Gilead Sciences Announces Third Quarter 2012 Financial Results

Selling, General and Administrative Expenses

Selling, general and administrative (SG&A) expenses for the third quarter of 2012 were $319.6 million compared to $295.9 million for the third quarter of 2011. Non-GAAP SG&A expenses for the third quarter of 2012, which exclude acquisition-related, restructuring and stock-based compensation expenses, were $287.2 million compared to $265.1 million for the third quarter of 2011 due primarily to increased expenses to support the ongoing growth of Gilead's business and an increase in the U.S. pharmaceutical excise tax, partially offset by lower bad debt expense.

Interest Expense and Other Income (Expense), Net

Interest expense for the third quarter of 2012 was $89.3 million compared to $43.1 million for the third quarter of 2011. The increase was due primarily to the additional debt issued in connection with the acquisition of Pharmasset Inc. (Pharmasset). Other income (expense), net for the third quarter of 2012 was a net expense of $3.5 million compared to net income of $14.4 million in the third quarter of 2011. The change was due primarily to decreased interest income resulting from lower cash, cash equivalents and marketable securities and lower yields.

Net Foreign Currency Exchange Impact

The net foreign currency exchange impact on third quarter 2012 product sales and pre-tax earnings was an unfavorable $20.5 million and $7.2 million, respectively, compared to the third quarter of 2011.

Cash, Cash Equivalents and Marketable Securities

As of September 30, 2012, Gilead had $2.65 billion of cash, cash equivalents and marketable securities compared to $9.96 billion as of December 31, 2011. The decrease was due to the acquisition of Pharmasset in the first quarter of 2012. Gilead generated $2.49 billion of operating cash flow during the first nine months of 2012 including $745.4 million generated in the third quarter of 2012. The operating cash flow for the first nine months of 2012 includes the collection of $460 million of accounts receivable in Spain.

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