| GILEAD SCIENCES INC ITEM 1A RISK FACTORS In evaluating our business, you should carefully consider the following risks in addition to the other information in this Annual Report on Form 10-K Any of the following risks could materially and adversely affect our business, results of operations and financial condition |
| We note these factors for investors as permitted by the Private Securities Litigation Reform Act of 1995 |
| It is not possible to predict or identify all such factors and, therefore, you should not consider any of the above risks to be a complete statement of all the potential risks or uncertainties that we face |
| Substantially all of our revenues are derived from sales of a limited number of products |
| If we are unable to maintain or continue increasing sales of our HIV products, our results of operations may be adversely affected |
| We are currently dependent on sales of our HIV products, especially Viread and Truvada, to support our existing operations |
| Our HIV products are exclusively of the nucleoside class of antiviral therapeutics |
| Were the treatment paradigm for HIV to change, causing nucleoside-based therapeutics to fall out of favor, or if we are unable to continue increasing our HIV product sales, our results of operations would likely suffer and we would likely need to scale back our operations, including our spending on research and development efforts |
| HIV product sales for the year ended December 31, 2005 were dlra1dtta39 billion, or 69prca of our total revenues, and sales of Viread and Truvada comprised 56prca and 41prca, respectively, of total HIV product sales in 2005 |
| We may not be able to continue the growth rate of sales of our HIV products for the reasons stated in this risk factor section and, in particular, for the following reasons: • As our HIV products are used over a longer period of time in many patients and in combination with other products, and additional studies are conducted, new issues with respect to safety, resistance and interactions with other drugs may arise, which could cause us to provide additional warnings on our labels, narrow our approved indications or halt sales of a product, each of which could reduce our revenues |
| • As a product matures, private insurers and government reimbursers often reduce the amount they will reimburse patients for these products, which increases pressure on us to reduce prices |
| • A large part of the market for our HIV products consists of patients who are already taking other HIV drugs |
| If we are not successful in encouraging physicians to change patients’ regimens to include our HIV products, the sales of our HIV products will be limited |
| • As generic HIV products are introduced into major markets, our ability to maintain pricing may be affected |
| If we fail to commercialize new products or expand the indications for existing products, our prospects for future revenues and our stock price may be adversely affected |
| If we do not introduce new products or increase revenues from our existing products, we will not be able to increase our total revenues |
| If we fail to increase our sales of our HIV products, we may not be able to increase revenues and expand our research and development efforts |
| We may face difficulties in our collaboration efforts with BMS to commercialize a once-a-day single pill combination of Truvada and Sustiva |
| For example, regulatory approval for the NDA that we expect to file with the FDA in the second quarter of 2006 may not be granted on a timely basis, or at all |
| We face significant competition |
| We face significant competition from businesses that have substantially greater resources than we do |
| In addition, our competitors have more products and have operated in the fields in which we compete for longer than we have |
| Our HIV products compete primarily with products from GSK, which markets fixed-dose combination products that compete with Truvada |
| For AmBisome, we are encountering significant competition from new products produced by Merck and Pfizer |
| In addition, we are aware of reports of at least three lipid 19 ______________________________________________________________________ [47]Table of Contents formulations that claim similarity to AmBisome becoming available outside of the United States, including the anticipated entry of one such formulation in Greece in 2006 |
| For Hepsera, we have encountered increased competition with the launch of BMS’s Baraclude (entecavir) and there is the potential for future competition from telbivudine, developed by Novartis and Idenix, which is awaiting approval in the United States and Europe |
| These companies may significantly impede our ability to be successful with our antiviral products and AmBisome |
| If significant safety issues arise for our marketed products, our sales may decline, which would adversely affect our results of operations |
| The data that support the marketing approvals for our products and that form the basis for the safety warnings in our product labels were obtained in controlled clinical trials of limited duration and, in some cases, from limited post-approval use |
| Safety and efficacy studies of Viread and Emtriva, dosed as separate products, are ongoing and have been underway for a longer period of time than the safety and efficacy studies of Truvada (Viread and Emtriva together), which are also underway |
| Following approval, our products are used over longer periods of time by many patients taking numerous other medicines, many of whom have underlying health problems and would not be monitored for dosing compliance |
| As drugs are used over longer periods of time by more patients, we have found and expect to continue to find new issues such as safety, resistance or drug interaction issues, which may require us to provide additional warnings on our labels or narrow our approved indications, each of which could reduce the market acceptance of these products |
| If serious safety, resistance or interaction issues arise with our marketed products, sales of these products could be limited or halted by us or by regulatory authorities |
| Our operations depend on compliance with complex FDA and comparable international regulations |
| Failure to obtain broad approvals on a timely basis or to achieve continued compliance could delay or halt commercialization of our products |
| The products that we develop must be approved for marketing and sale by regulatory authorities and, once approved, are subject to extensive regulation by the FDA and comparable regulatory agencies in other countries |
| We are continuing clinical trials for Viread, Truvada, Emtriva, AmBisome and Hepsera for currently approved and additional uses |
| We anticipate that we will file for marketing approval in additional countries and for additional products over the next several years |
| These products may fail to receive marketing approval on a timely basis, or at all |
| In addition, our marketed products and how we manufacture and sell these products are subject to extensive continued regulation and review |
| Discovery of previously unknown problems with our marketed products or problems with our manufacturing or promotional activities may result in restrictions on our products, including withdrawal of the products from the market |
| If we fail to comply with applicable regulatory requirements, we could be subject to penalties including fines, suspensions of regulatory approvals, product recalls, seizure of products and criminal prosecution |
| We depend on contract research organizations and our results of clinical trials are uncertain and may not support continued development of a product pipeline, which would adversely affect our prospects for future revenue growth |
| Gilead extensively outsources its clinical trial activities and usually performs only a small portion of the start-up activities in-house |
| We rely on third party contract research organizations (CROs) to perform most of our clinical studies, including document preparation, site identification, screening and preparation, pre-study visits, training and program management |
| If there is any dispute or disruption in our relationship with our CROs, our clinical trials may be delayed |
| In addition, we are required to demonstrate the safety and effectiveness of products we develop in each intended use through extensive preclinical studies and clinical trials |
| The results from preclinical and early clinical studies do not always accurately predict results in later, large-scale clinical trials |
| Even successfully completed large-scale clinical trials may not result in marketable products |
| If any of our 20 ______________________________________________________________________ [48]Table of Contents products under development fails to achieve its primary endpoint in clinical trials or if safety issues arise, commercialization of that drug candidate could be delayed or halted |
| In addition, clinical trials involving our commercial products could raise new safety issues for our existing products, which could in turn reduce our revenues |
| Manufacturing problems could delay product shipments and regulatory approvals, which may adversely affect our results of operations |
| We depend on third parties to perform manufacturing activities effectively and on a timely basis |
| If these third parties fail to perform as required, this could impair our ability to deliver our products on a timely basis or cause delays in our clinical trials and applications for regulatory approval, and these events could harm our competitive position |
| The manufacturing process for pharmaceutical products is highly regulated, and regulators may shut down manufacturing facilities that they believe do not comply with regulations |
| We and our manufacturers are subject to the FDA’s current Good Manufacturing Practices, which are extensive regulations governing manufacturing processes, stability testing, record-keeping and quality standards and similar regulations are in effect in other countries |
| In addition, our manufacturing operations are subject to routine inspections by regulatory agencies |
| We depend on third party manufacturers to manufacture Viread, Truvada, Emtriva, Hepsera and Vistide, including the Truvada and Viread made available to physicians and treatment programs at cost in developing countries under our Access Program |
| We rely on these third parties for the manufacture of both the active pharmaceutical ingredient and final drug product for clinical and commercial purposes |
| In addition, Roche, either by itself or through third parties, is responsible for manufacturing Tamiflu |
| These third-party manufacturers may develop problems over which we have no control and these problems may adversely affect our business |
| We manufacture AmBisome and Macugen at our facilities in San Dimas, California |
| These are our only formulation and manufacturing facilities in the United States |
| We own a manufacturing facility in Ireland that conducts quality control testing, labeling and packaging |
| In addition, we use third parties as alternate contract suppliers to fill and freeze dry certain batches of product |
| In the event of a natural disaster, including an earthquake, equipment failure, strike or other difficulty, we may be unable to replace this manufacturing capacity in a timely manner and would be unable to manufacture AmBisome and Macugen to meet market needs |
| We may not be able to obtain materials necessary to manufacture our products, which could limit our ability to generate revenues |
| Many of the materials that we utilize in our operations are made at only one facility |
| For example, we depend on single suppliers for high quality amphotericin B, distearoylphosphatidylcholine and high quality cholesterol, each of which is used in the manufacture of AmBisome |
| Because the suppliers of key components and materials must be named in the NDA filed with the FDA for a product, significant delays can occur if the qualification of a new supplier is required |
| If delivery of material from our suppliers were interrupted for any reason, we may be unable to ship Viread, AmBisome, Hepsera, Emtriva, Truvada or Vistide, or to supply any of our products in development for clinical trials |
| We depend on relationships with other companies for sales and marketing performance and revenues |
| Failure to maintain these relationships, poor performance by these companies or disputes with these other companies could negatively impact our business |
| We rely on a number of significant collaborative relationships with major pharmaceutical companies for our sales and marketing performance |
| These include collaborations with Astellas and Sumitomo for AmBisome, GSK for Hepsera, Roche for Tamiflu, Pfizer for Vistide, OSI and Pfizer for Macugen and Japan Tobacco for Viread, Truvada and Emtriva and our joint venture with BMS to develop and commercialize a fixed-dose regimen of Truvada and Sustiva |
| In many countries, we rely on international distributors for sales of Viread, 21 ______________________________________________________________________ [49]Table of Contents Truvada, Emtriva, AmBisome and Hepsera outside the United States |
| Some of these relationships also involve the clinical development of these products by our partners |
| Reliance on collaborative relationships poses a number of risks, including: • we are not able to control whether our corporate partners devote sufficient resources to our programs or products; • disputes may arise in the future with respect to the ownership of rights to technology developed with corporate partners; • disagreements with corporate partners could lead to delays in, or termination of, the research, development or commercialization of product candidates or result in litigation or arbitration; • contracts with our corporate partners may fail to provide significant protection or may fail to be effectively enforced if one of these partners fails to perform; • corporate partners have considerable discretion in electing whether to pursue the development of any additional products and may pursue alternative technologies or products either on their own or in collaboration with our competitors; • corporate partners with marketing rights may choose to devote fewer resources to the marketing of our products than they do to products of their own development; and • our distributors and corporate partners may be unable to pay us |
| Given these risks, there is a great deal of uncertainty regarding the success of our current and future collaborative efforts |
| If these efforts fail, our product development or commercialization of new products could be delayed or revenue from existing products could decline |
| Under our April 2002 licensing agreement with GSK, we gave GSK the right to control clinical and regulatory development and commercialization of Hepsera in territories in Asia, Africa and Latin America |
| These include major markets for Hepsera, such as China, Japan, Taiwan and The Republic of Korea |
| The success of Hepsera in these territories will depend almost entirely on the efforts of GSK In this regard, GSK promotes Epivir-HBV/Zeffix, a product that competes with Hepsera |
| Consequently, GSK’s marketing strategy for Hepsera may be influenced by its promotion of Epivir-HBV We receive royalties from GSK equal to a percentage of GSK’s net sales of Hepsera as well as net sales of GSK’s Epivir-HBV/Zeffix |
| If GSK fails to devote sufficient resources to, or does not succeed in developing or commercializing Hepsera in its territories, our potential revenues from sales of Hepsera may be substantially reduced |
| Expenses associated with clinical trials and sales fluctuations as a result of inventory levels held by wholesalers may cause our earnings to fluctuate, which could adversely affect our stock price |
| The clinical trials required for regulatory approval of our products, as well as clinical trials we are required to conduct after approval, are extremely expensive |
| It is difficult to accurately predict or control the amount or timing of these expenses from quarter to quarter |
| In addition, during the year ended December 31, 2005, approximately 89prca of our product sales in the United States were to three wholesalers, AmerisourceBergen Corp, Cardinal Health, Inc |
| and McKesson Corp |
| Inventory levels held by those wholesalers can cause our operating results to fluctuate unexpectedly if our sales to wholesalers do not match end user demand |
| The US wholesalers with whom we have entered into inventory management agreements may not be completely effective in matching inventory levels to end user demand, as they make estimates to determine end user demand |
| Approximately half of our product sales occurs outside the United States, and currency fluctuations may cause our earnings to fluctuate, which could adversely affect our stock price |
| A significant percentage of our product sales are denominated in foreign currencies, primarily the Euro |
| Increases in the value of the US dollar against foreign currencies in the past have reduced, and in the future may 22 ______________________________________________________________________ [50]Table of Contents reduce, our US dollar equivalent sales and negatively impact our financial condition and results of operations |
| We use foreign currency forward contracts to hedge a percentage of our forecasted international sales, primarily those denominated in the Euro currency |
| We also hedge a portion of our accounts receivable balances denominated in foreign currencies, which reduces but does not eliminate our exposure to currency fluctuations between the date a sale is recorded and the date that cash is collected |
| Our hedging program only hedges a portion of our total exposure and significant foreign exchange rate fluctuations within a short period of time could still adversely affect our results of operations |
| We face credit risks from our European customers that may adversely affect our results of operations |
| Our European product sales to government owned or supported customers in Greece, Italy, Portugal and Spain are subject to significant payment delays due to government funding and reimbursement practices |
| Our accounts receivable from government owned or supported customers in these countries totaled dlra221dtta9 million as of December 31, 2005 |
| Historically, receivables tended to accumulate over a period of time and were settled as large lump sum payments as government funding became available |
| If significant changes were to occur in the reimbursement practices of European governments or if government funding becomes unavailable, we may not be able to collect on amounts due to us from these customers and our results of operations would be adversely affected |
| Our plan to supply Viread and Truvada to certain developing countries under our Access Program may expose us to unforeseen liabilities and risks |
| We have launched our Access Program pursuant to which we will supply Viread and Truvada at our cost to all 97 developing countries |
| The supply and distribution of drugs in a resource-poor environment is a complicated undertaking |
| As this program develops, we could face unforeseen challenges and risks, which could give rise to unforeseen liabilities |
| For example, patients in less developed countries using Viread and Truvada may not be as closely supervised by a doctor as they would be in more developed nations |
| Accordingly, there may be an increased likelihood of Viread- or Truvada-related complications going undetected or untreated, which could result in significant liability to Gilead |
| Our product revenues could be reduced by imports from countries where our products are available at lower prices |
| Prices for our products are based on local market economics and competition and sometimes differ from country to country |
| Our sales in countries with relatively higher prices may be reduced if products can be imported into those countries from lower price markets |
| There have been cases in which pharmaceutical products were sold at steeply discounted prices in the developing world and then re-exported to European countries where they could be re-sold at much higher prices |
| If this happens with our products, particularly Viread and Truvada, which we have agreed to provide at our cost under our Access Program, our revenues would be adversely affected |
| In addition, in the European Union, we are required to permit cross border sales |
| This allows buyers in countries where government-approved prices for our products are relatively high to purchase our products legally from countries where they must be sold at lower prices |
| Additionally, some US consumers have been able to purchase products, including HIV products, from Internet pharmacies in other countries at substantial discounts |
| Such cross border sales could adversely affect our revenues |
| In some countries, we may be required to grant compulsory licenses for our products or face generic competition for our products |
| In a number of developing countries, government officials and other groups have suggested that pharmaceutical companies should make drugs for HIV infection available at a low cost |
| Alternatively, governments in those countries could require that we grant compulsory licenses to allow competitors to 23 ______________________________________________________________________ [51]Table of Contents manufacture and sell their own versions of our products, thereby reducing our product sales |
| Certain offices of the government of Brazil have expressed concern over the affordability of our HIV products and declared that they are considering issuing compulsory licenses to permit the manufacture of otherwise patented products for HIV infection, including Viread |
| We are currently engaged in discussions with the Brazilian government regarding the affordability of our HIV products |
| In addition, concerns over the cost and availability of Tamiflu as fear grows about a potential avian flu pandemic have generated international discussions over potential compulsory licensing of our Tamiflu patents |
| Furthermore, Roche may issue voluntary licenses to permit third party manufacturing of Tamiflu |
| Should one or more compulsory licenses be issued permitting generic manufacturing to override Gilead’s Tamiflu patents, or should Roche issue additional voluntary licenses to permit third party manufacturing of Tamiflu, those developments could reduce royalties received from Roche’s sales of Tamiflu |
| Certain countries do not permit enforcement of our patents, and manufacturers are able to sell generic versions of our products in those countries |
| Compulsory licenses or sales of generic versions of our products could significantly reduce our sales and adversely affect our results of operations, particularly if generic versions of our products are imported into territories where we have existing commercial sales |
| Our existing products are subject to reimbursement from government agencies and other third parties |
| Pharmaceutical pricing and reimbursement pressures may reduce profitability |
| Successful commercialization of our products depends, in part, on the availability of governmental and third party payor reimbursement for the cost of such products and related treatments |
| Government health administration authorities, private health insurers and other organizations generally provide reimbursement |
| Government authorities and third-party payors increasingly are challenging the price of medical products and services, particularly for innovative new products and therapies |
| This has resulted in lower average sales prices |
| For example, a majority of our sales of AmBisome and Vistide, and a majority of our sales of Truvada, Viread and Hepsera, are subject to reimbursement by government agencies, resulting in significant discounts from list price and rebate obligations |
| Our business may be adversely affected by an increase in US or international pricing pressures |
| These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and health care reform, pharmaceutical reimbursement policies and pricing in general |
| In Europe, the success of Viread, Truvada, Emtriva, Hepsera, AmBisome and Tamiflu will also depend largely on obtaining and maintaining government reimbursement because in many European countries, including the United Kingdom and France, patients will not use prescription drugs that are not reimbursed by their governments |
| In addition, negotiating prices with governmental authorities can delay commercialization by twelve months or more |
| We also expect that the success of our products in development, particularly in Europe, will depend on the ability to obtain reimbursement |
| Even if reimbursement is available, reimbursement policies may adversely affect our ability to sell our products on a profitable basis |
| For example, in Europe as in many international markets, governments control the prices of prescription pharmaceuticals and expect prices of prescription pharmaceuticals to decline over the life of the product or as volumes increase |
| As new drugs come to market, we may face significant price decreases for our products across much of Europe |
| We believe that this will continue into the foreseeable future as governments struggle with escalating health care spending |
| As a result of these pricing practices, it may become difficult to maintain our historic levels of profitability or to achieve expected rates of growth |
| Our results of operations could be adversely affected by future health care reforms |
| In both the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes to the healthcare system that could impact the pricing of our products |
| In the United States, in December 2003, President Bush signed into law new Medicare prescription drug coverage legislation |
| Part of the legislation authorizes the Centers for Medicare & Medicaid Services, or CMS, the agency within the Department of Health and Human Services that administers Medicare, to implement a new Medicare Part D coverage benefit 24 ______________________________________________________________________ [52]Table of Contents for prescription drugs |
| The prescription drug program began on January 1, 2006 |
| Many factors influence the possible impact to Gilead |
| Further, payment levels under the new Medicare program may be lower than the previous Medicare payment |
| Medicare patients will have to pay co-insurance, which may influence which products are recommended by physicians and selected by patients |
| Program enrollment is mandatory for those who are dually eligible for both Medicaid and Medicare |
| There is no assurance that our drugs will be recognized under the new Medicare Part D program for outpatient prescription drugs or paid at levels that reflect current or historical levels |
| Further, federal Medicare proposals, along with State Medicaid drug payment changes and healthcare reforms could also lower payment for our products |
| Our results of operations could be materially adversely affected by the reimbursement changes emerging in 2006, 2007 and beyond from the Medicare prescription drug coverage legislation |
| To the extent that private insurers such as Blue Cross and Blue Shield or managed care programs follow Medicaid coverage and payment developments, the adverse effects of lower Medicare payment may be magnified by private insurers adopting lower payment |
| Additionally, some states have enacted health care reform legislation |
| Further federal and state developments are possible |
| The impact of proposed legislation and other reforms is unclear, but it may result in pricing and reimbursement restrictions, which could adversely impact our revenues |
| We may not be able to obtain effective patents to protect our technologies from use by competitors and patents of other companies could require us to stop using or pay for the use of required technology |
| Our success will depend to a significant degree on our ability to: • obtain patents and licenses to patent rights; • preserve trade secrets; and • operate without infringing on the proprietary rights of others |
| We have a number of US and foreign patents, patent applications and rights to patents related to our compounds, products and technology |
| There is a risk, however, that issued patents will not be enforceable or provide adequate protection or that pending patent applications will not result in issued patents |
| Patent applications are confidential for at least some period of time until a patent issues |
| As a result, we may not know if our competitors filed patent applications for technology covered by our pending applications or if we were the first to invent the technology that is the subject of our patent applications |
| Competitors may have filed patent applications or received patents and may obtain additional patents and proprietary rights that block or compete with our patents |
| Patents do not cover the active ingredients in AmBisome |
| In addition, we do not have patent filings in China or certain other Asian countries covering all forms of adefovir dipivoxil, the active ingredient in Hepsera |
| Asia is a major market for therapies for HBV, the indication for which Hepsera has been developed |
| We may obtain patents for certain products many years before marketing approval is obtained for those products |
| Because patents have a limited life, which may begin to run prior to the commercial sale of the related product, the commercial value of the patent may be limited |
| However, we may be able to apply for patent term extensions |
| In addition, certain countries in Africa and Asia, including China do not permit enforcement of our patents, and manufacturers are able to sell generic versions of our products in those countries |
| Our competitors may file patent applications covering our technology |
| If so, we may have to participate in interference proceedings or litigation to determine the right to a patent |
| Litigation and interference proceedings are expensive even if we are ultimately successful |
| As part of the approval process of some of our products, the FDA has determined that the products would be granted an exclusivity period during which other manufacturers’ applications for approval of generic versions of our product will not be granted |
| Generic manufacturers often wait to challenge the patents protecting products that have been granted exclusivity until one year prior to the end of the exclusivity period |
| From time to time, we have received notices from manufacturers indicating that they intend to import chemical intermediates possibly 25 ______________________________________________________________________ [53]Table of Contents for use in making our products |
| It is, therefore, possible that generic manufacturers are considering attempts to seek FDA approval for a similar or identical drug through an Abbreviated New Drug Application, which is the application form typically used by manufacturers seeking approval of a generic drug |
| If our patents are subject to challenges, we may need to spend significant resources to defend such challenges and we may not be able to defend our patents successfully |
| Our success depends in large part on our ability to operate without infringing upon the patents or other proprietary rights of third parties |
| If we infringe the patents of others, we may be prevented from commercializing products or may be required to obtain licenses from these third parties |
| We may not be able to obtain alternative technologies or any required license on reasonable terms or at all |
| If we fail to obtain such licenses or alternative technologies, we may be unable to develop or commercialize some or all of our products |
| In addition, we use significant proprietary technology and rely on unpatented trade secrets and proprietary know-how to protect certain aspects of our production and other technologies |
| Our trade secrets may become known or independently discovered by our competitors |
| We may face significant liability resulting from our products that may not be covered by insurance and successful claims could materially reduce our earnings |
| The testing, manufacturing, marketing and use of our commercial products, as well as products in development, involve substantial risk of product liability claims |
| These claims may be made directly by consumers, healthcare providers, pharmaceutical companies or others |
| Although we maintain product liability insurance, a successful product liability claim against us may not be covered by our insurance or could require us to pay amounts beyond that provided by our insurance, either of which could impair our financial condition and our ability to clinically test and to market our products |
| Expensive litigation may reduce our earnings |
| We are named as a defendant in lawsuits regarding the use of average wholesale price and reimbursement rates under Medicaid |
| We have also been named as a defendant in a lawsuit alleging violations of the federal securities laws |
| Adverse results from these lawsuits could result in material damages that could significantly reduce our earnings or cash flows |
| Changes in our effective income tax rate could reduce our earnings |
| Various factors may have favorable or unfavorable effects on our effective income tax rate |
| These factors include, but are not limited to, interpretations of existing tax laws, our adoption of the Statement of Financial Accounting Standards Nodtta 123 (revised 2004), Share-Based Payment (SFAS 123R) relating to the accounting for stock options and other share-based payments, changes in tax laws and rates, future levels of research and development spending, changes in accounting standards, future levels of capital expenditures, changes in the mix of earnings in the various tax jurisdictions in which we operate and changes in overall levels of pre-tax earnings |
| The impact on our income tax provision resulting from the above-mentioned factors may be significant and could have a negative impact on our results of operations |
| Recently adopted changes in accounting for stock options will significantly reduce our earnings |
| The Financial Accounting Standards Board (FASB) recently issued SFAS 123R, under which we will be required to record additional compensation expense related to stock options and other equity incentives in 2006 and beyond |
| The impact on our earnings resulting from this new standard will have a significant negative impact on our reported results of operations compared to the results we have reported under prior accounting standards on stock options and other share-based payments |