimated net selling price of efavirenz in the European Territory is included in inventories on our Consolidated Balance Sheets.

The parties also formed a limited liability company to hold the marketing authorization for Atripla in Europe. We have primary responsibility for regulatory activities and we share marketing and sales efforts with BMS. In the major market countries, both parties have agreed to provide equivalent sales force efforts. Revenue and cost sharing is based on the relative ratio of the respective net selling prices of Truvada and efavirenz.

PARI GmbH

As a result of our acquisition of Corus Pharma, Inc. (Corus) in August 2006, we assumed all rights to the February 2002 development agreement between Corus and PARI GmbH (PARI) for the development of Cayston and development of an inhalation delivery device for this product. Under the terms of the agreement, we are obligated to pay PARI for services rendered, and subject to the achievement of specific milestones, we are obligated to pay certain milestone payments to PARI. In addition, we will make royalty payments based on net sales of Cayston. The agreement also provided us the right to reduce the royalty rate payable to PARI. In November 2007, we paid PARI  $13.5 million to reduce the royalty rate under the agreement. As Cayston had not yet been approved for commercialization at the time of the payment, we recorded this payment in R&D expenses in our Consolidated Statement of Income. In April 2008, pursuant to the February 2002 development agreement, we entered into a commercialization agreement with PARI which provides for the supply and manufacture of an inhalation delivery device and accessories for use with Cayston. Under the terms of this agreement, we are obligated to pay royalties on future net sales of these products pursuant to the 2002 development agreement.

In February 2010, we received marketing approval from the FDA for Cayston as a treatment to improve respiratory symptoms in CF patients with P. aeruginosa. Cayston was conditionally approved in Europe and Canada in September 2009.

Parion Sciences, Inc.

In August 2007, we entered into a research collaboration and license agreement with Parion Sciences, Inc. (Parion) to research, develop and commercialize certain epithelial sodium channel (ENaC) inhibitors for the treatment of pulmonary diseases. The agreement granted us worldwide commercialization rights to GS 9411 (formerly P-680), an ENaC inhibitor discovered by Parion, for the treatment of pulmonary diseases, including CF, chronic obstructive pulmonary disease and non-CF bronchiectasis. In accordance with the terms of the agreement, we paid a  $5.0 million up-front license fee that was recorded in R&D expenses in our Consolidated Statement of Income as there was no future alternative use for this technology, and made a  $5.0 million investment in Parion in the form of convertible debt, which was recorded as other noncurrent assets in our Consolidated Balance Sheet. Under the collaboration agreement, we will lead all development and commercialization activities and provide funding of full time equivalent employees for certain research activities. In addition, we are obligated to make additional payments upon the achievement of certain milestones and pay royalties on future net sales of products that are developed and approved in relation to this collaboration. In August 2010, development of GS 9411 was terminated and the term of the research collaboration was extended to identify additional ENaC inhibitors for development.

Roche

In September 1996, we entered into a development and license agreement (the 1996 Agreement) with Roche to develop and commercialize therapies to treat and prevent viral influenza. Tamiflu, an antiviral oral formulation for the treatment and prevention of influenza, was co-developed by us and Roche. Under the 1996 Agreement, Roche has the exclusive right to manufacture and sell Tamiflu worldwide, subject to its obligation to pay us a percentage of the net revenues that Roche generates from Tamiflu sales, which, in turn, has been subject to reduction for certain defined manufacturing costs.

In November 2005, we entered into a first amendment and supplement to the 1996 Agreement with Roche. The amended agreement provided for the formation of a joint manufacturing committee to review Roche's manufacturing capacity for Tamiflu and its global plans for manufacturing Tamiflu, a U.S. commercial committee to evaluate commercial plans and strategies for Tamiflu in the United States and a joint supervisory committee to evaluate Roche's overall commercial plans for Tamiflu on a global basis in each case, consisting of representatives of Roche and us. Under the amended agreement, we also have the option to provide a specialized sales force to supplement Roche's marketing efforts in the United States for Tamiflu.

The royalties payable to us on net sales of Tamiflu sold by Roche remain the same under the amended agreement, which are as follows: (a) 14% of the first  $200.0 million in worldwide net sales in a given calendar year; (b) 18% of the next  $200.0 million in worldwide net sales during the same calendar year; and (c) 22% of worldwide net sales in excess of  $400.0 million during the same calendar year.The amended agreement revised the provision in the 1996 Agreement relating to the calculation of royalty payments such that in any given calendar quarter Roche will pay royalties based on the actual royalty rates applicable to such quarter. In addition, under the amended agreement, royalties payable by Roche to us will no longer be subject to a cost of goods sold adjustment that was provided in the 1996 Agreement. We recorded a total of  $386.5 million,  $392.7 million and  $155.5 million of Tamiflu royalties in 2010, 2009 and 2008, respectively.

As a result of our acquisition of CV Therapeutics in April 2009, we assumed all rights to the agreement between CV Therapeutics and Roche under which we have an exclusive worldwide license to Ranexa. Under the license agreement, we paid an initial license fee and are obligated to make certain payments to Roche upon receipt of the first and second product approvals for Ranexa in any of the following major market countries: France, Germany, Italy, the United States and the United Kingdom. In January 2006, we received FDA approval for Ranexa for the treatment of chronic angina and paid  $11.0 million to Roche in accordance with the agreement. In July 2008, we received marketing authorization from the European Medicines Agency (EMEA) for Ranexa for the treatment of chronic angina in all 27 European Union member states and paid  $9.0 million to Roche related to this approval. This amount was capitalized as a noncurrent asset on our Consolidated Balance Sheet and is being amortized over its useful patent life, which is approximately 11 years, expiring in September 2019.

In June 2006, we entered into an amendment to the agreement with Roche related to Ranexa. This amendment provided us with exclusive worldwide commercial rights to Ranexa for all potential indications in humans. Under the terms of the amendment, we made an upfront payment to Roche and are obligated to make royalty payments to Roche on worldwide net product sales of any licensed products. In addition, we are obligated to make additional milestone payments upon the achievement of certain regulatory approvals.

Japan Tobacco Inc.

In March 2005, Japan Tobacco Inc. (Japan Tobacco) granted us exclusive rights to develop and commercialize elvitegravir, a novel HIV integrase inhibitor formerly known as GS 9137, in all countries of the world, excluding Japan, where Japan Tobacco retained such rights. Under the terms of the agreement, we incurred an up-front license fee of  $15.0 million which was included in R&D expenses in 2005 as there was no future alternative use for this technology. In March 2006, we recorded  $5.0 million in R&D expenses related to a milestone we incurred as a result of dosing the first patient in a Phase 2 clinical study and in July 2008, we recorded  $7.0 million in R&D expenses related to a milestone we paid related to the dosing of the first patient in a Phase 3 clinical study. We are obligated to make additional payments upon the achievement of other milestones as well as pay royalties on any future product sales arising from this collaboration.

GlaxoSmithKline Inc.

In April 2002, we granted GSK the right to commercialize Hepsera, our oral antiviral for the treatment of chronic hepatitis B, in Asia, Latin America and certain other territories. Under the agreement, we retained rights to Hepsera in the United States, Canada, Europe, Australia, New Zealand and Turkey. GSK received exclusive rights to develop Hepsera solely for the treatment of chronic hepatitis B in all of its territories, the most significant of which include China, Japan, South Korea and Taiwan. GSK has full responsibility for the development and commercialization of Hepsera in its territories. Under the terms of the agreement, we received an up-front license payment of  $10.0 million and from 2002 to 2004, we received an aggregate of  $17.0 million in milestone payments related to the commercial approvals of Hepsera in various countries. In 2006, we received an aggregate of  $10.0 million in milestone payments from GSK for the achievement by GSK of four consecutive quarters of Hepsera gross sales exceeding  $75.0 million and the achievement of a certain drug status in China. The up-front license fee and milestone payments had been recorded as deferred revenue with a total of  $3.4 million and  $3.6 million being amortized into contract revenue in 2008 and 2007, respectively. During the first quarter of 2009, we terminated our supply agreement with GSK to allow GSK to assume all manufacturing and supply obligations for Hepsera for use in the GSK territories. As a result of the termination of this supply agreement, we recognized the remaining  $24.5 million balance of deferred revenue into contract revenue as of March 31, 2009. Under the terms of the agreement, GSK is also required to pay us royalties on net sales that GSK generates from sales of Hepsera and Epivir-HBV/Zeffix (GSK's hepatitis product) in the GSK territories. We recorded  $48.0 million,  $32.4 million and  $31.7 million of royalty revenues in 2010, 2009 and 2008, respectively.

In November 2009, we entered into an agreement with GSK to commercialize Viread for the treatment of chronic hepatitis B in five countries in Asia. Under the agreement, we will retain exclusive rights for commercialization of Viread for chronic hepatitis B in Hong Kong, Singapore, South Korea and Taiwan. In China, GSK will have exclusive commercialization rights for Viread for chronic hepatitis B. Each company will pay royalties to the other on sales of Viread for chronic hepatitis B in their respective Asian territories.

In September 2010, we granted GSK the exclusive right to commercialize tenofovir disoproxil fumarate for chronic hepatitis B in Japan. GSK will be required to pay us royalties on sales of tenofovir disoproxil fumarate for chronic hepatitis B in this territory.

As a result of our acquisition of Myogen, Inc. (Myogen) in November 2006, we assumed all rights to the March 2006 license and distribution and supply agreements between Myogen and GSK. Under the terms of the license agreement, GSK has exclusive rights to market ambrisentan (the active pharmaceutical ingredient in Letairis) under the name Volibris for PAH in territories outside the United States. We received an up-front payment of  $20.0 million and, subject to the achievement of specific milestones, we are eligible to receive total additional milestone payments of  $80.0 million. In addition, we will receive royalties based on net sales of Volibris in the GSK territories. GSK has an option to negotiate from us an exclusive sublicense for additional therapeutic uses for Volibris in the GSK territories during the term of the license agreement. We will continue to conduct and bear the expense of all clinical development activities that we believe are required to obtain and maintain regulatory approvals for Letairis and Volibris in the United States, Canada and the European Economic Area, and each party may conduct additional development activities in its territories at its own expense. The parties may agree to jointly develop ambrisentan for new indications in the licensed field and each party will pay its share of external costs associated with such joint development. In 2007, we received a milestone payment of  $11.0 million from GSK for validation by the EMEA of the marketing authorization application for Volibris, and in 2008, we received a  $20.0 million milestone payment related to the European Commission marketing authorization approval for Volibris. The milestone and up-front license payments have been recorded as deferred revenue and are being amortized into contract revenue over the remaining period for which we have performance obligations under the agreement, which is approximately six years. We amortized  $8.7 million,  $8.3 million and  $5.0 million to contract revenue in 2010, 2009 and 2008, respectively.

Astellas US LLC and Astellas Pharma US, Inc. (Astellas), as applicable

As a result of our acquisition of CV Therapeutics in April 2009, we assumed all rights to the July 2000 collaboration agreement between CV Therapeutics and Astellas US LLC to develop and market second generation pharmacologic MPI stress agents. Under this agreement, Astellas received exclusive North American rights to Lexiscan and to a backup compound. In April 2008, we received FDA approval of Lexiscan for use as a pharmacologic stress agent in MPI studies in patients unable to undergo adequate exercise stress. Under the terms of the agreement, the product is marketed by Astellas and was launched in June 2008 in the United States. For the years ended December 31, 2010 and 2009, we recognized  $43.2 million and  $19.7 million, respectively, of royalty revenue from Astellas related to sales of Lexiscan.

Since 1991, we have had an agreement with Astellas Pharma US, Inc. related to rights to market AmBisome. Under the terms of the agreement, Astellas is responsible for promotion of AmBisome in the United States and Canada. We have exclusive marketing rights to AmBisome in the rest of the world, subject to our obligation to pay royalties to Astellas in connection with sales in significant markets in Asia. We receive royalties from Astellas' sales of AmBisome in the Unites States and Canada. In connection with this agreement, we recorded royalty revenues of  $10.2 million,  $9.4 million and  $9.5 million in 2010, 2009 and 2008, respectively.

Tibotec Pharmaceuticals

In July 2009, we entered into a license and collaboration agreement with Tibotec Pharmaceuticals (Tibotec), a wholly-owned subsidiary of Johnson & Johnson, to develop and commercialize a fixed-dose combination of our Truvada and Tibotec's non-nucleoside reverse transcriptase inhibitor, TMC278 (25 mg rilpivirine hydrochloride), for which we currently have a pending marketing application. In January 2011, we received a "refuse to file" notification from the U.S. FDA. In its communication, the FDA requested additional information with respect to the Chemistry, Manufacturing and Controls section of the NDA submission. In February 2011, we re-filed our new drug application, which included the requested information, and are awaiting the FDA's response as to whether it is substantially complete to permit a substantive review. Under our license and collaboration agreement with Tibotec, we were granted an exclusive license to the combination product for administration to adults in a once daily, oral dosage form, worldwide excluding developing world countries and Japan. Neither party is restricted from combining its drug products with any other drugs.

In accordance with the terms of the agreement, we will reimburse up to €71.5 million (approximately  $100.0 million) of development costs incurred by Tibotec for TMC278 through December 2011, and we are required to use commercially reasonable efforts to develop and formulate the combination product, including the completion of bioequivalence studies. For the years ended December 31, 2010 and 2009, we recorded €17.9 million (approximately  $22.1 million) and €35.7 million (approximately  $52.4 million), respectively, in reimbursable R&D expenses incurred by Tibotec in the development of TMC278. Tibotec is required to use commercially reasonable efforts to develop TMC278 and obtain its approval in the United States and Europe. We will manufacture the combination product and assume the lead role in registration, distribution and, subject to regulatory approval, commercialization of the combination product in the licensed countries. Tibotec will have the right to detail the combination product in the licensed countries, and, at its option, can request that it be the distributor of the combination product in a limited number of such countries. The price of the combination product is expected to be the sum of the prices of the Truvada and TMC278 components. We expect to recognize product sales revenue from future sales of the combination product if and when it is approved. The cost of TMC278 to be purchased by us from Tibotec for the combination product will approximate the market price of TMC278, less a specified percentage of up to thirty percent.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet18.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Long-Term Obligations
12 Months Ended
Dec. 31, 2010
Long-Term Obligations
Long-Term Obligations
11. LONG-TERM OBLIGATIONS

Convertible Senior Notes

The following table summarizes the carrying amount of our convertible senior notes (in thousands):

 

     December 31,  
     2010      2009  

2011 convertible senior notes

    $ 638,991        $ 606,786   

2013 convertible senior notes

     576,884         548,480   

2014 convertible senior notes

     1,153,805         —     

2016 convertible senior notes

     1,107,884         —     
                 

Total convertible senior notes, net

     3,477,564         1,155,266   

Less current portion (2011 convertible senior notes)

     638,991         —     
                 

Total non-current convertible senior notes, net

    $ 2,838,573        $ 1,155,266   
                 

2011 and 2013 Notes

In April 2006, we issued  $650.0 million of convertible senior notes due in 2011 (2011 Notes) and  $650.0 million of convertible senior notes due in 2013 (2013 Notes) in a private placement pursuant to Rule 144A of the Securities Act of 1933, as amended. The 2011 Notes and the 2013 Notes were issued at par and bear interest rates of 0.50% and 0.625%, respectively. Debt issuance costs of  $23.8 million were recorded in other noncurrent assets and are being amortized to interest expense over the contractual terms of the 2011 and 2013 Notes. The initial conversion rate for the 2011 Notes is 25.8048 shares per  $1,000 principal amount of 2011 Notes (which represents an initial conversion price of approximately  $38.75 per share), and the initial conversion rate for the 2013 Notes is 26.2460 shares per  $1,000 principal amount of 2013 Notes (which represents an initial conversion price of approximately  $38.10 per share). The conversion rates are subject to customary anti-dilution adjustments.

The 2011 and 2013 notes may be converted, subject to adjustment, only under the following circumstances: 1) during any calendar quarter beginning after September 30, 2006 if the closing price of our common stock for at least 20 trading days during the last 30 consecutive trading day period of the previous quarter is more than 130% of the applicable conversion price per share, 2) if we make specified distributions to holders of our common stock or if specified corporate transactions occur, or 3) during the last month prior to maturity of the applicable notes. Upon conversion, a holder would receive an amount in cash equal to the lesser of (i) the principal amount of the note or (ii) the conversion value for such note. If the conversion value exceeds the principal amount, we may also deliver, at our option, cash or common stock or a combination of cash and common stock for the conversion value in excess of the principal amount. If the 2011 and 2013 notes are converted in connection with a change in control, we may be required to provide a make whole premium in the form of an increase in the conversion rate, subject to a stated maximum amount. In addition, in the event of a change in control, the holders may require us to purchase all or a portion of their notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

 

Concurrent with the issuance of the 2011 and 2013 notes, we purchased convertible note hedges in private transactions at a cost of  $379.1 million, which is tax deductible over the life of the notes. We also sold warrants in private transactions and received net proceeds of  $235.5 million from the sale of the warrants. The convertible note hedges and warrants are intended to reduce the potential economic dilution upon future conversions of the 2011 and 2013 notes by effectively increasing our conversion price to  $50.80 per share for the 2011 Notes and  $53.90 per share for the 2013 Notes. The net cost of  $143.7 million of the convertible note hedge and warrant transactions was recorded in stockholders' equity on our Consolidated Balance Sheets.

The convertible note hedges cover, subject to customary anti-dilution adjustments, 33.8 million shares of our common stock at strike prices that initially correspond to the initial conversion prices of the 2011 and 2013 notes and are subject to adjustments similar to those applicable to the conversion price of the related notes. If the market value per share of our common stock at the time of conversion of the 2011 and 2013 notes is above the strike price of the applicable convertible note hedges, we will be entitled to receive from the counterparties in the transactions shares of our common stock or, to the extent we have made a corresponding election with respect to the related convertible notes, cash or a combination of cash and shares of our common stock, at our option, for the excess of the market value of the common stock over the strike price of the convertible note hedges. The convertible note hedges will terminate upon the maturity of the 2011 and 2013 notes or when none of the 2011 and 2013 notes remain outstanding due to conversion or otherwise. There are 33.8 million shares of our common stock underlying the warrants, subject to customary anti-dilution adjustments. The warrants have strike prices of  $50.80 per share (for the warrants expiring in 2011) and  $53.90 per share (for the warrants expiring in 2013) and are exercisable only on their respective expiration dates. If the market value of our common stock at the time of the exercise of the applicable warrants exceeds their respective strike prices, we will be required to net settle in cash or shares of our common stock, at our option, with the respective counterparties for the value of the warrants in excess of the warrant strike prices.

Contemporaneously with the closing of the sale of the 2011 and 2013 notes, a portion of the net proceeds from the notes' issuance and the proceeds of the warrant transactions were used to repurchase 16.7 million shares of our common stock for  $544.9 million.

Under current accounting guidance, we bifurcated the conversion option of the 2011 and 2013 notes from the debt instrument, classified the conversion option in equity and are accreting the resulting debt discount as interest expense. The following table summarizes information about the equity and liability components of the 2011 and 2013 notes (in thousands):

 

     Carrying Value of Equity
Component
     Net Carrying Amount of
Liability Component
     Unamortized Discount of
Liability Component
 
     December 31,      December 31,      December 31,  
     2010      2009      2010      2009      2010     2009  

2011 convertible senior notes

    $ 147,481        $ 147,481        $ 638,991        $ 606,786        $ (10,996    $ (43,201

2013 convertible senior notes

     193,231         193,231         576,884         548,480         (72,983     (101,387
                                                    

Total 2011 and 2013 convertible senior notes

    $ 340,712        $ 340,712        $ 1,215,875        $ 1,155,266        $ (83,979    $ (144,588
                                                    

For the years ended December 31, 2010, 2009 and 2008, we recognized  $67.9 million,  $64.6 million and  $61.5 million, respectively, in interest expense related to the contractual coupon rates and amortization of the debt discount for the 2011 and 2013 notes. The effective interest rates on the liability components of the 2011 and 2013 notes were 5.7% and 5.8%, respectively. If the notes were converted as of December 31, 2010, the if-converted value would not exceed the principal amounts of the 2011 Notes and 2013 Notes.

2014 and 2016 Notes

In July 2010, we issued  $1.25 billion of convertible senior notes due in 2014 (2014 Notes) and  $1.25 billion of convertible senior notes due in 2016 (2016 Notes) in a private placement pursuant to Rule 144A of the Securities Act of 1933, as amended. The 2014 and 2016 notes were issued at par and bear interest rates of 1.00% and 1.625%, respectively. Debt issuance costs are primarily comprised of  $37.5 million in bankers' fees, the majority of which were recorded in other noncurrent assets and are being amortized to interest expense over the contractual terms of the 2014 and 2016 notes. The aggregate principal amount of the 2014 and 2016 notes sold reflects the full exercise by the initial purchasers of their option to purchase additional notes to cover over-allotments. The initial conversion rate for the 2014 Notes is 22.1845 shares per  $1,000 principal amount (which represents an initial conversion price of approximately  $45.08 per share), and the initial conversion rate for the 2016 Notes is 22.0214 shares per  $1,000 principal amount (which represents an initial conversion price of approximately  $45.41 per share). The conversion rates are subject to customary anti-dilution adjustments.

The 2014 and 2016 notes may be converted prior to April 1, 2014 and April 1, 2016, respectively, only under the following circumstances: 1) during any calendar quarter commencing after September 30, 2010, if the closing price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than 130% of the applicable conversion price on each applicable trading day, or 2) during the five business day period after any measurement period of ten consecutive trading days in which, for each trading day of such period, the trading price per  $1,000 principal amount of notes was less than 98% of the product of the last reported sale price of Gilead common stock and the applicable conversion rate on such trading day, or 3) upon the occurrence of specified corporate transactions, such as the distribution of certain stock rights, cash amounts, or other assets to all Gilead shareholders or the occurrence of a change in control. On and after April 1, 2014, in the case of the 2014 Notes, and April 1, 2016, in the case of the 2016 Notes, holders may convert their notes at any time, regardless of the foregoing circumstances. Generally, upon conversion, a holder would receive an amount in cash equal to the lesser of (i) the principal amount of the note or (ii) the conversion value for such note, as measured under the indenture governing the relevant notes. If the conversion value exceeds the principal amount, we may also deliver, at our option, cash or common stock or a combination of cash and common stock for the conversion value in excess of the principal amount. If the 2014 and 2016 notes are converted in connection with a change in control, we may be required to provide a make whole premium in the form of an increase in the conversion rate, subject to a stated maximum amount. In addition, in the event of a change in control, the holders may require us to purchase all or a portion of their notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

 

Concurrent with the issuance of the 2014 and 2016 notes, we purchased convertible note hedges in private transactions at a cost of  $362.6 million, which is tax deductible over the life of the notes. We also sold warrants in private transactions and received net proceeds of  $155.4 million from the sale of the warrants. The convertible note hedges and warrants are intended to reduce the potential economic dilution upon future conversions of the 2014 and 2016 notes by effectively increasing our conversion price to  $56.76 per share for the 2014 Notes and  $60.10 per share for the 2016 Notes. The net cost of  $207.2 million of the convertible note hedge and warrant transactions was recorded in stockholders' equity on our Consolidated Balance Sheets.

The convertible note hedges cover, subject to customary anti-dilution adjustments, 55.3 million shares of our common stock at strike prices that initially correspond to the initial conversion prices of the 2014 and 2016 notes and are subject to adjustments similar to those applicable to the conversion price of the related notes. If the market value per share of our common stock at the time of conversion of the 2014 and 2016 notes is above the strike price of the applicable convertible note hedges, we will be entitled to receive from the counterparties in the transactions shares of our common stock or, to the extent we have made a corresponding election with respect to the related convertible notes, cash or a combination of cash and shares of our common stock, at our option, for the excess of the market value of the common stock over the strike price of the convertible note hedges. The convertible note hedges will terminate upon the maturity of the 2014 and 2016 notes or when none of the 2014 and 2016 notes remain outstanding due to conversion or otherwise. There are 55.3 million shares of our common stock underlying the warrants, subject to customary anti-dilution adjustments. The warrants have strike prices of  $56.76 per share (for the warrants expiring in 2014) and  $60.10 per share (for the warrants expiring in 2016) and are exercisable only on their respective expiration dates. If the market value of our common stock at the time of the exercise of the applicable warrants exceeds their respective strike prices, we will be required to net settle in cash or shares of our common stock, at our option, with the respective counterparties for the value of the warrants in excess of the warrant strike prices.

We have used and will continue to use the net proceeds from the issuance of the convertible notes to repurchase shares of our common stock and repay existing indebtedness.

Under current accounting guidance, we bifurcated the conversion option of the 2014 and 2016 notes from the debt instrument, classified the conversion option in equity and are accreting the resulting debt discount as interest expense. The following table summarizes information about the equity and liability components of the 2014 and 2016 notes (in thousands):

 

     Carrying Value of Equity
Component
     Net Carrying Amount of
Liability Component
     Unamortized Discount of
Liability Component
 
     December 31, 2010      December 31, 2010      December 31, 2010  

2014 convertible senior notes

    $ 107,496        $ 1,153,805        $ (96,195

2016 convertible senior notes

     152,039         1,107,884         (142,116
                          

Total 2014 and 2016 convertible senior notes

    $ 259,535        $ 2,261,689        $ (238,311
                          

For the year ended December 31, 2010, we recognized  $34.9 million in interest expense related to the contractual coupon rates and amortization of the debt discount for the 2014 and 2016 notes. The effective interest rate on the liability components of the 2014 and 2016 notes was 3.5% and 4.0%, respectively. If the notes were converted as of December 31, 2010, the if-converted value would not exceed the principal amounts of the 2014 Notes and 2016 Notes.

Credit Facility

Under our amended and restated credit agreement, we, along with our wholly-owned subsidiary, Gilead Biopharmaceutics Ireland Corporation, may borrow up to an aggregate of  $1.25 billion in revolving credit loans. The credit agreement also includes a sub-facility for swing-line loans and letters of credit. Loans under the credit agreement bear interest at an interest rate of either LIBOR plus a margin ranging from 20 basis points to 32 basis points or the base rate, as described in the credit agreement. We may reduce the commitments and may prepay loans under the credit agreement in whole or in part at any time without penalty, subject to certain conditions. The credit agreement will terminate in December 2012 and all unpaid borrowings thereunder shall be due and payable at that time. In April 2009, in connection with the acquisition of CV Therapeutics, we borrowed  $400.0 million under the credit agreement to partially fund the acquisition. As of December 31, 2009, we had repaid the  $400.0 million under this credit agreement. In May 2010, we borrowed  $500.0 million under the credit agreement to fund our stock repurchases. In August 2010, we repaid the  $500.0 million borrowed under this credit agreement using proceeds from our convertible senior notes issued in July 2010. As of December 31, 2010, we had  $5.0 million in letters of credit outstanding under the  $1.25 billion credit agreement. We are required to comply with certain covenants under the credit agreement and as of December 31, 2010, we were in compliance with all such covenants.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet19.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Commitments and Contingencies
12 Months Ended
Dec. 31, 2010
Commitments and Contingencies
Commitments and Contingencies
12. COMMITMENTS AND CONTINGENCIES

Lease Arrangements

We have entered into various long-term non-cancelable operating leases for equipment and facilities. We lease facilities in Foster City, Palo Alto and San Dimas, California; Durham, North Carolina; Boulder, Colorado; Seattle, Washington; the Dublin and Cork areas of Ireland and the London area of the United Kingdom. We also have operating leases for sales, marketing and administrative facilities in Europe, Canada and Asia Pacific. Our leases expire on various dates between 2011 and 2029, with many of our leases containing options to renew. Certain facility leases also contain rent escalation clauses. Our most significant lease, related to a facility in Seattle, Washington, expires in 2020 and has a 10-year term. The lease provides us with three consecutive rights to extend the term of the lease through 2035 and contains an annual three percent rent escalation clause. The lease also requires us to pay additional amounts for operating expenses and maintenance. We also have leases for three corporate aircraft, with varying terms, with renewal options upon expiration of the lease terms.

Lease expense under our operating leases was approximately  $41.7 million,  $37.3 million and  $29.3 million during the years ended December 31, 2010, 2009 and 2008, respectively. Aggregate non-cancelable future minimum rental payments under operating leases are as follows (in thousands):

 

2011

    $ 45,887   

2012

     37,733   

2013

     29,648   

2014

     21,477   

2015

     19,078   

Thereafter

     57,344   
        
    $ 211,167   
        

Legal Proceedings

On August 12, 2009, we received a subpoena from the Office of the Inspector General of the U.S. Department of Health and Human Services requesting documents regarding the development, marketing and sales of Ranexa®. Ranexa is approved for the treatment of chronic angina and was developed and originally commercialized by CV Therapeutics, a company that Gilead acquired in April 2009. Following receipt of the subpoena, we cooperated with the government's inquiry. On December 13, 2010, the United States Department of Justice notified the United States District Court for the Northern District of California "of its decision not to intervene" in a False Claims Act lawsuit filed by a former employee of CV Therapeutics regarding the promotion of Ranexa. On December 16, 2010, the plaintiff-relator filed a notice of voluntary dismissal without prejudice of the underlying lawsuit, and the United States consented to the dismissal without prejudice.

We are a party to various other legal actions that arose in the ordinary course of our business. We do not believe that any of these other legal actions will have a material adverse impact on our consolidated business, financial position or results of operations.

 

Other Commitments

In the normal course of business, we enter into various firm purchase commitments primarily related to active pharmaceutical ingredients and certain inventory related items. As of December 31, 2010, these commitments for the next five years were approximately  $640.3 million in 2011,  $149.3 million in 2012,  $57.5 million in 2013,  $20.2 million in 2014 and  $3.1 million in 2015. The amounts related to active pharmaceutical ingredients represent minimum purchase requirements. Actual payments for the purchases related to these active pharmaceutical ingredients were  $835.7 million,  $1.03 billion and  $1.04 billion during the years ended December 31, 2010, 2009 and 2008, respectively.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet20.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stockholders' Equity
12 Months Ended
Dec. 31, 2010
Stockholders' Equity
Stockholders' Equity
13. STOCKHOLDERS' EQUITY

Stock Repurchase Programs

In October 2007, our Board authorized a program for the repurchase of our common stock in an amount of up to  $3.00 billion through open market and private block transactions pursuant to Rule 10b5-1 plans or privately negotiated purchases or other means, including accelerated stock repurchase transactions or similar arrangements. In 2007, we repurchased and retired 705,600 shares of our common stock at  $46.28 per share for an aggregate of  $32.7 million under the  $3.00 billion stock repurchase program.

In February 2008, we entered into an accelerated share repurchase agreement with a financial institution to repurchase  $500.0 million of our common stock on an accelerated basis. Under the terms of this accelerated share repurchase agreement, we paid  $500.0 million to the financial institution to settle the initial purchase transaction and received 9,373,548 shares of our common stock at a price of  $53.34 per share. In June 2008, upon maturity of the agreement and in accordance with the share delivery provisions of the agreement, we received an additional 239,612 shares of our common stock based on the average of the daily volume weighted-average prices of our common stock during a specified period less a predetermined discount per share. As a result, the average purchase price of our common stock from the accelerated share repurchase was  $52.01 per share.

We accounted for the accelerated share repurchase as two separate transactions: (a) as shares of common stock acquired in a treasury stock transaction recorded on the transaction date and (b) as a forward contract indexed to our own common stock. As such, we accounted for the 9,373,548 shares that we received as a repurchase of our common stock and retired those shares immediately for net income per share purposes. The 239,612 additional shares that we received upon maturity of the contract in June 2008 were also recorded in stockholders' equity. We determined that the forward contract indexed to our own common stock met all of the applicable criteria for equity classification, and therefore, the contract was not accounted for as a derivative.

In October 2008, we entered into an accelerated share repurchase agreement with a financial institution to repurchase  $750.0 million of our common stock on an accelerated basis. Under the terms of the accelerated share repurchase agreement, we paid  $750.0 million to settle the initial purchase transaction and received 14,874,519 shares of our common stock at an initial price of  $50.42 per share. In March 2009, upon termination of the agreement and in accordance with the share delivery provisions of the agreement, we received an additional 1,356,337 shares of our common stock based on the average of the daily volume weighted-average prices of our common stock during a specified period less a predetermined discount per share. As a result, the total number of shares repurchased and retired under this accelerated share repurchase agreement was 16,230,856 shares at an average purchase price of  $46.21 per share. The accounting for this accelerated share repurchase was consistent with that of our previous accelerated share repurchase.

 

In 2008, in addition to the common stock repurchased under the two accelerated share repurchase transactions, we repurchased and retired 14,696,449 shares of our common stock at an average purchase price of  $48.94 per share, for an aggregate purchase price of  $719.3 million through open market transactions.

In 2009, in addition to the additional shares that we received under the accelerated share repurchase agreement completed in March 2009, we repurchased and retired 21,845,929 shares of our common stock at an average purchase price of  $45.69 per share, for an aggregate purchase price of  $998.1 million through open market transactions. As of December 31, 2009, we completed share repurchases under our  $3.00 billion stock repurchase program.

In January 2010, our Board authorized a new program for the repurchase of our common stock in an amount of up to  $1.00 billion through open market and private block transactions pursuant to Rule 10b5-1 plans, privately negotiated purchases or other means. We completed this plan in May 2010, at which time our Board authorized a new three-year,  $5.00 billion stock repurchase program. As of December 31, 2010, we have repurchased  $3.02 billion of our common stock under this program. As of December 31, 2010, the remaining authorized amount of stock repurchases that may be made under our  $5.00 billion repurchase program was  $1.98 billion. In 2010, we utilized a total of  $4.02 billion to repurchase and retire 109.9 million shares of our common stock, at an average purchase price of  $36.57 per share.

In January 2011, our Board authorized an additional three-year,  $5.00 billion stock repurchase program which will commence upon the completion of our existing program authorized in May 2010.

We use the par value method of accounting for our stock repurchases. Under the par value method, common stock is first charged with the par value of the shares involved. The excess of the cost of shares acquired over the par value is allocated to APIC based on an estimated average sales price per issued share with the excess amounts charged to retained earnings. As a result of our stock repurchases in 2008, we reduced common stock and APIC by an aggregate of  $95.8 million and charged  $1.88 billion to retained earnings. As a result of our stock repurchases in 2009, we reduced common stock and APIC by an aggregate of  $61.7 million and charged  $940.8 million to retained earnings. As a result of our stock repurchases in 2010, we reduced common stock and APIC by an aggregate of  $319.8 million and charged  $3.71 billion to retained earnings.

Preferred Stock

We have 5,000,000 shares of authorized preferred stock issuable in series. Our Board is authorized to determine the designation, powers, preferences and rights of any such series. We have designated 800,000 shares of Series A Junior Participating Preferred Stock for potential issuance under our November 1994 rights agreement with BNY Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), as amended (the Rights Plan). There was no preferred stock outstanding as of December 31, 2010 and 2009.

Rights Plan

In October 1999, October 2003 and May 2006, our Board approved amendments to the Rights Plan. The first amendment provided, among other things, for an increase in the exercise price of a right under the plan from  $15 to  $100 and an extension of the term of the plan from November 2004 to October 2009. The second amendment provides, among other things, for an increase in the exercise price of a right under the plan from  $100 to  $400 and an extension of the term of the Rights Plan to October 2013. The third amendment was a clarifying amendment entered into in connection with an increase in the designated number of shares of Series A Junior Participating Preferred Stock for potential issuance under the Rights Plan in May 2006.

Stock Option Plans

In May 2004, our stockholders approved and we adopted the Gilead Sciences, Inc. 2004 Equity Incentive Plan (the 2004 Plan). Stock options under the NeXstar Pharmaceuticals, Inc. (NeXstar), Triangle Pharmaceuticals, Inc. (Triangle), Corus, Myogen and CV Therapeutics stock option plans, which we assumed as a result of the acquisitions of NeXstar, Triangle, Corus, Myogen and CV Therapeutics have been converted into options to purchase our common stock effective with the closing of the respective acquisitions. The 2004 Plan is a broad based incentive plan that allows for awards to be granted to our employees, directors and consultants. The 2004 Plan provides for option grants designated as either non-qualified or incentive stock options. Prior to January 1, 2006, we granted both non-qualified and incentive stock options, but all stock options granted after January 1, 2006 have been non-qualified stock options. Under the 2004 Plan, employee stock options granted prior to 2011 generally vest over five years, are exercisable over a period not to exceed the contractual term of ten years from the date the stock options are issued and are granted at prices not less than the fair market value of our common stock on the grant date. Stock option exercises are settled with common stock from the 2004 Plan's previously authorized and available pool of shares.

In connection with the acquisition of CV Therapeutics, we assumed CV Therapeutics' 1994 Equity Incentive Plan, as amended and restated, Non-Employee Directors' Stock Option Plan, as amended and restated, 2000 Equity Incentive Plan, as amended and restated, 2000 Nonstatutory Incentive Plan, as amended and restated, and 2004 Employee Commencement Incentive Plan, as amended and restated (collectively, the CV Therapeutics Plans). The majority of options that were issued and outstanding under the CV Therapeutics Plans as of April 15, 2009 were converted into options to purchase approximately 1.8 million shares of our common stock and remain subject to their original terms and conditions. There are no shares available for future grant under the CV Therapeutics Plans.

As of December 31, 2010, a total of 121,594,183 shares of common stock have been authorized for grant and 51,793,307 shares remain available for future grant under the 2004 Plan.

 

The following table summarizes activity under our stock option plans. All option grants presented in the table had exercise prices not less than the fair value of the underlying common stock on the grant date (shares in thousands):

 

     Year Ended December 31,  
     2010      2009      2008  
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
 

Outstanding, beginning of year

     69,193       $ 28.09         76,811       $ 24.70         84,977       $ 20.33   

Granted and assumed

     4,836       $ 44.27         7,286       $ 48.87         9,807       $ 47.11   

Forfeited

     (2,348    $ 43.16         (2,393    $ 39.33         (2,471    $ 30.61   

Expired

     (759    $ 53.27         (440    $ 64.08         (59    $ 11.72   

Exercised

     (10,671    $ 17.68         (12,071    $ 15.56         (15,443    $ 13.97   
                                

Outstanding, end of year

     60,251       $ 30.32         69,193       $ 28.09         76,811       $ 24.70   
                                

Exercisable, end of year

     45,018       $ 25.92         47,090       $ 22.36         45,235       $ 17.29   
                                

Weighted-average grant date fair value of options granted during the year

      $ 14.24          $ 17.00          $ 16.95   

The total intrinsic value of options exercised during the years ended December 31, 2010, 2009 and 2008 was  $262.3 million,  $379.8 million and  $551.7 million, respectively. The total fair value of stock options that vested during the years ended December 31, 2010, 2009 and 2008 was  $124.6 million,  $162.9 million and  $169.2 million, respectively.

As of December 31, 2010, the number of options outstanding that are expected to vest, net of estimated future option forfeitures was 13,302,022 with a weighted-average exercise price of  $43.12 per share, an aggregate intrinsic value of  $9.6 million and a weighted-average remaining contractual life of 7.62 years. The aggregate intrinsic value of stock options outstanding and stock options exercisable as of December 31, 2010 were  $564.2 million and  $554.0 million, respectively. As of December 31, 2010, the weighted-average remaining contractual life for options outstanding and options exercisable were 5.3 and 4.5 years, respectively.

As of December 31, 2010, there was  $260.8 million of unrecognized compensation cost related to stock options, which is expected to be recognized over an estimated weighted-average period of 2.7 years.

Performance Shares and Restricted Stock Awards

Under the 2004 plan, we grant performance-based restricted stock awards which vest upon the achievement of specified market and performance goals relative to a pre-determined peer group. The actual number of common shares ultimately issued is calculated by multiplying the number of performance shares by a payout percentage ranging from 0% to 200%. Performance shares vest only when a committee (or subcommittee) of our Board has determined that we have achieved our specified market and performance goals. In January 2010, 2009 and 2008 we granted 412,505426,305 and 219,690 performance-based share awards (the 2010 performance shares, the 2009 performance shares and the 2008 performance shares, respectively). These awards will vest over a single three-year performance measurement and vesting period for each of the performance share awards.

The fair value of each performance share grant is estimated at the grant date using a Monte Carlo valuation methodology. The weighted-average grant date fair values of the 2010, 2009 and 2008 performance shares were  $54.25,  $61.89 and  $56.61 per share, respectively. We recognized  $21.3 million,  $14.9 million and  $7.5 million of stock-based compensation expenses in 2010, 2009 and 2008, respectively, related to these performance shares.

We have also granted performance-based restricted stock awards to certain of our employees under the 2004 Plan. The vesting of these awards is subject to the achievement of specified performance goals. The number of these awards issued to date has not been significant.

During 2010 we granted 2,189,903 time-based restricted stock awards to employees under the 2004 Plan. These awards vest annually over a five-year period. We recognized  $19.5 million of stock-based compensation expenses in 2010 related to time-based awards.

Employee Stock Purchase Plan

Under our Employee Stock Purchase Plan, as amended (ESPP), employees can purchase shares of our common stock based on a percentage of their compensation subject to certain limits. The purchase price per share is equal to the lower of 85% of the fair market value of our common stock on the offering date or the purchase date. The ESPP offers a two-year look-back feature as well as an automatic reset feature that provides for an offering period to be reset to a new lower-priced offering if the offering price of the new offering period is less than that of the current offering period. ESPP purchases are settled with common stock from the ESPP's previously authorized and available pool of shares. During 2010, 1,110,485 shares were issued under the ESPP for  $32.3 million. A total of 33,280,000 shares of common stock have been reserved for issuance under the ESPP, and there were 6,567,411 shares available for issuance under the ESPP as of December 31, 2010.

As of December 31, 2010, there was  $22.1 million of unrecognized compensation cost related to the ESPP, which is expected to be recognized over an estimated weighted-average period of 1.0 year.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet21.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stock-Based Compensation
12 Months Ended
Dec. 31, 2010
Stock-Based Compensation
Stock-Based Compensation
14. STOCK-BASED COMPENSATION

The following table summarizes the stock-based compensation expenses included in our Consolidated Statements of Income (in thousands:

 

     Year Ended December 31,  
     2010     2009     2008  

Cost of goods sold

    $ 10,180       $ 10,859       $ 10,312   

Research and development expenses

     84,048        82,893        66,523   

Selling, general and administrative expenses

     105,813        92,006        76,529   
                        

Stock-based compensation expense included in total costs and expenses

     200,041        185,758        153,364   

Income tax effect

     (52,331     (46,486     (40,565
                        

Stock-based compensation expense included in net income

    $ 147,710       $ 139,272       $ 112,799   
                        

During the years ended December 31, 2010, 2009 and 2008, we capitalized  $10.9 million,  $11.4 million and  $9.9 million of stock-based compensation costs to inventory, respectively.

Stock-based compensation is recognized as expense over the requisite service periods in our Consolidated Statements of Income using a graded vesting expense attribution approach for unvested stock options granted prior to January 1, 2006, and using the straight-line expense attribution approach for stock options granted after our adoption of new guidance for share-based payments to employees and directors on January 1, 2006. As stock-based compensation expenses related to stock options recognized on adoption of the new guidance is based on awards ultimately expected to vest, gross expense has been reduced for estimated forfeitures. The guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We estimated forfeitures based on our historical experience. Prior to the adoption of this guidance, pro forma information that was required to be disclosed included forfeitures as they occurred. As a result of the guidance adopted on January 1, 2006, we only recognize a tax benefit from stock-based compensation in APIC if an incremental tax benefit is realized after all other tax attributes currently available to us have been utilized. In addition, we have elected to account for the indirect benefits of stock-based compensation on the research tax credit and the extraterritorial income deduction through the Consolidated Statements of Income rather than through APIC.

Valuation Assumptions

Fair values of awards granted under our stock option plans and ESPP were estimated at grant or purchase dates using a Black-Scholes option valuation model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including expected stock price volatility and expected award life. We used the following assumptions to calculate the estimated fair value of the awards:

 

     Year Ended December 31,  
     2010      2009      2008  

Expected volatility:

        

Stock options

     31%         35%         34%   

ESPP

     35%         37%         31%   

Expected term in years:

        

Stock options

     5.4         5.3         5.3   

ESPP

     1.3         1.3         1.2   

Risk-free interest rate:

        

Stock options

     2.3%         2.1%         2.8%   

ESPP

     0.4%         0.7%         2.1%   

Expected dividend yield

     0%         0%         0%   

The fair value of stock options granted was calculated using the single option approach. We use a blend of historical volatility along with implied volatility for traded options on our common stock to determine our expected volatility. The expected term of stock-based awards represents the weighted-average period the awards are expected to remain outstanding. We estimate the weighted-average expected term based on historical cancellation and historical exercise data related to our stock options as well as the contractual term and vesting terms of the awards. The risk-free interest rate is based upon observed interest rates appropriate for the term of the stock-based awards. The dividend yield is based on our history and expectation of dividend payouts.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet22.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Comprehensive Income (Loss)
12 Months Ended
Dec. 31, 2010
Comprehensive Income (Loss)
Comprehensive Income (Loss)
15. COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) comprises net income and certain changes in stockholders' equity that are excluded from net income, such as changes in the fair value of our outstanding effective cash flow hedges, changes in unrealized gains and losses on our available-for-sale securities and changes in our cumulative foreign currency translation account. Comprehensive income (loss) for the years ended December 31, 2010, 2009 and 2008 is included in our Consolidated Statements of Stockholders' Equity. The components of comprehensive income (loss) are shown net of related taxes where the underlying assets or liabilities are held in jurisdictions that are expected to generate a future tax benefit or liability.

The following reclassifications were recorded in connection with net realized gains (losses) on sales of securities and cash flow hedges that were previously included in comprehensive income (loss) (in thousands):

 

     Year Ended December 31,  
     2010     2009     2008  

Net unrealized gain (loss) related to available-for-sale securities, net of tax impact of  $(6,624),  $(11,724) and  $11,487 for 2010, 2009 and 2008, respectively

    $ 13,450       $ 21,689       $ (21,607

Net unrealized gain (loss) related to cash flow hedges, net of tax impact of  $(9,149),  $10,682 and  $(40,681) for 2010, 2009 and 2008, respectively

     105,924        (19,016     93,962   

Reclassification adjustments, net of tax impact of  $9,028,  $32,532 and  $1,805 for 2010, 2009 and 2008, respectively

     (74,289     (58,130     (5,603
                        

Other comprehensive income (loss)

    $ 45,085       $ (55,457    $ 66,752   
                        

The balance of accumulated other comprehensive income (loss), net of taxes, as reported on our Consolidated Balance Sheets consists of the following components (in thousands):

 

     As of December 31,  
     2010     2009  

Net unrealized gain on available-for-sale securities

    $ 16,528       $ 9,509   

Net unrealized gain (loss) on cash flow hedges

     21,615        (16,450

Cumulative foreign currency translation adjustment

     (7,232     1,183   
                

Accumulated other comprehensive income (loss)

    $ 30,911       $ (5,758
                
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet23.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Segment Information
12 Months Ended
Dec. 31, 2010
Segment Information
Segment Information
16. SEGMENT INFORMATION

We operate in one business segment, which primarily focuses on the development and commercialization of human therapeutics for life threatening diseases. All products are included in one segment, because our major products, Atripla, Truvada and Viread, which together accounted for substantially all of our total product sales for each of the years ended December 31, 2010, 2009 and 2008, have similar economic and other characteristics, including the nature of the products and production processes, type of customers, distribution methods and regulatory environment.

 

Product sales consist of the following (in thousands):

 

     Year Ended December 31,  
     2010      2009      2008  

Antiviral products:

        

Atripla

    $ 2,926,579        $ 2,382,113        $ 1,572,455   

Truvada

     2,649,908         2,489,682         2,106,687   

Viread

     732,240         667,510         621,187   

Hepsera

     200,592         271,595         341,023   

Emtriva

     27,679         27,974         31,080   
                          

Total antiviral products

     6,536,998         5,838,874         4,672,432   

AmBisome

     305,856         298,597         289,651   

Letairis

     240,279         183,949         112,855   

Ranexa

     239,832         131,062         —     

Other products

     66,956         16,829         9,858   
                          

Total product sales

    $ 7,389,921        $ 6,469,311        $ 5,084,796   
                          

The following table summarizes total revenues from external customers and collaboration partners by geographic region (in thousands). Product sales and product-related contract revenue are attributed to countries based on ship-to location. Royalty and non-product related contract revenue are attributed to countries based on the location of the collaboration partner.

 

     Year Ended December 31,  
     2010      2009      2008  

United States

    $ 4,224,035        $ 3,599,313        $ 2,857,472   

Outside of the United States:

        

Switzerland

     458,606         448,203         193,314   

France

     519,700         468,314         395,672   

Spain

     456,647         451,115         356,607   

United Kingdom

     450,368         393,036         297,276   

Italy

     345,189         323,709         277,441   

Germany

     274,991         293,111         242,193   

Other European countries

     665,237         603,068         346,722   

Other countries

     554,647         431,514         369,053   
                          

Total revenues outside of the United States

     3,725,385         3,412,070         2,478,278   
                          

Total revenues

    $ 7,949,420        $ 7,011,383        $ 5,335,750   
                          

The following table summarizes revenues from each of our customers who individually accounted for 10% or more of our total revenues (as a % of total revenues):

 

     Year Ended December 31,  
     2010      2009      2008  

Cardinal Health, Inc.

     17%         18%         21%   

McKesson Corp.

     14%         13%         16%   

AmerisourceBergen Corp.

     12%         11%         11%   

 

At December 31, 2010, the net book value of our property, plant and equipment in the United States, Ireland and Canada was  $519.4 million,  $112.2 million and  $53.9 million, respectively, which comprised approximately 98% of the total net book value of our property, plant and equipment. At December 31, 2009, the net book value of our property, plant and equipment in the United States, Ireland and Canada was  $510.0 million,  $115.3 million and  $57.0 million, respectively, which comprised approximately 97% of the total net book value of our property, plant and equipment.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet24.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes
12 Months Ended
Dec. 31, 2010
Income Taxes
Income Taxes
17. INCOME TAXES

The provision for income taxes consists of the following (in thousands):

 

     Year Ended December 31,  
     2010     2009     2008  

Federal:

      

Current

    $ 852,822       $ 719,777       $ 585,075   

Deferred

     (29,854     (47,608     6,099   
                        
     822,968        672,169        591,174   
                        

State:

      

Current

     139,819        153,376        56,223   

Deferred

     17,464        9,150        24,333   
                        
     157,283        162,526        80,556   
                        

Foreign:

      

Current

     43,094        42,860        38,738   

Deferred

     454        (1,191     (8,105
                        
     43,548        41,669        30,633   
                        

Provision for income taxes

    $ 1,023,799       $ 876,364       $ 702,363   
                        

Foreign pre-tax income was  $1.37 billion,  $1.33 billion and  $0.90 billion in 2010, 2009 and 2008, respectively. The cumulative unremitted foreign earnings that are considered to be permanently invested outside the United States and for which no U.S. taxes have been provided, were approximately  $4.48 billion and  $3.19 billion as of December 31, 2010 and 2009, respectively. The residual U.S. tax liability, if such amounts were remitted, would be approximately  $1.60 billion and  $1.14 billion as of December 31, 2010 and 2009, respectively.

The difference between the provision for income taxes and the amount computed by applying the U.S. federal statutory income tax rate to income before provision for income taxes is as follows (in thousands):

 

     Year Ended December 31,  
     2010     2009     2008  

Income before provision for income taxes

    $ 3,913,548       $ 3,501,956       $ 2,672,698   
                        

Tax at federal statutory rate

    $ 1,369,742       $ 1,225,685       $ 935,444   

State taxes, net of federal benefit

     106,250        111,095        58,166   

Foreign earnings at different rates

     (435,767     (399,993     (257,835

Research and other credits

     (33,072     (43,045     (32,270

Net unbenefitted stock compensation

     13,188        4,269        5,224   

Other

     3,458        (21,647     (6,366
                        

Provision for income taxes

    $  1,023,799       $ 876,364       $ 702,363   
                        

 

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows (in thousands):

 

     December 31,  
     2010     2009  

Deferred tax assets:

    

Net operating loss carryforwards

    $ 308,854       $ 377,058   

Stock-based compensation

     142,242        117,019   

Reserves and accruals not currently deductible

     109,806        90,760   

Deferred revenue

     49,194        67,389   

Depreciation related

     58,875        44,166   

Research and other credit carryforwards

     25,151        28,980   

Capitalized intangibles

     5,839        12,086   

Other, net

     88,669        64,881   
                

Total deferred tax assets before valuation allowance

     788,630        802,339   

Valuation allowance

     (13,040     (1,078
                

Total deferred tax assets

     775,590        801,261   
                

Deferred tax liabilities:

    

Intangibles

     (322,168     (384,480

Unremitted foreign earnings

     (15,928     (15,928

Other

     (20,774     (17,053
                

Total deferred tax liabilities

     (358,870     (417,461
                

Net deferred tax assets

    $ 416,720       $ 383,800   
                

The valuation allowance increased (decreased) by  $11.9 million,  $1.1 million and  $(23.5) million for the years ended December 31, 2010, 2009 and 2008, respectively. We have concluded, based on the standard set forth in the FASB Accounting Standards Codification related to Income Taxes, that it is more likely than not that we will not realize any benefit from the deferred tax assets related to certain state net operating loss and credit carryforwards.

At December 31, 2010, we had U.S. federal net operating loss carryforwards of approximately  $732.5 million. The federal net operating loss carryforwards will start to expire in 2016, if not utilized. We also had federal tax credit carryforwards of approximately  $26.2 million which will start to expire in 2016, if not utilized. In addition, we had state net operating loss and tax credit carryforwards of approximately  $1.40 billion and  $3.3 million, respectively. The state net operating loss and tax credit carryforwards will start to expire in 2011 and 2016, respectively, if not utilized.

Utilization of net operating losses and tax credits may be subject to an annual limitation due to ownership change limitations provided in the Internal Revenue Code of 1986, as amended, and similar state provisions. This annual limitation may result in the expiration of the net operating losses (NOLs) and credits before utilization.

We file federal, state and foreign income tax returns in many jurisdictions in the United States and abroad. For federal income tax purposes, the statute of limitations is open for 2003 and onwards. For certain acquired entities, the statute of limitations is open for all years from inception due to our utilization of their NOLs and credits carried over from prior years. For California income tax purposes, the statute of limitations remains open for 2002 and onwards.

 

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service (IRS) for the 2005, 2006 and 2007 tax years and by various state and foreign jurisdictions. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. We periodically evaluate our exposures associated with our tax filing positions.

At December 31, 2010 and 2009, the total gross unrecognized tax benefits were  $126.5 million and  $106.5 million, respectively. Of the total unrecognized tax benefits,  $106.5 million and  $72.6 million at December 31, 2010 and 2009, respectively, if recognized, would reduce our effective tax rate in the period of recognition. We have continued to classify interest and penalties related to unrecognized tax benefits as part of our income tax provision in our Consolidated Statements of Income. As of December 31, 2010 and 2009, we had accrued interest and penalties related to unrecognized tax benefits of  $12.3 million and  $5.4 million, respectively.

As of December 31, 2010, we believe it is reasonably possible that our unrecognized tax benefits will decrease by approximately  $6.0 million in the next 12 months as we expect to have clarification from the tax authorities around certain of our uncertain tax positions. With respect to the remaining unrecognized tax benefits, we are currently unable to make a reasonable estimate as to the period of cash settlement, if any, with the respective tax authorities.

The following is a rollforward of our total gross unrecognized tax benefit liabilities for the years ended December 31, 2010 and 2009 (in thousands):

 

     December 31,  
     2010     2009     2008  

Balance, beginning of period

    $ 106,506       $ 121,424       $ 115,087   

Tax positions related to current year:

      

Additions

     24,320        25,036        37,495   

Reductions

     (3,303     (8,380     —     

Tax positions related to prior years:

      

Additions

     25,581        37,014        4,298   

Reductions

     (23,474     (36,277     (23,307

Settlements

     (2,160     (31,517     (10,252

Lapse of statute of limitations

     (954     (794     (1,897
                        

Balance, end of period

    $ 126,516       $ 106,506       $ 121,424   
                        
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet25.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Deferred Compensation Plans
12 Months Ended
Dec. 31, 2010
Deferred Compensation Plans
Deferred Compensation Plans
18. DEFERRED COMPENSATION PLANS

We maintain a retirement savings plan under which eligible employees may defer compensation for income tax purposes under Section 401(k) of the Internal Revenue Code (Gilead Plan). Under the Gilead Plan, employees may contribute up to 60% of their eligible annual compensation, subject to IRS plan limits. We make matching contributions under the Gilead Plan. In 2010, 2009 and 2008, we contributed up to 50% of an employee's contributions up to an annual maximum match of  $5,000. Our total matching contribution expense under the Gilead Plan for the years ended December 31, 2010, 2009 and 2008 was  $11.2 million,  $10.2 million, and  $7.8 million, respectively.

We maintain a deferred compensation plan under which our directors and key employees may defer compensation for income tax purposes. The deferred compensation plan is a non-qualified deferred compensation plan which is not subject to the qualification requirements under Section 401(a) of the Internal Revenue Code. Compensation deferred after December 31, 2004 is subject to the requirements of Section 409A of the Internal Revenue Code. Under the plan, officers and other senior grade level employees may contribute up to 70% of their annual salaries and up to 100% of their annual bonus while directors may contribute up to 100% of their annual retainer fee. Amounts deferred by participants are deposited in a rabbi trust and are recorded in other noncurrent assets in our Consolidated Balance Sheets. Beginning in 2004, directors may also elect to receive all or a portion of their annual cash retainer in phantom shares, which gives the participant the right to receive an amount equal to the value of a specified number of shares over a specified period of time and which will be payable in shares of our common stock (with fractional shares paid out in cash) as established by the plan administrator. As of December 31, 2010, we had 31,682 phantom shares outstanding. Participants can elect one of several distribution dates available under the plan at which they will receive their deferred compensation payment.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet26.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Subsequent Events
12 Months Ended
Dec. 31, 2010
Subsequent Events
Subsequent Events
19. SUBSEQUENT EVENTS

Stock Repurchase Program

In January 2011, our Board authorized an additional three-year,  $5.00 billion stock repurchase program which will commence upon the completion of our existing program authorized in May 2010.

Acquisition of Arresto Biosciences, Inc.

In December 2010, we entered into an agreement to acquire Arresto Biosciences, Inc. (Arresto) for  $225 million plus potential future payments based on achievement of certain sales levels. This transaction closed on January 14, 2011, at which time Arresto became a wholly-owned subsidiary. Arresto was a privately-held, development-stage biotechnology company based in Palo Alto, California, focused on developing antibodies for the potential treatment of fibrotic diseases and cancer. The company's lead product is GS 6224 (formerly AB0024), a humanized monoclonal antibody (mAb) targeting the human lysyl oxidase-like-2 (LOXL2) protein. In addition to an ongoing Phase 1 study of GS 6224 in patients with advanced solid tumors, a Phase 1 study had also been initiated to evaluate GS 6224 in patients with idiopathic pulmonary fibrosis. We believe that Arresto's pipeline and research and development expertise are well aligned with Gilead's areas of focus. Given the timing of the closing of this acquisition, we are currently in the process of valuing the assets acquired and liabilities assumed in the business combination. As a result, we are unable to provide the amounts recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed and certain disclosures pertaining to contingent consideration.

Acquisition of Calistoga Pharmaceuticals, Inc.

In February 2011, we entered into an agreement to acquire Calistoga Pharmaceuticals, Inc. (Calistoga) for  $375 million plus potential payments of up to  $225 million based on the achievement of certain milestones. This transaction is expected to close in the second quarter of 2011. Calistoga is a privately-held, biotechnology company based in Seattle, Washington, focused on the development of medicines to treat cancer and inflammatory diseases. The company has a portfolio of proprietary compounds that selectively target isoforms of phosphoinositide-3 kinase (P13K). Calistoga's lead product candidate, CAL-101, is a first-in-class specific inhibitor of the P13K delta isoform. P13K delta is preferentially expressed in leukocytes involved in a variety of inflammatory and autoimmune diseases and hematological cancers.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet27.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Quarterly Results of Operations
12 Months Ended
Dec. 31, 2010
Quarterly Results of Operations
Quarterly Results Of Operations
20. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

The following amounts are in thousands, except per share amounts:

 

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet28.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Schedule II Valuation and Qualifying Accounts
12 Months Ended
Dec. 31, 2010
Schedule II Valuation and Qualifying Accounts
Schedule II Valuation and Qualifying Accounts

GILEAD SCIENCES, INC.

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet29.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Organization and Summary of Significant Accounting Policies (Policy)
12 Months Ended
Dec. 31, 2010
Organization and Summary of Significant Accounting Policies
Basis of Presentation and Significant Accounting Policies, Estimates and Judgments
Revenue Recognition
Shipping and Handling Costs

Shipping and Handling Costs

Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of goods sold in our Consolidated Statements of Income.

Research and Development Expenses
Advertising Expenses
Net Income Per Share Attributable to Gilead Common Stockholders
Stock-Based Compensation
Cash and Cash Equivalents
Marketable and Nonmarketable Securities
Concentrations of Risk
Accounts Receivable

Accounts Receivable

Trade accounts receivable are recorded net of allowances for wholesaler chargebacks related to government rebate programs, cash discounts for prompt payment, doubtful accounts and sales returns. Estimates for wholesaler chargebacks for government rebates, cash discounts and sales returns are based on contractual terms, historical trends and our expectations regarding the utilization rates for these programs. Estimates for our allowance for doubtful accounts is determined based on existing contractual payment terms, historical payment patterns of our customers and individual customer circumstances, an analysis of days sales outstanding by geographic region and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Historically, the amounts of uncollectible accounts receivable that have been written off have been insignificant and consistent with management's expectations.

Inventories

Inventories

Inventories are recorded at the lower of cost or market, with cost determined on a first-in, first-out basis. We periodically review the composition of our inventories in order to identify obsolete, slow-moving or otherwise unsaleable items. If unsaleable items are observed and there are no alternate uses for the inventory, we will record a write-down to net realizable value in the period that the impairment is first recognized.

Prepaid Royalties
Property, Plant and Equipment
Goodwill and Other Intangible Assets
Impairment of Long-Lived Assets
Foreign Currency Translation, Transactions and Contracts

Foreign Currency Translation, Transactions and Contracts

Adjustments resulting from translating the financial statements of our foreign subsidiaries into U.S. dollars are excluded from the determination of net income and are recorded in accumulated other comprehensive income (loss) as a separate component of stockholders' equity. Net foreign currency exchange transaction gains or losses are included in interest and other income, net, on our Consolidated Statements of Income. Net transaction losses totaled  $3.7 million,  $16.4 million and  $36.5 million in 2010, 2009 and 2008, respectively.

 

We hedge a portion of our foreign currency exposures related to outstanding monetary assets and liabilities as well as forecasted product sales using foreign currency exchange forward and option contracts. In general, the market risk related to these contracts is offset by corresponding gains and losses on the hedged transactions. The credit risk associated with these contracts is driven by changes in interest and currency exchange rates and, as a result, varies over time. By working only with major banks and closely monitoring current market conditions, we limit the risk that counterparties to these contracts may be unable to perform. We also limit our risk of loss by entering into contracts that permit net settlement at maturity. Therefore, our overall risk of loss in the event of a counterparty default is limited to the amount of any unrecognized gains on outstanding contracts (i.e., those contracts that have a positive fair value) at the date of default. We do not enter into derivative contracts for trading purposes, nor do we hedge our net investment in any of our foreign subsidiaries.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Our financial instruments consist principally of cash and cash equivalents, marketable securities, accounts receivable, foreign currency exchange forward and option contracts, accounts payable, and short-term and long-term debt. Cash and cash equivalents, marketable securities and foreign currency exchange contracts that hedge accounts receivable and forecasted sales are reported at their respective fair values on our Consolidated Balance Sheets. The carrying value and fair value of the Notes were  $3.48 billion and  $3.97 billion, respectively, as of December 31, 2010. The carrying value and fair value of the Notes were  $1.16 billion and  $1.58 billion, respectively as of December 31, 2009. The fair value of the Notes was based on their quoted market values. The remaining financial instruments are reported on our Consolidated Balance Sheets at amounts that approximate current fair values.

Income Taxes
Recent Accounting Pronouncements
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet30.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Organization and Summary of Significant Accounting Policies (Tables)
12 Months Ended
Dec. 31, 2010
Organization and Summary of Significant Accounting Policies
Reconciliation of the Numerator and Denominator Used in the Calculation of Basic and Diluted Net Income Per Share
     Year Ended December 31,  
     2010      2009      2008  

Numerator:

        

Net income attributable to Gilead

    $ 2,901,257        $ 2,635,755        $ 1,978,899   
                          

Denominator:

        

Weighted-average shares of common stock outstanding used in the calculation of basic net income per share attributable to Gilead common stockholders

     856,060         904,604         920,693   

Effect of dilutive securities:

        

Stock options and equivalents

     16,606         23,850         30,727   

Conversion spread related to the 2011 Notes

     222         2,684         3,559   

Conversion spread related to the 2013 Notes

     508         2,971         3,846   
                          

Weighted-average shares of common stock outstanding used in the calculation of diluted net income per share attributable to Gilead common stockholders

     873,396         934,109         958,825   
                          
Estimated Useful Lives in Years

Description

   Estimated Useful Life

Buildings and improvements

   20-35

Laboratory and manufacturing equipment

   4-10

Office and computer equipment

   3-7

Leasehold improvements

   Shorter of useful life

or lease term

------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet31.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Fair Value Measurements (Tables)
12 Months Ended
Dec. 31, 2010
Fair Value Measurements
Summary of Assets and Liabilities Recorded at Fair Value and Classification by Level of Input
    December 31, 2010     December 31, 2009  
    Level 1     Level 2     Level 3     Total     Level 1     Level 2     Level 3     Total  

Assets:

               

Debt securities:

               

U.S. treasury securities

   $ 1,355,437       $ —         $ —         $ 1,355,437       $ 289,790       $ —         $ —         $ 289,790   

U.S.government agencies and FDIC guaranteed securities

    —          1,296,110        —          1,296,110        —          1,086,082        —          1,086,082   

Municipal debt securities

    —          17,625        —          17,625        —          433,474        —          433,474   

Non-U.S. government securities

    —          278,610        9,594        288,204        —          75,524        —          75,524   

Corporate debt securities

    —          1,119,254        —          1,119,254        —          566,176        —          566,176   

Residential mortgage and asset-backed securities

    —          277,043        —          277,043        —          120,407        839        121,246   

Student loan-backed securities

    —          —          70,771        70,771        —          —          104,823        104,823   
                                                               

Total debt securities

    1,355,437        2,988,642        80,365        4,424,444        289,790        2,281,663        105,662        2,677,115   

Equity securities

    4,631        —          —          4,631        3,470        —          —          3,470   

Derivatives

    —          64,461        —          64,461        —          26,198        —          26,198   
                                                               
   $ 1,360,068       $ 3,053,103       $ 80,365       $ 4,493,536       $ 293,260       $ 2,307,861       $ 105,662       $ 2,706,783   
                                                               

Liabilities:

               

Contingent consideration

    —          —          11,100        11,100        —          —          —          —     

Derivatives

    —          38,553        —          38,553        —          47,688        —          47,688   
   $ —         $ 38,553       $ 11,100       $ 49,653       $ —         $ 47,688       $ —         $ 47,688   
                                                               
Reconciliation of Marketable Securities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)
     Year Ended December 31,  
     2010     2009  

Balance, beginning of period

    $ 105,662       $ 102,633   

Total realized and unrealized gains (losses) included in:

    

Interest and other income, net

     115        (29

Other comprehensive income, net

     5,026        10,332   

Sales of marketable securities

     (40,032     (7,274

Transfers into Level 3

     9,594        —     
                

Balance, end of period

    $ 80,365       $ 105,662   
                

Total losses included in interest and other income, net attributable to the change in unrealized losses relating to assets still held at the reporting date

    $ —         $ (29
                
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet32.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Tables)
12 Months Ended
Dec. 31, 2010
Available-For-Sale Securities
Summary of Available-for-Sale Debt and Equity Securities at Estimated Fair Value
     Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Estimated
Fair Value
 

December 31, 2010

          

Debt securities:

          

U.S. treasury securities

    $ 1,349,348        $ 7,109        $ (1,020    $ 1,355,437   

U.S. government agencies and FDIC guaranteed securities

     1,284,654         11,919         (463     1,296,110   

Municipal debt securities

     17,543         103         (21     17,625   

Non-U.S. government securities

     286,410         1,880         (86     288,204   

Corporate debt securities

     1,112,976         8,040         (1,762     1,119,254   

Residential mortgage and asset-backed securities

     277,359         923         (1,239     277,043   

Student loan-backed securities

     75,900         —           (5,129     70,771   
                                  

Total debt securities

     4,404,190         29,974         (9,720     4,424,444   

Equity securities

     1,451         3,180         —          4,631   
                                  

Total

    $ 4,405,641        $ 33,154        $ (9,720    $ 4,429,075   
                                  

December 31, 2009

          

Debt securities:

          

U.S. treasury securities

    $ 289,055        $ 844        $ (109    $ 289,790   

U.S. government agencies and FDIC guaranteed securities

     1,077,910         9,116         (944     1,086,082   

Municipal debt securities

     429,583         3,986         (95     433,474   

Non-U.S. government securities

     74,756         874         (106     75,524   

Corporate debt securities

     557,116         9,563         (503     566,176   

Residential mortgage and asset-backed securities

     119,308         2,048         (110     121,246   

Student loan-backed securities

     115,400         —           (10,577     104,823   
                                  

Total debt securities

     2,663,128         26,431         (12,444     2,677,115   

Equity securities

     1,451         2,019         —          3,470   
                                  

Total

    $ 2,664,579        $ 28,450        $ (12,444    $ 2,680,585   
                                  
Summary of the Classification of Available-For-Sale Debt and Equity Securities
     December 31, 2010      December 31, 2009  

Cash and cash equivalents

    $ 18,883        $ 48,697   

Short-term marketable securities

     1,190,789         384,017   

Long-term marketable securities

     3,219,403         2,247,871   
                 

Total

    $ 4,429,075        $ 2,680,585   
                 
Summary of Available-For-Sale Debt Securities by Contractual Maturity
     December 31, 2010      December 31, 2009  
     Amortized
Cost
     Fair Value      Amortized
Cost
     Fair Value  

Less than one year

    $ 1,206,032        $ 1,209,672        $ 429,980        $ 432,714   

Greater than one year but less than five years

     3,022,744         3,044,114         1,878,589         1,898,183   

Greater than five years but less than ten years

     33,076         33,580         56,895         57,585   

Greater than ten years

     142,338         137,078         297,664         288,633   
                                   

Total

    $ 4,404,190        $ 4,424,444        $ 2,663,128        $ 2,677,115   
                                   
Summary of Gross Realized Gains and Losses Related to Marketable Securities
     Year Ended December 31,  
     2010     2009     2008  

Gross realized gains on sales

    $ 13,254       $ 10,373       $ 28,368   

Gross realized losses on sales

    $ (3,657    $ (1,405    $ (18,732
Summary of Available-For-Sale Debt Securities that were in a Continuous Unrealized Loss Position but were not Deemed to be Other-Than-Temporarily Impaired
     Less Than 12 Months      12 Months or Greater      Total  
     Gross
Unrealized
Losses
    Estimated
Fair Value
     Gross
Unrealized
Losses
    Estimated
Fair Value
     Gross
Unrealized
Losses
    Estimated
Fair Value
 
              
              

December 31, 2010

              

Debt securities:

              

U.S. treasury securities

    $ (1,020    $ 531,184        $ —         $ —          $ (1,020    $ 531,184   

U.S. government agencies and FDIC guaranteed securities

     (463     226,176         —          —           (463     226,176   

Municipal debt securities

     (21     4,688         —          —           (21     4,688   

Non-U.S. government securities

     (86     44,317         —          —           (86     44,317   

Corporate debt securities

     (1,762     459,412         —          —           (1,762     459,412   

Residential mortgage and asset-backed securities

     (1,239     197,330         —          —           (1,239     197,330   

Student loan-backed securities

     —          —           (5,129     70,771         (5,129     70,771   
                                                  

Total

    $ (4,591    $ 1,463,107        $ (5,129    $ 70,771        $ (9,720    $ 1,533,878   
                                                  

December 31, 2009

              

Debt securities:

              

U.S. treasury securities

    $ (109    $ 97,871        $ —         $ —          $ (109    $ 97,871   

U.S. government agencies and FDIC guaranteed securities

     (944     223,901         —          —           (944     223,901   

Municipal debt securities

     (95     65,377         —          —           (95     65,377   

Non-U.S. government securities

     (106     30,924         —          —           (106     30,924   

Corporate debt securities

     (503     126,410         —          —           (503     126,410   

Residential mortgage and asset-backed securities

     (110     36,446         —          —           (110     36,446   

Student loan-backed securities

     —          —           (10,577     104,823         (10,577     104,823   
                                                  

Total

    $ (1,867    $ 580,929        $ (10,577    $ 104,823        $ (12,444    $ 685,752   
                                                  
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet33.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Derivative Financial Instruments (Tables)
12 Months Ended
Dec. 31, 2010
Derivative Financial Instruments
Summary of Information About the Fair Values of Derivative Instruments on Consolidated Balance Sheets
     As of December 31, 2010  
     Asset Derivatives      Liability Derivatives  
     Location      Fair Value      Location      Fair Value  

Derivatives designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
    $ 59,276        
 
Other accrued
liabilities
  
  
    $ 36,493   

Foreign currency exchange contracts

    
 
Other noncurrent
assets
  
  
     5,089        
 
Other long-term
obligations
  
  
     2,022   
                       

Total derivatives designated as hedges

        64,365            38,515   
                       

Derivatives not designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
     96        
 
Other accrued
liabilities
  
  
     38   
                       

Total derivatives not designated as hedges

        96            38   
                       

Total derivatives

       $ 64,461           $ 38,553   
                       
     As of December 31, 2009  
     Asset Derivatives      Liability Derivatives  
     Location      Fair Value      Location      Fair Value  

Derivatives designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
    $ 16,183        
 
Other accrued
liabilities
  
  
    $ 45,482   

Foreign currency exchange contracts

    
 
Other noncurrent
assets
  
  
     10,010        
 
Other long-term
obligations
  
  
     2,180   
                       

Total derivatives designated as hedges

        26,193            47,662   
                       

Derivatives not designated as hedges:

           

Foreign currency exchange contracts

    
 
Other current
assets
  
  
     5        
 
Other accrued
liabilities
  
  
     26   
                       

Total derivatives not designated as hedges

        5            26   
                       

Total derivatives

       $ 26,198           $ 47,688   
                       
Summary of the Effect of Foreign Currency Exchange Contracts on Consolidated Statements of Income
     Year Ended December 31  
     2010      2009  

Derivatives designated as hedges:

     

Net gains (losses) recognized in OCI (effective portion)

    $ 115,073        $ (29,698

Net gains reclassified from accumulated OCI into product sales (effective portion)

    $ 73,720        $ 81,694   

Net gains (losses) recognized in interest and other income, net (ineffective portion and amounts excluded from effectiveness testing)

    $ 887        $ (14,493

Derivatives not designated as hedges:

     

Net gains (losses) recognized in interest and other income, net

    $ 66,639        $ (11,981
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet34.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Acquisitions (Tables)
0 Months Ended
Jul. 08, 2010
Apr. 15, 2009
Acquisitions
Summary of Assets Acquired and Liabilities Assumed, Stated at Fair Value

Intangible assets—IPR&D

    $ 26,630   

Goodwill

     70,111   

Deferred tax assets

     12,656   

Deferred tax liabilities

     (6,313

Other net liabilities assumed

     (984
        

Total consideration transferred

    $ 102,100   
        
Schedule of Assets Acquired and Liabilities Assumed

Intangible assets—marketed products

    $ 951,200   

Intangible assets—IPR&D

     138,900   

Goodwill

     341,910   

Deferred tax assets

     413,816   

Deferred tax liabilities

     (426,861

Other assets/liabilities

  

Cash and cash equivalents

     129,087   

Marketable securities

     116,363   

Accounts receivable

     9,136   

Inventories

     50,455   

Prepaids and other current assets

     60,671   

Property, plant and equipment

     11,672   

Other assets

     20,162   

Accounts payable

     (5,089

Accrued and other current liabilities

     (87,898

Convertible senior notes

     (303,060

Other liabilities

     (27,906
        

Total other net liabilities

     (26,407
        

Total consideration transferred

    $ 1,392,558   
        
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet35.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Restructuring (Tables)
12 Months Ended
Dec. 31, 2010
Restructuring
Schedule of Restructuring Reserve by Type of Cost
     Employee
Severance
and
Termination
Benefits
    Facilities-
Related
Costs
 

Balance at December 31, 2008

    $ —         $ —     

Costs incurred during the period

     33,797        9,880   

Costs paid or settled during the period

     (24,108     (545
                

Balance at December 31, 2009

    $ 9,689       $ 9,335   

Costs incurred during the period

     2,190        9,727   

Costs paid or settled during the period

     (11,445     (4,529
                

Balance at December 31, 2010

    $ 434       $ 14,533   
              
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet36.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Inventories (Tables)
12 Months Ended
Dec. 31, 2010
Inventories
Schedule of Inventories
     December 31,  
     2010      2009  

Raw materials

    $ 408,015        $ 333,582   

Work in process

     454,652         392,042   

Finished goods

     341,142         326,147   
                 

Total inventories

    $ 1,203,809        $ 1,051,771   
                 
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet37.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Property, Plant and Equipment (Tables)
12 Months Ended
Dec. 31, 2010
Property, Plant and Equipment
Property, Plant and Equipment
     December 31,  
     2010     2009  

Property, plant and equipment, net:

    

Buildings and improvements (including leasehold improvements)

    $ 501,401       $ 490,632   

Laboratory and manufacturing equipment

     168,711        176,362   

Office and computer equipment

     116,479        126,375   

Capitalized leased equipment

     10,865        15,232   

Construction in progress

     82,334        58,448   
                

Subtotal

     879,790        867,049   

Less accumulated depreciation and amortization (including  $10,451 and  $14,999 relating to capitalized leased equipment for 2010 and 2009, respectively)

     (316,367     (304,888
                

Subtotal

     563,423        562,161   

Land

     137,812        137,809   
                

Total

    $ 701,235       $ 699,970   
                
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet38.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets (Tables)
12 Months Ended
Dec. 31, 2010
Intangible Assets
Schedule of Carrying Amount of Intangible Assets
     December 31,  
     2010      2009  

Goodwill

    $ 532,669        $ 462,558   

Finite lived intangible assets

     863,393         923,319   

Indefinite lived intangible assets

     29,530         138,900   
                 

Total

    $ 1,425,592        $ 1,524,777   
                 
Schedule of Changes in the Carrying Amount of Goodwill

Balance at December 31, 2009

    $ 462,558   

Goodwill resulting from the acquisition of CGI

     70,111   
        

Balance at December 31, 2010

    $ 532,669   
        
Schedule of Finite-Lived Intangible Assets
     December 31, 2010      December 31, 2009  
     Gross Carrying
Amount
     Accumulated
Amortization
     Gross Carrying
Amount
     Accumulated
Amortization
 

Intangible asset—Ranexa

    $ 688,400        $ 54,795        $ 688,400        $ 21,889   

Intangible asset—Lexiscan

     262,800         43,979         262,800         18,235   

Other

     22,095         11,128         22,095         9,852   
                                   

Total

    $ 973,295        $ 109,902        $ 973,295        $ 49,976   
                                   
Schedule of Estimated Future Amortization Expense

Fiscal Year

   Amount  

2011

    $ 69,324   

2012

     75,776   

2013

     82,086   

2014

     90,940   

2015

     100,647   
        

Total

    $ 418,773   
        
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet39.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Long-Term Obligations (Tables)
12 Months Ended
Dec. 31, 2010
Schedule of Carrying Amount of Convertible Senior Notes
     December 31,  
     2010      2009  

2011 convertible senior notes

    $ 638,991        $ 606,786   

2013 convertible senior notes

     576,884         548,480   

2014 convertible senior notes

     1,153,805         —     

2016 convertible senior notes

     1,107,884         —     
                 

Total convertible senior notes, net

     3,477,564         1,155,266   

Less current portion (2011 convertible senior notes)

     638,991         —     
                 

Total non-current convertible senior notes, net

    $ 2,838,573        $ 1,155,266   
                 
2011 and 2013 Convertible Senior Notes [Member]
Schedule of Carrying Amount of Convertible Senior Notes
     Carrying Value of Equity
Component
     Net Carrying Amount of
Liability Component
     Unamortized Discount of
Liability Component
 
     December 31,      December 31,      December 31,  
     2010      2009      2010      2009      2010     2009  

2011 convertible senior notes

    $ 147,481        $ 147,481        $ 638,991        $ 606,786        $ (10,996    $ (43,201

2013 convertible senior notes

     193,231         193,231         576,884         548,480         (72,983     (101,387
                                                    

Total 2011 and 2013 convertible senior notes

    $ 340,712        $ 340,712        $ 1,215,875        $ 1,155,266        $ (83,979    $ (144,588
                                                    
2014 and 2016 Convertible Senior Notes [Member]
Schedule of Carrying Amount of Convertible Senior Notes
     Carrying Value of Equity
Component
     Net Carrying Amount of
Liability Component
     Unamortized Discount of
Liability Component
 
     December 31, 2010      December 31, 2010      December 31, 2010  

2014 convertible senior notes

    $ 107,496        $ 1,153,805        $ (96,195

2016 convertible senior notes

     152,039         1,107,884         (142,116
                          

Total 2014 and 2016 convertible senior notes

    $ 259,535        $ 2,261,689        $ (238,311
                          
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet40.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Commitments and Contingencies (Tables)
12 Months Ended
Dec. 31, 2010
Commitments and Contingencies
Future Minimum Rental Payments Under Operating Leases

2011

    $ 45,887   

2012

     37,733   

2013

     29,648   

2014

     21,477   

2015

     19,078   

Thereafter

     57,344   
        
    $ 211,167   
        
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet41.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stockholders' Equity (Tables)
12 Months Ended
Dec. 31, 2010
Stockholders' Equity
Schedule of Summary of Activity Under Stock Option Plans
     Year Ended December 31,  
     2010      2009      2008  
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
     Shares     Weighted-
Average
Exercise Price
 

Outstanding, beginning of year

     69,193       $ 28.09         76,811       $ 24.70         84,977       $ 20.33   

Granted and assumed

     4,836       $ 44.27         7,286       $ 48.87         9,807       $ 47.11   

Forfeited

     (2,348    $ 43.16         (2,393    $ 39.33         (2,471    $ 30.61   

Expired

     (759    $ 53.27         (440    $ 64.08         (59    $ 11.72   

Exercised

     (10,671    $ 17.68         (12,071    $ 15.56         (15,443    $ 13.97   
                                

Outstanding, end of year

     60,251       $ 30.32         69,193       $ 28.09         76,811       $ 24.70   
                                

Exercisable, end of year

     45,018       $ 25.92         47,090       $ 22.36         45,235       $ 17.29   
                                

Weighted-average grant date fair value of options granted during the year

      $ 14.24          $ 17.00          $ 16.95   
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet42.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stock-Based Compensation (Tables)
12 Months Ended
Dec. 31, 2010
Stock-Based Compensation
Schedule of Stock-Based Compensation Expenses Included in Consolidated Statement of Income
     Year Ended December 31,  
     2010     2009     2008  

Cost of goods sold

    $ 10,180       $ 10,859       $ 10,312   

Research and development expenses

     84,048        82,893        66,523   

Selling, general and administrative expenses

     105,813        92,006        76,529   
                        

Stock-based compensation expense included in total costs and expenses

     200,041        185,758        153,364   

Income tax effect

     (52,331     (46,486     (40,565
                        

Stock-based compensation expense included in net income

    $ 147,710       $ 139,272       $ 112,799   
                        
Schedule of Assumptions to Calculate the Estimated Fair Value of the Awards
     Year Ended December 31,  
     2010      2009      2008  

Expected volatility:

        

Stock options

     31%         35%         34%   

ESPP

     35%         37%         31%   

Expected term in years:

        

Stock options

     5.4         5.3         5.3   

ESPP

     1.3         1.3         1.2   

Risk-free interest rate:

        

Stock options

     2.3%         2.1%         2.8%   

ESPP

     0.4%         0.7%         2.1%   

Expected dividend yield

     0%         0%         0%   
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet43.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Comprehensive Income (Loss) (Tables)
12 Months Ended
Dec. 31, 2010
Comprehensive Income (Loss)
Net Realized Gains (Losses) on Sale of Securities and Cash Flow Hedges
     Year Ended December 31,  
     2010     2009     2008  

Net unrealized gain (loss) related to available-for-sale securities, net of tax impact of  $(6,624),  $(11,724) and  $11,487 for 2010, 2009 and 2008, respectively

    $ 13,450       $ 21,689       $ (21,607

Net unrealized gain (loss) related to cash flow hedges, net of tax impact of  $(9,149),  $10,682 and  $(40,681) for 2010, 2009 and 2008, respectively

     105,924        (19,016     93,962   

Reclassification adjustments, net of tax impact of  $9,028,  $32,532 and  $1,805 for 2010, 2009 and 2008, respectively

     (74,289     (58,130     (5,603
                        

Other comprehensive income (loss)

    $ 45,085       $ (55,457    $ 66,752   
                        
Accumulated Other Comprehensive Income (Loss), Net of Taxes
     As of December 31,  
     2010     2009  

Net unrealized gain on available-for-sale securities

    $ 16,528       $ 9,509   

Net unrealized gain (loss) on cash flow hedges

     21,615        (16,450

Cumulative foreign currency translation adjustment

     (7,232     1,183   
                

Accumulated other comprehensive income (loss)

    $ 30,911       $ (5,758
                
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet44.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Segment Information (Tables)
12 Months Ended
Dec. 31, 2010
Segment Information
Schedule of Product Sales
     Year Ended December 31,  
     2010      2009      2008  

Antiviral products:

        

Atripla

    $ 2,926,579        $ 2,382,113        $ 1,572,455   

Truvada

     2,649,908         2,489,682         2,106,687   

Viread

     732,240         667,510         621,187   

Hepsera

     200,592         271,595         341,023   

Emtriva

     27,679         27,974         31,080   
                          

Total antiviral products

     6,536,998         5,838,874         4,672,432   

AmBisome

     305,856         298,597         289,651   

Letairis

     240,279         183,949         112,855   

Ranexa

     239,832         131,062         —     

Other products

     66,956         16,829         9,858   
                          

Total product sales

    $ 7,389,921        $ 6,469,311        $ 5,084,796   
                          
Schedule of Total Revenues from External Customers and Collaboration Partners by Geographic Region
     Year Ended December 31,  
     2010      2009      2008  

United States

    $ 4,224,035        $ 3,599,313        $ 2,857,472   

Outside of the United States:

        

Switzerland

     458,606         448,203         193,314   

France

     519,700         468,314         395,672   

Spain

     456,647         451,115         356,607   

United Kingdom

     450,368         393,036         297,276   

Italy

     345,189         323,709         277,441   

Germany

     274,991         293,111         242,193   

Other European countries

     665,237         603,068         346,722   

Other countries

     554,647         431,514         369,053   
                          

Total revenues outside of the United States

     3,725,385         3,412,070         2,478,278   
                          

Total revenues

    $ 7,949,420        $ 7,011,383        $ 5,335,750   
                          
Schedule of Revenues from Each Customer who Individually Accounted for 10% or More as a % of Total Revenues
     Year Ended December 31,  
     2010      2009      2008  

Cardinal Health, Inc.

     17%         18%         21%   

McKesson Corp.

     14%         13%         16%   

AmerisourceBergen Corp.

     12%         11%         11%   
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet45.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes (Tables)
12 Months Ended
Dec. 31, 2010
Income Taxes
Provision for Income Taxes
     Year Ended December 31,  
     2010     2009     2008  

Federal:

      

Current

    $ 852,822       $ 719,777       $ 585,075   

Deferred

     (29,854     (47,608     6,099   
                        
     822,968        672,169        591,174   
                        

State:

      

Current

     139,819        153,376        56,223   

Deferred

     17,464        9,150        24,333   
                        
     157,283        162,526        80,556   
                        

Foreign:

      

Current

     43,094        42,860        38,738   

Deferred

     454        (1,191     (8,105
                        
     43,548        41,669        30,633   
                        

Provision for income taxes

    $ 1,023,799       $ 876,364       $ 702,363   
                        
Difference Between the Provision for Income Taxes and Federal Statutory Income Tax Rate Before Income Tax
     Year Ended December 31,  
     2010     2009     2008  

Income before provision for income taxes

    $ 3,913,548       $ 3,501,956       $ 2,672,698   
                        

Tax at federal statutory rate

    $ 1,369,742       $ 1,225,685       $ 935,444   

State taxes, net of federal benefit

     106,250        111,095        58,166   

Foreign earnings at different rates

     (435,767     (399,993     (257,835

Research and other credits

     (33,072     (43,045     (32,270

Net unbenefitted stock compensation

     13,188        4,269        5,224   

Other

     3,458        (21,647     (6,366
                        

Provision for income taxes

    $  1,023,799       $ 876,364       $ 702,363   
                        
Components Deferred Tax Assets and Liabilities
     December 31,  
     2010     2009  

Deferred tax assets:

    

Net operating loss carryforwards

    $ 308,854       $ 377,058   

Stock-based compensation

     142,242        117,019   

Reserves and accruals not currently deductible

     109,806        90,760   

Deferred revenue

     49,194        67,389   

Depreciation related

     58,875        44,166   

Research and other credit carryforwards

     25,151        28,980   

Capitalized intangibles

     5,839        12,086   

Other, net

     88,669        64,881   
                

Total deferred tax assets before valuation allowance

     788,630        802,339   

Valuation allowance

     (13,040     (1,078
                

Total deferred tax assets

     775,590        801,261   
                

Deferred tax liabilities:

    

Intangibles

     (322,168     (384,480

Unremitted foreign earnings

     (15,928     (15,928

Other

     (20,774     (17,053
                

Total deferred tax liabilities

     (358,870     (417,461
                

Net deferred tax assets

    $ 416,720       $ 383,800   
                
Total Gross Unrecognized Tax Benefit Liabilities
     December 31,  
     2010     2009     2008  

Balance, beginning of period

    $ 106,506       $ 121,424       $ 115,087   

Tax positions related to current year:

      

Additions

     24,320        25,036        37,495   

Reductions

     (3,303     (8,380     —     

Tax positions related to prior years:

      

Additions

     25,581        37,014        4,298   

Reductions

     (23,474     (36,277     (23,307

Settlements

     (2,160     (31,517     (10,252

Lapse of statute of limitations

     (954     (794     (1,897
                        

Balance, end of period

    $ 126,516       $ 106,506       $ 121,424   
                        
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet46.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Quarterly Results Of Operations (Tables)
12 Months Ended
Dec. 31, 2010
Quarterly Results of Operations
Quarterly Results of Operations
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet47.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Schedule II Valuation and Qualifying Accounts (Tables)
12 Months Ended
Dec. 31, 2010
Schedule II Valuation and Qualifying Accounts
Schedule ll: Valuation and Qualifying Accounts
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet48.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Organization and Summary of Significant Accounting Policies (Narrative) (Details) (USD  $)
Share data in Millions, except Per Share data, unless otherwise specified
1 Months Ended 12 Months Ended
Dec. 31, 2010
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Dec. 31, 2010
Warrants Expiring in 2011 [Member]
Dec. 31, 2010
Warrants Expiring in 2013 [Member]
Dec. 31, 2010
Warrants Expiring in 2014 [Member]
Dec. 31, 2010
Warrants Expiring in 2016 [Member]
Dec. 31, 2010
2011 Convertible Senior Notes [Member]
Apr. 30, 2006
2011 Convertible Senior Notes [Member]
Dec. 31, 2010
2013 Convertible Senior Notes [Member]
Apr. 30, 2006
2013 Convertible Senior Notes [Member]
Dec. 31, 2010
2014 Convertible Senior Notes [Member]
Jul. 31, 2010
2014 Convertible Senior Notes [Member]
Dec. 31, 2010
2016 Convertible Senior Notes [Member]
Jul. 31, 2010
2016 Convertible Senior Notes [Member]
Advertising expenses  $ 116,500,000  $ 108,100,000  $ 96,200,000
Conversion price of notes 38.75 38.75 38.1 38.1 45.08 45.08 45.41 45.41
Warrants strike price  $ 50.8  $ 53.9  $ 56.76  $ 60.1
Weighted-average shares of common stock outstanding excluded from the computation of diluted net income per share because their effect was antidilutive 22.5 17.4 11.4
Percentage of fair value of securities sold to us collateralized by U.S. government securities 102.00% 102.00%
Purchase cost of royalties interest paid 525,000,000 525,000,000
Percentage share cost of royalty interest paid 65.00%
Percentage share cost of royalty interest by Royalty Pharma 35.00%
Prepaid royalties capitalized 341,300,000 341,300,000
Unamortized prepaid royalty asset 219,500,000 219,500,000 245,000,000
Amortized to cost of goods sold 25,500,000 29,900,000 31,800,000
Unamortized capitalized software costs 22,500,000 22,500,000 25,200,000
Net transaction losses 3,700,000 16,400,000 36,500,000
Carrying value of notes 3,480,000,000 3,480,000,000 1,160,000,000
Fair value of the notes 3,970,000,000 3,970,000,000 1,580,000,000
Excise tax, minimum 30,000,000
Excise tax, maximum  $ 50,000,000
Use of estimates
Revenue recognition, product sales

We recognize revenue from product sales when there is persuasive evidence that an arrangement exists, delivery to the customer has occurred, the price is fixed or determinable and collectability is reasonably assured. Upon recognition of revenue from product sales, provisions are made for government rebates such as Medicaid reimbursements, customer incentives such as cash discounts for prompt payment, distributor fees and expected returns of expired products, as appropriate.

Revenue recognition, government rebates

We estimate reductions to our revenues for government-managed Medicaid programs as well as for certain other qualifying federal, state and foreign government programs based on contractual terms, historical utilization rates, new information regarding changes in these programs' regulations and guidelines that would impact the amount of the actual rebates, our expectations regarding future utilization rates for these programs and, for our U.S. product sales, channel inventory data obtained from our major U.S. wholesalers in accordance with our inventory management agreements. Government rebates that are invoiced directly to us are recorded in accrued government rebates on our Consolidated Balance Sheets. For qualified programs that can purchase our products through wholesalers at a lower contractual government price, the wholesalers charge back to us the difference between their acquisition cost and the lower contractual government price, which we record as allowances against accounts receivable.

Revenue recognition, cash discounts

We estimate cash discounts based on contractual terms, historical utilization rates and our expectations regarding future utilization rates.

Revenue recognition, distributor fees

Under our inventory management agreements with our significant U.S. wholesalers, we pay the wholesalers a fee primarily for the compliance of certain contractually determined covenants such as the maintenance of agreed upon inventory levels. These distributor fees are based on a contractually determined fixed percentage of sales.

Revenue recognition, product returns

We do not provide our customers with a general right of product return, but permit returns if the product is damaged or defective when received by the customer, or in the case of product sold in the Unites States and certain countries outside the United States, if the product has expired. We will accept returns for product that will expire within six months prior to or that have expired up to one year after their expiration dates. Our estimates for expected returns of expired products are based primarily on an ongoing analysis of historical return patterns.

Revenue recognition, royalty revenues
Revenue recognition, contract and other revenues
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet49.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Organization and Summary of Significant Accounting Policies (Reconciliation of the Numerator and Denominator Used in the Calculation of Basic and Diluted Net Income Per Share) (Details) (USD  $)
In Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2009
Sep. 30, 2009
Jun. 30, 2009
Mar. 31, 2009
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Net income attributable to Gilead  $ 629,419 [1]  $ 704,876 [1]  $ 712,061 [1]  $ 854,901 [1]  $ 802,212  $ 673,033  $ 571,398  $ 589,112  $ 2,901,257  $ 2,635,755  $ 1,978,899
Weighted-average shares of common stock outstanding used in the calculation of basic net income per share attributable to Gilead common stockholders 856,060 904,604 920,693
Stock options and equivalents 16,606 23,850 30,727
Weighted-average shares of common stock outstanding used in the calculation of diluted net income per share attributable to Gilead common stockholders 873,396 934,109 958,825
2011 Convertible Senior Notes [Member]
Conversion spread 222 2,684 3,559
2013 Convertible Senior Notes [Member]
Conversion spread 508 2,971 3,846
[1] During 2010, we recorded  $136.0 million of impairment charges in R&D expense, related to certain IPR&D assets acquired from CV Therapeutics. See Notes 5 and 9.
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet50.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Organization and Summary of Significant Accounting Policies (Estimated Useful Lives) (Details)
12 Months Ended
Dec. 31, 2010
Leasehold Improvements [Member]
Estimated Useful Lives Shorter of useful life or lease term
Buildings and Improvements [Member]
Estimated Useful Lives, Minimum 20
Estimated Useful Lives, Maximum 35
Office and Computer Equipment [Member]
Estimated Useful Lives, Minimum 3
Estimated Useful Lives, Maximum 7
Laboratory and Manufacturing Equipment [Member]
Estimated Useful Lives, Minimum 4
Estimated Useful Lives, Maximum 10
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet51.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Fair Value Measurements (Narrative) (Details)
12 Months Ended
Dec. 31, 2010
Fair Value Measurements
Annual discount rate used in discounted cash flow model 2.12%
Auction rate reset, upper range, in days 14
Auction rate reset, lower range, in days 7
Auction rate securities annual interest rate, lower range 0.43%
Auction rate securities annual interest rate, higher range 1.19%
Lower limit for weighted average expected life of student loans, in years 4
Upper limit for weighted average expected life of student loans, in years 8
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet52.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Fair Value Measurements (Summary of Assets and Liabilities Recorded at Fair Value and Classification by Level of Input) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Assets [Member]
Fair value, total  $ 4,493,536  $ 2,706,783
Assets [Member] | Level 1 [Member]
Fair value, total 1,360,068 293,260
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | U.S. Treasury Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 1,355,437 289,790
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | U.S. Government Agencies and FDIC Guaranteed Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | Municipal Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | Non-U.S. Government Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | Residential Mortgage and Asset-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | Student Loan-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 1 [Member] | Debt Securities [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Measured on Recurring Basis, Investments 1,355,437 289,790
Assets [Member] | Level 1 [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Equity securities 4,631 3,470
Fair Value, Assets Measured on Recurring Basis, Derivative Financial Instruments, Assets    
Assets [Member] | Level 2 [Member]
Fair value, total 3,053,103 2,307,861
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | U.S. Treasury Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | U.S. Government Agencies and FDIC Guaranteed Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 1,296,110 1,086,082
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | Municipal Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 17,625 433,474
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | Non-U.S. Government Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 278,610 75,524
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | Residential Mortgage and Asset-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 277,043 120,407
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | Student Loan-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 2 [Member] | Debt Securities [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Measured on Recurring Basis, Investments 2,988,642 2,281,663
Assets [Member] | Level 2 [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Equity securities    
Fair Value, Assets Measured on Recurring Basis, Derivative Financial Instruments, Assets 64,461 26,198
Assets [Member] | Level 3 [Member]
Fair value, total 80,365 105,662
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | U.S. Treasury Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | U.S. Government Agencies and FDIC Guaranteed Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | Municipal Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | Non-U.S. Government Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 9,594  
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | Residential Mortgage and Asset-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments   839
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | Student Loan-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 70,771 104,823
Assets [Member] | Level 3 [Member] | Debt Securities [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Measured on Recurring Basis, Investments 80,365 105,662
Assets [Member] | Level 3 [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Equity securities    
Fair Value, Assets Measured on Recurring Basis, Derivative Financial Instruments, Assets    
Assets [Member] | Debt Securities [Member] | U.S. Treasury Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 1,355,437 289,790
Assets [Member] | Debt Securities [Member] | U.S. Government Agencies and FDIC Guaranteed Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 1,296,110 1,086,082
Assets [Member] | Debt Securities [Member] | Municipal Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 17,625 433,474
Assets [Member] | Debt Securities [Member] | Non-U.S. Government Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 288,204 75,524
Assets [Member] | Debt Securities [Member] | Residential Mortgage and Asset-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 277,043 121,246
Assets [Member] | Debt Securities [Member] | Student Loan-Backed Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 70,771 104,823
Assets [Member] | Debt Securities [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Measured on Recurring Basis, Investments 4,424,444 2,677,115
Assets [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Equity securities 4,631 3,470
Fair Value, Assets Measured on Recurring Basis, Derivative Financial Instruments, Assets 64,461 26,198
Liabilities [Member]
Fair value, total 49,653 47,688
Business Acquisition, Contingent Consideration, at Fair Value 11,100  
Liabilities [Member] | Level 1 [Member]
Fair value, total    
Business Acquisition, Contingent Consideration, at Fair Value    
Liabilities [Member] | Level 1 [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Liabilities Measured on Recurring Basis, Derivative Financial Instruments, Liabilities    
Liabilities [Member] | Level 2 [Member]
Fair value, total 38,553 47,688
Business Acquisition, Contingent Consideration, at Fair Value    
Liabilities [Member] | Level 2 [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Liabilities Measured on Recurring Basis, Derivative Financial Instruments, Liabilities 38,553 47,688
Liabilities [Member] | Level 3 [Member]
Fair value, total 11,100  
Business Acquisition, Contingent Consideration, at Fair Value 11,100  
Liabilities [Member] | Level 3 [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Liabilities Measured on Recurring Basis, Derivative Financial Instruments, Liabilities    
Liabilities [Member] | Total Debt Securities, Equity Securities and Derivatives [Member]
Fair Value, Liabilities Measured on Recurring Basis, Derivative Financial Instruments, Liabilities 38,553 47,688
Level 1 [Member] | Debt Securities [Member] | Corporate Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Level 2 [Member] | Debt Securities [Member] | Corporate Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments 1,119,254 566,176
Level 3 [Member] | Debt Securities [Member] | Corporate Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments    
Debt Securities [Member] | Corporate Debt Securities [Member]
Fair Value, Measured on Recurring Basis, Investments  $ 1,119,254  $ 566,176
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet53.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Fair Value Measurements (Reconciliation of Marketable Securities Measured at Fair Value Using Significant Unobservable Inputs (Level 3)) (Details) (Level 3 [Member], USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Balance, beginning of period  $ 105,662  $ 102,633
Total realized and unrealized gains (losses) included in interest and other income, net 115 (29)
Total realized and unrealized gains (losses) included in other comprehensive income, net 5,026 10,332
Sales of marketable securities (40,032) (7,274)
Transfers into Level 3 9,594  
Balance, end of period 80,365 105,662
Total losses included in interest and other income, net attributable to the change in unrealized losses relating to assets still held at the reporting date  $ (29)
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet54.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Narrative) (Details)
Dec. 31, 2010
Dec. 31, 2009
Number of securities in an unrealized loss position, percentage of total 34.00% 32.00%
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet55.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Summary of Available-For-Sale Debt and Equity Securities at Estimated Fair Value) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Amortized cost  $ 4,405,641  $ 2,664,579
Gross unrealized gains 33,154 28,450
Gross unrealized losses (9,720) (12,444)
Estimated fair value 4,429,075 2,680,585
U.S. Treasury Securities [Member]
Amortized cost 1,349,348 289,055
Gross unrealized gains 7,109 844
Gross unrealized losses (1,020) (109)
Estimated fair value 1,355,437 289,790
U.S. Government Agencies and FDIC Guaranteed Debt Securities [Member]
Amortized cost 1,284,654 1,077,910
Gross unrealized gains 11,919 9,116
Gross unrealized losses (463) (944)
Estimated fair value 1,296,110 1,086,082
Municipal Debt Securities [Member]
Amortized cost 17,543 429,583
Gross unrealized gains 103 3,986
Gross unrealized losses (21) (95)
Estimated fair value 17,625 433,474
Non-U.S. Government Securities [Member]
Amortized cost 286,410 74,756
Gross unrealized gains 1,880 874
Gross unrealized losses (86) (106)
Estimated fair value 288,204 75,524
Corporate Debt Securities [Member]
Amortized cost 1,112,976 557,116
Gross unrealized gains 8,040 9,563
Gross unrealized losses (1,762) (503)
Estimated fair value 1,119,254 566,176
Residential Mortgage and Asset-Backed Securities [Member]
Amortized cost 277,359 119,308
Gross unrealized gains 923 2,048
Gross unrealized losses (1,239) (110)
Estimated fair value 277,043 121,246
Student Loan-Backed Securities [Member]
Amortized cost 75,900 115,400
Gross unrealized gains    
Gross unrealized losses (5,129) (10,577)
Estimated fair value 70,771 104,823
Equity Securities [Member]
Amortized cost 1,451 1,451
Gross unrealized gains 3,180 2,019
Gross unrealized losses    
Estimated fair value 4,631 3,470
Debt Securities [Member]
Amortized cost 4,404,190 2,663,128
Gross unrealized gains 29,974 26,431
Gross unrealized losses (9,720) (12,444)
Estimated fair value  $ 4,424,444  $ 2,677,115
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet56.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Summary of the Classification of Available-For-Sale Debt and Equity Securities) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Available For Sale Securities  $ 4,429,075  $ 2,680,585
Cash and Cash Equivalents [Member]
Available-for-sale debt and equity securities 18,883 48,697
Short-Term Marketable Securities [Member]
Available-for-sale debt and equity securities 1,190,789 384,017
Long-Term Marketable Securities [Member]
Available-for-sale debt and equity securities  $ 3,219,403  $ 2,247,871
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet57.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Summary of Available-For-Sale Debt Securities by Contractual Maturity) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Available-For-Sale Securities
Less than one year, amortized cost  $ 1,206,032  $ 429,980
Greater than one year but less than five years, amortized cost 3,022,744 1,878,589
Greater than five years but less than ten years, amortized cost 33,076 56,895
Greater than ten years, amortized cost 142,338 297,664
Total, amortized cost 4,404,190 2,663,128
Less than one year, fair value 1,209,672 432,714
Greater than one year but less than five years, fair value 3,044,114 1,898,183
Greater than five years but less than ten years, fair value 33,580 57,585
Greater than ten years, fair value 137,078 288,633
Total, fair value  $ 4,424,444  $ 2,677,115
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet58.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Summary of Gross Realized Gains and Losses Related to Marketable Securities) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Available-For-Sale Securities
Gross realized gains on sales  $ 13,254  $ 10,373  $ 28,368
Gross realized losses on sales  $ (3,657)  $ (1,405)  $ (18,732)
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet59.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Available-For-Sale Securities (Summary of Available-For-Sale Debt Securities that were in a Continuous Unrealized Loss Position but were not Deemed to be Other-Than-Temporarily Impaired) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Less than 12 months, gross unrealized losses  $ (4,591)  $ (1,867)
Less than 12 months, estimated fair value 1,463,107 580,929
12 months or greater, gross unrealized losses (5,129) (10,577)
12 months or greater, estimated fair value 70,771 104,823
Total, gross unrealized losses (9,720) (12,444)
Total, estimated fair value 1,533,878 685,752
U.S. Treasury Securities [Member]
Less than 12 months, gross unrealized losses (1,020) (109)
Less than 12 months, estimated fair value 531,184 97,871
12 months or greater, gross unrealized losses    
12 months or greater, estimated fair value    
Total, gross unrealized losses (1,020) (109)
Total, estimated fair value 531,184 97,871
U.S. Government Agencies and FDIC Guaranteed Debt Securities [Member]
Less than 12 months, gross unrealized losses (463) (944)
Less than 12 months, estimated fair value 226,176 223,901
12 months or greater, gross unrealized losses    
12 months or greater, estimated fair value    
Total, gross unrealized losses (463) (944)
Total, estimated fair value 226,176 223,901
Municipal Debt Securities [Member]
Less than 12 months, gross unrealized losses (21) (95)
Less than 12 months, estimated fair value 4,688 65,377
12 months or greater, gross unrealized losses    
12 months or greater, estimated fair value    
Total, gross unrealized losses (21) (95)
Total, estimated fair value 4,688 65,377
Non-U.S. Government Securities [Member]
Less than 12 months, gross unrealized losses (86) (106)
Less than 12 months, estimated fair value 44,317 30,924
12 months or greater, gross unrealized losses    
12 months or greater, estimated fair value    
Total, gross unrealized losses (86) (106)
Total, estimated fair value 44,317 30,924
Corporate Debt Securities [Member]
Less than 12 months, gross unrealized losses (1,762) (503)
Less than 12 months, estimated fair value 459,412 126,410
12 months or greater, gross unrealized losses    
12 months or greater, estimated fair value    
Total, gross unrealized losses (1,762) (503)
Total, estimated fair value 459,412 126,410
Residential Mortgage and Asset-Backed Securities [Member]
Less than 12 months, gross unrealized losses (1,239) (110)
Less than 12 months, estimated fair value 197,330 36,446
12 months or greater, gross unrealized losses    
12 months or greater, estimated fair value    
Total, gross unrealized losses (1,239) (110)
Total, estimated fair value 197,330 36,446
Student Loan-Backed Securities [Member]
Less than 12 months, gross unrealized losses    
Less than 12 months, estimated fair value    
12 months or greater, gross unrealized losses (5,129) (10,577)
12 months or greater, estimated fair value 70,771 104,823
Total, gross unrealized losses (5,129) (10,577)
Total, estimated fair value  $ 70,771  $ 104,823
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet60.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Derivative Financial Instruments (Narrative) (Details) (USD  $)
In Billions
Dec. 31, 2010
Dec. 31, 2009
Derivative Financial Instruments
Notional amounts on foreign currency exchange forward contracts outstanding  $ 3.55  $ 3.45
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet61.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Derivative Financial Instruments (Summary of Information About the Fair Values of Derivative Instruments on Consolidated Balance Sheets) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Asset derivatives designated as hedges  $ 64,365  $ 26,193
Liability derivatives designated as hedges 38,515 47,662
Asset derivatives not designated as hedges 96 5
Liability derivatives not designated as hedges 38 26
Total derivatives, asset derivatives 64,461 26,198
Total derivatives, liability derivatives 38,553 47,688
Foreign Currency Exchange Contracts [Member] | Other Current Assets [Member]
Asset derivatives designated as hedges 59,276 16,183
Asset derivatives not designated as hedges 96 5
Foreign Currency Exchange Contracts [Member] | Other Noncurrent Assets [Member]
Asset derivatives designated as hedges 5,089 10,010
Foreign Currency Exchange Contracts [Member] | Other Accrued Liabilities [Member]
Liability derivatives designated as hedges 36,493 45,482
Liability derivatives not designated as hedges 38 26
Foreign Currency Exchange Contracts [Member] | Other Long-Term Obligations [Member]
Liability derivatives designated as hedges  $ 2,022  $ 2,180
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet62.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Derivative Financial Instruments (Summary of the Effect of Foreign Currency Exchange Contracts on Consolidated Statements of Income) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Derivative Financial Instruments
Net gains (losses) recognized in OCI (effective portion)  $ 115,073  $ (29,698)
Net gains reclassified from accumulated OCI into product sales (effective portion) 73,720 81,694
Net gains (losses) recognized in interest and other income, net (ineffective portion and amounts excluded from effectiveness testing) 887 (14,493)
Net gains (losses) recognized in interest and other income, net  $ 66,639  $ (11,981)
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet63.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Acquisitions (Narrative) (Details) (USD  $)
12 Months Ended 3 Months Ended 0 Months Ended 0 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Marketed Products [Member]
Apr. 15, 2009
Marketed Products [Member]
CV Therapeutics, Inc. [Member]
Dec. 31, 2010
IPR&D [Member]
CV Therapeutics, Inc. [Member]
Apr. 15, 2009
IPR&D [Member]
CV Therapeutics, Inc. [Member]
Dec. 31, 2010
Ranexa [Member]
Dec. 31, 2010
Lexiscan [Member]
May 31, 2008
Navitas Assets, LLC [Member]
Apr. 15, 2009
GS 9667 [Member]
CV Therapeutics, Inc. [Member]
Apr. 15, 2009
2.75% Senior Subordinated Convertible Notes Due 2012 [Member]
CV Therapeutics, Inc. [Member]
Apr. 15, 2009
3.25% Senior Subordinated Convertible Notes Due 2013 [Member]
CV Therapeutics, Inc. [Member]
Apr. 15, 2009
2.0% Senior Subordinated Convertible Debentures Due 2023 [Member]
CV Therapeutics, Inc. [Member]
Jul. 08, 2010
CGI Pharmaceuticals [Member]
Jun. 30, 2010
CGI Pharmaceuticals [Member]
Apr. 15, 2009
CV Therapeutics, Inc. [Member]
Dec. 31, 2010
CV Therapeutics, Inc. [Member]
Maximum consideration of acquisition  $ 120,000,000
Total cash paid for acquisition 91,000,000 1,380,000,000
Maximum value of contingent consideration 29,000,000
Total consideration paid in connection with the acquisition 10,900,000 102,100,000 1,392,558,000
Contingent consideration paid 11,100,000
Fair value of intangible assets related to IPR&D 138,900,000 93,400,000 26,630,000
Present value discount rate 2.12% 18.00%
Intangible assets related to the marketed products 951,200,000 951,200,000 688,400,000 262,800,000
Asset impairment charges 136,000,000 136,000,000
Intangible assets - IPR&D 29,530,000 138,900,000
Business acquisition, effective date of acquisition April 15, 2009
Percentage of shares acquired on outstanding shares of common stock 89.00%
Fair value of vested stock options 15,700,000
Business Acquisition, Equity Interest Issued or Issuable, Basis for Determining Value

In accordance with the merger agreement, the number of Gilead stock options and restricted stock units into which assumed CV Therapeutics' stock options and restricted stock units were converted was determined based on an option conversion ratio. This conversion ratio was calculated by taking the per share acquisition price of  $20.00 and dividing it by the average closing price of our common stock for the five consecutive trading days immediately preceding (but not including) the closing date of April 17, 2009, which was  $46.24 per share. The fair value of stock options assumed was calculated using a Black-Scholes valuation model with the following assumptions: market price of  $44.54 per share, which was the closing price of our common stock on the acquisition date; expected term ranging from 0.1 to 5.2 years; risk-free interest rate ranging from 0.1% to 1.7%; expected volatility ranging from 37.4% to 43.2%; and no dividend yield. The fair value of restricted stock units assumed was calculated using the acquisition-date closing price of  $44.54 per share for our common stock.

Estimated fair value of unvested stock options and restricted stock units assumed 11,200,000
Deferred tax assets resulting from the acquisition primarily related to federal and state net operating loss and tax credit carryforwards 12,656,000 413,816,000
Deferred tax liabilities resulting from the acquisition primarily related to the difference between the book basis and tax basis of the intangible assets 6,313,000 426,861,000
Deferred tax liability reduced as result of impairment charges 49,700,000
Valuation allowance related to deferred tax assets 13,040,000 1,078,000 15,100,000
Senior subordinated convertible notes - interest rate 2.75% 3.25% 2.00%
Senior subordinated convertible notes - maturity date Dec 31, 2012 Dec 31, 2013 Dec 31, 2023
Goodwill resulting from the acquisition of CGI 70,111,000 341,910,000
Aggregate consideration transferred for the acquisition  $ 10,900,000  $ 102,100,000  $ 1,392,558,000
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet64.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Acquisitions (Summary of Assets Acquired and Liabilities Assumed, Stated at Fair Value) (Details) (CGI Pharmaceuticals [Member], USD  $)
In Thousands
Jul. 08, 2010
Intangible assets - IPR&D  $ 26,630
Goodwill 70,111
Deferred tax assets 12,656
Deferred tax liabilities (6,313)
Other net liabilities assumed (984)
Total consideration transferred  $ 102,100
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet65.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Acquisitions (Schedule of Assets Acquired and Liabilities Assumed) (Details) (CV Therapeutics, Inc. [Member], USD  $)
In Thousands
Apr. 15, 2009
Goodwill  $ 341,910
Deferred tax assets 413,816
Deferred tax liabilities (426,861)
Cash and cash equivalents 129,087
Marketable securities 116,363
Accounts receivable 9,136
Inventories 50,455
Prepaids and other current assets 60,671
Property, plant and equipment 11,672
Other assets 20,162
Accounts payable (5,089)
Accrued and other current liabilities (87,898)
Convertible senior notes (303,060)
Other liabilities (27,906)
Total other net liabilities (26,407)
Total consideration transferred 1,392,558
Marketed Products [Member]
Intangible assets 951,200
IPR&D [Member]
Intangible assets - IPR&D  $ 138,900
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet66.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Restructuring (Narrative) (Details) (USD  $)
In Millions
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
CVT/Cardiovascular Restructuring [Member] | Selling, General and Administrative Expenses [Member]
Restructuring and related cost  $ 10.6  $ 26.2
Total amount to be incurred in connection with our restructuring plan 36.8
CVT/Cardiovascular Restructuring [Member] | Research Development Expenses [Member]
Restructuring and related cost 3.4 25.7
Total amount to be incurred in connection with our restructuring plan 29.1
Durham Restructuring [Member] | Selling, General and Administrative Expenses [Member]
Restructuring and related cost 14.6
Durham Restructuring [Member] | Research Development Expenses [Member]
Restructuring and related cost  $ 10.4
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet67.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Restructuring (Schedule of Restructuring Reserve by Type of Cost) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Employee Severance and Termination Benefits [Member]
Costs incurred during the period  $ 2,190  $ 33,797
Costs paid or settled during the period (11,445) (24,108)
Balance 434 9,689
Facilities Related Costs [Member]
Costs incurred during the period 9,727 9,880
Costs paid or settled during the period (4,529) (545)
Balance  $ 14,533  $ 9,335
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet68.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Inventories (Narrative) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Total inventory  $ 1,203,809  $ 1,051,771
Joint Venture, Gilead and BMS [Member]
Total inventory  $ 811,900  $ 667,800
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet69.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Inventories (Summary of Inventories) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Inventories
Raw materials  $ 408,015  $ 333,582
Work in process 454,652 392,042
Finished goods 341,142 326,147
Total inventories  $ 1,203,809  $ 1,051,771
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet70.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Property, Plant and Equipment (Narrative) (Details) (USD  $)
In Millions, unless otherwise specified
Jan. 31, 2009
Number of acres of land purchased 30
Purchase cost of office building and land located in Foster city  $ 140.1
Land [Member]
Purchase cost of office building and land located in Foster city 71.6
Land Improvements [Member]
Purchase cost of office building and land located in Foster city 2.7
Building [Member]
Purchase cost of office building and land located in Foster city 64.3
Office and Computer Equipment [Member]
Purchase cost of office building and land located in Foster city  $ 1.1
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet71.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Property, Plant and Equipment (Property, Plant and Equipment) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Buildings and Improvements [Member]
Dec. 31, 2009
Buildings and Improvements [Member]
Dec. 31, 2010
Laboratory and Manufacturing Equipment [Member]
Dec. 31, 2009
Laboratory and Manufacturing Equipment [Member]
Dec. 31, 2010
Office and Computer Equipment [Member]
Dec. 31, 2009
Office and Computer Equipment [Member]
Dec. 31, 2010
Capital Lease Equipment [Member]
Dec. 31, 2009
Capital Lease Equipment [Member]
Dec. 31, 2010
Construction in Progress [Member]
Dec. 31, 2009
Construction in Progress [Member]
Dec. 31, 2010
Property Plant and Equipment [Member]
Dec. 31, 2009
Property Plant and Equipment [Member]
Dec. 31, 2010
Land [Member]
Dec. 31, 2009
Land [Member]
Subtotal  $ 501,401  $ 490,632  $ 168,711  $ 176,362  $ 116,479  $ 126,375  $ 10,865  $ 15,232  $ 82,334  $ 58,448  $ 879,790  $ 867,049  $ 137,812  $ 137,809
Less accumulated depreciation and amortization (including  $10,451 and  $14,999 relating to capitalized leased equipment for 2010 and 2009, respectively) (316,367) (304,888)
Property, plant and equipment, net 701,235 699,970 563,423 562,161
Depreciation on capitalized leased equipments  $ 10,451  $ 14,999
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet72.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets (Narrative) (Details) (USD  $)
12 Months Ended 3 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Dec. 31, 2010
CGI Pharmaceuticals [Member]
IPR&D [Member]
Dec. 31, 2010
CV Therapeutics [Member]
IPR&D [Member]
Dec. 31, 2009
CV Therapeutics [Member]
IPR&D [Member]
Dec. 31, 2010
IPR&D Related to CVT [Member]
Amortization expense  $ 59,900,000  $ 43,400,000  $ 2,800,000
Weighted-average amortization period for intangible assets, in years 10
Indefinite-lived intangible assets 29,530,000 138,900,000 26,600,000 2,900,000 138,900,000
Impairment charges  $ 136,000,000
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet73.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets (Schedule of Carrying Amount of Intangible Assets) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Intangible Assets
Goodwill  $ 532,669  $ 462,558
Finite lived intangible assets 863,393 923,319
Intangible assets - IPR&D 29,530 138,900
Total  $ 1,425,592  $ 1,524,777
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet74.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets (Schedule of Changes in the Carrying Amount of Goodwill) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Jul. 08, 2010
CGI Pharmaceuticals [Member]
Year end balance  $ 532,669  $ 462,558
Goodwill resulting from the acquisition of CGI  $ 70,111
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet75.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets (Schedule of Finite-Lived intangible Assets) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Gross carrying amount  $ 973,295  $ 973,295
Accumulated amortization 109,902 49,976
Ranexa [Member]
Gross carrying amount 688,400 688,400
Accumulated amortization 54,795 21,889
Lexiscan [Member]
Gross carrying amount 262,800 262,800
Accumulated amortization 43,979 18,235
Other Intangible Assets [Member]
Gross carrying amount 22,095 22,095
Accumulated amortization  $ 11,128  $ 9,852
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet76.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Intangible Assets (Schedule of Estimated Future Amortization Expense) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Intangible Assets
2011  $ 69,324
2012 75,776
2013 82,086
2014 90,940
2015 100,647
Total  $ 418,773
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet77.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Collaborative Arrangements (Details)
12 Months Ended 1 Months Ended 3 Months Ended 12 Months Ended 1 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended
Dec. 31, 2010
USD ( $)
Dec. 31, 2009
USD ( $)
Dec. 31, 2008
USD ( $)
Jul. 31, 2008
Renexa Product [Member]
Roche [Member]
USD ( $)
Jan. 31, 2006
Renexa Product [Member]
Roche [Member]
USD ( $)
Mar. 31, 2009
Hespera Product [Member]
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2008
Hespera Product [Member]
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2007
Hespera Product [Member]
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2010
Volibris Product [Member]
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2009
Volibris Product [Member]
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2008
Volibris Product [Member]
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2010
Lexiscan Product [Member]
Astellas US LLC and Astellas Pharma US, Inc. [Member]
USD ( $)
Dec. 31, 2009
Lexiscan Product [Member]
Astellas US LLC and Astellas Pharma US, Inc. [Member]
USD ( $)
Dec. 31, 2010
TCM278 Product [Member]
Tibotec Pharmaceuticals [Member]
USD ( $)
Dec. 31, 2010
TCM278 Product [Member]
Tibotec Pharmaceuticals [Member]
EUR ( €)
Dec. 31, 2009
TCM278 Product [Member]
Tibotec Pharmaceuticals [Member]
USD ( $)
Dec. 31, 2009
TCM278 Product [Member]
Tibotec Pharmaceuticals [Member]
EUR ( €)
Dec. 31, 2009
Tamiflu Royalty Arrangement [Member]
Roche [Member]
Aug. 31, 2007
Up-front Payments [Member]
Parion Sciences, Inc. [Member]
USD ( $)
Mar. 31, 2005
Up-front Payments [Member]
Japan Tobacco Inc. [Member]
USD ( $)
Nov. 30, 2007
PARI GmbH [Member]
USD ( $)
Aug. 31, 2007
Parion Sciences, Inc. [Member]
USD ( $)
Jul. 31, 2008
Japan Tobacco Inc. [Member]
USD ( $)
Mar. 31, 2006
Japan Tobacco Inc. [Member]
USD ( $)
Mar. 31, 2006
GlaxoSmithKline Inc. [Member]
USD ( $)
Apr. 30, 2002
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2010
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2009
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2008
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2007
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2006
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2004
GlaxoSmithKline Inc. [Member]
USD ( $)
Dec. 31, 2010
Roche [Member]
USD ( $)
Dec. 31, 2009
Roche [Member]
USD ( $)
Dec. 31, 2008
Roche [Member]
USD ( $)
Dec. 31, 2010
Astellas US LLC and Astellas Pharma US, Inc. [Member]
USD ( $)
Dec. 31, 2009
Astellas US LLC and Astellas Pharma US, Inc. [Member]
USD ( $)
Dec. 31, 2008
Astellas US LLC and Astellas Pharma US, Inc. [Member]
USD ( $)
Jul. 31, 2009
Tibotec Pharmaceuticals [Member]
EUR ( €)
Jul. 31, 2009
Tibotec Pharmaceuticals [Member]
USD ( $)
Total assets of the joint venture  $ 1,450,000,000  $ 1,400,000,000
Total liabilities of the joint venture 759,500,000 1,030,000,000
Amount paid to reduce the royalty rate 13,500,000
Investment in the form of convertible debt 5,000,000
Royalty agreement terms The royalties payable to us on net sales of Tamiflu sold by Roche remain the same under the amended agreement, which are as follows: (a) 14% of the first  $200.0 million in worldwide net sales in a given calendar year; (b) 18% of the next  $200.0 million in worldwide net sales during the same calendar year; and (c) 22% of worldwide net sales in excess of  $400.0 million during the same calendar year.
Payment in accordance with agreement 9,000,000 11,000,000
Number of years amortized over its useful patent life 11
Research and development expense 22,100,000 17,900,000 52,400,000 35,700,000 5,000,000 15,000,000 7,000,000 5,000,000
Milestone payments received 20,000,000 11,000,000 10,000,000 17,000,000
Future milestone receivables 80,000,000
Deferred revenue recognized 24,500,000 3,400,000 3,600,000 8,700,000 8,300,000 5,000,000
Gross sales limit for achievement 75,000,000
Up-front payment received 20,000,000 10,000,000
Number of years milestone and up-front license payments amortized 6
Royalty revenue 545,970,000 491,818,000 218,180,000 43,200,000 19,700,000 48,000,000 32,400,000 31,700,000 386,500,000 392,700,000 155,500,000 10,200,000 9,400,000 9,500,000
Research and development reimbursement contract, maximum  € 71,500,000  $ 100,000,000
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet78.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Long-Term Obligations (Narrative) (Details) (USD  $)
Share data in Millions, except Per Share data, unless otherwise specified
1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended
May 31, 2010
Apr. 30, 2009
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Warrants Expiring in 2011 [Member]
Dec. 31, 2010
Warrants Expiring in 2013 [Member]
Dec. 31, 2010
Warrants Expiring in 2014 [Member]
Dec. 31, 2010
Warrants Expiring in 2016 [Member]
Apr. 30, 2006
Warrants Expiring in 2011 and 2013 [Member]
Jul. 31, 2010
Warrants Expiring in 2014 and 2016 [Member]
Apr. 30, 2006
2011 and 2013 Convertible Note Hedges [Member]
Jul. 31, 2010
2014 and 2016 Convertible Note Hedges [Member]
Apr. 30, 2006
2014 and 2016 Convertible Note Hedges [Member]
Jul. 31, 2010
Convertible Notes Hedges and Warrants [Member]
Apr. 30, 2006
Convertible Notes Hedges and Warrants [Member]
Apr. 30, 2006
2011 Convertible Senior Notes [Member]
Dec. 31, 2010
2011 Convertible Senior Notes [Member]
Apr. 30, 2006
2013 Convertible Senior Notes [Member]
Dec. 31, 2010
2013 Convertible Senior Notes [Member]
Jul. 31, 2010
2014 Convertible Senior Notes [Member]
Dec. 31, 2010
2014 Convertible Senior Notes [Member]
Apr. 30, 2006
2011 and 2013 Convertible Senior Notes [Member]
Dec. 31, 2010
2011 and 2013 Convertible Senior Notes [Member]
Dec. 31, 2009
2011 and 2013 Convertible Senior Notes [Member]
Dec. 31, 2008
2011 and 2013 Convertible Senior Notes [Member]
Jul. 31, 2010
2016 Convertible Senior Notes [Member]
Dec. 31, 2010
2016 Convertible Senior Notes [Member]
Jul. 31, 2010
2014 and 2016 Convertible Senior Notes [Member]
Dec. 31, 2010
2014 and 2016 Convertible Senior Notes [Member]
Convertible senior notes  $ 650,000,000  $ 650,000,000  $ 1,250,000,000  $ 1,250,000,000
Convertible senior notes, effective interest rate 5.70% 5.80% 3.50% 4.00%
Convertible senior notes, stated interest rate 0.50% 0.63% 1.00% 1.63%
Initial conversion ratio 25.8048 26.246 22.1845 22.0214
Principle amount applied to initial conversion ratio 1,000 1,000 1,000 1,000
Payments of debt issuance costs 23,800,000 37,500,000
Debt instrument conversion price per share 38.75 38.75 38.1 38.1 45.08 45.08 45.41 45.41
Debt instrument, convertible, terms of conversion feature

The 2011 and 2013 notes may be converted, subject to adjustment, only under the following circumstances: 1) during any calendar quarter beginning after September 30, 2006 if the closing price of our common stock for at least 20 trading days during the last 30 consecutive trading day period of the previous quarter is more than 130% of the applicable conversion price per share, 2) if we make specified distributions to holders of our common stock or if specified corporate transactions occur, or 3) during the last month prior to maturity of the applicable notes. Upon conversion, a holder would receive an amount in cash equal to the lesser of (i) the principal amount of the note or (ii) the conversion value for such note. If the conversion value exceeds the principal amount, we may also deliver, at our option, cash or common stock or a combination of cash and common stock for the conversion value in excess of the principal amount. If the 2011 and 2013 notes are converted in connection with a change in control, we may be required to provide a make whole premium in the form of an increase in the conversion rate, subject to a stated maximum amount. In addition, in the event of a change in control, the holders may require us to purchase all or a portion of their notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

The 2014 and 2016 notes may be converted prior to April 1, 2014 and April 1, 2016, respectively, only under the following circumstances: 1) during any calendar quarter commencing after September 30, 2010, if the closing price of the common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than 130% of the applicable conversion price on each applicable trading day, or 2) during the five business day period after any measurement period of ten consecutive trading days in which, for each trading day of such period, the trading price per  $1,000 principal amount of notes was less than 98% of the product of the last reported sale price of Gilead common stock and the applicable conversion rate on such trading day, or 3) upon the occurrence of specified corporate transactions, such as the distribution of certain stock rights, cash amounts, or other assets to all Gilead shareholders or the occurrence of a change in control. On and after April 1, 2014, in the case of the 2014 Notes, and April 1, 2016, in the case of the 2016 Notes, holders may convert their notes at any time, regardless of the foregoing circumstances. Generally, upon conversion, a holder would receive an amount in cash equal to the lesser of (i) the principal amount of the note or (ii) the conversion value for such note, as measured under the indenture governing the relevant notes. If the conversion value exceeds the principal amount, we may also deliver, at our option, cash or common stock or a combination of cash and common stock for the conversion value in excess of the principal amount. If the 2014 and 2016 notes are converted in connection with a change in control, we may be required to provide a make whole premium in the form of an increase in the conversion rate, subject to a stated maximum amount. In addition, in the event of a change in control, the holders may require us to purchase all or a portion of their notes at a purchase price equal to 100% of their principal amount, plus accrued and unpaid interest, if any.

Payments to acquire convertible note hedges 362,622,000 379,100,000 362,600,000
Proceeds from sale of warrants 155,425,000 235,500,000 155,400,000
Net cost of convertible note hedge and warrant transactions 207,200,000 143,700,000
Effective conversion price  $ 50.8  $ 53.9  $ 56.76  $ 60.1
Common stock covered by the Convertible Note Hedges, subject to anti-dilution adjustments 33.8 55.3
Common stock underlying the warrants, subject to anti-dilution adjustments 33.8 55.3
Repurchase of common stock relating to sale of notes, shares 16.7
Repurchase of common stock relating to sale of notes, value 544,900,000
Interest expense, long-term debt 67,900,000 64,600,000 61,500,000 34,900,000
Borrowing under the credit agreement 5,000,000
Proceeds from credit facility 500,000,000 400,000,000 500,000,000 400,000,000
Amount available under the credit agreement 1,250,000,000
Warrants strike price  $ 50.8  $ 53.9  $ 56.76  $ 60.1
Repayments of Lines of Credit  $ 500,000,000  $ 400,000,000
Line of credit facility, description The credit agreement also includes a sub-facility for swing-line loans and letters of credit. Loans under the credit agreement bear interest at an interest rate of either LIBOR plus a margin ranging from 20 basis points to 32 basis points or the base rate, as described in the credit agreement. We may reduce the commitments and may prepay loans under the credit agreement in whole or in part at any time without penalty, subject to certain conditions. The credit agreement will terminate in December 2012 and all unpaid borrowings thereunder shall be due and payable at that time.
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet79.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Long-Term Obligations (Schedule of Carrying Amount of Convertible Senior Notes) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Total convertible senior notes, net  $ 3,477,564  $ 1,155,266
Less current portion (2011 convertible senior notes) 638,991  
Total non-current convertible senior notes, net 2,838,573 1,155,266
2011 Convertible Senior Notes [Member]
Total convertible senior notes, net 638,991 606,786
2013 Convertible Senior Notes [Member]
Total convertible senior notes, net 576,884 548,480
2014 Convertible Senior Notes [Member]
Total convertible senior notes, net 1,153,805  
2016 Convertible Senior Notes [Member]
Total convertible senior notes, net  $ 1,107,884  
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet80.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Long-Term Obligations (Schedule of Information about Equity and Liability Components of Convertible Senior Notes 2011 and 2013 Notes) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2010
2011 and 2013 Convertible Senior Notes [Member]
Dec. 31, 2009
2011 and 2013 Convertible Senior Notes [Member]
Dec. 31, 2010
2011 Convertible Senior Notes [Member]
Dec. 31, 2009
2011 Convertible Senior Notes [Member]
Dec. 31, 2010
2013 Convertible Senior Notes [Member]
Dec. 31, 2009
2013 Convertible Senior Notes [Member]
Carrying Value of Equity Component  $ 255,517  $ 340,712  $ 340,712  $ 147,481  $ 147,481  $ 193,231  $ 193,231
Net Carrying Amount of Liability Component 1,215,875 1,155,266 638,991 606,786 576,884 548,480
Unamortized Discount of Liability Component  $ (83,979)  $ (144,588)  $ (10,996)  $ (43,201)  $ (72,983)  $ (101,387)
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet81.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Long-Term Obligations (Schedule of Information about Equity and Liability Components of Convertible Senior Notes 2014 and 2016 Notes) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Carrying Value of Equity Component  $ 255,517
2016 Convertible Senior Notes [Member]
Carrying Value of Equity Component 152,039
Net Carrying Amount Of Liability Component 1,107,884
Unamortized Discount of Liability Component (142,116)
2014 Convertible Senior Notes [Member]
Carrying Value of Equity Component 107,496
Net Carrying Amount Of Liability Component 1,153,805
Unamortized Discount of Liability Component (96,195)
2014 and 2016 Convertible Senior Notes [Member]
Carrying Value of Equity Component 259,535
Net Carrying Amount Of Liability Component 2,261,689
Unamortized Discount of Liability Component  $ (238,311)
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet82.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Commitments and Contingencies (Narrative) (Details) (USD  $)
In Millions
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Commitments and Contingencies
Description of lessee leasing arrangements, operating leases

We have entered into various long-term non-cancelable operating leases for equipment and facilities. We lease facilities in Foster City, Palo Alto and San Dimas, California; Durham, North Carolina; Boulder, Colorado; Seattle, Washington; the Dublin and Cork areas of Ireland and the London area of the United Kingdom. We also have operating leases for sales, marketing and administrative facilities in Europe, Canada and Asia Pacific. Our leases expire on various dates between 2011 and 2029, with many of our leases containing options to renew. Certain facility leases also contain rent escalation clauses. Our most significant lease, related to a facility in Seattle, Washington, expires in 2020 and has a 10-year term. The lease provides us with three consecutive rights to extend the term of the lease through 2035 and contains an annual three percent rent escalation clause. The lease also requires us to pay additional amounts for operating expenses and maintenance. We also have leases for three corporate aircraft, with varying terms, with renewal options upon expiration of the lease terms.

Lease expense under our operating leases  $ 41.7  $ 37.3  $ 29.3
Purchase Commitments, 2011 640.3
Purchase Commitments, 2012 149.3
Purchase Commitment, 2013 57.5
Purchase Commitment, 2014 20.2
Purchase Commitment, 2015 3.1
Actual payments for purchases related to active pharmaceutical ingredients  $ 835.7  $ 1,030  $ 1,040
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet83.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Commitments and Contingencies (Future Minimum Rental Payments Under Operating Leases) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Commitments and Contingencies
2011  $ 45,887
2012 37,733
2013 29,648
2014 21,477
2015 19,078
Thereafter 57,344
Total  $ 211,167
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet84.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stockholders' Equity (Narrative) (Details) (USD  $)
1 Months Ended 12 Months Ended 1 Months Ended 12 Months Ended 12 Months Ended 1 Months Ended 5 Months Ended 1 Months Ended 12 Months Ended 1 Months Ended 8 Months Ended 12 Months Ended 1 Months Ended
Jan. 31, 2010
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Jan. 31, 2010
Performance Based Share Awards [Member]
Jan. 31, 2009
Performance Based Share Awards [Member]
Jan. 31, 2008
Performance Based Share Awards [Member]
Dec. 31, 2010
Performance Based Share Awards [Member]
Dec. 31, 2009
Performance Based Share Awards [Member]
Dec. 31, 2008
Performance Based Share Awards [Member]
Dec. 31, 2010
Performance Based Share Awards [Member]
Three Years Vesting [Member]
Dec. 31, 2010
Time-Based Restricted Stock Awards [Member]
Dec. 31, 2010
Time-Based Restricted Stock Awards [Member]
Five Years Period [Member]
Dec. 31, 2010
Employee Stock Purchase Plan [Member]
Dec. 31, 2010
Stock Option Plans [Member]
Dec. 31, 2010
Two Thousand Four Plan [Member]
Dec. 31, 2009
Open Market Transactions [Member]
Dec. 31, 2008
Open Market Transactions [Member]
Dec. 31, 2007
Open Market Transactions [Member]
Jun. 30, 2008
 $500M Accelerated Repurchase [Member]
Stock Repurchase Program;  $3B 3-Year [Member]
Feb. 29, 2008
 $500M Accelerated Repurchase [Member]
Stock Repurchase Program;  $3B 3-Year [Member]
Mar. 31, 2009
 $750M Accelerated Repurchase [Member]
Stock Repurchase Program;  $3B 3-Year [Member]
Oct. 31, 2008
 $750M Accelerated Repurchase [Member]
Stock Repurchase Program;  $3B 3-Year [Member]
Mar. 31, 2009
 $750M Accelerated Repurchase [Member]
Stock Repurchase Program;  $3B 3-Year [Member]
Oct. 31, 1999
First Amendment of Rights Plan [Member]
Series A Junior Participating Preferred Stock [Member]
Oct. 31, 2003
Second Amendment of Rights Plan [Member]
Series A Junior Participating Preferred Stock [Member]
Dec. 31, 2010
CV Therapeutics Plans [Member]
Oct. 31, 2007
Stock Repurchase Program;  $3B 3-Year [Member]
Jan. 31, 2011
Stock Repurchase Program;  $5B, 3-Year [Member]
May 31, 2010
Stock Repurchase Program;  $5B, 3-Year [Member]
Dec. 31, 2010
Stock Repurchase Program;  $5B, 3-Year [Member]
Dec. 31, 2010
Stock Repurchase Program;  $5B, 3-Year [Member]
Nov. 30, 1994
Series A Junior Participating Preferred Stock [Member]
Dec. 31, 2010
Series A Junior Participating Preferred Stock [Member]
Authorized common stock repurchase program  $ 1,000,000,000  $ 3,000,000,000  $ 5,000,000,000  $ 5,000,000,000
Aggregate purchase price of the stock repurchased and retired under the stock repurchase programs 998,100,000 719,300,000 32,700,000 3,020,000,000 4,020,000,000
Number of stock repurchased and retired under the stock repurchase programs 21,845,929 14,696,449 705,600 109,900,000
Incremental common shares attributable to accelerated share repurchase agreements 239,612 9,373,548 1,356,337 14,874,519 16,230,856
Average purchase price per share of the stock repurchased and retired under the stock repurchase programs  $ 45.69  $ 48.94  $ 46.28  $ 36.57
Accelerated share repurchases, settlement payment or receipt 500,000,000 750,000,000
Accelerated share repurchases, initial price paid per share  $ 53.34  $ 50.42
Accelerated share repurchases, final price paid per share  $ 52.01  $ 46.21
Remaining authorized amount of stock repurchases 1,980,000,000
Decrease in common stock and APIC 319,800,000 61,700,000 95,800,000
Excess of purchase price over par value charged against retained earnings 3,710,000,000 940,800,000 1,880,000,000
Preferred stock, shares authorized 5,000,000 5,000,000 800,000
Preferred stock, shares outstanding 0 0
Preferred Stock, Participation Rights The first amendment provided, among other things, for an increase in the exercise price of a right under the plan from  $15 to  $100 and an extension of the term of the plan from November 2004 to October 2009. The second amendment provides, among other things, for an increase in the exercise price of a right under the plan from  $100 to  $400 and an extension of the term of the Rights Plan to October 2013.
Number of shares authorized for future issuance 51,793,307 0
Options assumed from acquisition and converted into options to purchase common stock 1,800,000
Number of shares authorized for grant 121,594,183
Purchase of shares converted under the option plan 45,018,000 47,090,000 45,235,000
Purchase of shares converted under the option plan 1,800,000
Total intrinsic value of options exercised 262,300,000 379,800,000 551,700,000
Total fair value of stock options vested 124,600,000 162,900,000 169,200,000
Number of options outstanding that are expected to vest 13,302,022
Weighted average exercise price of options outstanding that are expected to vest  $ 43.12
Intrinsic Value of options outstanding that are expected to vest 9,600,000
Weighted average remaining contractual life of options outstanding that are expected to vest 7.62
Aggregate intrinsic value of stock options outstanding 564,200,000
Aggregate intrinsic value of stock options exercisable 554,000,000
Weighted-average remaining contractual life for options outstanding 5.3
Weighted-average remaining contractual life for options exercisable 4.5
Unrecognized compensation cost related to stock options 22,100,000 260,800,000
Unrecognized compensation costs, weighted-average period of recognition 1 2.7
Share based awards granted 412,505 426,305 219,690
Payout percentage, minimum 0.00%
Payout percentage, maximum 200.00%
Share based awards weighted-average grant date fair values  $ 54.25  $ 61.89  $ 56.61
Stock-based compensation expense 200,041,000 185,758,000 153,364,000 21,300,000 14,900,000 7,500,000 19,500,000
Awards vesting period three five
Time-based restricted stock awards to employees 2,189,903
Percentage of purchase price lower than fair market value of common stock 85.00%
Shares issued under Employee Stock Purchase Plan   1,110,485
Value of shares issued under Employee Stock Purchase Plan  $ 32,307,000  $ 34,873,000  $ 30,386,000
Shares reserved for issuance 33,280,000
Shares available for issuance 6,567,411
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet85.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stockholders' Equity (Schedule of Summary of Activity Under Stock Option Plans) (Details) (USD  $)
In Thousands, except Per Share data
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Stockholders' Equity
Outstanding, beginning of year 69,193 76,811 84,977
Granted and assumed 4,836 7,286 9,807
Forfeited (2,348) (2,393) (2,471)
Expired (759) (440) (59)
Exercised (10,671) (12,071) (15,443)
Outstanding, end of year 60,251 69,193 76,811
Exercisable, end of year 45,018 47,090 45,235
Outstanding, beginning of year  $ 28.09  $ 24.7  $ 20.33
Granted and assumed  $ 44.27  $ 48.87  $ 47.11
Forfeited  $ 43.16  $ 39.33  $ 30.61
Expired  $ 53.27  $ 64.08  $ 11.72
Exercised  $ 17.68  $ 15.56  $ 13.97
Outstanding, end of year  $ 30.32  $ 28.09  $ 24.7
Exercisable, end of year  $ 25.92  $ 22.36  $ 17.29
Weighted-average grant date fair value of options granted during the year  $ 14.24  $ 17  $ 16.95
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet86.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stock-Based Compensation (Narrative) (Details) (USD  $)
In Millions
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Stock-Based Compensation
Capitalized amount of stock-based compensation costs to inventory  $ 10.9  $ 11.4  $ 9.9
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet87.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stock-Based Compensation (Schedule of Stock-Based Compensations Expenses Included in Consolidated Statements of Income) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Stock-based compensation expense included in total costs and expenses  $ 200,041  $ 185,758  $ 153,364
Income tax effect (52,331) (46,486) (40,565)
Stock-based compensation expense included in net income 147,710 139,272 112,799
Cost of Goods Sold [Member]
Stock-based compensation expense included in total costs and expenses 10,180 10,859 10,312
Research and Development Expenses [Member]
Stock-based compensation expense included in total costs and expenses 84,048 82,893 66,523
Selling, General and Administrative Expenses [Member]
Stock-based compensation expense included in total costs and expenses  $ 105,813  $ 92,006  $ 76,529
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet88.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Stock-Based Compensation (Schedule of Assumptions to Calculate the Estimated Fair Value of the Awards) (Details)
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Expected dividend yield 0.00% 0.00% 0.00%
ESPP [Member]
Expected volatility 35.00% 37.00% 31.00%
Expected term in years 1.3 1.3 1.2
Risk-free interest rate 0.40% 0.70% 2.10%
Stock Options [Member]
Expected volatility 31.00% 35.00% 34.00%
Expected term in years 5.4 5.3 5.3
Risk-free interest rate 2.30% 2.10% 2.80%
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet89.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Comprehensive Income (Loss) (Net Realized Gains (Losses) on Sale of Securities and Cash Flow Hedges) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Comprehensive Income (Loss)
Net unrealized gain (loss) related to available-for-sale securities, net of tax impact of  $(6,624),  $(11,724) and  $11,487 for 2010, 2009 and 2008, respectively  $ 13,450  $ 21,689  $ (21,607)
Net unrealized gain (loss) related to cash flow hedges, net of tax impact of  $(9,149),  $10,682 and  $(40,681) for 2010, 2009 and 2008, respectively 105,924 (19,016) 93,962
Reclassification adjustments, net of tax impact of  $9,028,  $32,532 and  $1,805 for 2010, 2009 and 2008, respectively (74,289) (58,130) (5,603)
Other comprehensive income (loss) 45,085 (55,457) 66,752
Net unrealized gain (loss) related to available-for-sale securities, tax (6,624) (11,724) 11,487
Net unrealized gain (loss) related to cash flow hedges, tax (9,149) 10,682 (40,681)
Reclassification adjustment, tax  $ 9,028  $ 32,532  $ 1,805
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet90.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Comprehensive Income (Loss) (Accumulated Other Comprehensive Income (Loss), Net of Taxes) (Details) (USD  $)
In Thousands
Dec. 31, 2010
Dec. 31, 2009
Comprehensive Income (Loss)
Net unrealized gain on available-for-sale securities  $ 16,528  $ 9,509
Net unrealized gain (loss) on cash flow hedges 21,615 (16,450)
Cumulative foreign currency translation adjustment (7,232) 1,183
Accumulated other comprehensive income (loss)  $ 30,911  $ (5,758)
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet91.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Segment Information (Narrative) (Details) (USD  $)
In Millions, unless otherwise specified
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Major customers percentage of total revenues, minimum 10.00%
Property, plant and equipment percentage in major reporting geographical segment At December 31, 2010, the net book value of our property, plant and equipment in the United States, Ireland and Canada was  $519.4 million,  $112.2 million and  $53.9 million, respectively, which comprised approximately 98% of the total net book value of our property, plant and equipment.
United States [Member]
Property, plant and equipment, net  $ 519.4  $ 510
Ireland [Member]
Property, plant and equipment, net 112.2 115.3
Canada [Member]
Property, plant and equipment, net  $ 53.9  $ 57
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet92.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Segment Information (Product Sales) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Product sales  $ 7,389,921  $ 6,469,311  $ 5,084,796
Antiviral Products Atripla [Member]
Product sales 2,926,579 2,382,113 1,572,455
Antiviral Products Truvada [Member]
Product sales 2,649,908 2,489,682 2,106,687
Antiviral Products Viread [Member]
Product sales 732,240 667,510 621,187
Antiviral Products Hepsera [Member]
Product sales 200,592 271,595 341,023
Antiviral Products Emtriva [Member]
Product sales 27,679 27,974 31,080
Total Antiviral Products [Member]
Product sales 6,536,998 5,838,874 4,672,432
AmBisome [Member]
Product sales 305,856 298,597 289,651
Letairis [Member]
Product sales 240,279 183,949 112,855
Ranexa [Member]
Product sales 239,832 131,062
Other Products [Member]
Product sales  $ 66,956  $ 16,829  $ 9,858
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet93.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Segment Information (Schedule of total Revenues From External Customers and Collaboration Partners by Geographic Region) (Details) (USD  $)
In Thousands
3 Months Ended 12 Months Ended
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2009
Sep. 30, 2009
Jun. 30, 2009
Mar. 31, 2009
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Total revenues  $ 1,998,687 [1]  $ 1,937,656 [1]  $ 1,927,224 [1]  $ 2,085,853 [1]  $ 2,032,379  $ 1,801,389  $ 1,647,155  $ 1,530,460  $ 7,949,420  $ 7,011,383  $ 5,335,750
United States [Member]
Total revenues 4,224,035 3,599,313 2,857,472
France [Member]
Total revenues 519,700 468,314 395,672
Spain [Member]
Total revenues 456,647 451,115 356,607
United Kingdom [Member]
Total revenues 450,368 393,036 297,276
Italy [Member]
Total revenues 345,189 323,709 277,441
Germany [Member]
Total revenues 274,991 293,111 242,193
Switzerland [Member]
Total revenues 458,606 448,203 193,314
Other European Countries [Member]
Total revenues 665,237 603,068 346,722
Other Countries [Member]
Total revenues 554,647 431,514 369,053
Total Revenues Outside of the United States [Member]
Total revenues  $ 3,725,385  $ 3,412,070  $ 2,478,278
[1] During 2010, we recorded  $136.0 million of impairment charges in R&D expense, related to certain IPR&D assets acquired from CV Therapeutics. See Notes 5 and 9.
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet94.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Segment Information (Schedule of Revenues from Each Customer Who Individually Accounted for 10% or More as a % of Total Revenues) (Details)
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Cardinal Health, Inc. [Member]
The percentage of total revenues from the customers 17.00% 18.00% 21.00%
McKesson Corp. [Member]
The percentage of total revenues from the customers 14.00% 13.00% 16.00%
AmerisourceBergen Corp. [Member]
The percentage of total revenues from the customers 12.00% 11.00% 11.00%
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet95.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes (Narrative) (Details) (USD  $)
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Dec. 31, 2007
Foreign pre-tax income  $ 1,370,000,000  $ 1,330,000,000  $ 900,000,000
Cumulative unremitted foreign earnings that are permanently invested 4,480,000,000 3,190,000,000
Tax liability if remitted 1,600,000,000 1,140,000,000
Change in valuation allowance 11,900,000 1,100,000 (23,500,000)
Total federal, state and foreign unrecognized tax benefits 126,516,000 106,506,000 121,424,000 115,087,000
Unrecognized tax benefits that would impact effective tax rate 106,500,000 72,600,000
Unrecognized tax benefits, accrued interest and penalties 12,300,000 5,400,000
Reasonably possible estimated decrease in unrecognized tax benefits in the next 12 months 6,000,000
U.S. Federal [Member]
Net operating loss carryforwards 732,500,000
Tax credit carryforwards 26,200,000
Operating loss carryforwards, expiration dates 2016
State [Member]
Net operating loss carryforwards 1,400,000,000
Tax credit carryforwards  $ 3,300,000
Operating loss carryforwards, expiration dates 2011
Tax credit carryforwards, expiration dates 2016
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet96.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes (Provision for Income Taxes) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Income Taxes
Current  $ 852,822  $ 719,777  $ 585,075
Deferred (29,854) (47,608) 6,099
Federal Total 822,968 672,169 591,174
Current 139,819 153,376 56,223
Deferred 17,464 9,150 24,333
State Total 157,283 162,526 80,556
Current 43,094 42,860 38,738
Deferred 454 (1,191) (8,105)
Foreign Total 43,548 41,669 30,633
Provision for income taxes  $ 1,023,799  $ 876,364  $ 702,363
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet97.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes (Difference Between the Provision for Income Taxes and Federal Statutory Income Tax Rate Before Income Tax) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Income Taxes
Income before provision for income taxes  $ 3,913,548  $ 3,501,956  $ 2,672,698
Tax at federal statutory rate 1,369,742 1,225,685 935,444
State taxes, net of federal benefit 106,250 111,095 58,166
Foreign earnings at different rates (435,767) (399,993) (257,835)
Research and other credits (33,072) (43,045) (32,270)
Net unbenefitted stock compensation 13,188 4,269 5,224
Other 3,458 (21,647) (6,366)
Provision for income taxes  $ 1,023,799  $ 876,364  $ 702,363
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet98.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes (Components Deferred Tax Assets and Liabilities) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Income Taxes
Net operating loss carryforwards  $ 308,854  $ 377,058
Stock-based compensation 142,242 117,019
Reserves and accruals not currently deductible 109,806 90,760
Deferred revenue 49,194 67,389
Depreciation related 58,875 44,166
Research and other credit carryforwards 25,151 28,980
Capitalized intangibles 5,839 12,086
Other, net 88,669 64,881
Total deferred tax assets before valuation allowance 788,630 802,339
Valuation allowance (13,040) (1,078)
Total deferred tax assets 775,590 801,261
Intangibles (322,168) (384,480)
Unremitted foreign earnings (15,928) (15,928)
Other (20,774) (17,053)
Total deferred tax liabilities (358,870) (417,461)
Net deferred tax assets  $ 416,720  $ 383,800
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet99.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Income Taxes (Total Gross Unrecognized Tax Benefit Liabilities) (Details) (USD  $)
In Thousands
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Income Taxes
Balance, beginning of period  $ 106,506  $ 121,424  $ 115,087
Additions 24,320 25,036 37,495
Reductions (3,303) (8,380)
Additions 25,581 37,014 4,298
Reductions (23,474) (36,277) (23,307)
Settlements (2,160) (31,517) (10,252)
Lapse of statute of limitations (954) (794) (1,897)
Balance, end of period  $ 126,516  $ 106,506  $ 121,424
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet100.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Deferred Compensation Plans (Details) (USD  $)
In Millions, except Share data
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Deferred compensation arrangement with individuals, maximum contractual term We maintain a retirement savings plan under which eligible employees may defer compensation for income tax purposes under Section 401(k) of the Internal Revenue Code (Gilead Plan). Under the Gilead Plan, employees may contribute up to 60% of their eligible annual compensation, subject to IRS plan limits. We make matching contributions under the Gilead Plan. In 2010, 2009 and 2008, we contributed up to 50% of an employee's contributions up to an annual maximum match of  $5,000.
Total matching contribution expense under Gilead plan  $ 11.2  $ 10.2  $ 7.8
Phantom shares outstanding 31,682
Management [Member]
Deferred compensation arrangement with individuals, maximum contractual term
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet101.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Subsequent Events (Details) (USD  $)
1 Months Ended 1 Months Ended
Jan. 31, 2010
Jan. 31, 2011
Stock Repurchase Program;  $5B, 3-Year [Member]
May 31, 2010
Stock Repurchase Program;  $5B, 3-Year [Member]
Jan. 14, 2011
Arresto Biosciences, Inc. [Member]
Feb. 28, 2011
Calistoga Pharmaceuticals, Inc. [Member]
Authorized common stock repurchase program  $ 1,000,000,000  $ 5,000,000,000  $ 5,000,000,000
Potential cash payment at acquisition related to acquisition tender offer 375,000,000
Total cash paid for acquisition 225,000,000
Potential future payments related to acquisition tender offer  $ 225,000,000
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet102.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Quarterly Results of Operations (Details) (USD  $)
In Thousands, except Per Share data
3 Months Ended 12 Months Ended
Dec. 31, 2010
Sep. 30, 2010
Jun. 30, 2010
Mar. 31, 2010
Dec. 31, 2009
Sep. 30, 2009
Jun. 30, 2009
Mar. 31, 2009
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2008
Quarterly Results of Operations
Total revenues  $ 1,998,687 [1]  $ 1,937,656 [1]  $ 1,927,224 [1]  $ 2,085,853 [1]  $ 2,032,379  $ 1,801,389  $ 1,647,155  $ 1,530,460  $ 7,949,420  $ 7,011,383  $ 5,335,750
Gross profit on product sales 1,433,901 [1] 1,387,975 [1] 1,350,536 [1] 1,347,633 [1] 1,330,999 1,239,255 1,185,333 1,118,166
Net income 626,365 [1] 702,163 [1] 709,127 [1] 852,094 [1] 799,393 670,478 569,145 586,576 2,889,749 2,625,592 1,970,335
Net income attributable to Gilead 629,419 [1] 704,876 [1] 712,061 [1] 854,901 [1] 802,212 673,033 571,398 589,112 2,901,257 2,635,755 1,978,899
Net income per share attributable to Gilead common stockholders-basic  $ 0.78 [1]  $ 0.85 [1]  $ 0.81 [1]  $ 0.95 [1]  $ 0.89  $ 0.75  $ 0.63  $ 0.65  $ 3.39  $ 2.91  $ 2.15
Net income per share attributable to Gilead common stockholders-diluted  $ 0.76 [1]  $ 0.83 [1]  $ 0.79 [1]  $ 0.92 [1]  $ 0.87  $ 0.72  $ 0.61  $ 0.63  $ 3.32  $ 2.82  $ 2.06
In-process research and development impairment charges  $ 136,000
[1] During 2010, we recorded  $136.0 million of impairment charges in R&D expense, related to certain IPR&D assets acquired from CV Therapeutics. See Notes 5 and 9.
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/Sheet103.html Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii"
Schedule II Valuation and Qualifying Accounts (Details) (USD  $)
12 Months Ended
Dec. 31, 2010
Dec. 31, 2009
Dec. 31, 2010
Accounts Receivable Allowances [Member]
Dec. 31, 2009
Accounts Receivable Allowances [Member]
Dec. 31, 2008
Accounts Receivable Allowances [Member]
Dec. 31, 2010
Valuation Allowance for Deferred Tax Assets [Member]
Dec. 31, 2009
Valuation Allowance for Deferred Tax Assets [Member]
Dec. 31, 2008
Valuation Allowance for Deferred Tax Assets [Member]
Balance at Beginning of Period  $ 132,810,000 [1]  $ 90,694,000 [1]  $ 72,217,000 [1]  $ 1,078,000 [2]   [2]  $ 23,498,000
Additions/Charged to Expense 818,132,000 [1] 606,504,000 [1] 500,037,000 [1] 12,127,000 [2] 15,103,000 [2] 965,000
Deductions 800,000,000 [1] 564,388,000 [1] 481,560,000 [1] 165,000 [2] 14,025,000 [2] 24,463,000
Balance at End of Period 150,942,000 [1] 132,810,000 [1] 90,694,000 [1] 13,040,000 [2] 1,078,000 [2]   [2]
Valuation allowance for deferred tax assets, acquisitions  $ 9,900,000  $ 1,100,000
[1] Allowances are for doubtful accounts, sales returns, cash discounts and chargebacks.
[2] Valuation allowance for deferred tax assets includes  $9.9 million and  $1.1 million as of December 31, 2010 and 2009, respectively, related to our acquisitions.
------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877 Content-Location: file:///C:/443b7a86_03ad_4718_a33a_b661e92b5877/Worksheets/filelist.xml Content-Transfer-Encoding: quoted-printable Content-Type: text/html; charset="us-ascii" ------=_NextPart_443b7a86_03ad_4718_a33a_b661e92b5877--