GILEAD SCIENCES INC (Form: 10-Q, Received: 05/04/2012 16:29:38)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2012



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File No. 0-19731

GILEAD SCIENCES, INC.

(Exact Name of Registrant as Specified in Its Charter)



Delaware	94-3047598
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

333 Lakeside Drive, Foster City, California	94404
(Address of principal executive offices)	(Zip Code)

650-574-3000

Registrant’s Telephone Number, Including Area Code

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ý

Number of shares outstanding of the issuer’s common stock, par value $0.001 per share, as of April 27, 2012: 757,321,824

GILEAD SCIENCES, INC.

INDEX



PART I.	FINANCIAL INFORMATION		3

	Item 1.	Condensed Consolidated Financial Statements	3

		Condensed Consolidated Balance Sheets at March 31, 2012 and December 31, 2011	3

		Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2012 and 2011	4

		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2012 and 2011	5

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011	6

		Notes to Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

	Item 4.	Controls and Procedures	33

PART II.	OTHER INFORMATION		34

	Item 1.	Legal Proceedings	34

	Item 1A.	Risk Factors	35

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52

	Item 3.	Defaults Upon Senior Securities	52

	Item 4.	Mine Safety Disclosures	52

	Item 5.	Other Information	52

	Item 6.	Exhibits	53

SIGNATURES			61

We own or have rights to various trademarks, copyrights and trade names used in our business, including the following: GILEAD ^® , GILEAD SCIENCES ^® , TRUVADA ^® , VIREAD ^® , HEPSERA ^® , AMBISOME ^® , EMTRIVA ^® , COMPLERA ^® , EVIPLERA ^® , VISTIDE ^® , LETAIRIS ^® , VOLIBRIS ^® , RANEXA ^® , CAYSTON ^® and RAPISCAN ^® . ATRIPLA ^® is a registered trademark belonging to Bristol-Myers Squibb & Gilead Sciences, LLC. LEXISCAN ^® is a registered trademark belonging to Astellas U.S. LLC. MACUGEN ^® is a registered trademark belonging to Valeant Pharmaceuticals International, Inc. SUSTIVA ^® is a registered trademark of Bristol-Myers Squibb Pharma Company. TAMIFLU ^® is a registered trademark belonging to Hoffmann-La Roche Inc. This report also includes other trademarks, service marks and trade names of other companies.


PART I.	FINANCIAL INFORMATION


ITEM 1.	CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share amounts)



	March 31, 2012		December 31, 2011
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1,451,942	$	9,883,777
Short-term marketable securities	—		16,491
Accounts receivable, net	2,163,659		1,951,167
Inventories	1,418,033		1,389,983
Deferred tax assets	193,938		208,155
Prepaid taxes	333,739		246,444
Prepaid expenses	89,592		95,922
Other current assets	175,629		126,846
Total current assets	5,826,532		13,918,785
Property, plant and equipment, net	782,867		774,406
Noncurrent portion of prepaid royalties	169,836		174,584
Noncurrent deferred tax assets	107,729		144,015
Long-term marketable securities	48,168		63,704
Intangible assets, net	11,767,027		1,062,864
Goodwill	1,078,919		1,004,102
Other noncurrent assets	169,308		160,674
Total assets	$	19,950,386	$	17,303,134
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	1,339,257	$	1,206,052
Accrued government rebates	652,703		547,473
Accrued compensation and employee benefits	136,626		173,316
Income taxes payable	14,491		40,583
Other accrued liabilities	593,063		471,129
Deferred revenues	100,191		74,665
Current portion of long-term debt and other obligations, net	1,351,573		1,572
Total current liabilities	4,187,904		2,514,790
Long-term deferred revenues	26,506		31,870
Long-term debt, net	8,077,246		7,605,734
Long-term income taxes payable	140,655		135,655
Other long-term obligations	153,991		147,736
Commitments and contingencies (Note 10)
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; 758,190 and 753,106 shares issued and outstanding at March 31, 2012 and December 31, 2011, respectively	758		753
Additional paid-in capital	5,100,624		4,903,143
Accumulated other comprehensive income	33,591		58,200
Retained earnings	2,178,639		1,776,760
Total Gilead stockholders’ equity	7,313,612		6,738,856
Noncontrolling interest	50,472		128,493
Total stockholders’ equity	7,364,084		6,867,349
Total liabilities and stockholders’ equity	$	19,950,386	$	17,303,134

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(in thousands, except per share amounts)



	Three Months Ended
	March 31,
	2012			2011
Revenues:
Product sales	$	2,208,342		$	1,863,578
Royalty revenues	71,105			58,665
Contract and other revenues	3,002			3,851
Total revenues	2,282,449			1,926,094
Costs and expenses:
Cost of goods sold	580,931			474,111
Research and development	458,211			254,446
Selling, general and administrative	443,121			295,568
Total costs and expenses	1,482,263			1,024,125
Income from operations	800,186			901,969
Interest expense	(97,270		)	(41,216		)
Other income (expense), net	(34,085		)	13,832
Income before provision for income taxes	668,831			874,585
Provision for income taxes	231,300			227,282
Net income	437,531			647,303
Net loss attributable to noncontrolling interest	4,425			3,838
Net income attributable to Gilead	$	441,956		$	651,141
Net income per share attributable to Gilead common stockholders—basic	$	0.58		$	0.82
Shares used in per share calculation—basic	756,286			796,115
Net income per share attributable to Gilead common stockholders—diluted	$	0.57		$	0.80
Shares used in per share calculation—diluted	777,388			811,857

See accompanying notes.

GILEAD SCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(in thousands)



	Three Months Ended
	March 31,
	2012			2011
Net income	$	437,531		$	647,303
Other comprehensive loss:
Net foreign currency translation gain	4,897			7,194
Available-for-sale securities:
Net unrealized loss, net of tax impact of $266 and $(372), respectively	(463		)	(1,684		)
Reclassifications to net income, net of tax impact of $(519) and $(899), respectively	30,600			(1,435		)
Net change	30,137			(3,119		)
Cash flow hedges:
Net unrealized loss, net of tax impact of $1,802 and $1,168, respectively	(48,816		)	(126,331		)
Reclassifications to net income, net of tax impact of $(400) and $(91), respectively	(10,827		)	(9,838		)
Net change	(59,643		)	(136,169		)
Other comprehensive loss	(24,609		)	(132,094		)
Comprehensive income	412,922			515,209
Comprehensive loss attributable to noncontrolling interest	4,425			3,838
Comprehensive income attributable to Gilead	$	417,347		$	519,047

See accompanying notes.

GILEAD SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands)

	Three Months Ended
	March 31,
	2012			2011
Operating Activities:
Net income	$	437,531		$	647,303
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	19,710			18,285
Amortization expense	46,457			62,629
Stock-based compensation expense	48,731			49,470
Excess tax benefits from stock-based compensation	(23,304		)	(14,255		)
Tax benefits from employee stock plans	18,153			12,136
Deferred income taxes	51,385			20,546
Other non-cash transactions	13,767			(7,249		)
Changes in operating assets and liabilities:
Accounts receivable, net	(196,531		)	(107,876		)
Inventories	(26,833		)	(97,174		)
Prepaid expenses and other assets	(75,176		)	(23,903		)
Accounts payable	107,652			176,114
Income taxes payable	(99,151		)	31,473
Accrued liabilities	110,402			61,414
Deferred revenues	20,176			(8,371		)
Net cash provided by operating activities	452,969			820,542
Investing Activities:
Purchases of marketable securities	—			(1,519,142		)
Proceeds from sales of marketable securities	56,719			1,285,547
Proceeds from maturities of marketable securities	—			169,189
Acquisitions, net of cash acquired	(10,751,636		)	(221,105		)
Purchases of other investments	(25,000		)	—
Capital expenditures	(23,199		)	(14,870		)
Net cash used in investing activities	(10,743,116		)	(300,381		)
Financing Activities:
Proceeds from issuances of senior notes, net of issuance costs	—			987,370
Proceeds from issuances of common stock	132,530			58,879
Proceeds from credit facilities, net of issuance costs	1,146,844			—
Proceeds from term loan, net of issuance costs	997,889			—
Repayments of term loan	(350,000		)	—
Repurchases of common stock	(20,770		)	(548,699		)
Repayments of other long-term obligations	(612		)	(1,533		)
Excess tax benefits from stock-based compensation	23,304			14,255
Contributions from (distributions to) noncontrolling interest	(73,595		)	(25,162		)
Net cash provided by financing activities	1,855,590			485,110
Effect of exchange rate changes on cash	2,722			(77,172		)
Net change in cash and cash equivalents	(8,431,835		)	928,099
Cash and cash equivalents at beginning of period	9,883,777			907,879
Cash and cash equivalents at end of period	$	1,451,942		$	1,835,978

See accompanying notes.

GILEAD SCIENCES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information. The financial statements include all adjustments (consisting only of normal recurring adjustments) that the management of Gilead Sciences, Inc. (Gilead, we or us) believes are necessary for a fair presentation of the periods presented. These interim financial results are not necessarily indicative of results expected for the full fiscal year or for any subsequent interim period.

The preparation of these Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate our estimates, including critical accounting policies or estimates related to revenue recognition, intangible assets, allowance for doubtful accounts, prepaid royalties, clinical trial accruals, our tax provision and stock-based compensation. We base our estimates on historical experience and on various other market specific and other relevant assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ significantly from these estimates.

The accompanying Condensed Consolidated Financial Statements include the accounts of Gilead, our wholly-owned subsidiaries and our joint ventures with Bristol-Myers Squibb Company (BMS), for which we are the primary beneficiary. We record a noncontrolling interest in our Condensed Consolidated Financial Statements to reflect BMS’s interest in the joint ventures. All intercompany transactions have been eliminated. The Condensed Consolidated Financial Statements include the results of companies acquired by us from the date of each acquisition for the applicable reporting periods.

The accompanying Condensed Consolidated Financial Statements and related financial information should be read in conjunction with the audited Consolidated Financial Statements and the related notes thereto for the year ended December 31, 2011, included in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (SEC). Certain amounts within our Condensed Consolidated Balance Sheets have been reclassified to conform to the current presentation.

Net Income Per Share Attributable to Gilead Common Stockholders

Basic net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding during the period. Diluted net income per share attributable to Gilead common stockholders is calculated based on the weighted-average number of shares of our common stock outstanding and other dilutive securities outstanding during the period. The potential dilutive shares of our common stock resulting from the assumed exercise of outstanding stock options, performance shares and the assumed exercise of warrants relating to the convertible senior notes due in May 2013 (May 2013 Notes), May 2014 (May 2014 Notes) and May 2016 (May 2016 Notes) (collectively, the Convertible Notes) are determined under the treasury stock method.

Because the principal amount of the Convertible Notes will be settled in cash, only the conversion spread relating to the Convertible Notes is included in our calculation of diluted net income per share attributable to Gilead common stockholders. Our common stock resulting from the assumed settlement of the conversion spread of the Convertible Notes has a dilutive effect when the average market price of our common stock during the period exceeds the conversion prices of $38.10 , $45.08 and $45.41 for the May 2013 Notes, May 2014 Notes and May 2016 Notes, respectively.

In 2011, our convertible senior notes due in May 2011 (May 2011 Notes) matured and the related warrants expired and as a result, we have only considered their impact for the period they were outstanding on our net income per share calculations. Our common stock resulting from the assumed settlement of the conversion spread of the May 2011 Notes had a dilutive effect when the average market price of our common stock during the period exceeded the conversion price of $38.75 . During the three months ended March 31, 2011 , the average market price of our common stock exceeded the conversion price of the May 2011 Notes and the dilutive effect is included in the accompanying table. Warrants related to the May 2011 Notes had a dilutive effect when the average market price of our common stock during the period exceeded the warrants’ exercise price of $50.80 . The average market price of our common stock during the three months ended March 31, 2011 did not exceed the warrants’ exercise price related to the May 2011 Notes; therefore, these warrants did not have a dilutive effect on our net income per share for that period.

During the three months ended March 31, 2012 , the average market price of our common stock exceeded the conversion prices of the May 2013 Notes, May 2014 Notes and May 2016 Notes and the dilutive effects are included in the accompanying table. During the three months ended March 31, 2011 , the average market price of our common stock exceeded the conversion price of the May 2013 Notes and the dilutive effect is included in the accompanying table. During the three months ended March 31, 2011 , the average market price of our common stock did not exceed the conversion prices of the May 2014 Notes and May 2016 Notes and therefore, these notes did not have a dilutive effect on our net income per share for that period.

Warrants relating to the May 2013 Notes, May 2014 Notes and May 2016 Notes have a dilutive effect when the average market price of our common stock during the period exceeds the warrants’ exercise prices of $53.90 , $56.76 and $60.10 , respectively. The average market prices of our common stock during each of the three months ended March 31, 2012 and 2011 did not exceed the warrants’ exercise prices relating to any of the Convertible Notes; therefore, these warrants did not have a dilutive effect on our net income per share for those periods.

Stock options to purchase approximately 10.9 million and 22.1 million weighted-average shares of our common stock were outstanding during the three months ended March 31, 2012 and 2011, respectively, but were not included in the computation of diluted net income per share attributable to Gilead common stockholders because their effect was antidilutive.

The following table is a reconciliation of the numerator and denominator used in the calculation of basic and diluted net income per share attributable to Gilead common stockholders (in thousands):



	Three Months Ended
	March 31,
	2012		2011
Numerator:
Net income attributable to Gilead	$	441,956	$	651,141
Denominator:
Weighted-average shares of common stock outstanding used in the calculation of basic net income per share attributable to Gilead common stockholders	756,286		796,115
Effect of dilutive securities:
Stock options and equivalents	14,873		15,007
Conversion spread related to the May 2011 Notes	—		224
Conversion spread related to the May 2013 Notes	3,423		511
Conversion spread related to the May 2014 Notes	1,505		—
Conversion spread related to the May 2016 Notes	1,301		—
Weighted-average shares of common stock outstanding used in the calculation of diluted net income per share attributable to Gilead common stockholders	777,388		811,857

Concentrations of Risk

We are subject to credit risk from our portfolio of cash equivalents and marketable securities. Under our investment policy, we limit amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. We are not exposed to any significant concentrations of credit risk from these financial instruments. The goals of our investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk; liquidity of investments sufficient to meet cash flow requirements; and a competitive after-tax rate of return.

We are also subject to credit risk from our accounts receivable related to our product sales. The majority of our trade accounts receivable arises from product sales in the United States and Europe. As of March 31, 2012, our accounts receivable in Southern Europe, specifically Greece, Italy, Portugal and Spain, totaled approximately $1.25 billion , of which $719.5 million were greater than 120 days past due and $313.3 million were greater than 365 days past due. To date, we have not experienced significant losses with respect to the collection of our accounts receivable. We believe that our allowance for doubtful accounts was adequate at March 31, 2012.

Recent Accounting Pronouncements

There have been no new accounting pronouncements during the three months ended March 31, 2012 that are of significance to us.


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. For our marketable securities, we review trading activity and pricing 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; 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.

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 Condensed Consolidated Balance Sheets. The carrying value and fair value of the Convertible Notes were $2.94 billion and $3.99 billion , respectively, as of March 31, 2012 . The carrying value and fair value of the Convertible Notes were $2.92 billion and $3.53 billion , respectively, as of December 31, 2011 .

In March 2011, we issued senior unsecured notes due in April 2021 (April 2021 Notes) in a registered offering for an aggregate principal amount of $1.00 billion . The carrying value and fair value of the April 2021 Notes were $992.3 million and $1.06 billion , respectively, as of March 31, 2012 . The carrying value and fair value of the April 2021 Notes were $992.1 million and $1.06 billion , respectively, as of December 31, 2011 . In December 2011, we issued senior unsecured notes due in December 2014 (December 2014 Notes), December 2016 (December 2016 Notes), December 2021 (December 2021 Notes) and December 2041 (December 2041 Notes) in a registered offering for an aggregate principal amount of $3.70 billion . The carrying value and fair value of these notes were $3.69 billion and $3.89 billion , respectively, as of March 31, 2012 . The carrying value and fair value of these notes were $3.69 billion and $3.93 billion , respectively, as of December 31, 2011 . The fair values of the Convertible Notes and senior unsecured notes were determined using Level 2 inputs based on their quoted market values.

The remaining financial instruments are reported on our Condensed Consolidated Balance Sheets at amounts that approximate current fair values.

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):



	March 31, 2012								December 31, 2011
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Debt securities:
Money market funds	$	518,248	$	—	$	—	$	518,248	$	7,455,982	$	—	$	—	$	7,455,982
Certificates of deposit	—		—		—		—		—		1,139,982		—		1,139,982
Non-U.S. government securities	—		—		—		—		—		—		24,741		24,741
Corporate debt securities	—		—		—		—		—		404,989		—		404,989
Student loan-backed securities	—		—		48,168		48,168		—		—		46,952		46,952
Total debt securities	518,248		—		48,168		566,416		7,455,982		1,544,971		71,693		9,072,646
Equity securities	—		—		—		—		8,503		—		—		8,503
Derivatives	—		51,958		—		51,958		—		100,475		—		100,475
	$	518,248	$	51,958	$	48,168	$	618,374	$	7,464,485	$	1,645,446	$	71,693	$	9,181,624
Liabilities:
Contingent consideration	$	—	$	—	$	138,328	$	138,328	$	—	$	—	$	135,591	$	135,591
Derivatives	—		18,404		—		18,404		—		5,710		—		5,710
	$	—	$	18,404	$	138,328	$	156,732	$	—	$	5,710	$	135,591	$	141,301

Level 3 Inputs

Assets measured at fair value using Level 3 inputs at March 31, 2012 were comprised of auction rate securities within our available-for-sale investment portfolio. The following table provides a rollforward of assets measured using Level 3 inputs (in thousands):



	Three Months Ended
	March 31,
	2012			2011
Balance, beginning of period	$	71,693		$	80,365
Total realized and unrealized gains (losses) included in:
Other income (expense), net	(40,096		)	1,246
Other comprehensive income, net	33,094			2,160
Sales of marketable securities	(16,523		)	(20,830		)
Transfers into Level 3	—			53,882
Balance, end of period	$	48,168		$	116,823

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.

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 two to seven 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 2.18% . 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 0.12% to 0.77% . As of March 31, 2012 , our auction rate securities continued to earn interest. Although there continued to be failed auctions as well as lack of market activity and liquidity, we believe we had no other-than-temporary impairments on these securities as of March 31, 2012 . We have the ability to hold these securities until the recovery of their amortized cost basis.

In 2010, the Greek government agreed to settle the majority of its aged outstanding accounts receivable with zero-coupon bonds, which were expected to trade at a discount to face value. We estimated the fair value of the Greek zero-coupon bonds using Level 3 inputs due to the then current lack of market activity and liquidity. The discount rates used in our fair value model for these bonds were based on credit default swap rates. In March 2012, the Greek government restructured its sovereign debt which impacted all holders of Greek bonds. As a result, we recorded a $40.1 million loss related to the debt restructuring as part of other income (expense), net on our Condensed Consolidated Statement of Income and exchanged the Greek government-issued bonds for new securities, which we liquidated during the first quarter of 2012.

As of March 31, 2012 and December 31, 2011 , our auction rate securities were recorded in long-term marketable securities on our Condensed Consolidated Balance Sheets. As of December 31, 2011 , our Greek government-issued bonds were recorded in short-term and long-term marketable securities on our Condensed Consolidated Balance Sheets.

The following table provides a rollforward of our contingent consideration liabilities (in thousands):



	Three Months Ended
	March 31,
	2012		2011
Balance, beginning of period	$	135,591	$	11,100
Changes in valuation	2,737		—
Balance, end of period	$	138,328	$	11,100

The estimated fair value of the contingent consideration liabilities for our acquisitions was based on the present value of the total earnout amount giving consideration to significant inputs such as the probability of technical and regulatory success, the discount rate used and the timeline to achieve each of the milestone events. Significant increases in the probability of success in isolation would result in a significantly higher fair value measurement while significant decreases in the probability of success in isolation would result in a significantly lower fair value measurement. Similarly, significant increases in the discount rate or timeline in isolation would result in a significantly lower fair value measurement while significant decreases in the discount rate or timeline in isolation would result in a significantly higher fair value measurement. We evaluate changes in each of the assumptions used to calculate fair values of our contingent consideration liabilities at the end of each period.


3.	AVAILABLE-FOR-SALE SECURITIES

The following table is a summary of available-for-sale debt and equity securities included in cash and cash equivalents or marketable securities in our Condensed Consolidated Balance Sheets. During the quarter ended March 31, 2012, we liquidated a portion of our investment portfolio to partially fund the acquisition of Pharmasset, Inc. (Pharmasset). 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
March 31, 2012
Debt securities:
Money market funds	$	518,248	$	—	$	—		$	518,248
Certificates of deposit	—		—		—			—
Non-U.S. government securities	—		—		—			—
Corporate debt securities	—		—		—			—
Student loan-backed securities	51,500		—		(3,332		)	48,168
Total debt securities	569,748		—		(3,332		)	566,416
Equity securities	—		—		—			—
Total	$	569,748	$	—	$	(3,332	)	$	566,416
December 31, 2011
Debt securities:
Money market funds	$	7,455,982	$	—	$	—		$	7,455,982
Certificates of deposit	1,140,000		—		(18		)	1,139,982
Non-U.S. government securities	55,246		—		(30,505		)	24,741
Corporate debt securities	404,994		—		(5		)	404,989
Student loan-backed securities	51,500		—		(4,548		)	46,952
Total debt securities	9,107,722		—		(35,076		)	9,072,646
Equity securities	1,451		7,052		—			8,503
Total	$	9,109,173	$	7,052	$	(35,076	)	$	9,081,149

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



	March 31, 2012		December 31, 2011
Cash and cash equivalents	$	518,248	$	9,000,954
Short-term marketable securities	—		16,491
Long-term marketable securities	48,168		63,704
Total	$	566,416	$	9,081,149

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



	March 31, 2012
	Amortized Cost		Fair Value
Less than one year	$	518,248	$	518,248
Greater than one year but less than five years	—		—
Greater than five years but less than ten years	—		—
Greater than ten years	51,500		48,168
Total	$	569,748	$	566,416

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



	Three Months Ended
	March 31,
	2012			2011
Gross realized gains on sales	$	10,015		$	3,697
Gross realized losses on sales	$	(40,096	)	$	(1,362	)

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
March 31, 2012
Debt securities:
Certificates of deposit	$	—		$	—	$	—		$	—	$	—		$	—
Non-U.S. government securities	—			—		—			—		—			—
Corporate debt securities	—			—		—			—		—			—
Student loan-backed securities	—			—		(3,332		)	48,168		(3,332		)	48,168
Total	$	—		$	—	$	(3,332	)	$	48,168	$	(3,332	)	$	48,168
December 31, 2011
Debt securities:
Certificates of deposit	$	(18	)	$	1,019,982	$	—		$	—	$	(18	)	$	1,019,982
Non-U.S. government securities	(30,505		)	24,741		—			—		(30,505		)	24,741
Corporate debt securities	(5		)	224,989		—			—		(5		)	224,989
Student loan-backed securities	—			—		(4,548		)	46,952		(4,548		)	46,952
Total	$	(30,528	)	$	1,269,712	$	(4,548	)	$	46,952	$	(35,076	)	$	1,316,664

As of March 31, 2012 and December 31, 2011 , we held a total of 12 and 42 securities, respectively, that were in an unrealized loss position.


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. We work only with major banks and closely monitor current market conditions, which limits the risk that counterparties to our 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 other income (expense), net on our Condensed 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 other income (expense), 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 March 31, 2012 will be reclassified to product sales within 12 months.

We had notional amounts on foreign currency exchange contracts outstanding of $3.90 billion and $4.03 billion at March 31, 2012 and December 31, 2011 , respectively.

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



	March 31, 2012
	Asset Derivatives			Liability Derivatives
	Classification	Fair Value		Classification	Fair Value
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	$	47,498	Other accrued liabilities	$	14,564
Foreign currency exchange contracts	Other noncurrent assets	4,459		Other long-term obligations	3,778
Total derivatives designated as hedges		51,957			18,342
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	1		Other accrued liabilities	61
Total derivatives not designated as hedges		1			61
Total derivatives		$	51,958		$	18,403



	December 31, 2011
	Asset Derivatives			Liability Derivatives
	Classification	Fair Value		Classification	Fair Value
Derivatives designated as hedges:
Foreign currency exchange contracts	Other current assets	$	77,066	Other accrued liabilities	$	5,052
Foreign currency exchange contracts	Other noncurrent assets	23,169		Other long-term obligations	620
Total derivatives designated as hedges		100,235			5,672
Derivatives not designated as hedges:
Foreign currency exchange contracts	Other current assets	240		Other accrued liabilities	38
Total derivatives not designated as hedges		240			38
Total derivatives		$	100,475		$	5,710

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



	Three Months Ended
	March 31,
	2012			2011
Derivatives designated as hedges:
Net gains (losses) recognized in OCI (effective portion)	$	(48,886	)	$	(127,499	)
Net gains (losses) reclassified from accumulated OCI into product sales (effective portion)	$	11,227		$	9,929
Net gains (losses) recognized in other income (expense), net (ineffective portion and amounts excluded from effectiveness testing)	$	(3,212	)	$	995
Derivatives not designated as hedges:
Net gains (losses) recognized in other income (expense), net	$	(27,174	)	$	(85,846	)

There were no material amounts recorded in other income (expense), net, for the three months ended March 31, 2012 and 2011 as a result of the discontinuance of cash flow hedges.


5.	ACQUISITION OF PHARMASSET, INC.

On January 17, 2012, we completed the acquisition of Pharmasset, a publicly-held clinical-stage pharmaceutical company committed to discovering, developing and commercializing novel drugs to treat viral infections. Pharmasset's primary focus was the development of oral therapeutics for the treatment of HCV infection. We believe the acquisition of Pharmasset will provide us with an opportunity to complement our existing HCV portfolio and help advance our effort to develop all-oral regimens for the treatment of HCV.

We acquired all of the outstanding shares of common stock of Pharmasset for $137 per share in cash through a tender offer and subsequent merger under the terms of an agreement and plan of merger entered into in November 2011. The aggregate cash payment to acquire all of the outstanding shares of common stock was $11.1 billion . We financed the transaction with approximately $5.2 billion in cash on hand, $2.2 billion in bank debt issued in January 2012 and $3.7 billion in senior unsecured notes issued in December 2011.

Pharmasset's lead compound, now known as GS-7977, is a nucleotide analog being evaluated in Phase 2 and Phase 3 clinical studies for the treatment of HCV infection across genotypes. Since the acquisition, we have received data from clinical trials evaluating GS-7977. For example:


•	In February 2012, we announced that data indicates that a 12 week course of treatment of GS-7977 with ribavirin in genotype 1 patients with a prior “null” response to an interferon-containing regimen will not be sufficient to cure their disease.

•

In April 2012, we announced data from our ELECTRON and QUANTUM studies, which found that 88% and 59% of genotype 1 patients and treatment-naïve patients, respectively, taking a 12-week all-oral regimen of GS-7977 and ribavirin achieved a sustained viral response four weeks after the completion of a 12-week course of therapy. We also announced data from our ATOMIC study, which found that 90% of genotype 1 HCV patients achieved a sustained viral response 12 weeks after a 12-week course of therapy with GS-7977 plus ribavirin and interferon.

•

Also in April 2012, Bristol-Myers Squibb Company (BMS) also announced data from its Phase 2 study evaluating GS-7977 in combination with daclatasvir with and without ribavirin in genotype 1 and genotype 2 and 3 treatment-naïve infected patients. The data showed that 100% of genotype 1 and 91% of genotype 2 and 3 patients achieved a sustained viral response four weeks after the completion of a 24-week course of treatment.

The Pharmasset acquisition was accounted for as a business combination. The results of operations of Pharmasset have been included in our Condensed Consolidated Statement of Income since January 13, 2012, the date on which we acquired approximately 88% of the outstanding shares of common stock of Pharmasset, cash consideration was transferred, and as a result, we obtained effective control of Pharmasset. During the first quarter of 2012, Pharmasset was integrated into Gilead's operations. As we do not track earnings results by product candidate or therapeutic area, we do not maintain separate earnings results for Pharmasset. The acquisition was completed on January 17, 2012 , at which time Pharmasset became a wholly-owned subsidiary of Gilead.

The following table summarizes the components of the cash paid to acquire Pharmasset (in thousands):



Total consideration transferred	$	10,858,372
Stock-based compensation expense	193,937
Total cash paid	$	11,052,309

The $11.1 billion cash payment consisted of a $10.38 billion cash payment to the outstanding common stockholders as well as a $668.3 million cash payment to option holders under the Pharmasset stock option plans. The $10.38 billion cash payment to the outstanding common stockholders and $474.3 million of the cash payment to the option holders under the Pharmasset stock option plans were accounted for as consideration transferred. The remaining $193.9 million of cash payment was accounted for as stock-based compensation expense resulting from the accelerated vesting of Pharmasset employee options immediately prior to the acquisition.

The following table summarizes the allocation of the consideration transferred to the acquisition date fair values of assets acquired and liabilities assumed (in thousands):



Intangible assets - in-process research and development	$	10,720,000
Cash and cash equivalents	106,737
Other assets acquired (liabilities assumed), net	(43,182		)
Total identifiable net assets	10,783,555
Goodwill	74,817
Total consideration transferred	$	10,858,372

In-Process Research and Development (IPR&D)

The estimated fair value of the acquired IPR&D related to GS-7977 was $10.72 billion , which was determined using a probability-weighted income approach, that discounts expected future cash flows to present value. The estimated net cash flows were discounted using a discount rate of 12% , which is based on the estimated weighted-average cost of capital for companies with profiles similar to that of Pharmasset. This rate is comparable to the estimated internal rate of return for the acquisition and represents the rate that market participants would use to value the intangible asset. The projected cash flows from GS-7977 were based on key assumptions such as: the time and resources needed to complete its development considering its stage of development on the acquisition date, the probability of obtaining approval from the U.S. Food and Drug Administration (FDA) and other regulatory agencies, estimates of revenues and operating profits, the life of the potential commercialized product and other associated risks related to the viability of and potential alternative treatments in future target markets. Intangible assets related to IPR&D projects are considered to be indefinite-lived assets until the completion or abandonment of the associated R&D efforts.

Goodwill

The $74.8 million of goodwill represents the excess of the consideration transferred over the fair values of assets acquired and liabilities assumed and is attributable to the synergies expected from combining our R&D operations with Pharmasset's. None of the goodwill is expected to be deductible for income tax purposes.

Stock-Based Compensation Expense

The stock-based compensation expense recognized for the accelerated vesting of employee options immediately prior to the acquisition was reported in our Condensed Consolidated Statement of Income as follows (in thousands):



Research and development expense	$	100,149
Selling, general and administrative expense	93,788
Total stock-based compensation expense	$	193,937

Other Costs

Other costs incurred in connection with the acquisition include (in thousands):



	Three Months Ended
	March 31, 2012		December 31, 2011
Transaction costs (e.g. investment advisory, legal and accounting fees)	$	9,040	$	28,461
Bridge financing costs	7,333		23,817
Restructuring costs	8,343		—
Total other costs	$	24,716	$	52,278

The following table summarizes these costs by the line item in the Condensed Consolidated Statement of Income in which these costs were recognized (in thousands).



	Three Months Ended
	March 31, 2012		December 31, 2011
Research and development expense	$	5,557	$	—
Selling, general and administrative expense	11,826		28,461
Interest expense	7,333		23,817
Total other costs	$	24,716	$	52,278

Pro Forma Information

The following unaudited pro forma information presents the combined results of operations of Gilead and Pharmasset as if the acquisition of Pharmasset had been completed on January 1, 2011, with adjustments to give effect to pro forma events that are directly attributable to the acquisition. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of Gilead and Pharmasset. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the period presented, nor are they indicative of future results of operations (in thousands):



	Three Months Ended
	March 31,
	2012		2011
Total revenues	$	2,282,449	$	1,926,094
Net income attributable to Gilead	$	574,375	$	397,165

The unaudited pro forma consolidated results include the following non-recurring pro forma adjustments:


•	Stock-based compensation expense of $193.9 million and other costs of $16.4 million were excluded from the net income attributable to Gilead for the three months ended March 31, 2012 and were included in the net income attributable to Gilead for the three months ended March 31, 2011;


•	Other costs of $52.3 million incurred during the three months ended December 31, 2011 were included in the net income attributable to Gilead for the three months ended March 31, 2011.


6.	INVENTORIES

Inventories are summarized as follows (in thousands):



	March 31, 2012		December 31, 2011
Raw materials	$	584,835	$	697,621
Work in process	603,428		466,499
Finished goods	229,770		225,863
Total	$	1,418,033	$	1,389,983

As of March 31, 2012 and December 31, 2011 , we held $974.3 million and $995.7 million of efavirenz in inventory, which was purchased from BMS at BMS’s estimated net selling price of efavirenz.


7.	INTANGIBLE ASSETS AND GOODWILL

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



	March 31, 2012		December 31, 2011
Indefinite-lived intangible assets	$	10,986,200	$	266,200
Finite-lived intangible assets	780,827		796,664
Total intangible assets	11,767,027		1,062,864
Goodwill	1,078,919		1,004,102
Total intangible assets and goodwill	$	12,845,946	$	2,066,966

Indefinite-Lived Intangible Assets

In January 2012, we acquired $10.72 billion of purchased IPR&D as part of our acquisition of Pharmasset that we have classified as indefinite-lived intangible assets (See Note 5).

As of December 31, 2011 , we had indefinite-lived intangible assets of $266.2 million , which consisted of $117.0 million and $149.2 million of purchased IPR&D from our acquisitions of Arresto Biosciences, Inc. and Calistoga Pharmaceuticals, Inc., respectively.

Finite-Lived Intangible Assets

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



	March 31, 2012				December 31, 2011
	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Intangible asset - Ranexa	$	688,400	$	106,104	$	688,400	$	97,099
Intangible asset - Lexiscan	262,800		76,159		262,800		69,723
Other	24,995		13,105		24,995		12,709
Total	$	976,195	$	195,368	$	976,195	$	179,531

Amortization expense related to intangible assets was $15.8 million and $17.4 million for the three months ended March 31, 2012 and 2011, respectively, and was recorded in cost of goods sold in our Condensed Consolidated Statements of Income.

As of March 31, 2012 , the estimated future amortization expense associated with our intangible assets for the remaining nine months of 2012 and each of the five succeeding fiscal years are as follows (in thousands):



Fiscal Year	Amount
2012 (remaining nine months)	$	47,509
2013	64,283
2014	66,735
2015	73,261
2016	100,048
2017	132,786
Total	$	484,622

Goodwill

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



Balance at December 31, 2011	$	1,004,102
Goodwill resulting from the acquisition of Pharmasset	74,817
Balance at March 31, 2012	$	1,078,919


8.	COLLABORATIVE ARRANGEMENTS

From time to time, as a result of entering into strategic collaborations, we may hold investments in non-public companies. We review our interests in investee companies for consolidation and/or appropriate disclosure based on applicable guidance. Contractual terms which provide us control over an entity may require us to consolidate the entity. Entities consolidated because they are controlled by means other than a majority voting interest are referred to as variable interest entities (VIE). We assess whether we are the primary beneficiary of a VIE based on our power to direct the activities of the VIE that most significantly impact the VIE's economic performance and our obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE. As of March 31, 2012 , we determined that certain of our investee companies are VIEs; 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 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 and BMS share marketing and sales efforts, with both parties providing equivalent sales force efforts at levels agreed to annually by BMS and Gilead. Since the second quarter of 2011, except for a limited number of activities that will be jointly managed, the parties no longer coordinate detailing and promotional activities in the United States and the parties have begun to reduce their joint promotional efforts in Canada as we launched Complera and in anticipation of the launch of Quad. 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 2006, we and BMS amended the joint venture's collaboration agreement to allow the joint venture to sell Atripla into Canada. As of March 31, 2012 and December 31, 2011 , 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 Condensed Consolidated Balance Sheets. As of March 31, 2012 , total assets held by the joint venture were $1.70 billion and consisted primarily of cash and cash equivalents of $204.7 million , accounts receivable (including intercompany receivables with Gilead) of $278.1 million and inventories of $1.20 billion ; total liabilities were $1.56 billion and consisted primarily of accounts payable (including intercompany payables with Gilead) of $611.7 million and other accrued expenses of $284.3 million . As of December 31, 2011 , total assets held by the joint venture were $1.62 billion and consisted primarily of cash and cash equivalents of $156.9 million , accounts receivable (including intercompany receivables with Gilead) of $266.5 million and inventories of $1.19 billion ; total liabilities were $1.27 billion and consisted primarily of accounts payable (including intercompany payables with Gilead) of $561.1 million and other accrued expenses of $232.9 million . These asset and liability amounts do not reflect the impact of intercompany eliminations that are included in our Condensed 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 2007, Gilead Sciences Limited, 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.

Starting in 2012, except for a limited number of activities that will be jointly managed, the parties no longer coordinate detailing and promotional activities in the region. We are also responsible for accounting, financial reporting and tax reporting for the collaboration. As of March 31, 2012 and December 31, 2011 , efavirenz purchased from BMS at BMS's estimated net selling price of efavirenz in the European Territory is included in inventories on our Condensed 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.

9. LONG-TERM OBLIGATIONS

Financing Arrangements

The following table summarizes the carrying amount of our borrowings under various financing arrangements (in thousands):



Type of Borrowing	Description	Issue Date	Due Date	Interest Rate	March 31, 2012		December 31, 2011
Convertible Senior	May 2013 Notes	April 2006	May 2013	0.625%	$	614,791	$	607,036
Convertible Senior	May 2014 Notes	July 2010	May 2014	1.00%	1,188,594		1,181,525
Convertible Senior	May 2016 Notes	July 2010	May 2016	1.625%	1,138,538		1,132,293
Senior Unsecured	April 2021 Notes	March 2011	April 2021	4.50%	992,280		992,066
Senior Unsecured	December 2014 Notes	December 2011	December 2014	2.40%	749,157		749,078
Senior Unsecured	December 2016 Notes	December 2011	December 2016	3.05%	698,921		698,864
Senior Unsecured	December 2021 Notes	December 2011	December 2021	4.40%	1,247,212		1,247,138
Senior Unsecured	December 2041 Notes	December 2011	December 2041	5.65%	997,753		997,734
Term Loan Facility	Term Loan	January 2012	January 2015	Variable	650,000		—
Credit Facility	Short-Term Revolver	January 2012	January 2013	Variable	400,000		—
Credit Facility	Five-Year Revolver	January 2012	January 2017	Variable	750,000		—
Total debt, net					$	9,427,246	$	7,605,734
Less current portion					1,350,000		—
Total long-term debt, net					$	8,077,246	$	7,605,734

Credit Facilities

We were eligible to borrow up to an aggregate of $1.25 billion in revolving credit loans under an amended and restated credit agreement that we entered into in 2007. The credit agreement also included a sub-facility for swing-line loans and letters of credit. As of December 31, 2011, we had $4.0 million in letters of credit outstanding under the credit agreement. In January 2012, we fully repaid the outstanding obligations under this credit agreement and terminated the credit agreement.

In January 2012, in conjunction with our acquisition of Pharmasset, we entered into a five-year $1.25 billion revolving credit facility credit agreement (the Five-Year Revolving Credit Agreement), a $750.0 million short-term revolving credit facility credit agreement (the Short-Term Revolving Credit Agreement) and a $1.00 billion term loan facility (the Term Loan Credit Agreement). We borrowed $750.0 million under the Five-Year Revolving Credit Agreement, $400.0 million under the Short-Term Revolving Credit Agreement and $1.00 billion under the Term Loan Credit Agreement, upon the close of the acquisition. In March 2012, we repaid $350.0 million of the outstanding debt under the Term Loan Credit Agreement.

All three credit agreements contain customary representations, warranties, affirmative, negative and financial maintenance covenants and events of default. The loans bear interest at either (i) the Eurodollar Rate plus the Applicable Margin or (ii) the Base Rate plus the Applicable Margin, each as defined in the applicable credit agreement. We may reduce the commitments and may prepay loans under any of these agreements in whole or in part at any time without premium or penalty.

The Five-Year Revolving Credit Agreement was inclusive of a $30.0 million swing line loan sub-facility and a $25.0 million letter of credit sub-facility. As of March 31, 2012, we had $4.0 million in letters of credit outstanding under the Five-Year Revolving Credit Agreement. The Five-Year Revolving Credit Agreement will terminate and all unpaid borrowings thereunder shall be due and payable in January 2017 . The Short-Term Revolving Credit Agreement will terminate and all unpaid borrowings thereunder shall be due and payable in January 2013 ; however, at our request, the maturity date may be extended until January 2014 . All principal repayment installments under the Term Loan Credit Agreement will be due and payable as specified in the Term Loan Credit Agreement, with the final principal installment payment due and payable in January 2015 .


10.	COMMITMENTS AND CONTINGENCIES

Legal Proceedings

In June 2011, we received a subpoena from the United States Attorney's Office for the Northern District of California requesting documents related to the manufacture, and related quality and distribution practices, of Atripla, Emtriva, Hepsera, Letairis, Truvada, Viread and Complera. We have been cooperating and will continue to cooperate with this governmental inquiry. An estimate of a possible loss or range of losses cannot be determined given we are at the early stage of the inquiry.

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


11.	STOCK-BASED COMPENSATION EXPENSE

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



	Three Months Ended
	March 31,
	2012			2011
Cost of goods sold	$	2,101		$	2,644
Research and development expenses	118,622			16,720
Selling, general and administrative expenses	121,945			30,106
Stock-based compensation expense included in total costs and expenses	242,668			49,470
Income tax effect	(13,064		)	(12,856		)
Stock-based compensation expense, net of tax	$	229,604		$	36,614

Total stock-based compensation for the three months ended March 31, 2012, included $100.1 million and $93.8 million in research and development expenses and selling, general and administrative expenses, respectively, related to the acceleration of unvested stock options in connection with the acquisition of Pharmasset.


12.	STOCKHOLDERS’ EQUITY

Stock Repurchase Program

During the three months ended March 31, 2012 , we repurchased a total of $20.8 million or 0.4 million shares of common stock under our January 2011, three-year, $5.00 billion stock repurchase program.


13.	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 the majority of our products 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 consisted of the following (in thousands):



	Three Months Ended
	March 31,
	2012		2011
Antiviral products:
Atripla	$	887,596	$	744,512
Truvada	758,263		673,111
Viread	191,693		168,395
Complera/Eviplera	52,180		—
Hepsera	29,297		38,096
Emtriva	6,777		6,576
Total antiviral products	1,925,806		1,630,690
AmBisome	84,764		78,506
Letairis	87,288		62,174
Ranexa	83,201		68,293
Other products	27,283		23,915
Total product sales	$	2,208,342	$	1,863,578

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



	Three Months Ended
	March 31,
	2012		2011
Cardinal Health, Inc.	20	%	17	%
McKesson Corp.	16	%	15	%
AmerisourceBergen Corp.	11	%	13	%


14.	INCOME TAXES

Our income tax rate of 34.6% for the three months ended March 31, 2012 differed from the U.S. federal statutory rate of 35% due primarily to tax credits and certain operating earnings from non-U.S subsidiaries that are considered indefinitely invested outside of the United States, partially offset by state taxes and the stock-based compensation expense related to the Pharmasset acquisition for which we received no tax benefit. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be permanently reinvested.

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 2008 and onwards. For certain acquired entities, the statute of limitations is open for all years from inception due to our utilization of their net operating losses and credits carried over from prior years. For California income tax purposes, the statute of limitations is 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 2008 and 2009 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.

As of March 31, 2012 , we believe that it is reasonably possible that our unrecognized tax benefits will not significantly change in the next 12 months as we do not expect to have clarification from the IRS and other tax authorities around any of our uncertain tax positions.

We record liabilities related to uncertain tax positions in accordance with the income tax guidance which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. We do not believe any of our uncertain tax positions will have a material adverse effect on our Condensed Consolidated Financial Statements, although an adverse resolution of one or more of these uncertain tax positions in any period could have a material impact on the results of operations for that period.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q contains forward-looking statements regarding future events and our future results that are subject to the safe harbors created under the Securities Act of 1933, as amended (the Securities Act), and the Securities Exchange Act of 1934, as amended (the Exchange Act). The forward-looking statements are contained principally in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors.” Words such as “expect,” “anticipate,” “target,” “goal,” “project,” “hope,” “intend,” “plan,” “believe,” “seek,” “estimate,” “continue,” “may,” “could,” “should,” “might,” variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements other than statements of historical fact are forward-looking statements, including statements regarding overall trends, operating cost and revenue trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends and similar expressions. We have based these forward-looking statements on our current expectations about future events. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Our actual results may differ materially from those suggested by these forward-looking statements for various reasons, including those identified below under “Risk Factors.” Given these risks and uncertainties, you are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements included in this report are made only as of the date hereof. Except as required under federal securities laws and the rules and regulations of the Securities and Exchange Commission (SEC), we do not undertake, and specifically decline, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions or otherwise. In evaluating our business, you should carefully consider the risks described in the section entitled “Risk Factors” under Part II, Item 1A below, in addition to the other information in this Quarterly Report on Form 10-Q. Any of the risks contained herein could materially and adversely affect our business, results of operations and financial condition.

You should read the following management’s discussion and analysis of our financial condition and results of operations in conjunction with our audited Consolidated Financial Statements and related notes thereto included as part of our Annual Report on Form 10-K for the year ended December 31, 2011 and our unaudited Condensed Consolidated Financial Statements for the three months ended March 31, 2012 and other disclosures (including the disclosures under “Part II. Item 1A. Risk Factors”) included in this Quarterly Report on Form 10-Q. Our Condensed Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) and are presented in U.S. dollars.

Management Overview

Gilead Sciences, Inc. (Gilead, we or us) is a research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. With each new discovery and experimental drug candidate, we seek to improve the care of patients suffering from life-threatening diseases around the world. Our primary areas of focus include human immunodeficiency virus (HIV)/AIDS, liver diseases such as hepatitis B virus (HBV) and hepatitis C virus (HCV), serious cardiovascular/metabolic and respiratory conditions and various oncologic disease areas. Headquartered in Foster City, California, we have operations in North America, Europe and Asia Pacific. We continue to seek to add to our existing portfolio of products through our internal discovery and clinical development programs and through a product acquisition and in-licensing strategy.

Our product portfolio is comprised of Atripla ^® , Truvada ^® , Viread ^® , Emtriva ^® , Complera ^® /Eviplera ^® , Hepsera ^® , AmBisome ^® , Letairis ^® , Ranexa ^® , Cayston ^® and Vistide ^® . 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 ^® ; GlaxoSmithKline Inc. (GSK) markets Hepsera and Viread in certain territories outside of the United States; GSK also markets Volibris ^® outside of the United States; Astellas Pharma US, Inc. markets AmBisome in the United States and Canada; Astellas US LLC markets Lexiscan ^® injection in the United States; Rapidscan Pharma Solutions, Inc. markets Rapiscan in certain territories outside of the United States; Menarini International Operations Luxembourg SA markets Ranexa in certain territories outside of the United States; and Japan Tobacco Inc. (Japan Tobacco) markets Truvada, Viread and Emtriva in Japan.

Business Highlights

During the first quarter of 2012, we continued to grow our business with increased product sales of 19% over the same quarter in 2011. We continued to advance our product pipeline through internal programs, and most recently, through our acquisition of Pharmasset, Inc. (Pharmasset) in January 2012. We believe the combination of our existing internal research programs and our recent partnerships and acquisitions will drive research and development efforts and accelerate our product pipeline so that we can continue to bring innovative therapies to individuals who are living with unmet medical needs.

HIV Product Development and New Drug Applications

In January 2012, we announced that the U.S. Food and Drug Administration (FDA) has approved Viread in combination with other antiretroviral agents for the treatment of HIV-1 infection in pediatric patients ages 2-12. The FDA approved a supplemental New Drug Application (sNDA) for three lower-strength once-daily tablets of Viread for children ages 6-12. The FDA also approved a New Drug Application (NDA) for an oral powder formulation of Viread for children ages 2-5.

Also in January 2012, we announced the initiation of a Phase 2 clinical trial evaluating GS-7340 for the treatment of HIV-1 infection in treatment-naïve adults. The Phase 2 study will evaluate GS-7340 as part of a once-daily, co-formulated single-tablet regimen that will also contain the boosting agent cobicistat, the integrase inhibitor elvitegravir, and Emtriva. The GS-7340-containing single-tablet regimen will be compared to our Quad, a once-daily single tablet regimen of elvitegravir, cobicistat, emtricitabine and tenofovir disoproxil fumarate for the treatment of HIV-1 infection. We plan to initiate a second Phase 2 trial for GS-7340 later in 2012 that will assess GS-7340 as part of another single-tablet regimen containing cobicistat, Emtriva and Tibotec Pharmaceuticals' (Tibotec) Prezista® (darunavir).

In February 2012, we announced that the FDA has accepted the sNDA and granted a six-month Priority Review for Truvada for pre-exposure prophylaxis (PrEP) to reduce the risk of HIV-1 infection among uninfected adults. The FDA has set a target review date for Truvada for PrEP of June 15, 2012 under the Prescription Drug User Fee Act (PDUFA). The FDA has also indicated that Truvada for PrEP will be discussed at the FDA Antiviral Drugs Advisory Committee meeting scheduled for May 10, 2012. If the sNDA is approved, Truvada would be the first agent indicated for uninfected individuals to reduce the risk of acquiring HIV.

In March 2012, we announced full Phase 3 clinical trial results from studies evaluating Quad versus a standard of care among HIV-1 infected antiretroviral treatment-naïve adults. The first study, Study 102, demonstrated that Quad is non-inferior to Atripla after 48 weeks of therapy in treatment-naïve adults. The second study, Study 103, found that Quad was non-inferior to a protease-based regimen of ritonavir-boosted atazanavir plus Truvada at 48 weeks of therapy among HIV-1 infected treatment-naïve adults. We submitted a NDA for Quad in October 2011, and the FDA has set a PDUFA target review date of August 27, 2012. The FDA has indicated that a panel will be convened on May 11, 2012 to provide expert advice on the application. In November 2011, we submitted a marketing application for Quad to the European Medicines Agency, whose review may be complete by the end of 2012.

Acquisition

Pharmasset's lead compound now known as GS-7977, is a nucleotide analog being evaluated in Phase 2 and Phase 3 clinical studies for the treatment of HCV-infection across genotypes.

Since the acquisition, we have received data from clinical trials evaluating GS-7977. For example:


•	In February 2012, we announced that data indicates that a 12 week course of treatment of GS-7977 with ribavirin in genotype 1 patients with a prior “null” response to an interferon-containing regimen will not be sufficient to cure their disease.

•


•	Also in April 2012, Bristol-Myers Squibb Company (BMS) also announced data from its Phase 2 study evaluating GS-7977 in combination with daclatasvir with and without ribavirin in genotype 1 and genotype 2

and 3 treatment-naïve infected patients. The data showed that 100% of genotype 1 and 91% of genotype 2 and 3 patients achieved a sustained viral response four weeks after the completion of a 24-week course of treatment.

We expect additional data from our Phase 2 and Phase 3 clinical studies of GS-7977, including in combination with other compounds, in the second and third quarters of 2012. If Phase 3 data for genotype 2 and 3 patients is consistent with data from our Phase 2 trials, we would expect to file a NDA for the treatment of genotype 2 and 3 patients in 2013 for potential approval in late 2013 or early 2014.

The following table summarizes the components of the cash paid to acquire Pharmasset (in thousands):



Total consideration transferred	$	10,858,372
Stock-based compensation expense	193,937
Total cash paid	$	11,052,309

The following table summarizes the allocation of the consideration transferred to the acquisition date fair values of assets acquired and liabilities assumed (in thousands):



Intangible assets - in-process research and development	$	10,720,000
Cash and cash equivalents	106,737
Other assets acquired (liabilities assumed), net	(43,182		)
Total identifiable net assets	10,783,555
Goodwill	74,817
Total consideration transferred	$	10,858,372

In-Process Research and Development (IPR&D)

Goodwill

Stock-Based Compensation Expense



Research and development expense	$	100,149
Selling, general and administrative expense	93,788
Total stock-based compensation expense	$	193,937

Other Costs

Other costs incurred in connection with the acquisition include (in thousands):



	Three Months Ended
	March 31, 2012		December 31, 2011
Transaction costs (e.g. investment advisory, legal and accounting fees)	$	9,040	$	28,461
Bridge financing costs	7,333		23,817
Restructuring costs	8,343		—
Total other costs	$	24,716	$	52,278

The following table summarizes these costs by the line item in the Condensed Consolidated Statement of Income in which these costs were recognized (in thousands).



	Three Months Ended
	March 31, 2012		December 31, 2011
Research and development expense	$	5,557	$	—
Selling, general and administrative expense	11,826		28,461
Interest expense	7,333		23,817
Total other costs	$	24,716	$	52,278

Pro Forma Information



	Three Months Ended
	March 31,
	2012		2011
Total revenues	$	2,282,449	$	1,926,094
Net income attributable to Gilead	$	574,375	$	397,165

The unaudited pro forma consolidated results include the following non-recurring pro forma adjustments:


•	Stock-based compensation expense of $193.9 million and other costs of $16.4 million were excluded from the net income attributable to Gilead for the three months ended March 31, 2012 and were included in the net income attributable to Gilead for the three months ended March 31, 2011;


•	Other costs of $52.3 million incurred during the three months ended December 31, 2011 were included in the net income attributable to Gilead for the three months ended March 31, 2011.

Other

In January 2012, we announced that Roy D. Baynes, MD, PhD, joined Gilead as Senior Vice President, Oncology Therapeutics to lead the efforts to advance discovery and development programs in oncology and inflammation.

Financial Highlights

During the first quarter of 2012, we delivered total product sales of $2.21 billion , an increase of 19% over the same period in 2011. The growth in product sales was primarily driven by growth in our antiviral franchise, where sales increased 18% to $1.93 billion when compared to the same period last year. Total revenues in the first quarter of 2012 grew 19% to $2.28 billion compared to $1.93 billion in the first quarter of 2011. Product gross margin decreased from 75% in the first quarter of 2011 to 74% in the first quarter of 2012 primarily due to the higher cost of efavirenz and changes in product mix. Efavirenz is the active pharmaceutical ingredient in Atripla that we purchase from Bristol-Myers Squibb Company (BMS) at BMS's estimated net selling price of efavirenz.

Research and development (R&D) expenses were $458.2 million for the first quarter of 2012 and $254.4 million for the same period in 2011, an increase of $203.8 million , or 80% . The increase was due primarily to stock-based compensation expense resulting from the Pharmasset acquisition, costs related to clinical studies and the impact of higher headcount and expenses associated with acquisitions, collaborations and the ongoing growth of our business.

Selling, general and administrative (SG&A) expenses were $443.1 million for the first quarter of 2012 and $295.6 million for the same period in 2011, an increase of $147.6 million , or 50% . The increase was due primarily to stock-based compensation expense resulting from the Pharmasset acquisition, an increase in the pharmaceutical excise tax and increased expenses associated with the ongoing growth of our business.

Net income for the first quarter of 2012 was $442.0 million , a 32% decrease from $651.1 million for the same period in 2011 due primarily to the $193.9 million of stock-based compensation expense related to the acceleration of unvested stock options in connection with the Pharmasset acquisition, the investments we made in our existing clinical programs and increased interest expense related to the additional debt we issued in connection with the Pharmasset acquisition. Our diluted earnings per share decreased by 29% to $0.57 in the first quarter of 2012 from $0.80 in the same period in 2011.

Financing Activity

Cash, cash equivalents and marketable securities decreased by $8.46 billion during the first quarter of 2012 to $1.50 billion at March 31, 2012. The primary uses of cash during the quarter were $11.1 billion for the acquisition of Pharmasset, which included the impact of the $193.9 million stock-based compensation expense and $350.0 million for the repayment of bank debt. The primary sources of cash during the quarter were operating cash flows of $453.0 million and $2.14 billion in net proceeds from the issuance of bank debt in conjunction with our acquisition of Pharmasset.

In the first quarter of 2012, we spent a total of $20.8 million of cash to repurchase and retire 0.4 million shares of our common stock under the three-year, $5.00 billion stock repurchase program authorized by our Board of Directors in January 2011. As of March 31, 2012, we had repurchased $423.8 million of our common stock under our January 2011 program.

Critical Accounting Policies, Estimates and Judgments

There have been no material changes in our critical accounting policies, estimates and judgments during the three months ended March 31, 2012 compared to the disclosures in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2011 .

Results of Operations

Total Revenues

We had total revenues of $2.28 billion for the three months ended March 31, 2012 , compared to total revenues of $1.93 billion for the same period in 2011. Total revenues included product sales, royalty revenues and contract and other revenues. Increases in total revenues were driven by growth in product sales. A significant percentage of our product sales is denominated in foreign currencies and we face exposure to adverse movements in foreign currency exchange rates. We use foreign currency exchange forward and option contracts to hedge a percentage of our forecasted international sales, primarily those denominated in Euro. Foreign currency exchange, net of hedges, had an unfavorable impact of $16.4 million on our first quarter 2012 revenues compared to the same period in 2011. Total product sales were $2.21 billion for the three months ended March 31, 2012 , an increase of 19% over total product sales of $1.86 billion for the same period in 2011, driven primarily by our antiviral franchise, resulting from increased sales of Atripla and Truvada and the launch of Complera/Eviplera.

Product Sales

Product sales in the United States were $1.27 billion for the three months ended March 31, 2012 , an increase of 25% over the same period in 2011, primarily driven by the continued sales growth in our antiviral franchise and the launch of Complera. Antiviral product sales for the first quarter of 2012 reflected the benefit of fiscal year-end purchases by certain state AIDS Drug Assistance Programs (ADAPs), which was ahead of patient demand. With the exception of 2011, this pattern is consistent with what we have observed in past years. The increase in U.S. product sales also reflected sales growth in our other franchises. Letairis sales contributed $87.3 million to our first quarter 2012 product sales, an increase of 40% compared to the same period in 2011. Ranexa sales contributed $83.2 million to our first quarter 2012 product sales, an increase of 22% compared to the same period in 2011.

Product sales in Europe were $763.9 million for the three months ended March 31, 2012 , an increase of 7% over the same period in 2011, primarily driven by sales growth in our antiviral franchise and the launch of Eviplera. Antiviral product sales in Europe totaled $696.5 million for the three months ended March 31, 2012 , an increase of 7% compared to $651.4 million for the same period in 2011, driven primarily by the sales of Truvada and Atripla. Foreign currency exchange, net of hedges, had an unfavorable impact of $21.4 million on our European product sales in the first quarter of 2012 compared to the same period last year.

The following table summarizes the period over period changes in our sales by product (in thousands):



	Three Months Ended March 31,
	2012		2011		Change
Antiviral products:
Atripla	$	887,596	$	744,512	19	%
Truvada	758,263		673,111		13	%
Viread	191,693		168,395		14	%
Complera/Eviplera	52,180		—		—
Hepsera	29,297		38,096		(23	)%
Emtriva	6,777		6,576		3	%
Total antiviral products	1,925,806		1,630,690		18	%
AmBisome	84,764		78,506		8	%
Letairis	87,288		62,174		40	%
Ranexa	83,201		68,293		22	%
Other	27,283		23,915		14	%
Total product sales	$	2,208,342	$	1,863,578	19	%

Antiviral Products

Antiviral product sales increased by 18% for the three months ended March 31, 2012 compared to the same period in 2011.


•	Atripla

Atripla sales increased by 19% for the three months ended March 31, 2012 compared to the same period in 2011, driven primarily by sales growth in the United States and Europe. Atripla sales include the efavirenz component which has a gross margin of zero. The efavirenz portion of our Atripla sales was approximately $326.4 million and $273.9 million for the three months ended March 31, 2012 and 2011, respectively. Atripla sales accounted for 46% of our total antiviral product sales for the three months ended March 31, 2012 and 2011.


•	Truvada

Truvada sales increased by 13% for the three months ended March 31, 2012 compared to the same period in 2011, driven primarily by sales growth in the United States and Europe. Truvada sales accounted for 39% and 41% of our total antiviral product sales for the three months ended March 31, 2012 and 2011, respectively.


•	Complera/Eviplera

Sales of Complera/Eviplera were $52.2 million for the three months ended March 31, 2012 and increased $32.5 million compared to the three months ended December 31, 2011. Complera and Eviplera were approved in the U.S. and European Union, respectively, in the second half of 2011.

Other Product Sales

Sales of AmBisome increased by 8% for the three months ended March 31, 2012 compared to the same period in 2011, driven primarily by sales growth in Europe and Asia. AmBisome product sales in the United States and Canada related solely to our sales of AmBisome to Astellas Pharma US, Inc., which were recorded at our manufacturing cost. Sales of Letairis increased by 40% for the three months ended March 31, 2012 compared to the same period in 2011, driven primarily by sales growth. Sales of Ranexa increased by 22% for the three months ended March 31, 2012 compared to the same period in 2011, driven primarily by sales growth.

Royalty Revenues



	Three Months Ended March 31,
(In thousands, except percentages)	2012		2011		Change
Royalty revenues	$	71,105	$	58,665	21	%

Royalty revenues increased 21% for the three months ended March 31, 2012 compared to the same period in 2011, driven primarily by an increase in Volibris royalties from GSK and Truvada royalties from Japan Tobacco, partially offset by a decrease in Tamiflu royalties from Roche.

Cost of Goods Sold and Product Gross Margin



	Three Months Ended March 31,
(In thousands, except percentages)	2012			2011			Change
Total product sales	$	2,208,342		$	1,863,578		19	%
Cost of goods sold	$	580,931		$	474,111		23	%
Product gross margin	74		%	75		%

Our product gross margin for the three months ended March 31, 2012 was 74% , a decrease of 1% compared to the same period in 2011, due primarily to the higher cost of efavirenz and changes in product mix as Atripla and Complera increase as a percentage of revenue, while Truvada decreases.

Research and Development Expenses



	Three Months Ended March 31,
(In thousands, except percentages)	2012		2011		Change
Research and development	$	458,211	$	254,446	80	%

We manage our R&D expenses by identifying the R&D activities we anticipate will be performed during a given period and then prioritizing efforts based on scientific data, probability of successful development, market potential, available human and capital resources and other similar considerations. We continually review our R&D pipeline and the status of development and, as necessary, reallocate resources among the R&D portfolio that we believe will best support the future growth of our business.

R&D expenses summarized above consist primarily of personnel costs, including salaries, benefits and stock-based compensation, clinical studies performed by contract research organizations, materials and supplies, licenses and fees, milestone payments under collaboration arrangements and overhead allocations consisting of various support and facilities-related costs.

R&D expenses for the three months ended March 31, 2012 increased by $203.8 million , or 80% , compared to the same period in 2011, due primarily to stock-based compensation expense of $100.1 million resulting from the Pharmasset acquisition; a $55.4 million increase in clinical studies and outside services mainly related to study progression in liver disease; and a $34.5 million increase in personnel expenses due to higher headcount and expenses to support the growth of our business.

Selling, General and Administrative Expenses



	Three Months Ended March 31,
(In thousands, except percentages)	2012		2011		Change
Selling, general and administrative	$	443,121	$	295,568	50	%

SG&A expenses are comprised primarily of compensation and benefits associated with sales and marketing, finance, human resources, legal and other administrative personnel; facilities and overhead costs; outside marketing, advertising and legal expenses; and other general and administrative costs.

SG&A expenses for the three months ended March 31, 2012 increased by $147.6 million or 50% , compared to the same period in 2011, due primarily to stock-based compensation expense of $93.8 million resulting from the Pharmasset acquisition; a $15.3 million increase in the pharmaceutical excise tax; a $12.0 million increase in compensation and benefits expenses as a result of higher headcount to support the ongoing growth of our business; and a $9.9 million increase in transaction costs related to our acquisition of Pharmasset.

Interest Expense

Our interest expense was $97.3 million and $41.2 million for the three months ended March 31, 2012 and 2011, respectively. The increase in interest expense for the three months ended March 31, 2012 compared to the same period in 2011 was due primarily to the additional debt we issued in connection with our acquisition of Pharmasset, which included $3.70 billion in senior unsecured notes issued in December 2011 and $2.15 billion in bank debt issued in January 2012. The increase in interest expense was also due to the $1.00 billion in senior unsecured notes we issued in March 2011 which are due in April 2021 (April 2021 Notes), partially offset by a decrease of $9.6 million in interest expense related to the maturity of our convertible senior notes due in May 2011.

Other Income (Expense), Net

Other income (expense), net, for the three months ended March 31, 2012 was a net expense of $34.1 million compared to net income of $13.8 million for the three months ended March 31, 2011, due primarily to a $40.1 million loss related to Greece's restructuring of its sovereign debt . The change in other income (expense), net, was also due to a decrease of $12.2 million in interest income from a lower average yield and a lower cash balance as we funded the Pharmasset acquisition.

Provision for Income Taxes

Our provision for income taxes was $231.3 million and $227.3 million for the three months ended March 31, 2012 and 2011, respectively. Our effective tax rate was 34.6% and 26.0% for the three months ended March 31, 2012 and 2011, respectively. The effective tax rate for the three months ended March 31, 2012 was higher than the effective tax rate for the same period in 2011 as a result of the expiration of the federal research tax credit as of December 31, 2011, lower earnings from non-U.S. subsidiaries that are considered indefinitely invested outside the United States as a percentage of total earnings, and the stock-based compensation expense related to the Pharmasset acquisition for which we receive no tax benefit.

The effective tax rate for the three months ended March 31, 2012 differed from the U.S. federal statutory rate of 35% due primarily to tax credits and certain operating earnings from non-U.S. subsidiaries that are considered indefinitely invested outside the United States, partially offset by state taxes and the stock-based compensation expense related to the Pharmasset acquisition for which we receive no tax benefit. We do not provide for U.S. income taxes on undistributed earnings of our foreign operations that are intended to be permanently reinvested.

Liquidity and Capital Resources

We believe that our existing capital resources, supplemented by our cash flows generated from operating activities, will be adequate to satisfy our capital needs for the foreseeable future. Our cash, cash equivalents and marketable securities decreased significantly in the first quarter of 2012 as we completed our acquisition of Pharmasset in January 2012. Below is additional information describing our cash, cash equivalents and marketable securities, working capital and primary sources and uses of cash.

The following table summarizes our cash, cash equivalents and marketable securities, our working capital and our cash flow activities as of the end of, and for each of, the periods presented (in thousands):



	March 31, 2012		December 31, 2011
Cash, cash equivalents and marketable securities	$	1,500,110	$	9,963,972
Working capital	$	1,638,628	$	11,403,995



	Three Months Ended March 31,
	2012			2011
Cash provided by (used in):
Operating activities	$	452,969		$	820,542
Investing activities	$	(10,743,116	)	$	(300,381	)
Financing activities	$	1,855,590		$	485,110

Cash, Cash Equivalents and Marketable Securities

Cash, cash equivalents and marketable securities totaled $1.50 billion at March 31, 2012 , a decrease of $8.46 billion or 85% from December 31, 2011 . This decrease was primarily attributable to the acquisition of Pharmasset for $11.1 billion and the repayment of our bank debt for $350.0 million. This decrease was partially offset by cash provided by operations of $453.0 million , which included the impact of the $193.9 million stock-based compensation expense related to Pharmasset, and net proceeds of $2.14 billion from the issuance of bank debt in connection with our acquisition of Pharmasset.

Working Capital

Working capital was $1.64 billion at March 31, 2012 . The decrease of $9.77 billion from December 31, 2011 was primarily attributable to:


•	a decrease of $11.1 billion in cash due to the Pharmasset acquisition; and


•	an increase of $1.35 billion related to the current portion of the bank debt incurred to finance the Pharmasset acquisition as we expect to repay the majority of our bank debt within the next year.

Cash Provided by Operating Activities

Cash provided by operating activities of $453.0 million for the three months ended March 31, 2012 primarily related to net income of $437.5 million , adjusted for non-cash items such as $66.2 million of depreciation and amortization expenses, $48.7 million of non-cash stock-based compensation expenses and $51.4 million of deferred income taxes. This was partially offset by $159.5 million of net cash outflow related to changes in operating assets and liabilities and $23.3 million of excess tax benefits from stock option exercises which we reclassified to cash provided by financing activities.

Cash provided by operating activities of $820.5 million for the three months ended March 31, 2011 primarily related to net income of $647.3 million , adjusted for non-cash items such as $80.9 million of depreciation and amortization expenses, $49.5 million of stock-based compensation expenses, $12.1 million of tax benefits from employee stock plans and $31.7 million of net cash inflow related to changes in operating assets and liabilities. This was partially offset by $14.3 million of excess tax benefits from stock option exercises which we reclassified to cash provided by financing activities.

Cash Used in Investing Activities

Cash used in investing activities for the three months ended March 31, 2012 was $10.74 billion , consisting primarily of $10.75 billion used in our acquisition of Pharmasset, net of the stock-based compensation expense and cash acquired.

Cash used in investing activities for the three months ended March 31, 2011 was $300.4 million , consisting of a net use of $64.4 million in purchases of marketable securities, $221.1 million used in our acquisition of Arresto Biosciences, Inc. and $14.9 million of capital expenditures.

Cash Provided by Financing Activities

Cash provided by financing activities for the three months ended March 31, 2012 was $1.86 billion , driven primarily by net proceeds of $2.14 billion from the issuance of bank debt in conjunction with the Pharmasset acquisition and $132.5 million in proceeds from issuances of common stock under our employee stock plans. The cash proceeds were partially offset by the $350.0 million used to repay bank debt during the quarter.

Cash provided by financing activities for the three months ended March 31, 2011 was $485.1 million , driven primarily by the $987.4 million of net proceeds from the issuance of our April 2021 Notes, partially offset by $548.7 million in cash used to repurchase our common stock under our stock repurchase program, including commissions.

During the first quarter of 2012, we made $20.8 million in purchases under our January 2011, three-year, $5.00 billion stock repurchase program. As of March 31, 2012, the remaining authorized amount of stock repurchases that may be made under the repurchase program was $4.58 billion .

Long-Term Debt

The following table summarizes the carrying amount of our borrowings under various financing arrangements (in thousands):



Type of Borrowing	Description	Issue Date	Due Date	Interest Rate	March 31, 2012		December 31, 2011
Convertible Senior	May 2013 Notes	April 2006	May 2013	0.625%	$	614,791	$	607,036
Convertible Senior	May 2014 Notes	July 2010	May 2014	1.00%	1,188,594		1,181,525
Convertible Senior	May 2016 Notes	July 2010	May 2016	1.625%	1,138,538		1,132,293
Senior Unsecured	April 2021 Notes	March 2011	April 2021	4.50%	992,280		992,066
Senior Unsecured	December 2014 Notes	December 2011	December 2014	2.40%	749,157		749,078
Senior Unsecured	December 2016 Notes	December 2011	December 2016	3.05%	698,921		698,864
Senior Unsecured	December 2021 Notes	December 2011	December 2021	4.40%	1,247,212		1,247,138
Senior Unsecured	December 2041 Notes	December 2011	December 2041	5.65%	997,753		997,734
Term Loan Facility	Term Loan	January 2012	January 2015	Variable	650,000		—
Credit Facility	Short-Term Revolver	January 2012	January 2013	Variable	400,000		—
Credit Facility	Five-Year Revolver	January 2012	January 2017	Variable	750,000		—
Total debt, net					$	9,427,246	$	7,605,734
Less current portion					1,350,000		—
Total long-term debt, net					$	8,077,246	$	7,605,734

The Five-Year Revolving Credit Agreement was inclusive of a $30.0 million swing line loan sub-facility and a $25.0 million letter of credit sub-facility. As of March 31, 2012, we had $4.0 million in letters of credit outstanding under the Five-Year Revolving Credit Agreement. The Five-Year Revolving Credit Agreement will terminate and all unpaid borrowings thereunder shall be due and payable in January 2017. The Short-Term Revolving Credit Agreement will terminate and all unpaid borrowings thereunder shall be due and payable in January 2013; however, at our request, the maturity date may be extended until January 2014. All principal repayment installments under the Term Loan Credit Agreement will be due and payable as specified in the Term Loan Credit Agreement, with the final principal installment payment due and payable in January 2015.

Off Balance Sheet Arrangements

We do not have any off balance sheet arrangements.

Recent Accounting Pronouncements

There have been no new accounting pronouncements during the three months ended March 31, 2012 that are of significance to us.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in our market risk during the three months ended March 31, 2012 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2011 .

In January 2012, we entered into credit agreements in connection with our acquisition of Pharmasset, that are subject to variable interest rates that create an exposure to interest rate risk similar to that disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.

In March 2012, the Greek government restructured its sovereign debt which impacted all holders of Greek bonds. As a result, we recorded a $40.1 million loss related to the debt restructuring as part of other income (expense), net on our Condensed Consolidated Statement of Income and exchanged the Greek government-issued bonds for new securities, which we liquidated during the first quarter of 2012.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation as of March 31, 2012 was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our “disclosure controls and procedures,” which are defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to the company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at March 31, 2012 .

Changes in Internal Control over Financial Reporting

Our management, including our Chief Executive Officer and Chief Financial Officer, has evaluated any changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2012 , and has concluded that there was no change during such quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met and, as set forth above, our Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.


PART II.	OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

In November 2008, we received notice that Teva Pharmaceuticals (Teva) submitted an abbreviated new drug application (ANDA) to the U.S. Food and Drug Administration (FDA) requesting permission to manufacture and market a generic version of Truvada. In the notice, Teva alleges that two of the patents associated with emtricitabine, owned by Emory University and licensed exclusively to us, are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In December 2008, we filed a lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents. In March 2009, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Atripla. In the notice, Teva challenged the same two emtricitabine patents. In May 2009, we filed another lawsuit in U.S. District Court in New York against Teva for infringement of the two emtricitabine patents, and this lawsuit was consolidated with the lawsuit filed in December 2008. In January 2010, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Viread. In the notice, Teva challenged four of the tenofovir disoproxil fumarate patents protecting Viread. In January 2010, we also received notices from Teva amending its ANDAs related to Atripla and Truvada. In the notice related to Atripla, Teva challenged four patents related to tenofovir disoproxil fumarate, two additional patents related to emtricitabine and two patents related to efavirenz. In the notice related to Truvada, Teva challenged four patents related to tenofovir disoproxil fumarate and two additional patents related to emtricitabine. In March 2010, we filed a lawsuit against Teva for infringement of the four Viread patents and two additional emtricitabine patents. In March 2010, Bristol-Myers Squibb Company and Merck & Co., Inc. filed a lawsuit against Teva for infringement of the patents related to efavirenz.

In June 2010, we received notice that Lupin Limited (Lupin) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Ranexa. In the notice, Lupin alleges that ten of the patents associated with Ranexa are invalid, unenforceable and/or will not be infringed by Lupin's manufacture, use or sale of a generic version of Ranexa. In July 2010, we filed a lawsuit in U.S. District Court in New Jersey against Lupin for infringement of our patents for Ranexa.

In August 2010, we received notice that Sigmapharm Labs (Sigmapharm) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Hepsera. In the notice, Sigmapharm alleges that both of the patents associated with Hepsera are invalid, unenforceable and/or will not be infringed by Sigmapharm's manufacture, use or sale of a generic version of Hepsera. In September 2010, we filed a lawsuit in U.S. District Court in New Jersey against Sigmapharm for infringement of our patents for Hepsera. One of the patents challenged by Sigmapharm is also being challenged by Ranbaxy, Inc. (Ranbaxy) pursuant to a notice received in October 2010. The patent challenged by Ranbaxy expires in July 2018. We have the option of filing a lawsuit at any time if we believe that Ranbaxy is infringing our patent.

In February 2011, we received notice that Natco Pharma Ltd. (Natco) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Tamiflu. In the notice, Natco alleges that one of the patents associated with Tamiflu is invalid, unenforceable and/or will not be infringed by Natco's manufacture, use or sale of a generic version of Tamiflu. In March 2011, we and F. Hoffmann-La Roche Ltd. filed a lawsuit in U.S. District Court in New Jersey against Natco for infringement of the patent associated with Tamiflu.

In November 2011, we received notice that Teva submitted an Abbreviated New Drug Submission (ANDS) to the Canadian Ministry of Health requesting permission to manufacture and market a generic version of our Truvada product. In the notice, Teva alleges that three of the patents associated with Truvada are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In January 2012, we filed a lawsuit in Canadian Federal Court against Teva seeking an order of prohibition against approval of this ANDS.

In December 2011, we received notice that Teva submitted an ANDS to the Canadian Ministry of Health requesting permission to manufacture and market a generic version of our Atripla product. In the notice, Teva alleges that three of our patents associated with Atripla and two of Merck's patents associated with Atripla are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Atripla. In February 2012, we filed a lawsuit in Canadian Federal Court against Teva seeking an order of prohibition against approval of this ANDS.

We cannot predict the ultimate outcome of these actions, and we may spend significant resources enforcing and defending these patents. If we are unsuccessful in these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated and the patent protection for Atripla, Truvada, Viread, Hepsera, Ranexa and Tamiflu in the United States and Atripla and Truvada in Canada could be substantially shortened. Further, if all of the patents covering those products are invalidated, the FDA could approve the requests to manufacture a generic version of such products prior to the expiration date of those patents.

In February 2012, we received notice that the United States Patent and Trademark Office (PTO) had declared an Interference between our U.S. Patent No. 7,429,572 and Idenix Pharmaceuticals, Inc.'s (Idenix) pending patent application no. 12/131868. An Interference is an administrative proceeding before the PTO designed to determine who was the first to invent the subject matter being claimed by both parties. Our patent covers metabolites of GS-7977 and RG7128. Idenix is attempting to claim a class of compounds including these metabolites in their pending patent application. In the course of this proceeding, both parties will be called upon to submit evidence of the date they conceived of their respective inventions. The Interference will determine who was first to invent these compounds and therefore who is entitled to the patent claiming these compounds. If the administrative law judge determines Idenix is entitled to these patent claims and it is determined that we have infringed those claims, we may be required to obtain a license from, and pay royalties to, Idenix to commercialize GS-7977 and RG7128. Any determination by the judge can be challenged by either party in U.S. Federal court.

In March 2012, Jeremy Clark, a former employee of Pharmasset, Inc. (Pharmasset), which we acquired in January 2012, and inventor of U.S. Patent No. 7,429,572, filed a demand for arbitration in his lawsuit against Pharmasset and Dr. Raymond Schinazi. Mr. Clark initially filed the lawsuit against Pharmasset and Dr. Schinazi in Alabama District Court in February 2008 seeking to void the assignment provision in his employment agreement and assert ownership of U.S. Patent No. 7,429,572, which claims metabolites of GS-7977 and RG7128. In December 2008, the court ordered a stay of the litigation pending the outcome of an arbitration proceeding required by Mr. Clark's employment agreement. Instead of proceeding with arbitration, Mr. Clark filed two additional lawsuits in September 2009 and June 2010, both of which were subsequently dismissed by the court. In September 2010, Mr. Clark filed a motion seeking reconsideration of the court's December 2008 order which was denied by the court. In December 2011, Mr. Clark filed a motion to appoint a special prosecutor. In February 2012, the Alabama court issued an order requiring Mr. Clark to enter arbitration or risk dismissal of his case. Mr. Clark filed a demand for arbitration in March 2012. We cannot predict the outcome of the arbitration. If Mr. Clark is ultimately found to be the owner of the 7,429,572 patent and it is determined that we have infringed the patent, we may be required to obtain a license from and pay royalties to Mr. Clark to commercialize GS-7977 and RG7128.


ITEM 1A.	RISK FACTORS

In evaluating our business, you should carefully consider the following risks in addition to the other information in this Quarterly Report on Form 10-Q. A manifestation of 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 the following risks to be a complete statement of all the potential risks or uncertainties that we face.

The public announcement of data from clinical studies evaluating GS-7977 in HCV-infected patients is likely to cause significant volatility in our stock price.

During 2012, we expect to receive a significant amount of data from clinical trials evaluating GS-7977, an investigational nucleotide analog we acquired through our purchase of Pharmasset Inc. (Pharmasset), in HCV-infected individuals across genotypes. In February 2012, we announced that the majority of HCV genotype 1 patients with a prior “null” response to an interferon-containing regimen enrolled in an arm of our ongoing ELECTRON study experienced viral relapse within four weeks of completing 12 weeks of treatment with GS-7977 plus ribavirin. These data indicate that treatment of genotype 1 patients classified as null responders with GS-7977 plus ribavirin for 12 weeks will not be sufficient to cure their disease. In April 2012, we announced data from our ELECTRON and QUANTUM studies, which found that 88 and 59 percent of genotype 1 patients and treatment-naïve patients, respectively, taking a 12-week all-oral regimen of GS-7977 and ribavirin achieved a sustained viral response four weeks after the completion of a 12-week course of therapy. We also announced data from our ATOMIC study, which found that 90 percent of genotype 1 HCV patients achieved a sustained viral response 12 weeks after a 12-week course of therapy with GS-7977 plus ribavirin and interferon. Also in April 2012, Bristol-Myers Squibb Company (BMS) also announced data from its Phase 2 study evaluating GS-7977 in combination with daclatasvir with and without ribavirin in genotype 1 and genotype 2 and 3 treatment-naïve infected patients. The data showed that 100% of genotype 1 and 91% of genotype 2 and 3 patients achieved a sustained viral response four weeks after the completion of a 24-week course of treatment. We have also begun Phase 3 studies evaluating GS-7977 and ribavirin in genotype 2 and 3 infected patients. We also expect to initiate additional studies with GS-7977 in combination with other oral antivirals in our pipeline in the second quarter.

Regulatory authorities require that patients have a sustained viral response for 12 weeks after the cessation of therapy to be considered “cured” of the disease. If data from any of the Phase 2 or 3 studies indicate that a smaller than anticipated number of patients achieved a sustained viral response at 12 or 24 weeks post-treatment, our stock price may decline significantly. Such results could also delay the approval of GS-7977 for the treatment of genotype 1, 2 and/or 3 patients, which could delay and/or reduce revenues expected from the sale of GS-7977. Developing drugs for the treatment of HCV is a competitive field and a significant number of drugs are under development. Depending on the length of any delay in our development of GS-7977, other companies who are developing competitive compounds in HCV may be able to progress their development timelines and potentially bring compounds to market before GS-7977 or shortly thereafter.

A substantial portion of our revenues is derived from sales of our HIV products, particularly Atripla and Truvada. If we are unable to maintain or continue increasing sales of these products, our results of operations may be adversely affected.

We are currently dependent on sales of our products for the treatment of HIV infection, particularly Atripla and Truvada, to support our existing operations. Our HIV products contain tenofovir disoproxil fumarate and/or emtricitabine, which belong to 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 were unable to maintain or 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 (R&D) efforts. For the quarter ended March 31, 2012, Atripla and Truvada product sales together were $1.65 billion , or 72% of our total revenues. We may not be able to sustain or increase the growth rate of sales of our HIV products, especially Atripla and Truvada, for any number of reasons including, but not limited to, the following:

•

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 or contraindications on our labels, narrow our approved indications or halt sales of a product, each of which could reduce our revenues.


•	As our HIV products mature, private insurers and government payers 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 and market share may be affected.

If we fail to commercialize new products or expand the indications for existing products, our prospects for future revenues may be adversely affected.

If we do not introduce new products to market or increase sales of our existing products, we will not be able to increase or maintain our total revenues and continue to expand our R&D efforts. Drug development is inherently risky and many product candidates fail during the drug development process. For example, in January 2011, we announced our decision to terminate our Phase 3 clinical trial of ambrisentan in patients with idiopathic pulmonary fibrosis (IPF). In April 2011, we announced our decision to terminate our Phase 3 clinical trial of aztreonam for inhalation solution for the treatment of cystic fibrosis (CF) in patients with Burkholderia spp . In addition, our marketing applications for our single-tablet “Quad” regimen of elvitegravir, cobicistat, tenofovir disoproxil fumarate and emtricitabine, for the treatment of HIV in treatment-naïve patients may not be approved by the FDA or other regulatory authorities. Further, even if marketing approval is granted, there may be significant limitations on its use. Further, we may be unable to file our marketing applications for elvitegravir and cobicistat in the currently anticipated timelines and marketing approval for the products may not be granted.

Our results of operations will be adversely affected by current and potential future healthcare reforms.

Legislative and regulatory changes to government prescription drug procurement and reimbursement programs occur relatively frequently in the United States and foreign jurisdictions. In March 2010, healthcare reform legislation was adopted in the United States. As a result, we are required to further rebate or discount products reimbursed or paid for by various public payers, including Medicaid and other entities eligible to purchase discounted products through the 340B Drug Pricing Program under the Public Health Service Act, such as AIDS Drug Assistance Programs (ADAPs). The discounts, rebates and fees in the legislation that impacted us include:


•	our minimum base rebate amount owed to Medicaid on products reimbursed by Medicaid has been increased by 8%, and the discounts or rebates we owe to ADAPs and other Public Health Service entities which reimburse or purchase our products have also been increased by 8%;


•	we are required to extend rebates to patients receiving our products through Medicaid managed care organizations;


•	we are required to provide a 50% discount on products sold to patients while they are in the Medicare Part D “donut hole;” and


•	we, along with other pharmaceutical manufacturers of branded drug products, are required to pay a portion of a new industry fee (also known as the pharmaceutical excise tax) of $2.5 billion for 2011, calculated based on select government sales during the 2009 calendar year as a percentage of total industry government sales.

The amount of the industry fee imposed on the pharmaceutical industry as a whole will increase to $2.8 billion in 2012, with additional increases over the next several years to a peak of $4.1 billion per year in 2018, and then decrease to $2.8 billion in 2019 and thereafter. As the amount of the industry fee increases, our product sales increase and drug patents expire on major drugs, such as Lipitor, we expect our portion of the excise tax to increase as well. We estimate the pharmaceutical excise tax to be $80-$100 million in 2012, compared to $50 million in 2011. The excise tax is not tax deductible.

Further, even though not addressed in the healthcare reform legislation, discussions continue at the federal level on legislation that would either allow or require the federal government to directly negotiate price concessions from pharmaceutical manufacturers or set minimum requirements for Medicare Part D pricing.

In addition, state Medicaid programs could request additional supplemental rebates on our products as a result of the increase in the federal base Medicaid rebate. Private insurers could also use the enactment of these increased rebates to exert pricing pressure on our products, and to the extent that private insurers or managed care programs follow Medicaid coverage and payment developments, the adverse effects may be magnified by private insurers adopting lower payment schedules.

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 payer reimbursement for the cost of such products and related treatments. Government health administration authorities, private health insurers and other organizations generally provide reimbursement. In the United States, the European Union and other significant or potentially significant markets for our products and product candidates, government authorities and third-party payers are increasingly attempting to limit or regulate the price of medical products and services, particularly for new and innovative products and therapies, which has resulted in lower average selling prices.

A significant portion of our sales of the majority of our products are subject to significant discounts from list price and rebate obligations. In the United States, state ADAPs, which purchase a significant portion of our HIV products, rely on federal, supplemental federal and state funding to help fund purchases of our products. Given the current economic downturn, we have

experienced a shift in our payer mix as patients previously covered by private insurance move to public reimbursement programs that require rebates or discounts from us or as patients previously covered by one public reimbursement program move to another public reimbursement program that requires greater rebates or discounts from us. As a result of this shift, revenue growth may be lower than prescription growth. If federal and state funds are not available in amounts sufficient to support the number of patients that rely on ADAPs, sales of our HIV products could be negatively impacted which would reduce our revenues. For example, during the first quarter of 2011, the state budget crisis in Florida led to a temporary movement of patients who were previously covered by Florida's ADAP into industry-supported patient assistance programs. Due to the insufficiency of federal and state funds and as many states have reduced eligibility criteria, we have also seen and may continue to see an increase in the number of patients on state ADAP wait lists. Until these patients are enrolled in ADAP, they generally receive product from industry-supported patient assistance programs or are unable to access treatment. The increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the European Union will put additional pressure on product pricing, reimbursement and usage, which may adversely affect our product sales and profitability. These pressures can arise from rules and practices of managed care groups, judicial decisions and governmental laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical reimbursement policies and pricing in general.

In Europe, the success of our commercialized products, and any other product candidates we may develop, will depend largely on obtaining and maintaining government reimbursement, because in many European countries patients are unlikely to use prescription drugs that are not reimbursed by their governments. In addition, negotiating prices with governmental authorities can delay commercialization by 12 months or more. Reimbursement policies may adversely affect our ability to sell our products on a profitable basis. In many international markets, governments control the prices of prescription pharmaceuticals, including through the implementation of reference pricing, price cuts, rebates, revenue-related taxes and profit control, and they expect prices of prescription pharmaceuticals to decline over the life of the product or as volumes increase.

Recently, many countries in the European Union have increased the amount of discounts required on our products, and these efforts could continue as countries attempt to manage healthcare expenditures, especially in light of the severe fiscal and debt crises experienced by many countries in the European Union. For example, in June 2010, Spain imposed an incremental discount on all branded drugs and in August 2010, Germany increased the rebate on prescription pharmaceuticals. As generic drugs come to market, we may face price decreases for our products in some countries in the European Union.

Approximately 42% of our product sales occur outside the United States, and currency fluctuations and hedging expenses may cause our earnings to fluctuate, which could adversely affect our stock price.

Because a significant percentage of our product sales are denominated in foreign currencies, primarily the Euro, we face exposure to adverse movements in foreign currency exchange rates. When the U.S. dollar strengthens against these foreign currencies, the relative value of sales made in the respective foreign currency decreases. Conversely, when the U.S. dollar weakens against these currencies, the relative value of such sales increases. Overall, we are a net receiver of foreign currencies and, therefore, benefit from a weaker U.S. dollar and are adversely affected by a stronger U.S. dollar relative to those foreign currencies in which we transact significant amounts of business.

We use foreign currency exchange forward and option contracts to hedge a percentage of our forecasted international sales, primarily those denominated in the Euro. We also hedge certain monetary assets and liabilities denominated in foreign currencies, which reduces but does not eliminate our exposure to currency fluctuations between the date a transaction is recorded and the date that cash is collected or paid. We cannot predict future fluctuations in the foreign currency exchange rate of the U.S. dollar. If the U.S. dollar appreciates significantly against certain currencies and our hedging program does not sufficiently offset the effects of such appreciation, our results of operations will be adversely affected and our stock price may decline.

Additionally, the expenses that we recognize in relation to our hedging activities can also cause our earnings to fluctuate. The level of hedging expenses that we recognize in a particular period is impacted by the changes in interest rate spreads between the foreign currencies that we hedge and the U.S. dollar.

Our inability to accurately estimate demand for our products, as well as sales fluctuations as a result of inventory levels held by wholesalers, pharmacies and non-retail customers make it difficult for us to accurately forecast sales and may cause our earnings to fluctuate, which could adversely affect our financial results and our stock price.

In the quarter ended March 31, 2012, approximately 84% of our product sales in the United States were to three wholesalers, Cardinal Health, Inc., McKesson Corp. and AmerisourceBergen Corp. The U.S. wholesalers with whom we have entered into inventory management agreements make estimates to determine end user demand and may not be completely effective in matching their inventory levels to actual end user demand. As a result, changes in inventory levels held by those wholesalers can cause our operating results to fluctuate unexpectedly if our sales to these wholesalers do not match end user

demand. In addition, inventory is held at retail pharmacies and other non-wholesale locations with whom we have no inventory management agreements and no control over buying patterns. Adverse changes in economic conditions or other factors may cause retail pharmacies to reduce their inventories of our products, which would reduce their orders from wholesalers and, consequently, the wholesalers' orders from us, even if end user demand has not changed. For example, during the fourth quarter of 2010, our wholesalers increased their inventory levels for our antiviral products. In the first quarter of 2011, our wholesalers drew down on their inventory such that inventory levels for our antiviral products moved to the lower end of the contractual boundaries set by our inventory management agreements. As inventory in the distribution channel fluctuates from quarter to quarter, we may continue to see fluctuations in our earnings and a mismatch between prescription demand for our products and our revenues.

In addition, the non-retail sector in the United States, which includes government institutions, including state ADAPs, correctional facilities and large health maintenance organizations, tends to be even less consistent in terms of buying patterns and often causes quarter over quarter fluctuations that do not necessarily mirror patient demand. For example, in the first quarter of 2012, we observed large non-retail purchases by a number of state ADAPs. We believe such purchases were driven by the grant cycle for federal ADAP funds rather than being completely demand-driven, and therefore such purchases could be lower in the second quarter of 2012. Federal and state budget pressures, as well as the annual grant cycles for federal and state ADAP funds, may cause ADAP purchasing patterns to not reflect patient demand. As a result, we expect to continue to experience fluctuations in the purchasing patterns of our non-retail customers which may result in fluctuations in our product sales, revenues and earnings in the future.

In light of the global economic downturn and budget crises faced by many European countries, we have observed variations in purchasing patterns induced by cost containment measures in Europe. We believe these measures have caused some purchasers to reduce inventory of our products in the distribution channels, and in some cases, even at the patient level, which has decreased our revenues and caused fluctuations in our product sales and earnings. We may continue to see this trend in the future.

We face significant competition.

We face significant competition from large pharmaceutical and biotechnology companies, most of whom 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 the joint venture established by GlaxoSmithKline Inc. (GSK) and Pfizer Inc. (Pfizer) which markets fixed-dose combination products that compete with Atripla, Truvada and Complera/Eviplera. For example, lamivudine, marketed by this joint venture, is competitive with emtricitabine, the active pharmaceutical ingredient of Emtriva and a component of Atripla, Truvada and Complera/Eviplera.

We also face competition from generic HIV products. In May 2010, the compound patent covering Epivir (lamivudine) itself expired in the United States, and generic lamivudine is now available in the United States, Spain and Portugal, and recently received pricing approval in Italy. We expect that generic versions of lamivudine will be launched in other countries within the European Union. In May 2011, a generic version of Combivir (lamivudine and zidovudine) was approved and was recently launched in the United States. In addition, in late 2011, generic tenofovir also became available in Turkey, which resulted in an increase in the rebate for Viread in Turkey.

For Viread and Hepsera for treatment of chronic hepatitis B, we compete primarily with products produced by GSK, BMS and Novartis Pharmaceuticals Corporation (Novartis) in the United States, the European Union and China. For AmBisome, we compete primarily with products produced by Merck & Co., Inc. (Merck) and Pfizer. In addition, we are aware of at least three lipid formulations that claim similarity to AmBisome becoming available outside of the United States, including the possible entry of such formulations in Greece and Taiwan. These formulations may reduce market demand for AmBisome. Furthermore, the manufacture of lipid formulations of amphotericin B is very complex and if any of these formulations are found to be unsafe, sales of AmBisome may be negatively impacted by association. Letairis competes directly with a product produced by Actelion Pharmaceuticals US, Inc. and indirectly with pulmonary arterial hypertension products from United Therapeutics Corporation and Pfizer. Ranexa competes predominantly with generic compounds from three distinct classes of drugs, beta-blockers, calcium channel blockers and long-acting nitrates for the treatment of chronic angina in the United States. Cayston competes with a product marketed by Novartis. Tamiflu competes with products sold by GSK and generic competitors.

In addition, a number of companies are pursuing the development of technologies which are competitive with our existing products or research programs. These competing companies include specialized pharmaceutical firms and large pharmaceutical companies acting either independently or together with other pharmaceutical companies. Furthermore, academic institutions, government agencies and other public and private organizations conducting research may seek patent protection and may establish collaborative arrangements for competitive products or programs.

If significant safety issues arise for our marketed products or our product candidates, our future sales may be reduced, which would adversely affect our results of operations.

The data supporting the marketing approvals for our products and forming the basis for the safety warnings in our product labels were obtained in controlled clinical trials of limited duration and, in some cases, from post-approval use. As our products are used over longer periods of time by many patients with underlying health problems, taking numerous other medicines, we expect to continue to find new issues such as safety, resistance or drug interaction issues, which may require us to provide additional warnings or contraindications on our labels or narrow our approved indications, each of which could reduce the market acceptance of these products.

Our product Letairis, which was approved by the FDA in June 2007, is a member of a class of compounds called endothelin receptor antagonists (ERAs) which pose specific risks, including serious risks of birth defects. Because of these risks, Letairis is available only through the Letairis Education and Access Program (LEAP), a restricted distribution program intended to help physicians and patients learn about the risks associated with the product and assure appropriate use of the product. As the product is used by additional patients, we may discover new risks associated with Letairis which may result in changes to the distribution program and additional restrictions on the use of Letairis which may decrease demand for the product.

If serious safety, resistance or drug interaction issues arise with our marketed products, sales of these products could be limited or halted by us or by regulatory authorities and our results of operations would be adversely affected.

Our operations depend on compliance with complex FDA and comparable international regulations. Failure to obtain broad approvals on a timely basis or to maintain compliance could delay or halt commercialization of our products.

The products we develop must be approved for marketing and sale by regulatory authorities and, once approved, are subject to extensive regulation by the FDA, the European Medicines Agency and comparable regulatory agencies in other countries. We are continuing clinical trials for Atripla, Truvada, Viread, Hepsera, Complera/Eviplera, Emtriva, AmBisome, Letairis, Ranexa and Cayston for currently approved and additional uses. We anticipate that we will file for marketing approval in additional countries and for additional indications and products over the next several years. These products may fail to receive such marketing approvals on a timely basis, or at all.

Further, our marketed products and how we manufacture and sell these products are subject to extensive 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, including those related to promotion and manufacturing, we could be subject to penalties including fines, suspensions of regulatory approvals, product recalls, seizure of products and criminal prosecution.

On September 27, 2007, President Bush signed into law the Food and Drug Administration Amendments Act of 2007, which significantly expanded the FDA's authority, including, among other things, to:


•	require sponsors of marketed products to conduct post-approval clinical studies to assess a known serious risk, signals of serious risk or to identify an unexpected serious risk;


•	mandate labeling changes to products, at any point in a product's lifecycle, based on new safety information; and


•	require sponsors to implement a Risk Evaluation and Mitigation Strategy for a product which could include a medication guide, patient package insert, a communication plan to healthcare providers or other elements as the FDA deems are necessary to assure safe use of the drug, which could include imposing certain restrictions on the distribution or use of a product.

Failure to comply with these or other requirements, if imposed on a sponsor by the FDA, could result in significant civil monetary penalties and our operating results may be adversely affected.

The results and anticipated timelines of our clinical trials are uncertain and may not support continued development of a product pipeline, which would adversely affect our prospects for future revenue growth.

We are required to demonstrate the safety and efficacy of products that we develop for 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 product candidates fails to achieve its primary endpoint in clinical trials, if safety issues arise or if the results from our clinical trials are otherwise inadequate to support regulatory approval of our product candidates, commercialization of that product candidate could be delayed or halted. For example, in January 2011, we announced our decision to terminate our Phase 3 clinical trial of ambrisentan in patients with IPF and, in April 2011, we announced our decision to terminate our Phase 3 clinical trial of aztreonam for inhalation solution for the treatment of CF in patients with Burkholderia spp . In addition, we may also face challenges in clinical trial protocol design. If the clinical trials for any of the product candidates in our pipeline are delayed or terminated, our prospects for future revenue growth would be adversely impacted. For example, we face numerous risks and uncertainties with our product candidates, including GS-7977 for the treatment of hepatitis C; aztreonam for inhalation solution for the treatment of bronchiectasis; ranolazine for the treatment of incomplete revascularization post-percutaneous coronary intervention and type II diabetes; and GS-1101 for the treatment of chronic lymphocytic leukemia, each currently in Phase 3 clinical trials, that could prevent completion of development of these product candidates. These risks include our ability to enroll patients in clinical trials, the possibility of unfavorable results of our clinical trials, the need to modify or delay our clinical trials or to perform additional trials and the risk of failing to obtain FDA and other regulatory body approvals. As a result, our product candidates may never be successfully commercialized. Further, we may make a strategic decision to discontinue development of our product candidates if, for example, we believe commercialization will be difficult relative to other opportunities in our pipeline. If these programs and others in our pipeline cannot be completed on a timely basis or at all, then our prospects for future revenue growth may be adversely impacted. In addition, clinical trials involving our commercial products could raise new safety issues for our existing products, which could in turn decrease our revenues and harm our business.

Due to our reliance on third-party contract research organizations to conduct our clinical trials, we are unable to directly control the timing, conduct, expense and quality of our clinical trials.

We extensively outsource our clinical trial activities and usually perform only a small portion of the start-up activities in-house. We rely on independent 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, program management and bioanalytical analysis. Many important aspects of the services performed for us by the CROs are out of our direct control. If there is any dispute or disruption in our relationship with our CROs, our clinical trials may be delayed. Moreover, in our regulatory submissions, we rely on the quality and validity of the clinical work performed by third-party CROs. If any of our CROs' processes, methodologies or results were determined to be invalid or inadequate, our own clinical data and results and related regulatory approvals could be adversely impacted.

Expenses associated with clinical trials 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 very expensive. It is difficult to accurately predict or control the amount or timing of these expenses from quarter to quarter, and the FDA and/or other regulatory agencies may require more clinical testing than we originally anticipated. Uneven and unexpected spending on these programs, including on the clinical trials that will be necessary to advance GS-7977 and our other product candidates for the treatment of HCV, may cause our operating results to fluctuate from quarter to quarter, and our stock price may decline.

We depend on relationships with other companies for sales and marketing performance, development and commercialization of product candidates and revenues. Failure to maintain these relationships, poor performance by these companies or disputes with these 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 in certain territories. These include collaborations with BMS for Atripla in the United States, Europe and Canada; F. Hoffmann-La Roche Ltd. (together with Hoffmann-La Roche Inc., Roche) for Tamiflu worldwide; and GSK for ambrisentan in territories outside of the United States. In some countries, we rely on international distributors for sales of Truvada, Viread, Hepsera, Emtriva and AmBisome. 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 the risk that:


•	we are unable to control the resources our corporate partners devote to our programs or products;


•	disputes may arise with respect to the ownership of rights to technology developed with our corporate partners;


•	disagreements with our corporate partners could cause 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;


•	our 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;


•	our corporate partners with marketing rights may choose to pursue competing technologies or to devote fewer resources to the marketing of our products than they do to products of their own development; and


•	our distributors and our corporate partners may be unable to pay us, particularly in light of current economic conditions.

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 revenues from products could decline.

We also rely on collaborative relationships with major pharmaceutical companies for development and commercialization of certain product candidates. Gilead (as successor to Pharmasset) is a party to a collaboration agreement with Roche to develop PSI-6130 and its prodrugs for the treatment of chronic HCV infection. The collaborative research efforts under this agreement ended on December 31, 2006. Roche later asked Pharmasset to consider whether Roche may have contributed to the inventorship of GS-7977 and whether Pharmasset has complied with the confidentiality provisions of the collaboration agreement. Pharmasset advised us that it carefully considered the issues raised by Roche and that it believed any such issues are without merit. We have also considered these issues and reached the same conclusion. However, if Roche were to successfully assert that it contributed to the inventorship of GS-7977 and either independently develop GS-7977 or file an abbreviated new drug application (ANDA) to market GS-7977, Roche could at some point in the future market that product and begin competing against us prior to the expiration of our patents for GS-7977. Such marketing activity by Roche could materially reduce the revenues we expect to receive from the sale of GS-7977, which could adversely affect our results of operations.

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 South Korea. In November 2009, we entered into an agreement with GSK that provided GSK with exclusive commercialization rights and registration responsibilities for Viread for the treatment of chronic hepatitis B in China. In October 2010, we granted similar rights to GSK in Japan and Saudi Arabia. The success of Hepsera and Viread for the treatment of chronic hepatitis B in these territories depends almost entirely on the efforts of GSK. In this regard, GSK promotes Epivir-HBV/Zeffix, a product that competes with Hepsera and Viread for the treatment of chronic hepatitis B. Consequently, GSK's marketing strategy for Hepsera and Viread for the treatment of chronic hepatitis B may be influenced by its promotion of Epivir-HBV/Zeffix. We receive royalties from GSK equal to a percentage of GSK's net sales of Hepsera and Viread for the treatment of chronic hepatitis B 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 or Viread for the treatment of chronic hepatitis B in its territories, our potential revenues in these territories may be substantially reduced.

In addition, Cayston and Letairis are distributed through third-party specialty pharmacies, which are pharmacies specializing in the dispensing of medications for complex or chronic conditions that may require a high level of patient education and ongoing counseling. The use of specialty pharmacies requires significant coordination with our sales and marketing, medical affairs, regulatory affairs, legal and finance organizations and involves risks, including but not limited to risks that these specialty pharmacies will:


•	not provide us with accurate or timely information regarding their inventories, patient data or safety complaints;


•	not effectively sell or support Cayston or Letairis;


•	not devote the resources necessary to sell Cayston or Letairis in the volumes and within the time frames that we expect;


•	not be able to satisfy their financial obligations to us or others; or


•	cease operations.

We also rely on a third party to administer LEAP, the restricted distribution program designed to support Letairis. This third party provides information and education to prescribers and patients on the risks of Letairis, confirms insurance coverage and investigates alternative sources of reimbursement or assistance, ensures fulfillment of the risk management requirements mandated for Letairis by the FDA and coordinates and controls dispensing to patients through the

third-party specialty pharmacies. Failure of this third party or the specialty pharmacies that distribute Letairis to perform as expected may result in regulatory action from the FDA or decreased Letairis sales, either of which would harm our business.

Further, Cayston may only be taken by patients using a specific inhalation device that delivers the drug to the lungs of patients. Our ongoing distribution of Cayston is entirely reliant upon the manufacturer of that device. For example, the manufacturer could encounter other issues with regulatory agencies related to the device or be unable to supply sufficient quantities of this device. In addition, the manufacturer may not be able to provide adequate warranty support for the device after it has been distributed to patients. With respect to distribution of the drug and device to patients, we are reliant on the capabilities of specialty pharmacies. For example, the distribution channel for drug and device is complicated and requires coordination. The reimbursement approval processes associated with both drug and device are similarly complex. If the device manufacturer is unable to obtain reimbursement approval or receives approval at a lower-than-expected price, sales of Cayston may be adversely affected. Any of the previously described issues may limit the sales of Cayston, which would adversely affect our financial results.

Our success will depend to a significant degree on our ability to protect our patents and other intellectual property rights both domestically and internationally. 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.

Patents and other proprietary rights are very important to our business. 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.

If we have a properly drafted and enforceable patent, it can be more difficult for our competitors to use our technology to create competitive products and more difficult for our competitors to obtain a patent that prevents us from using technology we create. As part of our business strategy, we actively seek patent protection both in the United States and internationally and file additional patent applications, when appropriate, to cover improvements in our compounds, products and technology.

We have a number of U.S. and foreign patents, patent applications and rights to patents related to our compounds, products and technology, but we cannot be certain that issued patents will be enforceable or provide adequate protection or that pending patent applications will result in issued patents. Patent applications are confidential for a period of time before a patent is issued. 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 products. In addition, if competitors file patent applications covering our technology, we may have to participate in interference proceedings or litigation to determine the right to a patent. Litigation and interference proceedings are unpredictable and expensive, such that, even if we are ultimately successful, our results of operations may be adversely affected by such events.

From time to time, certain individuals or entities may challenge our patents. For example, in 2007, the Public Patent Foundation filed requests for re-examination with the United States Patent and Trademark Office (PTO) challenging four of our patents related to tenofovir disoproxil fumarate, which is an active ingredient in Atripla, Truvada and Viread. The PTO granted these requests and issued non-final rejections for the four patents, which is a step common in a proceeding to initiate the re-examination process. In 2008, the PTO confirmed the patentability of all four patents.

Although we were successful in responding to the PTO actions in the instance above, similar organizations may still challenge our patents in U.S. and foreign jurisdictions. For example, in April 2008, the Brazilian Health Ministry, citing the U.S. patent re-examination proceedings as grounds for rejection, requested that the Brazilian patent authority issue a decision that is not supportive of our patent application for tenofovir disoproxil fumarate in Brazil. In August 2008, an examiner in the Brazilian patent authority issued a final rejection of our fumarate salt patent application, the only patent application for tenofovir disoproxil fumarate we have filed in Brazil. We then filed an appeal within the patent authority responding to the questions raised in the rejection. In July 2009, the Brazilian patent authority again rejected the application. This was the highest level of appeal available to us within the Brazilian patent authority. We have filed a civil action in Brazilian federal court to further appeal the action of the Brazilian patent authority. Because we do not currently have a patent in Brazil, the Brazilian government will likely purchase all of its supply of tenofovir disoproxil fumarate from generic manufacturers.

As another example, under Indian civil procedure, several parties filed oppositions to the grant of our patent applications covering tenofovir disoproxil and tenofovir disoproxil fumarate. In August 2009, the Indian Patent Office announced that it had decided these actions against us and would not therefore allow the patents to be granted. We have filed an appeal within the Indian Patent Office Intellectual Property Appellate Board on both of these applications. We cannot predict the outcome of these proceedings. If we are unsuccessful in our appeal of these decisions, any further appeals will have to be pursued in the Indian court system, and may ultimately prove unsuccessful. In the meantime, any competitor is able to sell generic tenofovir disoproxil fumarate in India. In addition, if we are unsuccessful in appealing any further negative decisions by the Indian Patent Office in the Indian courts, these competitors would be able to continue to sell generic tenofovir disoproxil fumarate.

From time to time, we may become involved in disputes with inventors on our patents. For example, in March 2012, Jeremy Clark, a former employee of Pharmasset, which we acquired in January 2012, and inventor of U.S. Patent No. 7,429,572, filed a demand for arbitration in his lawsuit against Pharmasset and Dr. Raymond Schinazi. Mr. Clark initially filed the lawsuit against Pharmasset and Dr. Schinazi in February 2008 seeking to void the assignment provision in his employment agreement and assert ownership of U.S. Patent No. 7,429,572, which claims metabolites of GS-7977 and RG7128. In December 2008, the court ordered a stay of the litigation pending the outcome of an arbitration proceeding required by Mr. Clark's employment agreement. Instead of proceeding with arbitration, Mr. Clark filed two additional lawsuits in September 2009 and June 2010, both of which were subsequently dismissed by the court. In September 2010, Mr. Clark filed a motion seeking reconsideration of the court's December 2008 order which was denied by the court. In December 2011, Mr. Clark filed a motion to appoint a special prosecutor. In February 2012, the court issued an order requiring Mr. Clark to enter arbitration or risk dismissal of his case. Mr. Clark filed a demand for arbitration in March 2012. We cannot predict the outcome of the arbitration. If Mr. Clark is ultimately found to be the owner of the 7,429,572 patent and it is determined that we have infringed the patent, we may be required to obtain a license from and pay royalties to Mr. Clark to commercialize GS-7977 and RG7128.

Patents do not cover the ranolazine compound, the active ingredient of Ranexa. Instead, when it was discovered that only a sustained release formulation of ranolazine would achieve therapeutic plasma levels, patents were obtained on those formulations and the characteristic plasma levels they achieve. 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 hepatitis B, 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 some countries.

As part of the approval process of some of our products, the FDA 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 for use in making our products. Generic manufacturers have sought and may continue to seek FDA approval for a similar or identical drug through an ANDA, the application form typically used by manufacturers seeking approval of a generic drug.

For example, in November 2008, we received notice that Teva Pharmaceuticals (Teva) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Teva alleges that two of the patents associated with emtricitabine are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In December 2008, we filed a lawsuit against Teva for infringement of the two emtricitabine patents. In March 2009, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Atripla. In the notice, Teva challenged the same two emtricitabine patents. In May 2009, we filed another lawsuit against Teva for infringement of the two emtricitabine patents, and this lawsuit was consolidated with the lawsuit filed in December 2008. In January 2010, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Viread. In the notice, Teva challenged four of the tenofovir disoproxil fumarate patents protecting Viread. In January 2010, we also received notices from Teva amending its ANDAs related to Atripla and Truvada. In the notice related to Truvada, Teva challenged four patents related to tenofovir disoproxil fumarate and two additional patents related to emtricitabine. In the notice related to Atripla, Teva challenged four patents related to tenofovir disoproxil fumarate, two additional patents related to emtricitabine and two patents related to efavirenz. In March 2010, we filed a lawsuit against Teva for infringement of the four Viread patents and two additional emtricitabine patents. In March 2010, BMS and Merck filed a lawsuit against Teva for infringement of the patents related to efavirenz.

are invalid, unenforceable and/or will not be infringed by Lupin's manufacture, use or sale of a generic version of Ranexa. In July 2010, we filed a lawsuit against Lupin for infringement of our patents for Ranexa.

In August 2010, we received notice that Sigmapharm Labs (Sigmapharm) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Hepsera. In the notice, Sigmapharm alleges that both of the patents associated with Hepsera are invalid, unenforceable and/or will not be infringed by Sigmapharm's manufacture, use or sale of a generic version of Hepsera. In September 2010, we filed a lawsuit against Sigmapharm for infringement of our patents for Hepsera. One of the patents challenged by Sigmapharm is also being challenged by Ranbaxy, Inc. (Ranbaxy) pursuant to a notice received in October 2010. The patent challenged by Ranbaxy expires in July 2018. We have the option of filing a lawsuit at any time if we believe that Ranbaxy is infringing our patent.

In February 2011, we received notice that Natco Pharma Limited (Natco) submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Tamiflu. In the notice, Natco alleges that one of the patents associated with Tamiflu is invalid, unenforceable and/or will not be infringed by Natco's manufacture, use or sale of a generic version of Tamiflu. In March 2011, we and Roche filed a lawsuit against Natco for infringement of the patent associated with Tamiflu.

In November 2011, we received notice that Teva submitted an Abbreviated New Drug Submission (ANDS) to the Canadian Ministry of Health requesting permission to manufacture and market a generic version of our Truvada product. In the notice, Teva alleges that three of the patents associated with Truvada are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In January 2012, we filed a lawsuit against Teva seeking an order of prohibition against approval of this ANDS.

In December 2011, we received notice that Teva submitted an ANDS to the Canadian Ministry of Health requesting permission to manufacture and market a generic version of our Atripla product. In the notice, Teva alleges that three of our patents associated with Atripla and two of Merck's patents associated with Atripla are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Atripla. In February 2012, we filed a lawsuit against Teva seeking an order of prohibition against approval of this ANDS.

We cannot predict the ultimate outcome of these actions, and we may spend significant resources enforcing and defending these patents. If we are unsuccessful in these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated and the patent protection for Atripla, Truvada, Viread, Hepsera, Ranexa and Tamiflu in the United States or Atripla and Truvada in Canada could be substantially shortened. Further, if all of the patents covering those products are invalidated, the FDA could approve the requests to manufacture a generic version of such products prior to the expiration date of those patents.

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 these licenses or alternative technologies, we may be unable to develop or commercialize some or all of our products. For example, we are aware of a body of patents that may relate to our operation of LEAP, our restricted distribution program designed to support Letairis.

We own patents that claim GS-7977 as a chemical entity and its metabolites. However, the existence of issued patents does not guarantee our right to practice the patented technology or commercialize the patented product. Third parties may have or obtain rights to patents which they may claim could be used to prevent or attempt to prevent us from commercializing the patented product candidates obtained from the Pharmasset acquisition. For example, we are aware of patents and patent applications owned by other parties that might be alleged to cover the use of GS-7977. If these other parties are successful in obtaining valid and enforceable patents, and establishing our infringement of those patents, we could be prevented from selling GS-7977 unless we were able to obtain a license under such patents. If any license is needed it may not be available on commercially reasonable terms or at all.

In some instances, we may be required to defend our right to a patent on an invention through an Interference proceeding before the PTO. An Interference is an administrative proceeding before the PTO designed to determine who was the first to invent the subject matter being claimed by both parties. In February 2012, we received notice that the PTO had declared an Interference between our U.S. Patent No. 7,429,572 and Idenix Pharmaceuticals, Inc.'s (Idenix) pending patent application no. 12/131868. Our patent covers metabolites of GS-7977 and RG7128. Idenix is attempting to claim a class of compounds including these metabolites in their pending patent application. In the course of this proceeding, both parties will be called upon to submit evidence of the date they conceived of their respective inventions. The Interference will determine who was first to

invent these compounds and therefore who is entitled to the patent claiming these compounds. If the administrative law judge determines Idenix is entitled to these patent claims and it is determined that we have infringed those claims, we may be required to obtain a license from, and pay royalties to, Idenix to commercialize GS-7977 and RG7128. Any determination by the judge can be challenged by either party in U.S. Federal court.

Furthermore, 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.

Manufacturing problems, including at our third-party manufacturers and corporate partners, could cause inventory shortages and delay product shipments and regulatory approvals, which may adversely affect our results of operations.

In order to generate revenue from our products, we must be able to produce sufficient quantities of our products to satisfy demand. Many of our products are the result of complex manufacturing processes. The manufacturing process for pharmaceutical products is also highly regulated and regulators may shut down manufacturing facilities that they believe do not comply with regulations.

Our products are either manufactured at our own facilities or by third-party manufacturers or corporate partners. We depend on third parties to perform manufacturing activities effectively and on a timely basis for the majority of our solid dose products. In addition, Roche, either by itself or through third parties, is responsible for manufacturing Tamiflu. We, our third-party manufacturers and our corporate partners are subject to current Good Manufacturing Practices (GMP), which are extensive regulations governing manufacturing processes, stability testing, record keeping and quality standards as defined by the FDA and the European Medicines Agency. Similar regulations are in effect in other countries.

Our third-party manufacturers and corporate partners are independent entities who are subject to their own unique operational and financial risks which are out of our control. If we or any of these third-party manufacturers or corporate partners fail to perform as required, this could impair our ability to deliver our products on a timely basis or receive royalties or cause delays in our clinical trials and applications for regulatory approval. To the extent these risks materialize and affect their performance obligations to us, our financial results may be adversely affected.

In addition, we, our third-party manufacturers and our corporate partners may only be able to produce some of our products at one or a limited number of facilities and, therefore, have limited manufacturing capacity for certain products. For example, due to unexpected delays both in qualifying two new external sites and with expanding Cayston manufacturing in San Dimas, we cannot supply enough Cayston to fulfill our projected demand. In February 2012, we suspended access for patients with new prescriptions for Cayston subject to certain exceptions where specific medical need exists. Patients may use other alternative treatment options until we are able to resolve the supply shortage. As a result of our inability to manufacture sufficient Cayston to meet demand, the amount of revenues we expect to receive from the sale of Cayston will be reduced.

Our manufacturing operations are subject to routine inspections by regulatory agencies. For example, in January and February 2010, the FDA conducted a routine inspection of our San Dimas manufacturing facility, where we exclusively manufacture Cayston and AmBisome and fill and finish Macugen. At the conclusion of that inspection, the FDA issued Form 483 Inspectional Observations stating concerns over: the maintenance of aseptic processing conditions in the manufacturing suite for our AmBisome product; environmental maintenance issues in the San Dimas warehousing facility; batch sampling; and the timeliness of completion of annual product quality reports. On September 24, 2010, our San Dimas manufacturing facility received a Warning Letter from the FDA further detailing the FDA's concerns over the AmBisome manufacturing environment, including control systems and monitoring, procedures to prevent microbiological contamination and preventative cleaning and equipment maintenance. Referencing certain Viread lots, the letter also stated concerns connected with quality procedures, controls and investigation procedures, and a generalized concern over the effectiveness of the San Dimas quality unit in carrying out its responsibilities. In November and December 2010, the FDA re-inspected the San Dimas facility. The re-inspection closed with no additional Form 483 observations. In August 2011, the FDA notified us that we resolved all issues raised by the FDA in its Warning Letter.

Our ability to successfully manufacture and commercialize Cayston will depend upon our ability to manufacture in a multi-product facility.

Aztreonam, the active pharmaceutical ingredient in Cayston, is a mono-bactam Gram-negative antibiotic. We manufacture Cayston by ourselves in San Dimas, California, or through third parties, in multi-product manufacturing facilities. Historically, the FDA has permitted the manufacture of mono-bactams in multi-product manufacturing facilities; however, there can be no assurance that the FDA will continue to allow this practice. We do not currently have a single-product facility that can be dedicated to the manufacture of Cayston nor have we engaged a contract manufacturer with a single-product facility for Cayston. If the FDA prohibits the manufacture of mono-bactam antibiotics, like aztreonam, in multi-product manufacturing

facilities in the future, we may not be able to procure a single-product manufacturing facility in a timely manner, which would adversely affect our commercial supplies of Cayston and our anticipated financial results attributable to such product.

We may not be able to obtain materials or supplies necessary to conduct clinical trials or to manufacture and sell our products, which would limit our ability to generate revenues.

We need access to certain supplies and products to conduct our clinical trials and to manufacture our products. In light of the global economic downturn, we have had increased difficulty in purchasing certain of the raw materials used in our manufacturing process. If we are unable to purchase sufficient quantities of these materials or find suitable alternate materials in a timely manner, our development efforts for our product candidates may be delayed or our ability to manufacture our products would be limited, which would limit our ability to generate revenues.

Suppliers of key components and materials must be named in an NDA filed with the FDA, EMA or other regulatory authority for any product candidate for which we are seeking marketing approval, and significant delays can occur if the qualification of a new supplier is required. Even after a manufacturer is qualified by the regulatory authority, the manufacturer must continue to expend time, money and effort in the area of production and quality control to ensure full compliance with GMP. Manufacturers are subject to regular, periodic inspections by the regulatory authorities following initial approval. If, as a result of these inspections, a regulatory authority determines that the equipment, facilities, laboratories or processes do not comply with applicable regulations and conditions of product approval, the regulatory authority may suspend the manufacturing operations. If the manufacturing operations of any of the single suppliers for our products are suspended, we may be unable to generate sufficient quantities of commercial or clinical supplies of product to meet market demand, which would in turn decrease our revenues and harm our business. In addition, if delivery of material from our suppliers were interrupted for any reason, we may be unable to ship certain of our products for commercial supply or to supply our products in development for clinical trials. In addition, some of our products and the materials that we utilize in our operations are made at only one facility. For example, we manufacture AmBisome and fill and finish Macugen exclusively at our facilities in San Dimas, California. In the event of a disaster, including an earthquake, equipment failure or other difficulty, we may be unable to replace this manufacturing capacity in a timely manner and may be unable to manufacture AmBisome and Macugen to meet market needs.

Cayston is dependent on two different third-party single-source suppliers. First, aztreonam, the active pharmaceutical ingredient in aztreonam for inhalation solution, is manufactured by a single supplier at a single site. Second, it is administered to the lungs of patients through a device that is made by a single supplier at a single site. Disruptions or delays with any of these single suppliers could adversely affect our ability to supply Cayston, and we cannot be sure that alternative suppliers can be identified in a timely manner, or at all. See the Risk Factor entitled “Our ability to successfully manufacture and commercialize Cayston will depend upon our ability to manufacture in a multi-product facility.”

In addition, we depend on a single supplier for high-quality cholesterol, which is used in the manufacture of AmBisome. We also rely on a single source for the active pharmaceutical ingredient of Ranexa, Hepsera, Letairis and Vistide and for the tableting of Letairis. Astellas US LLC, which markets Lexiscan in the United States, is responsible for the commercial manufacture and supply of product in the United States and is dependent on a single supplier for the active pharmaceutical ingredient of Lexiscan. Problems with any of the single suppliers we depend on may negatively impact our development and commercialization efforts.

A significant portion of the raw materials and intermediates used to manufacture our HIV products (Atripla, Truvada, Viread, Complera/Eviplera, Emtriva) are supplied by Chinese-based companies. As a result, an international trade dispute between China and the United States or any other actions by the Chinese government that would limit or prevent Chinese companies from supplying these materials would adversely affect our ability to manufacture and supply our HIV products to meet market needs and have a material and adverse effect on our operating results.

We face credit risks from our Southern European customers that may adversely affect our results of operations.

Our European product sales to government-owned or supported customers in Southern Europe, specifically Greece, Italy, Portugal and Spain have historically been and continue to be subject to significant payment delays due to government funding and reimbursement practices. This has resulted and may continue to result in days sales outstanding being significantly higher in these countries due to the average length of time that accounts receivable remain outstanding. As of March 31, 2012, our accounts receivable in these countries totaled approximately $1.25 billion of which, $719.5 million were past due greater than 120 days and $313.3 million were past due greater than 365 days as follows (in thousands):



	March 31, 2012
	Greater than 120 days past due		Greater than 365 days past due
Italy	$	122,165	$	34,226
Spain	466,811		233,612
Portugal	114,088		43,008
Greece	16,390		2,475
Total	$	719,454	$	313,321

As a result of the fiscal and debt crises in these countries, the number of days our invoices are past due has continued to increase in line with that being experienced by other pharmaceutical companies that are also selling directly to hospitals. Historically, receivable balances with certain publicly-owned hospitals accumulate over a period of time and are then subsequently settled as large lump sum payments. If significant changes were to occur in the reimbursement practices of these 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. For example, in 2011, the Greek government settled substantially all of its outstanding receivables subject to the bond settlement with zero-coupon bonds that traded at a discount to face value. In March 2012, the Greek government restructured its sovereign debt which impacted all holders of Greek bonds. As a result, we recorded a $40.1 million loss related to the debt restructuring as part of other income (expense), net on our Condensed Consolidated Statement of Income and exchanged the Greek government-issued bonds for new securities, which we liquidated during the first quarter of 2012. In Spain, Italy and Portugal, we are actively pursuing collection of the overdue receivables and taking action as necessary to enforce our legal right to payment.

Our revenues and gross margin 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 or other countries from lower price markets. There have been cases in which other 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 Truvada and Viread, which we have agreed to make available at substantially reduced prices to 134 countries participating in our Gilead Access Program, or Atripla, which Merck distributes at substantially reduced prices to HIV infected patients in developing countries under our 2006 agreement, our revenues would be adversely affected. In addition, we have established partnerships with thirteen Indian generic manufacturers to distribute high-quality, low-cost generic versions of tenofovir disoproxil fumarate to 112 developing world countries, including India. If generic versions of our medications under these licenses are then re-exported to the United States, Europe or other markets outside of these 112 countries, our revenues would be adversely affected.

In addition, purchases of our products in countries where our selling prices are relatively low for resale in countries in which our selling prices are relatively high may adversely impact our revenues and gross margin and may cause our sales to fluctuate from quarter to quarter. For example, in the European Union, we are required to permit products purchased in one country to be sold in another country. Purchases of our products in countries where our selling prices are relatively low for resale in countries in which our selling prices are relatively high affect the inventory level held by our wholesalers and can cause the relative sales levels in the various countries to fluctuate from quarter to quarter and not reflect the actual consumer demand in any given quarter. These quarterly fluctuations may impact our earnings, which could adversely affect our stock price and harm our business.

Expensive litigation and government investigations have reduced and may continue to reduce our earnings.

In November 2008, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Truvada. In the notice, Teva alleges that two of the patents associated with emtricitabine are

invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In December 2008, we filed a lawsuit against Teva for infringement of the two emtricitabine patents. In March 2009, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Atripla. In the notice, Teva challenged the same two emtricitabine patents. In May 2009, we filed another lawsuit against Teva for infringement of the two emtricitabine patents, and this lawsuit was consolidated with the lawsuit filed in December 2008. In January 2010, we received notice that Teva submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Viread. In the notice, Teva challenged four of the tenofovir disoproxil fumarate patents protecting Viread. In January 2010, we also received notices from Teva amending its ANDAs related to Atripla and Truvada. In the notice related to Truvada, Teva challenged four patents related to tenofovir disoproxil fumarate and two additional patents related to emtricitabine. In the notice related to Atripla, Teva challenged four patents related to tenofovir disoproxil fumarate, two additional patents related to emtricitabine and two patents related to efavirenz. In March 2010, we filed a lawsuit against Teva for infringement of the four Viread patents and two additional emtricitabine patents. In March 2010, BMS and Merck filed a lawsuit against Teva for infringement of the patents related to efavirenz.

In June 2010, we received notice that Lupin submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Ranexa. In the notice, Lupin alleges that ten of the patents associated with Ranexa are invalid, unenforceable and/or will not be infringed by Lupin's manufacture, use or sale of a generic version of Ranexa. In July 2010, we filed a lawsuit against Lupin for infringement of our patents for Ranexa.

In August 2010, we received notice that Sigmapharm submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Hepsera. In the notice, Sigmapharm alleges that both of the patents associated with Hepsera are invalid, unenforceable and/or will not be infringed by Sigmapharm's manufacture, use or sale of a generic version of Hepsera. In September 2010, we filed a lawsuit against Sigmapharm for infringement of our patents for Hepsera. One of the patents challenged by Sigmapharm is also being challenged by Ranbaxy pursuant to a notice received in October 2010. The patent challenged by Ranbaxy expires in July 2018. We are considering our options for enforcing our patent.

In February 2011, we received notice that Natco submitted an ANDA to the FDA requesting permission to manufacture and market a generic version of Tamiflu. In the notice, Natco alleges that one of the patents associated with Tamiflu is invalid, unenforceable and/or will not be infringed by Natco's manufacture, use or sale of a generic version of Tamiflu. In March 2011, we and Roche filed a lawsuit against Natco for infringement of the patent associated with Tamiflu.

In November 2011, we received notice that Teva submitted an Abbreviated New Drug Submission (ANDS) to the Canadian Ministry of Health requesting permission to manufacture and market a generic version of our Truvada product. In the notice, Teva alleges that three of the patents associated with Truvada are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Truvada. In January 2012, we filed a lawsuit against Teva seeking an order of prohibition against approval of this ANDS.

In December 2011, we received notice that Teva submitted an ANDS to the Canadian Ministry of Health requesting permission to manufacture and market a generic version of our Atripla product. In the notice, Teva alleges that three of our patents associated with Atripla and two of Merck's patents associated with Atripla are invalid, unenforceable and/or will not be infringed by Teva's manufacture, use or sale of a generic version of Atripla. In February 2012, we filed a lawsuit against Teva seeking an order of prohibition against approval of this ANDS.

We cannot predict the ultimate outcome of these actions, and we may spend significant resources enforcing and defending these patents. If we are unsuccessful in these lawsuits, some or all of our original claims in the patents may be narrowed or invalidated and the patent protection for Atripla, Truvada, Viread, Hepsera, Ranexa and Tamiflu in the United States and Atripla and Viread in Canada could be substantially shortened. Further, if all of the patents covering those products are invalidated, the FDA could approve the requests to manufacture a generic version of such products prior to the expiration date of those patents.

In addition, in June 2011, we received a subpoena from the United States Attorney's Office for the Northern District of California requesting documents related to the manufacture, and related quality and distribution practices, of Atripla, Emtriva, Hepsera, Letairis, Truvada, Viread and Complera.

In February 2012, we received notice that the PTO had declared an Interference between our U.S. Patent No. 7,429,572 and Idenix's pending patent application no. 12/131868. Our patent covers metabolites of GS-7977 and RG7128. Idenix is attempting to claim a class of compounds including these metabolites in their pending patent application. In the course of this proceeding, both parties will be called upon to submit evidence of the date they conceived of their respective inventions. The Interference will determine who was first to invent these compounds and therefore who is entitled to the patent claiming these compounds. If the administrative law judge determines Idenix is entitled to these patent claims and it is determined that we have infringed those claims, we may be required to obtain a license from, and pay royalties to, Idenix to commercialize GS-7977 and RG7128. Any determination by the judge can be challenged by either party in U.S. Federal court.

In February 2008, Jeremy Clark, a former employee of Pharmasset, filed a lawsuit against Pharmasset and Dr. Schinazi seeking to void the assignment provision in his employment agreement and assert ownership of U.S. Patent No. 7,429,572. In December 2008, the court ordered a stay of the litigation pending the outcome of an arbitration proceeding required by Mr. Clark's employment agreement. Instead of proceeding with arbitration, Mr. Clark filed two additional lawsuits in September 2009 and June 2010, both of which were subsequently dismissed by the court. In September 2010, Mr. Clark filed a motion seeking reconsideration of the court's December 2008 order which was denied by the court. In December 2011, Mr. Clark filed a motion to appoint a special prosecutor. In February 2012, the court issued an order requiring Mr. Clark to enter arbitration or risk dismissal of his case. Mr. Clark filed a demand for arbitration in March 2012. We cannot predict the outcome of the arbitration. If Mr. Clark is ultimately found to be the owner of the 7,429,572 patent and it is determined that we have infringed the patent, we may be required to obtain a license from and pay royalties to Mr. Clark to commercialize GS-7977 and RG7128.

The outcome of the lawsuits above, or any other lawsuits that may be brought against us, the investigation or any other investigations that may be initiated, are inherently uncertain, and adverse developments or outcomes can result in significant expenses, monetary damages, penalties or injunctive relief against us that could significantly reduce our earnings and cash flows and harm our business.

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 interested groups have suggested that pharmaceutical companies should make drugs for HIV infection available at low cost. Alternatively, governments in those developing countries could require that we grant compulsory licenses to allow competitors to manufacture and sell their own versions of our products, thereby reducing our product sales. For example, in the past, certain offices of the government of Brazil have expressed concern over the affordability of our HIV products and declared that they were considering issuing compulsory licenses to permit the manufacture of otherwise patented products for HIV infection, including Viread. In July 2009, the Brazilian patent authority rejected our patent application for tenofovir disoproxil fumarate, the active pharmaceutical ingredient in Viread. This was the highest level of appeal available to us within the Brazilian patent authority. Because we do not currently have a patent in Brazil, the Brazilian government will likely purchase all of its supply of tenofovir disoproxil fumarate from generic manufacturers.

In addition, concerns over the cost and availability of Tamiflu related to a potential avian flu pandemic and H1N1 influenza generated international discussions over compulsory licensing of our Tamiflu patents. For example, the Canadian government considered allowing Canadian manufacturers to manufacture and export the active ingredient in Tamiflu to eligible developing and least developed countries under Canada's Access to Medicines Regime. Furthermore, Roche issued voluntary licenses to permit third-party manufacturing of Tamiflu. For example, Roche granted a sublicense to Shanghai Pharmaceutical (Group) Co., Ltd. for China and a sublicense to India's Hetero Drugs Limited for India and certain developing countries. Should one or more compulsory licenses be issued permitting generic manufacturing to override our Tamiflu patents, or should Roche issue additional voluntary licenses to permit third-party manufacturing of Tamiflu, those developments could reduce royalties we receive from Roche's sales of Tamiflu. Certain countries do not permit enforcement of our patents, and third-party 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.

Changes in royalty revenue disproportionately affect our pre-tax income, earnings per share and gross margins.

A portion of our revenues is derived from royalty revenues recognized from collaboration agreements with third parties. Royalty revenues impact our pre-tax income, earnings per share and gross margins disproportionately more than their contributions to our revenues. Any increase or decrease to our royalty revenue could be material and could significantly impact our operating results. For example, we recognized $75.5 million in royalty revenue for the year ended December 31, 2011 related to royalties received from sales of Tamiflu by F. Hoffmann-La Roche Ltd (together with Hoffmann-La Roche Inc., Roche). Although such royalty revenue represented approximately 1% of our total revenues in 2011, it represented approximately 2% of our pre-tax income during the period. Roche's Tamiflu sales have unpredictable variability due to their strong relationship with global pandemic planning efforts. Tamiflu royalties increased sharply in 2009 and the first quarter of 2010 primarily as a result of pandemic planning initiatives worldwide. Tamiflu royalties since the second quarter of 2010 have decreased due to declining pandemic planning initiatives worldwide.

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 product candidates in development, involve substantial risk of product liability claims. These claims may be made directly by consumers, healthcare

providers, pharmaceutical companies or others. In recent years, coverage and availability of cost-effective product liability insurance has decreased, so we may be unable to maintain sufficient coverage for product liabilities that may arise. In addition, the cost to defend lawsuits or pay damages for product liability claims may exceed our coverage. If we are unable to maintain adequate coverage or if claims exceed our coverage, our financial condition and our ability to clinically test our product candidates and market our products will be adversely impacted. In addition, negative publicity associated with any claims, regardless of their merit, may decrease the future demand for our products and impair our financial condition.

Business disruptions from natural or man-made disasters may harm our future revenues.

Our worldwide operations could be subject to business interruptions stemming from natural or man-made disasters for which we may be self-insured. Our corporate headquarters and Fremont locations, which together house a majority of our research and development activities, and our San Dimas and Oceanside manufacturing facilities are located in California, a seismically active region. As we do not carry earthquake insurance and significant recovery time could be required to resume operations, our financial condition and operating results could be materially adversely affected in the event of a major earthquake.

Changes in our effective income tax rate could reduce our earnings.

Various factors may have favorable or unfavorable effects on our income tax rate. These factors include, but are not limited to, interpretations of existing tax laws, changes in tax laws and rates, our portion of the non-deductible pharmaceutical excise tax, the accounting for stock options and other share-based payments, mergers and acquisitions, future levels of R&D spending, changes in accounting standards, changes in the mix of earnings in the various tax jurisdictions in which we operate, changes in overall levels of pre-tax earnings and resolution of federal, state and foreign income tax audits. The impact on our income tax provision resulting from the above mentioned factors may be significant and could have a negative impact on our net income.

Our income tax returns are audited by federal, state and foreign tax authorities. We are currently under examination by the Internal Revenue Service for the 2008 and 2009 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. Resolution of one or more of these exposures in any reporting period could have a material impact on the results of operations for that period.

If we fail to attract and retain highly qualified personnel, we may be unable to successfully develop new product candidates, conduct our clinical trials and commercialize our product candidates.

Our future success will depend in large part on our continued ability to attract and retain highly qualified scientific, technical and management personnel, as well as personnel with expertise in clinical testing, governmental regulation and commercialization. We face competition for personnel from other companies, universities, public and private research institutions, government entities and other organizations. Competition for qualified personnel in the biopharmaceutical field is intense, and there is a limited pool of qualified potential employees to recruit. We may not be able to attract and retain quality personnel on acceptable terms. If we are unsuccessful in our recruitment and retention efforts, our business may be harmed.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

During the first quarter of 2012, we made $20.8 million in purchases under our January 2011, three-year, $5.00 billion stock repurchase program. As of March 31, 2012 , we had repurchased $423.8 million of our common stock under the January 2011 stock repurchase program with a remaining authorized amount of $4.58 billion available for repurchases under this program.

The table below summarizes our stock repurchase activity for the three months ended March 31, 2012 (in thousands, except per share amounts):



	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs		Maximum Fair Value of Shares that May Yet Be Purchased Under the Program
January 1 – January 31, 2012	13		$	47.22	—		$	4,596,954
February 1 – February 29, 2012	478		$	54.10	218		$	4,585,086
March 1 – March 31, 2012	313		$	47.37	185		$	4,576,191
Total	804	⁽¹⁾	$	51.37	403	⁽¹⁾


⁽¹⁾	The difference between the total number of shares purchased and the total number of shares purchased as part of publicly announced programs is due to shares of common stock withheld by us from employee restricted stock awards in order to satisfy our applicable tax withholding obligations.


ITEM 3.	DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.	MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.	OTHER INFORMATION

Not applicable.


ITEM 6.	EXHIBITS



Exhibit Footnote	Exhibit Number	Description of Document
√(1)	2.1	Agreement and Plan of Merger among Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc., dated as of March 12, 2009

†(2)	2.5	Agreement and Plan of Merger among Registrant, Merger Sub and Pharmasset, Inc., dated as of November 21, 2011

(3)	3.1	Restated Certificate of Incorporation of Registrant, as amended through May 12, 2011

(4)	3.2	Certificate of Designation of the Series A Junior Participating Preferred Stock of Registrant

(5)	3.3	Certificate of Amendment to Certificate of Designation of Series A Junior Participating Preferred Stock of Registrant

(3)	3.4	Amended and Restated Bylaws of Registrant, as amended and restated on May 12, 2011

	4.1	Reference is made to Exhibit 3.1, Exhibit 3.2, Exhibit 3.3 and Exhibit 3.4

(6)	4.2	Amended and Restated Rights Agreement between Registrant and ChaseMellon Shareholder Services, LLC, dated October 21, 1999

(7)	4.3	First Amendment to Amended and Restated Rights Agreement between Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated October 29, 2003

(8)	4.4	Second Amendment to Amended and Restated Rights Agreement between Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated May 11, 2006

(9)	4.5	Indenture related to the Convertible Senior Notes due 2013, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.625% Convertible Senior Note due 2013), dated April 25, 2006

(10)	4.6	Indenture related to the Convertible Senior Notes due 2014, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.00% Convertible Senior Note due 2014), dated July 30, 2010

(10)	4.7	Indenture related to the Convertible Senior Notes due 2016, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.625% Convertible Senior Note due 2016), dated July 30, 2010

(11)	4.8	Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee

(11)	4.9	First Supplemental Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including form of Senior Notes)

(12)	4.10	Second Supplemental Indenture related to Senior Notes, dated as of December 13, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2014 Note, Form of 2016 Note, Form of 2021 Note, Form of 2041 Note)

(13)	10.1	Confirmation of OTC Convertible Note Hedge related to 2013 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

(13)	10.2	Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2013

(14)	10.3	Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.

(14)	10.4	Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

(14)	10.5	Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.



Exhibit Footnote	Exhibit Number	Description of Document
(14)	10.6	Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

(14)	10.7	Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

(14)	10.8	Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

(14)	10.9	Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

(14)	10.10	Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

(15)	10.11	Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.12	Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.13	Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.14	Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.15	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

(15)	10.16	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

(15)	10.17	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

(15)	10.18	Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

(15)	10.19	Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.20	Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.21	Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.22	Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.23	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.24	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.25	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.26	Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(16)	10.27	5-Year Revolving Credit Facility Credit Agreement among Registrant and Gilead Biopharmaceutics Ireland Corporation, as Borrowers, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012



Exhibit Footnote	Exhibit Number	Description of Document
(16)	10.28	Short-Term Revolving Credit Facility Credit Agreement, among Registrant and Gilead Biopharmaceutics Ireland Corporation, as Borrowers, Bank of America, N.A., as Administrative Agent, certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012

(16)	10.29	Term Loan Facility Credit Agreement, among Registrant, as Borrower, Bank of America, N.A., certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012

(16)	10.30	Parent Guaranty Agreement (5-Year Revolving Credit Facility), dated as of January 12, 2012, by Registrant

(16)	10.31	Parent Guaranty Agreement (Short-Term Revolving Credit Facility), dated as of January 12, 2012, by Registrant

*(17)	10.32	Gilead Sciences, Inc. 1991 Stock Option Plan, as amended through January 29, 2003

*(18)	10.33	Form of option agreements used under the 1991 Stock Option Plan

*(17)	10.34	Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan, as amended through January 30, 2002

*(19)	10.35	Form of option agreement used under the Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan

*(20)	10.36	Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended through May 6, 2009

*(21)	10.37	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants prior to February 2008)

*(22)	10.38	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants made February 2008 through April 2009)

*(23)	10.39	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in May 2009)

*(24)	10.40	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in February 2010)

*(25)	10.41	Form of employee stock option agreement used under 2004 Equity Incentive Plan (for 2011 and subsequent year grants)

*(22)	10.42	Form of non-employee director stock option agreement used under 2004 Equity Incentive Plan (for grants prior to 2008)

*(22)	10.43	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for initial grants made in 2008)

*(22)	10.44	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2008)

*(23)	10.45	Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants commencing in May 2009)

*(23)	10.46	Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2009)

*(23)	10.47	Form of restricted stock award agreement used under 2004 Equity Incentive Plan (for annual grants to certain non-employee directors)

*(23)	10.48	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2009)



Exhibit Footnote	Exhibit Number	Description of Document
*(24)	10.49	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2010)

*(25)	10.50	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2011)

*	10.51	Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2012)

*(26)	10.52	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made prior to May 2009)

*(23)	10.53	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers commencing in May 2009)

*(27)	10.54	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in November 2009)

*(25)	10.55	Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in 2011)

*(24)	10.56	Gilead Sciences, Inc. Employee Stock Purchase Plan, amended and restated on November 3, 2009

*(28)	10.57	Gilead Sciences, Inc. International Employee Stock Purchase Plan, adopted November 3, 2009

*(29)	10.58	Gilead Sciences, Inc. Deferred Compensation Plan-Basic Plan Document

*(29)	10.59	Gilead Sciences, Inc. Deferred Compensation Plan-Adoption Agreement

*(29)	10.60	Addendum to the Gilead Sciences, Inc. Deferred Compensation Plan

*(30)	10.61	Gilead Sciences, Inc. 2005 Deferred Compensation Plan, as amended and restated on October 23, 2008

*	10.62	Gilead Sciences, Inc. Severance Plan, as amended on January 26, 2012

*(21)	10.63	Gilead Sciences, Inc. Corporate Bonus Plan

*(3)	10.64	Amended and Restated Gilead Sciences, Inc. Code Section 162(m) Bonus Plan

*(31)	10.65	2012 Base Salaries for the Named Executive Officers

*(32)	10.66	Offer Letter dated April 16, 2008 between Registrant and Robin Washington

*(18)	10.67	Form of Indemnity Agreement entered into between Registrant and its directors and executive officers

*(18)	10.68	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

*(24)	10.69	Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised in September 2006)

(33)	10.70	Amended and Restated Collaboration Agreement by and among Registrant, Gilead Holdings, LLC, Bristol-Myers Squibb Company, E.R. Squibb & Sons, L.L.C., and Bristol-Myers Squibb & Gilead Sciences, LLC, dated September 28, 2006

(22)	10.71	Commercialization Agreement by and between Gilead Sciences Limited and Bristol-Myers Squibb Company, dated December 10, 2007

(34)	10.72	Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement), the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement) and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)

(35)	10.73	Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000 amending the 1991 License Agreement and the December 1992 License Agreement



Exhibit Footnote	Exhibit Number	Description of Document

(33)	10.74	Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006 amending the October 1992 License Agreement and the December 1992 License Agreement

(33)	10.75	Development and License Agreement among Registrant and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., dated September 27, 1996

(36)	10.76	First Amendment and Supplement dated November 15, 2005 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(37)	10.77	Second Amendment dated December 22, 2011 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(38)	10.78	Exclusive License Agreement between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

(39)	10.79	Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

(39)	10.80	Amended and Restated License Agreement between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005.

(40)	10.81	License Agreement between Japan Tobacco Inc. and Registrant, dated March 22, 2005

(41)	10.82	First Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 19, 2005

(41)	10.83	Second Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 17, 2010

(41)	10.84	Third Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(41)	10.85	Fourth Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(42)	10.86	License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Deutschland Holding GmbH dated October 8, 2001

(42)	10.87	License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated March 27, 1996

(43)	10.88	First Amendment to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated July 3, 1997

(43)	10.89	Amendment No. 2 to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated November 30. 1999

(44)	10.90	Amendment No. 4 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated June 20, 2006

(37)	10.91	Amendment No. 5 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated December 22, 2011

(45)	10.92	License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Tibotec Pharmaceuticals, dated July 16, 2009

(41)	10.93	Second Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Tibotec Pharmaceuticals, dated July 1, 2011

(46)	10.94	Master Clinical and Commercial Supply Agreement between Gilead World Markets, Limited, Registrant and Patheon Inc., dated January 1, 2003

(39)	10.95	Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama), Ltd., dated July 17, 2003



Exhibit Footnote	Exhibit Number	Description of Document
(47)	10.96	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated May 10, 2007

(30)	10.97	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated December 5, 2008

(25)	10.98	Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated February 3. 2011

(48)	10.99	Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and Ampac Fine Chemicals LLC, dated November 3, 2010

(36)	10.100	Restated and Amended Toll Manufacturing Agreement between Gilead Sciences Limited, Registrant and Nycomed GmbH (formerly ALTANA Pharma Oranienburg GmbH), dated November 7, 2005

(13)	10.101	Emtricitabine Manufacturing Supply Agreement between Gilead Sciences Limited and Evonik Degussa GmbH (formerly known as Degussa AG), dated June 6, 2006

(14)	10.102	Amendment No. 1 to Emtricitabine Manufacturing Supply Agreement between Gilead Sciences Limited and Evonik Degussa GmbH (formerly known as Degussa AG), dated April 30, 2010

(30)	10.103	Purchase and Sale Agreement and Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated October 23, 2008

	31.1	Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	31.2	Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	32.1**	Certifications of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)

	101***	The following materials from Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Other Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.


(1)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on March 12, 2009, and incorporated herein by reference.


(2)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on November 25, 2011, and incorporated herein by reference.


(3)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 17, 2011, and incorporated herein by reference.


(4)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on November 22, 1994, and incorporated herein by reference.


(5)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 11, 2006, and incorporated herein by reference.


(6)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on October 22, 1999, and incorporated herein by reference.


(7)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on October 31, 2003, and incorporated herein by reference.


(8)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-135412) filed on June 28, 2006, and incorporated herein by reference.


(9)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 25, 2006, and incorporated herein by reference.


(10)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on August 2, 2010, and incorporated herein by reference.


(11)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 1, 2011, and incorporated herein by reference.


(12)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on December 13, 2011, and incorporated herein by reference.


(13)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(14)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, and incorporated herein by reference.


(15)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, and incorporated herein by reference.


(16)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on January 17, 2012, and incorporated herein by reference.


(17)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-102912) filed on January 31, 2003, and incorporated herein by reference.


(18)	Filed as an exhibit to Registrant's Registration Statement on Form S-1 (No. 33-55680), as amended, and incorporated herein by reference.


(19)	Filed as an exhibit to Registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998, and incorporated herein by reference.


(20)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 11, 2009, and incorporated herein by reference.


(21)	Filed as an exhibit to Registrant's Current Report on Form 8-K/A filed on February 22, 2006, and incorporated herein by reference.


(22)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.


(23)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.


(24)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference. [update reference to 10-Q]


(25)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and incorporated herein by reference.


(26)	Filed as an exhibit to Registrant's Current Report on Form 8-K first filed on December 19, 2007, and incorporated herein by reference.


(27)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, and incorporated herein by reference.


(28)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-163871) filed on December 21, 2009, and incorporated herein by reference.


(29)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, and incorporated herein by reference.


(30)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and incorporated herein by reference.


(31)	Information is included in Registrant's Current Report on Form 8-K filed on February 1, 2012, and incorporated herein by reference.


(32)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference.


(33)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and incorporated herein by reference.


(34)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and incorporated herein by reference.


(35)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and incorporated herein by reference.


(36)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and incorporated herein by reference.


(37)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and incorporated herein by reference.


(38)	Filed as an exhibit to Triangle Pharmaceuticals, Inc.'s Quarterly Report on Form 10-Q/A filed on November 3, 1999, and incorporated herein by reference.


(39)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by reference.


(40)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated herein by reference.


(41)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.


(42)	Filed as an exhibit to Myogen, Inc.'s Registration Statement on Form S-1 (No. 333-108301), as amended, originally filed on August 28, 2003, and incorporated herein by reference.


(43)	Filed as an exhibit to CV Therapeutics, Inc.'s Registration Statement on Form S-3 (No. 333-59318), as amended, originally filed on April 20, 2001, and incorporated herein by reference.


(44)	Filed as an exhibit to CV Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(45)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, and incorporated herein by reference.


(46)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and incorporated herein by reference.


(47)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on August 7, 2007, and incorporated herein by reference.


(48)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and incorporated herein by reference.

√

The Agreement and Plan of Merger (the Merger Agreement) contains representations and warranties of Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc. made solely to each other as of specific dates. Those representations and warranties were made solely for purposes of the Merger Agreement and may be subject to important qualifications and limitations agreed to by Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a standard of materiality provided for in the Merger Agreement and have been used for the purpose of allocating risk among Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc. rather than establishing matters as facts.

†

The Agreement and Plan of Merger (the Pharmasset Merger Agreement) contains representations and warranties of Registrant, Merger Sub and Pharmasset, Inc. made solely to each other as of specific dates. Those representations and warranties were made solely for purposes of the Pharmasset Merger Agreement and may be subject to important qualifications and limitations agreed to by Registrant, Merger Sub and Pharmasset, Inc.. Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a standard of materiality provided for in the Pharmasset Merger Agreement and have been used for the purpose of allocating risk among Registrant, Merger Sub and Pharmasset, Inc. rather than establishing matters as facts.


*	Management contract or compensatory plan or arrangement.

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.


***	XBRL information is filed herewith.


+	Certain confidential portions of this Exhibit were omitted by means of marking such portions with an asterisk (the Mark). This Exhibit has been filed separately with the Secretary of the SEC without the Mark pursuant to Registrant's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		GILEAD SCIENCES, INC.
		(Registrant)

Date:	May 4, 2012	/s/ J OHN C. M ARTIN
		John C. Martin, Ph.D. Chairman and Chief Executive Officer (Principal Executive Officer)

Date:	May 4, 2012	/s/ R OBIN L. W ASHINGTON
		Robin L. Washington Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit Index



Exhibit Footnote		Exhibit Number	Description of Document
√ (1)	2.1		Agreement and Plan of Merger among Registrant, Apex Merger Sub, Inc. and CV Therapeutics, Inc., dated as of March 12, 2009

†(2)	2.5		Agreement and Plan of Merger among Registrant, Merger Sub and Pharmasset, Inc., dated as of November 21, 2011

(3)	3.1		Restated Certificate of Incorporation of Registrant, as amended through May 12, 2011

(4)	3.2		Certificate of Designation of the Series A Junior Participating Preferred Stock of Registrant

(5)	3.3		Certificate of Amendment to Certificate of Designation of Series A Junior Participating Preferred Stock of Registrant

(3)	3.4		Amended and Restated Bylaws of Registrant, as amended and restated on May 12, 2011

	4.1		Reference is made to Exhibit 3.1, Exhibit 3.2, Exhibit 3.3 and Exhibit 3.4

(6)	4.2		Amended and Restated Rights Agreement between Registrant and ChaseMellon Shareholder Services, LLC, dated October 21, 1999

(7)	4.3		First Amendment to Amended and Restated Rights Agreement between Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated October 29, 2003

(8)	4.4		Second Amendment to Amended and Restated Rights Agreement between Registrant and Mellon Investor Services, LLC (formerly known as ChaseMellon Shareholder Services, LLC), dated May 11, 2006

(9)	4.5		Indenture related to the Convertible Senior Notes due 2013, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 0.625% Convertible Senior Note due 2013), dated April 25, 2006

(10)	4.6		Indenture related to the Convertible Senior Notes due 2014, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.00% Convertible Senior Note due 2014), dated July 30, 2010

(10)	4.7		Indenture related to the Convertible Senior Notes due 2016, between Registrant and Wells Fargo Bank, National Association, as trustee (including form of 1.625% Convertible Senior Note due 2016), dated July 30, 2010

(11)	4.8		Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee

(11)	4.9		First Supplemental Indenture related to Senior Notes, dated as of March 30, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including form of Senior Notes)

(12)	4.10		Second Supplemental Indenture related to Senior Notes, dated as of December 13, 2011, between Registrant and Wells Fargo, National Association, as Trustee (including Form of 2014 Note, Form of 2016 Note, Form of 2021 Note, Form of 2041 Note)

(13)	10.1		Confirmation of OTC Convertible Note Hedge related to 2013 Notes, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A.

(13)	10.2		Confirmation of OTC Warrant Transaction, dated April 19, 2006, as amended and restated as of April 24, 2006, between Registrant and Bank of America, N.A. for warrants expiring in 2013

(14)	10.3		Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.

(14)	10.4		Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

(14)	10.5		Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and Goldman, Sachs & Co.



Exhibit Footnote		Exhibit Number	Description of Document
(14)	10.6		Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association

(14)	10.7		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

(14)	10.8		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

(14)	10.9		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

(14)	10.10		Confirmation of OTC Warrant Transaction, dated July 26, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

(15)	10.11		Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.12		Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.13		Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.14		Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.15		Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2014

(15)	10.16		Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2014

(15)	10.17		Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and Goldman, Sachs & Co. for warrants expiring in 2016

(15)	10.18		Confirmation of OTC Additional Warrant Transaction, dated August 5, 2010, between Registrant and JPMorgan Chase Bank, National Association for warrants expiring in 2016

(15)	10.19		Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.20		Amendment to Confirmation of OTC Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.21		Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.22		Amendment to Confirmation of OTC Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.23		Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.24		Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2014 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(15)	10.25		Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and Goldman, Sachs & Co.

(15)	10.26		Amendment to Confirmation of OTC Additional Convertible Note Hedge related to 2016 Notes, dated August 30, 2010, between Registrant and JPMorgan Chase Bank, National Association

(16)	10.27		5-Year Revolving Credit Facility Credit Agreement among Registrant and Gilead Biopharmaceutics Ireland Corporation, as Borrowers, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012



Exhibit Footnote		Exhibit Number	Description of Document
(16)	10.28		Short-Term Revolving Credit Facility Credit Agreement, among Registrant and Gilead Biopharmaceutics Ireland Corporation, as Borrowers, Bank of America, N.A., as Administrative Agent, certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012

(16)	10.29		Term Loan Facility Credit Agreement, among Registrant, as Borrower, Bank of America, N.A., certain other lenders parties thereto, Barclays Capital, as Syndication Agent, and Goldman Sachs Bank USA, JPMorgan Chase Bank, N.A., Royal Bank of Canada and Wells Fargo Bank, N.A., as Co-Documentation Agents, dated as of January 12, 2012

(16)	10.30		Parent Guaranty Agreement (5-Year Revolving Credit Facility), dated as of January 12, 2012, by Registrant

(16)	10.31		Parent Guaranty Agreement (Short-Term Revolving Credit Facility), dated as of January 12, 2012, by Registrant

*(17)	10.32		Gilead Sciences, Inc. 1991 Stock Option Plan, as amended through January 29, 2003

*(18)	10.33		Form of option agreements used under the 1991 Stock Option Plan

*(17)	10.34		Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan, as amended through January 30, 2002

*(19)	10.35		Form of option agreement used under the Gilead Sciences, Inc. 1995 Non-Employee Directors' Stock Option Plan

*(20)	10.36		Gilead Sciences, Inc. 2004 Equity Incentive Plan, as amended through May 6, 2009

*(21)	10.37		Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants prior to February 2008)

*(22)	10.38		Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants made February 2008 through April 2009)

*(23)	10.39		Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in May 2009)

*(24)	10.40		Form of employee stock option agreement used under 2004 Equity Incentive Plan (for grants commencing in February 2010)

*(25)	10.41		Form of employee stock option agreement used under 2004 Equity Incentive Plan (for 2011 and subsequent year grants)

*(22)	10.42		Form of non-employee director stock option agreement used under 2004 Equity Incentive Plan (for grants prior to 2008)

*(22)	10.43		Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for initial grants made in 2008)

*(22)	10.44		Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants made in May 2008)

*(23)	10.45		Form of non-employee director option agreement used under 2004 Equity Incentive Plan (for annual grants commencing in May 2009)

*(23)	10.46		Form of restricted stock unit issuance agreement used under 2004 Equity Incentive Plan (for annual grants to non-employee directors commencing in May 2009)

*(23)	10.47		Form of restricted stock award agreement used under 2004 Equity Incentive Plan (for annual grants to certain non-employee directors)

*(23)	10.48		Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2009)

*(24)	10.49		Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2010)



Exhibit Footnote		Exhibit Number	Description of Document
*(25)	10.50		Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2011)

*	10.51		Form of performance share award agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made in 2012)

*(26)	10.52		Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers made prior to May 2009)

*(23)	10.53		Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (for grants to certain executive officers commencing in May 2009)

*(27)	10.54		Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in November 2009)

*(25)	10.55		Form of restricted stock unit issuance agreement used under the 2004 Equity Incentive Plan (service-based vesting for certain executive officers commencing in 2011)

*(24)	10.56		Gilead Sciences, Inc. Employee Stock Purchase Plan, amended and restated on November 3, 2009

*(28)	10.57		Gilead Sciences, Inc. International Employee Stock Purchase Plan, adopted November 3, 2009

*(29)	10.58		Gilead Sciences, Inc. Deferred Compensation Plan-Basic Plan Document

*(29)	10.59		Gilead Sciences, Inc. Deferred Compensation Plan-Adoption Agreement

*(29)	10.60		Addendum to the Gilead Sciences, Inc. Deferred Compensation Plan

*(30)	10.61		Gilead Sciences, Inc. 2005 Deferred Compensation Plan, as amended and restated on October 23, 2008

*	10.62		Gilead Sciences, Inc. Severance Plan, as amended on January 26, 2012

*(21)	10.63		Gilead Sciences, Inc. Corporate Bonus Plan

*(3)	10.64		Amended and Restated Gilead Sciences, Inc. Code Section 162(m) Bonus Plan

*(31)	10.65		2012 Base Salaries for the Named Executive Officers

*(32)	10.66		Offer Letter dated April 16, 2008 between Registrant and Robin Washington

*(18)	10.67		Form of Indemnity Agreement entered into between Registrant and its directors and executive officers

*(18)	10.68		Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees

*(24)	10.69		Form of Employee Proprietary Information and Invention Agreement entered into between Registrant and certain of its officers and key employees (revised in September 2006)

(33)	10.70		Amended and Restated Collaboration Agreement by and among Registrant, Gilead Holdings, LLC, Bristol-Myers Squibb Company, E.R. Squibb & Sons, L.L.C., and Bristol-Myers Squibb & Gilead Sciences, LLC, dated September 28, 2006

(22)	10.71		Commercialization Agreement by and between Gilead Sciences Limited and Bristol-Myers Squibb Company, dated December 10, 2007

(34)	10.72		Amendment Agreement, dated October 25, 1993, between Registrant, the Institute of Organic Chemistry and Biochemistry (IOCB) and Rega Stichting v.z.w. (REGA), together with the following exhibits: the License Agreement, dated December 15, 1991, between Registrant, IOCB and REGA (the 1991 License Agreement), the License Agreement, dated October 15, 1992, between Registrant, IOCB and REGA (the October 1992 License Agreement) and the License Agreement, dated December 1, 1992, between Registrant, IOCB and REGA (the December 1992 License Agreement)

(35)	10.73		Amendment Agreement between Registrant and IOCB/REGA, dated December 27, 2000 amending the 1991 License Agreement and the December 1992 License Agreement

(33)	10.74		Sixth Amendment Agreement to the License Agreement, between IOCB/REGA and Registrant, dated August 18, 2006 amending the October 1992 License Agreement and the December 1992 License Agreement



Exhibit Footnote		Exhibit Number	Description of Document
(33)	10.75		Development and License Agreement among Registrant and F. Hoffmann-La Roche Ltd and Hoffmann-La Roche Inc., dated September 27, 1996

(36)	10.76		First Amendment and Supplement dated November 15, 2005 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(37)	10.77		Second Amendment dated December 22, 2011 to the Development and Licensing Agreement between Registrant, F. Hoffmann-La Roche Ltd and Hoffman-La Roche Inc. dated September 27, 1996

(38)	10.78		Exclusive License Agreement between Registrant (as successor to Triangle Pharmaceuticals, Inc.), Glaxo Group Limited, The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory University, dated May 6, 1999

(39)	10.79		Royalty Sale Agreement by and among Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 18, 2005

(39)	10.80		Amended and Restated License Agreement between Registrant, Emory University and Investors Trust & Custodial Services (Ireland) Limited, solely in its capacity as Trustee of Royalty Pharma, dated July 21, 2005.

(40)	10.81		License Agreement between Japan Tobacco Inc. and Registrant, dated March 22, 2005

(41)	10.82		First Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 19, 2005

(41)	10.83		Second Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated May 17, 2010

(41)	10.84		Third Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(41)	10.85		Fourth Amendment to License Agreement between Japan Tobacco Inc. and Registrant, dated July 5, 2011

(42)	10.86		License Agreement between Registrant (as successor to Myogen, Inc.) and Abbott Deutschland Holding GmbH dated October 8, 2001

(42)	10.87		License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated March 27, 1996

(43)	10.88		First Amendment to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated July 3, 1997

(43)	10.89		Amendment No. 2 to License Agreement between Registrant (as successor to CV Therapeutics, Inc.) and Syntex (U.S.A.) Inc., dated November 30. 1999

(44)	10.90		Amendment No. 4 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated June 20, 2006

(37)	10.91		Amendment No. 5 to License Agreement with Registrant (as successor to CV Therapeutics, Inc.) and Roche Palo Alto LLC (successor in interest by merger to Syntex (U.S.A.) Inc.), dated December 22, 2011

(45)	10.92		License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Tibotec Pharmaceuticals, dated July 16, 2009

(41)	10.93		Second Amendment to License and Collaboration Agreement by and among Registrant, Gilead Sciences Limited and Tibotec Pharmaceuticals, dated July 1, 2011

(46)	10.94		Master Clinical and Commercial Supply Agreement between Gilead World Markets, Limited, Registrant and Patheon Inc., dated January 1, 2003

(39)	10.95		Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama), Ltd., dated July 17, 2003

(47)	10.96		Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated May 10, 2007

(30)	10.97		Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated December 5, 2008

(25)	10.98		Addendum to Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and PharmaChem Technologies (Grand Bahama) Ltd., dated February 3. 2011



Exhibit Footnote		Exhibit Number	Description of Document
(48)	10.99		Tenofovir Disoproxil Fumarate Manufacturing Supply Agreement by and between Gilead Sciences Limited and Ampac Fine Chemicals LLC, dated November 3, 2010

(36)	10.100		Restated and Amended Toll Manufacturing Agreement between Gilead Sciences Limited, Registrant and Nycomed GmbH (formerly ALTANA Pharma Oranienburg GmbH), dated November 7, 2005

(13)	10.101		Emtricitabine Manufacturing Supply Agreement between Gilead Sciences Limited and Evonik Degussa GmbH (formerly known as Degussa AG), dated June 6, 2006

(14)	10.102		Amendment No. 1 to Emtricitabine Manufacturing Supply Agreement between Gilead Sciences Limited and Evonik Degussa GmbH (formerly known as Degussa AG), dated April 30, 2010

(30)	10.103		Purchase and Sale Agreement and Escrow Instructions between Electronics for Imaging, Inc. and Registrant, dated October 23, 2008

	31.1		Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	31.2		Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

	32.1**		Certifications of Chief Executive Officer and Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)

	101***		The following materials from Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Income, (iii) Condensed Consolidated Statements of Other Comprehensive Income, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Condensed Consolidated Financial Statements.


(1)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on March 12, 2009, and incorporated herein by reference.


(2)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on November 25, 2011, and incorporated herein by reference.


(3)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 17, 2011, and incorporated herein by reference.


(4)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on November 22, 1994, and incorporated herein by reference.


(5)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 11, 2006, and incorporated herein by reference.


(6)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on October 22, 1999, and incorporated herein by reference.


(7)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on October 31, 2003, and incorporated herein by reference.


(8)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-135412) filed on June 28, 2006, and incorporated herein by reference.


(9)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 25, 2006, and incorporated herein by reference.


(10)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on August 2, 2010, and incorporated herein by reference.


(11)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on April 1, 2011, and incorporated herein by reference.


(12)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on December 13, 2011, and incorporated herein by reference.


(13)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(14)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, and incorporated

herein by reference.


(15)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, and incorporated herein by reference.


(16)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on January 17, 2012, and incorporated herein by reference.


(17)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-102912) filed on January 31, 2003, and incorporated herein by reference.


(18)	Filed as an exhibit to Registrant's Registration Statement on Form S-1 (No. 33-55680), as amended, and incorporated herein by reference.


(19)	Filed as an exhibit to Registrant's Annual Report on Form 10-K/A for the fiscal year ended December 31, 1998, and incorporated herein by reference.


(20)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on May 11, 2009, and incorporated herein by reference.


(21)	Filed as an exhibit to Registrant's Current Report on Form 8-K/A filed on February 22, 2006, and incorporated herein by reference.


(22)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and incorporated herein by reference.


(23)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2009, and incorporated herein by reference.


(24)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, and incorporated herein by reference. [update reference to 10-Q]


(25)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, and incorporated herein by reference.


(26)	Filed as an exhibit to Registrant's Current Report on Form 8-K first filed on December 19, 2007, and incorporated herein by reference.


(27)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, and incorporated herein by reference.


(28)	Filed as an exhibit to Registrant's Registration Statement on Form S-8 (No. 333-163871) filed on December 21, 2009, and incorporated herein by reference.


(29)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001, and incorporated herein by reference.


(30)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2008, and incorporated herein by reference.


(31)	Information is included in Registrant's Current Report on Form 8-K filed on February 1, 2012, and incorporated herein by reference.


(32)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, and incorporated herein by reference.


(33)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2006, and incorporated herein by reference.


(34)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, and incorporated herein by reference.


(35)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2000, and incorporated herein by reference.


(36)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and incorporated herein by reference.


(37)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and incorporated herein by reference.


(38)	Filed as an exhibit to Triangle Pharmaceuticals, Inc.'s Quarterly Report on Form 10-Q/A filed on November 3, 1999, and incorporated herein by reference.


(39)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, and incorporated herein by reference.


(40)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2005, and incorporated herein by reference.


(41)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2011, and incorporated herein by reference.


(42)	Filed as an exhibit to Myogen, Inc.'s Registration Statement on Form S-1 (No. 333-108301), as amended, originally filed on August 28, 2003, and incorporated herein by reference.


(43)	Filed as an exhibit to CV Therapeutics, Inc.'s Registration Statement on Form S-3 (No. 333-59318), as amended, originally filed on April 20, 2001, and incorporated herein by reference.


(44)	Filed as an exhibit to CV Therapeutics, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, and incorporated herein by reference.


(45)	Filed as an exhibit to Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2009, and incorporated herein by reference.


(46)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003, and incorporated herein by reference.


(47)	Filed as an exhibit to Registrant's Current Report on Form 8-K filed on August 7, 2007, and incorporated herein by reference.


(48)	Filed as an exhibit to Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2010, and incorporated herein by reference.

√

†


*	Management contract or compensatory plan or arrangement.


***	XBRL information is filed herewith.


+	Certain confidential portions of this Exhibit were omitted by means of marking such portions with an asterisk (the Mark). This Exhibit has been filed separately with the Secretary of the SEC without the Mark pursuant to Registrant's Application Requesting Confidential Treatment under Rule 24b-2 under the Securities Exchange Act of 1934, as amended.

Exhibit 10.51

GILEAD SCIENCES, INC.

PERFORMANCE SHARE AWARD AGREEMENT

RECITALS

A. The Corporation has implemented the Plan for the purpose of providing incentives to attract, retain and motivate eligible Employees, Directors and Consultants to continue their service relationship with the Corporation.

B. Participant is to render valuable services to the Corporation (or a Related Entity), and this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in connection with the Corporation's issuance of shares of Common Stock to Participant thereunder.

C. All capitalized terms in this Agreement shall have the meaning assigned to them in the attached Appendix A.

NOW, THEREFORE , it is hereby agreed as follows:

1. Grant of Performance Shares . The Corporation hereby awards to Participant, as of the Award Date indicated below, an award (the “Award”) of Performance Shares under the Corporation's 2004 Equity Incentive Plan, as amended (the “Plan”). Each Performance Share which vests pursuant to the terms of this Agreement shall provide Participant with the right to receive one or more shares of Common Stock on the designated issuance date for those shares. The number of shares of Common Stock subject to the awarded Performance Shares, the applicable performance-vesting and service-vesting requirements for each separate tranche or subtranche of those shares, the date or dates on which the shares of Common Stock that vest hereunder shall become issuable and the remaining terms and conditions governing the Award, including the applicable vesting acceleration provisions, shall be as set forth in this Agreement.

Exhibit 10.51

AWARD SUMMARY



Participant		FIRST NAME, MIDDLE NAME, LAST NAME
Award Date:		GRANT DATE
Designated Number of Performance Shares:		The actual number of shares of Common Stock that may become issuable pursuant to the Performance Shares awarded under this Agreement shall be determined in accordance with the performance-vesting and service-vesting provisions of attached Schedules I and II. For purposes of the applicable calculations under those schedules, the total designated number of Performance Shares to be utilized is [ SHARES] shares. Those Performance Shares shall be divided into two separate Tranches. ______percent (__ %) of the Performance Shares shall be allocated to Tranche One, and the remaining _____ percent (___ %) of the Performance Shares shall be allocated to Tranche Two.
Vesting Schedule:		Tranche One shall be subject to the performance-vesting and service-vesting requirements set forth in attached Schedule I. Tranche Two shall be divided into _____Subtranches, with each Subtranche equal to ______ percent (____ %) of the number of Performance Shares allocated to Tranche Two. Each such Subtranche shall have its own separate performance-vesting and service-vesting requirements as set forth in attached Schedule II. Change in Control Vesting. The shares of Common Stock underlying Tranche One and the three separate Subtranches of Tranche Two may also vest on an accelerated basis in accordance with the applicable provisions of Paragraph 4 and Paragraph 5 should a Change in Control occur after the start but prior to the completion of the Performance Period or Service Period applicable to that Tranche or Subtranche.
Issuance Date :		The shares of Common Stock which actually vest and become issuable pursuant to Tranche One or each Subtranche of Tranche Two shall be issued in accordance with the provisions of this Agreement applicable to the particular circumstances under which such vesting occurs.

2. Limited Transferability . Prior to the actual issuance of the shares of Common Stock which vest hereunder, Participant may not transfer any interest in the Performance Shares subject to this Award or the underlying shares of Common Stock or pledge or otherwise hedge the sale of those Performance Shares or underlying shares, including (without limitation) any short sale or any acquisition or disposition of any put or call option or other instrument tied to the value of the underlying shares of Common Stock. However, any shares of Common Stock which vest hereunder but otherwise remain unissued at the time of Participant's death may be transferred pursuant to the provisions of Participant's will or the laws of inheritance or to Participant's designated beneficiary or beneficiaries of this Award. Participant may also direct the Corporation to record the ownership of any shares of Common Stock which in fact vest and become issuable hereunder in the name of a revocable living trust established for the exclusive benefit of Participant or Participant and his or her spouse. Participant may make such a beneficiary designation or ownership directive at any time by completing the Corporation's Universal Beneficiary Designation form and filing the completed form with the Plan Administrator or its designee.

3. Stockholder Rights and Dividend Equivalents

(a) The holder of this Award shall not have any stockholder rights, including voting, dividend or liquidation rights, with respect to the shares of Common Stock subject to the Award until Participant becomes the record holder of those shares upon their actual issuance following the Corporation's

Exhibit 10.51

collection of the applicable Withholding Taxes. Notwithstanding the foregoing, should any dividend or other distribution, whether regular or extraordinary and whether payable in cash, securities (other than Common Stock) or other property, be declared and paid on the outstanding Common Stock while one or more Performance Shares remain subject to this Award (i.e., the underlying shares of Common Stock are not otherwise issued and outstanding for purposes of entitlement to the dividend or distribution), then a special book account shall be established for Participant and credited with a phantom dividend equivalent to the actual dividend or distribution that would have been paid on the maximum number of shares of Common Stock that can qualify as Performance-Qualified Shares under this Award, had that number of shares been issued and outstanding and entitled to that dividend or distribution. As one or more shares of Common Stock subsequently vest hereunder upon the satisfaction of the applicable vesting requirements for those shares, the phantom dividend equivalents credited to those particular shares in the book account shall vest, and those vested dividend equivalents shall be distributed to Participant (in the same form the actual dividend or distribution was paid to the holders of the Common Stock entitled to that dividend or distribution or in such other form as the Administrator deems appropriate under the circumstances) concurrently with the issuance of those vested shares. However, such distribution shall be subject to the Corporation's collection of the Withholding Taxes applicable to that distribution. To the extent any phantom dividend equivalents are to be distributed in shares of Common Stock, the following conversion process will be in effect. For each such dividend or distribution that is to be converted into shares of Common Stock, the aggregate dollar value of the cash, securities or other property that would have been paid as an actual dividend or distribution on the shares of Common Stock subject to this Award had they been actually issued and outstanding shares at the time of such dividend or distribution will be divided by the Fair Market Value per share of Common Stock measured as of the date on which such dividend or distribution was paid on the outstanding Common Stock, with any fractional share of Common Stock rounded up to the next whole share of Common Stock. The Administrator shall have the sole discretion to determine the dollar value of any such dividend or distribution paid other than in the form of cash, and its determination shall be controlling.

(b) To the extent the maximum number of shares of Common Stock that can qualify as Performance-Qualified Shares under any Tranche or Subtranche of this Award is not in fact earned by reason of the level at which the Performance Goal applicable to that Tranche or Subtranche is actually attained, then the phantom dividend equivalents credited to those unearned shares shall be cancelled, and Participant shall cease to have any right or entitlement to receive any distributions or other amounts with respect to those cancelled dividend equivalents.

(c) Should Participant cease Continuous Service without vesting in one or more of the shares of Common Stock subject to this Award (including any shares which do not otherwise vest at that time after taking into account any applicable vesting acceleration provisions set forth in this Agreement and the attached Schedules), then the phantom dividend equivalents credited to those unvested shares shall be cancelled, and Participant shall thereupon cease to have any further right or entitlement to those cancelled amounts.

4. Change in Control - Tranche One . The following provisions shall apply only to the extent a Change in Control is consummated prior to the completion of the Performance Period applicable to Tranche One and shall have no force or effect if the effective date of the Change in Control occurs after the completion date of the Tranche One Performance Period:

(a) Should (i) the Change in Control occur within the first twelve (12) months of the Tranche One Performance Period and (ii) Participant remain in Continuous Service through the effective date of that Change in Control, then Participant shall immediately vest in that number of shares of Common Stock equal to the designated number of Performance Shares allocated to Tranche One in accordance with Paragraph 1, without any measurement of Tranche One Performance Goal attainment to date.

Exhibit 10.51

(b) Should (i) the Change in Control occur at any time on or after the completion of the first twelve (12) months of the Tranche One Performance Period but prior to the completion of the entire Tranche One Performance Period and (ii) Participant remain in Continuous Service through the effective date of that Change in Control, then Participant shall immediately vest in that number of shares of Common Stock equal to the greater of (i) the designated number of Performance Shares allocated to Tranche One in accordance with Paragraph 1 or (ii) the number of Performance-Qualified Shares determined by multiplying (A) the designated number of Performance Shares allocated to Tranche One in accordance with Paragraph 1 by (B) the applicable percentage (determined in accordance with the payout slope set forth in attached Schedule I) for the level at which the Tranche One Performance Goal is attained over an abbreviated Tranche One Performance Period ending with the close of the Corporation's fiscal quarter coincident with or immediately preceding the effective date of the Change in Control.

(c) The foregoing provisions of this Paragraph 4 shall also apply should Participant's Continuous Service terminate, by reason of an involuntary termination other than for Cause or his or her resignation due to Constructive Termination, at any time during the period beginning with the execution date of the definitive agreement for the Change in Control transaction and ending with the earlier of (i) the effective date of that Change in Control or (ii) the termination of the definitive agreement without the consummation of the Change in Control; provided, however , that in no event shall Participant become entitled to any shares of Common Stock pursuant to this Paragraph 4 if the Change in Control is not in fact consummated.

Should Participant cease Continuous Service during the Tranche One Performance Period by reason of death or Permanent Disability and a Change in Control subsequently occur prior to the completion of that Performance Period, then Participant shall, at the time of such Change in Control, vest in a pro-rated number of shares of Common Stock calculated by multiplying (i) the number of Performance Shares or Performance-Qualified Shares determined in accordance with the applicable provisions of subparagraphs (a) and (b) of this Paragraph 4 by (ii) a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in the Tranche One Performance Period (rounded to the closest whole month), andthe denominator of which is the number of months(rounded to the closest whole number) comprising the portion of the Tranche One Performance Period ending with the earlier of (i) the effective date of the Change in Control or (ii) the last day of the abbreviated Tranche One Performance Period (if any) taken into account under clause (ii) of Paragraph 4(b).

(d) Should Participant cease Continuous Service by reason of his or her Retirement at any time after the completion of the first twelve (12) months of the Tranche One Performance Period but prior to the completion of the entire Tranche One Performance Period and a Change in Control subsequently occur prior to the completion of that Performance Period, then Participant shall, at the time of such Change in Control, vest in a pro-rated number of shares of Common Stock calculated by multiplying (i) the number of Performance Shares or Performance-Qualified Shares determined in accordance with the provisions of subparagraph (b) of this Paragraph 4 by (ii) a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in the Tranche One Performance Period prior to his or her Retirement (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) comprising the portion of the Tranche One Performance Period ending with the earlier of (i) the effective date of the Change in Control or (ii) the last day of the abbreviated Tranche One Performance Period (if any) taken into account under clause (ii) of Paragraph 4(b).

Exhibit 10.51

consummation of the Change in Control, and such consideration shall be distributed to Participant on the tenth (10th) business day following the effective date of that Change in Control. Each issuance or distribution made under this Paragraph 4(f) shall be subject to the Corporation's collection of the applicable Withholding Taxes.

(f) Except for the actual number of shares of Common Stock in which Participant vests in accordance with this Paragraph 4 or Paragraph 5 below, Participant shall cease to have any further right or entitlement to any additional shares of Common Stock under this Agreement following the effective date of the Change in Control.

(g) This Agreement shall not in any way affect the right of the Corporation to adjust, reclassify, reorganize or otherwise change its capital or business structure or to merge, consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.

5. Change in Control-Tranche Two . The following provisions shall apply only to the extent a Change in Control is consummated prior to the completion of the one or more separate Service Periods that are in effect at the time of such Change in Control with respect to the individual Subtranches into which Tranche Two is divided in accordance with attached Schedule II:

(a) Should (i) the Change in Control occur during a Performance Period that is in effect at the time with respect to any Subtranche into which Tranche Two is divided in accordance with Schedule II but prior to the completion of that Performance Period and (ii) Participant remain in Continuous Service through the effective date of that Change in Control, then Participant shall immediately vest in that number of shares of Common Stock equal to the designated number of Performance Shares allocated to that particular Subtranche in accordance with Paragraph 1 of this Agreement and the provisions of attached Schedule II, without any measurement of Performance Goal attainment to date with respect to that particular Subtranche. To the extent a Performance Period for a particular Subtranche of Tranche Two has not commenced prior to the effective date of the Change in Control, the Performance Shares allocated to that Subtranche in accordance with Paragraph 1 of this agreement and the provisions of attached Schedule II shall be cancelled, and Participant shall not have any further right or entitlement to receive any shares of Common Stock with respect to those cancelled Performance Shares.

(b) Should (i) the Change in Control occur at any time on or after the completion of the Performance Period applicable to any Subtranche into which Tranche Two is divided in accordance with Schedule II but prior to the completion of the Service Period specified for that Subtranche in attached Schedule II and (ii) Participant remain in Continuous Service through the effective date of that Change in Control, then Participant shall immediately vest in the number of shares of Common Stock equal to the number of Performance-Qualified Shares (if any) at the time subject to that Subtranche by reason of the level at which the Performance Goal for that Subtranche was in fact attained for the Performance Period applicable to that Subtranche.

(c) Subparagraphs (a) and (b) of this Paragraph 5 shall also apply should Participant's Continuous Service terminate, by reason of an involuntary termination other than for Cause or his or her resignation due to Constructive Termination, at any time during the period beginning with the execution date of the definitive agreement for the Change in Control transaction and ending with the earlier of (i) the effective date of that Change in Control or (ii) the termination of the definitive agreement without the consummation of the Change in Control; provided, however , that in no event shall Participant become entitled to any shares of Common Stock pursuant to this Paragraph 5 if the Change in Control is not in fact consummated.

Exhibit 10.51

(d) Should Participant cease Continuous Service by reason of Retirement, death or Permanent Disability during one or more Service Periods that are, pursuant to the provisions of attached Schedule II, in effect at that time with respect to one or more Subtranches into which Tranche Two is divided and a Change in Control subsequently occur prior to the completion of each such applicable Service Period, then Participant shall, at the time of such Change in Control, vest in a pro-rated number of shares of Common Stock calculated by multiplying (i) the number of Performance Shares or Performance-Qualified Shares determined for each such Subtranche in accordance with the applicable provisions of subparagraphs (a) and (b) of this Paragraph 5 by (ii) a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in the applicable Service Period for such Subtranche (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) comprising the portion of that Service Period ending with the effective date of the Change in Control.

(e) The number of shares of Common Stock in which Participant vests on the basis of the Performance Shares or Performance-Qualified Shares determined in accordance with the foregoing provisions of this Paragraph 5 shall be converted into the right to receive for each such share the same consideration per share of Common Stock payable to the other stockholders of the Corporation in consummation of the Change in Control, and such consideration shall be distributed to Participant on the earlier of (i) tenth (10th) business days following the effective date of the Change in Control, provided such Change in Control also constitutes a Qualifying Change in Control, or (ii) the date those shares would have been issued to Participant in accordance with Paragraph 7 in the absence of such Change in Control, unless a later issuance date is in effect for those shares pursuant to any deferral election made by Participant pursuant to Paragraph 8. Each issuance or distribution made under this Paragraph 5(e) shall be subject to the Corporation's collection of the applicable Withholding Taxes.

(f) Except for the actual number of shares of Common Stock in which Participant vests in accordance with this Paragraph 5 or Paragraph 4 above, Participant shall cease to have any further right or entitlement to any additional shares of Common Stock under this Agreement following the effective date of the Change in Control.

6. Adjustment in Shares . Should any change be made to the Common Stock by reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of shares, spin-off transaction, extraordinary dividend or distribution or other change affecting the outstanding Common Stock as a class without the Corporation's receipt of consideration, or should the value of the outstanding shares of Common Stock be substantially reduced as a result of a spin-off transaction or an extraordinary dividend or distribution, or should there occur any merger, consolidation or other reorganization, then equitable adjustments shall be made by the Administrator to the total number and/or class of securities issuable pursuant to this Award in order to reflect such change. In making such equitable adjustments, the Administrator shall take into account any amounts credited to Participant's book account under Paragraph 3(a) in connection with the transaction, and the determination of the Administrator shall be final, binding and conclusive. In the event of any Change in Control transaction, the provisions of Paragraphs 4 and 5 shall be controlling.

7. Issuance or Distribution of Vested Shares or Other Amounts.

(a) Except as otherwise provided in Paragraph 4, Paragraph 5 or Paragraph 8, the shares of Common Stock in which Participant vests pursuant to the performance-vesting and Continuous Service vesting provisions of attached Schedules I and II shall be issued in accordance with the following provisions:

Exhibit 10.51

- For any shares subject to Tranche One, the issuance shall be effected during the period beginning with the first business day of the calendar year immediately succeeding the end of the Tranche One Performance Period and ending no later than March 15 of that calendar year.

- For any shares subject to any Subtranche of Tranche Two, the issuance shall be effected during the period beginning with the first business day of the calendar year immediately succeeding the end of the Service Period specified for that Subtranche in attached Schedule II and ending no later than March 15 of that calendar year.

(b) The Corporation shall, on the applicable issuance date, issue to or on behalf of Participant a certificate in electronic form for the shares of Common Stock in which Participant vests pursuant to the performance-vesting and Continuous Service vesting provisions of attached Schedules I and II and shall concurrently distribute to Participant any phantom dividend equivalents with respect to those Shares. In lieu of such electronic delivery of the shares, Participant may request actual stock certificates for those shares.

(c) Except as otherwise provided in Paragraph 4 or Paragraph 5, no shares of Common Stock shall be issued prior to the completion of the Service Period applicable to those Shares. No fractional shares of Common Stock shall be issued pursuant to this Award, and any fractional share resulting from any calculation made in accordance with the terms of this Agreement shall be rounded down to the next whole share.

(d) Regardless of any action the Corporation and/or the Employer take with respect to any or all Withholding Taxes related to Participant's participation in the Plan and legally applicable to Participant, Participant acknowledges that the ultimate liability for all Withholding Taxes is and remains Participant's responsibility and may exceed the amount actually withheld by the Corporation or the Employer. Participant further acknowledges that the Corporation and/or the Employer (i) make no representations or undertakings regarding the treatment of any Withholding Taxes in connection with any aspect of the Award, including the grant, vesting or settlement of the Award, the issuance of shares of Common Stock or other property in settlement of the Award, the subsequent sale of the shares of Common Stock acquired pursuant to such issuance and the receipt of any dividends and/or phantom dividend equivalents and (ii) do not commit to, and are under no obligation to, structure the terms of the grant or any aspect of the Award to reduce or eliminate Participant's liability for Withholding Taxes or achieve any particular tax result. Further, if Participant has become subject to Withholding Taxes in more than one jurisdiction between the Award Date and the date of any relevant taxable or tax withholding event (as applicable), Participant acknowledges that the Corporation and/or the Employer (or former employer, as applicable) may be required to withhold or account for Withholding Taxes in more than one jurisdiction.

(e) The Corporation shall collect, and Participant hereby authorizes the Corporation to collect, the Withholding Taxes with respect to the shares of Common Stock issued under this Agreement (including shares of Common Stock issued in settlement of phantom dividend equivalents) through an automatic share withholding procedure pursuant to which the Corporation will withhold, immediately as the shares of Common Stock are issued under the Award, a portion of those shares with a Fair Market Value (measured as of the issuance date) equal to the amount of such Withholding Taxes (the “ Share Withholding Method ”). Notwithstanding the foregoing, the Share Withholding Method shall not be utilized if (i) such method is not permissible or advisable under local law or (ii) the Corporation otherwise decides no longer to utilize such method and provides Participant with notice to such effect.

Exhibit 10.51

(f) If the Share Withholding Method is to be utilized for the collection of Withholding Taxes, then the Corporation shall withhold the number of otherwise issuable shares of Common Stock necessary to satisfy the applicable Withholding Taxes based on the applicable minimum statutory rate or other applicable withholding rate. If the obligation for Withholding Taxes is satisfied by using the Share Withholding Method, then Participant will, for tax purposes, be deemed to have been issued the full number of shares of Common Stock subject to the vested Award, notwithstanding that a number of shares of Common Stock are withheld solely for the purpose of paying the applicable Withholding Taxes.

(g) The Corporation shall have sole discretion to determine whether or not the Share Withholding Method shall be utilized for the collection of the applicable Withholding Taxes. Participant shall be notified (in writing or through the Corporation's electronic mail system) in the event the Corporation no longer intends to utilize the Share Withholding Method. Should any shares of Common Stock become issuable under the Award (including shares of Common Stock issued in settlement of phantom dividend equivalents) at a time when the Share Withholding Method is not being utilized by the Corporation, then the Withholding Taxes shall be collected from Participant through a sale-to-cover transaction authorized by Participant, pursuant to which an immediate open-market sale of a portion of the shares of Common Stock issued to Participant will be effected, for and on behalf of Participant, by the Corporation's designated broker to cover the Withholding Tax liability estimated by the Corporation to be applicable to such issuance. Participant shall, promptly upon request from the Corporation, execute (whether manually or through electronic acceptance) an appropriate sales authorization (in form and substance reasonably satisfactory to the Corporation) that authorizes and directs the broker to effect such open-market, sale-to-cover transactions and remit the sale proceeds, net of brokerage fees and other applicable charges, to the Corporation in satisfaction of the applicable Withholding Taxes. However, no sale-to-cover transaction shall be effected unless (i) such a sale is at the time permissible under the Corporation's insider trading policies governing the sale of Common Stock and (ii) the transaction is not otherwise deemed to constitute a prohibited loan under Section 402 of the Sarbanes-Oxley Act of 2002.

(h) If the Corporation determines that such sale-to-cover transaction is not permissible or advisable at the time or if Participant otherwise fails to effect a timely sales authorization as required by this Agreement, then the Corporation may, in its sole discretion, elect either to defer the issuance of the shares of Common Stock until such sale-to-cover transaction can be effected in accordance with Participant's executed sale directive or to collect the applicable Withholding Taxes through Participant's delivery of his or her separate check payable to the Corporation in the amount of such Withholding Taxes or by withholding such amount from other wages payable to Participant. In no event shall any shares of Common Stock be issued in the absence of an arrangement reasonably satisfactory to the Corporation for the satisfaction of the applicable Withholding Taxes, and any such arrangement must be in compliance with any applicable requirements of Code Section 409A.

(i) The Corporation shall collect the Withholding Taxes with respect to the phantom dividend equivalents distributed in a form other than shares of Common Stock by withholding a portion of that distribution equal to the amount of the applicable Withholding Taxes, with the cash portion of the distribution to be the first portion so withheld, or through such other tax withholding arrangement as the Corporation deems appropriate

(j) Notwithstanding the foregoing provisions of Paragraphs 7(d) through 7(h), the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting of the shares of Common Stock or any other amounts hereunder (the “Employment Taxes”) shall in all events be collected from Participant no later than the last business day of the calendar year in which those shares or other amounts vest hereunder. Accordingly, to the extent the applicable issuance date for one or more vested shares of Common Stock or the distribution date for such

Exhibit 10.51

other amounts is to occur in a year subsequent to the calendar year in which those shares or other amounts vest, Participant shall, on or before the last business day of the calendar year in which such shares or other amounts vest, deliver to the Corporation a check payable to its order in the dollar amount equal to the Employment Taxes required to be withheld with respect to those shares or other amounts. The provisions of this Paragraph 7(j) shall be applicable only to the extent necessary to comply with the applicable tax withholding requirements of Code Section 3121(v).

(k) Except as otherwise provided in Paragraph 4 or Paragraph 5 or this Paragraph 7, the settlement of all Performance or Performance-Qualified Shares which vest under the Award shall be made solely in shares of Common Stock.

Special Deferral Election . Provided Participant is a U.S. tax resident and subject to Participant's satisfaction of any applicable Withholding Tax obligations under Paragraph 7 and any other eligibility requirements established by the Administrator for a deferral election hereunder, Participant may elect to defer the issuance date of any shares of Common Stock which may become issuable to Participant pursuant to the terms of this Agreement, by submitting to the Corporation on a timely basis a deferral election in the form provided for such purpose. Such deferral election must be submitted to the Corporation prior to the last six (6) months of the Performance Period (including any abbreviated Performance Period) applicable to the shares for which the deferral election is made, and any deferral election submitted within that six (6)-month period or after the performance-based compensation subject to that election has become ascertainable shall have no force and effect. The deferral election must specify one or more deferred issuance dates or events that qualify as permissible distribution events under Code Section 409A and the Treasury Regulations thereunder. In submitting such deferral election, Participant must represent that he or she understands the effect of such deferral under relevant federal, state and local income and employment tax laws, including (without limitation) the fact that Social Security, Medicare and other taxes may be due upon the vesting of theshares of Common Stock notwithstanding the deferral election. In no event may such a deferral election be made after Participant's cessation of Continuous Service, and no deferral election shall have any force or effect unless such election complies with all applicable requirements of Code Section 409A and the Treasury Regulations thereunder.

8. Leaves of Absence . For purposes of the applying the various Continuous Service vesting provisions of this Agreement, Participant shall be deemed to cease Continuous Service on the commencement date of any leave of absence and not to remain in Continuous Service status during the period of that leave, except to the extent otherwise required under employment laws in the jurisdiction where Participant is employed or pursuant to the following policy:

- Participant shall be deemed to remain in Continuous Service status during (i) the first three (3) months of an approved personal leave of absence or (ii) the first seven (7) months of any bona fide leave of absence (other than an approved personal leave) and shall be deemed to cease Continuous Service upon the expiration of the applicable three (3)-month or seven (7)-month period.

- In no event, however, shall Participant be deemed, for vesting purposes hereunder, to remain in Continuous Service beyond the earlier of (i) the expiration date of that leave of absence, unless Participant returns to active Continuous Service or Employee status on or before that date, or (ii) the date Participant's Continuous Service or Employee status actually terminates by reason of his or her voluntary or involuntary termination or by reason of his or her death or disability.

Exhibit 10.51

9. Compliance with Laws and Regulations . The issuance of shares of Common Stock pursuant to the Award shall be subject to compliance by the Corporation and Participant with all Applicable Laws relating thereto.

10. Notices . Any notice required to be given or delivered to the Corporation under the terms of this Agreement shall be in writing and addressed to the Corporation at its principal corporate offices. Any notice required to be given or delivered to Participant shall be in writing and addressed to Participant at the most current address then indicated for Participant on the Corporation's employee records or shall be delivered electronically to Participant through the Corporation's electronic mail system or through an on-line brokerage firm authorized by the Corporation to effect sales of the Common Stock issued hereunder. All notices shall be deemed effective upon personal delivery or delivery through the Corporation's electronic mail system or upon deposit in the U.S. mail, postage prepaid and properly addressed to the party to be notified.

11. Successors and Assigns . Except to the extent otherwise provided in this Agreement, the provisions of this Agreement shall inure to the benefit of, and be binding upon, the Corporation and its successors and assigns and Participant, Participant's assigns, the legal representatives, heirs and legatees of Participant's estate and any beneficiaries of the Award designated by Participant.

12. Code Section 409A

(a) It is the intention of the parties that the provisions of this Agreement shall, to the maximum extent permissible, comply with the requirements of the short-term deferral exception to Section 409A of the Code and Treasury Regulations Section 1.409A-1(b)(4) with respect to one or more Tranches or Subtranches of this Award. Accordingly, to the extent there is any ambiguity as to whether one or more provisions of this Agreement would otherwise contravene the requirements or limitations of Code Section 409A applicable to such short-term deferral exception, then those provisions, as they apply to such Tranches or Subtranches, shall be interpreted and applied in a manner that does not result in a violation of the requirements or limitations of Code Section 409A and the Treasury Regulations thereunder that apply to such exception.

(b) However, to the extent this Agreement should be deemed to create a deferred compensation arrangement subject to the requirements of Code Section 409A with respect to one or more Tranches or Subtranches of this Award, whether by reason of any deferral election made pursuant to Paragraph 8 above or the pro-rata service-vesting provisions of this Agreement, then the following provisions shall apply with respect to any such Tranche or Subtranche, notwithstanding anything to the contrary set forth herein:

- No shares of Common Stock or other amounts which become issuable or distributable with respect to such Tranche or Subtranche by reason of Participant's cessation of Continuous Service shall actually be issued or distributed to Participant until the date of Participant's Separation from Service or as soon thereafter as administratively practicable, but in no event later than the later of (i) the close of the calendar year in which such Separation from Service occurs or (ii) the fifteenth day of the third calendar month following the date of such Separation from Service.

- No shares of Common Stock or other amounts which become issuable or distributable with respect to such Tranche or Subtranche by reason of Participant's cessation of Continuous Service shall actually be issued or distributed to Participant prior to the earlier of (i) the first day of the seventh (7th) month following the date of Participant's Separation

Exhibit 10.51

from Service or (ii) the date of Participant's death, if Participant is deemed at the time of such Separation from Service to be a specified employee under Section 1.409A-1(i) of the Treasury Regulations issued under Code Section 409A, as determined by the Administrator in accordance with consistent and uniform standards applied to all other Code Section 409A arrangements of the Corporation, and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). The deferred Shares or other distributable amount shall be issued or distributed in a lump sum on the first day of the seventh (7th) month following the date of Participant's Separation from Service or, if earlier, the first day of the month immediately following the date the Corporation receives proof of Participant's death.

- No amounts that vest and become payable under Paragraph 4 or Paragraph 5 of this Agreement with respect to that Tranche or Subtranche by reason of a Change in Control shall be distributed to Participant at the time of such Change in Control, unless that transaction also constitutes a Qualifying Change in Control. In the absence of such a Qualifying Change in Control, the distribution shall not be made until the date on which the shares to which those amounts pertain would have become issuable in accordance with the provisions of Paragraph 7(a) of this Agreement.

- If Participant has made a deferral election under Paragraph 8 of this Agreement with respect to any Tranche or Subtranche of this Award, no amounts that vest and become payable under Paragraph 4 or Paragraph 5 with respect to that Tranche or Subtranche by reason of a Change in Control shall be distributed to Participant at the time of that Change in Control unless (i) the transaction also constitutes a Qualifying Change in Control and (ii) such deferral election provides for a distribution upon such an event. In the absence of such a Qualifying Change in Control or distribution election tied thereto, the distribution shall not be made until the date on which the shares to which those amounts pertain would have become issuable in accordance with Participant's deferral election under Paragraph 8 of this Agreement.

- The shares of Common Stock that are issuable pursuant to each Tranche or separate Subtranche of this Award in accordance with the provisions of this Agreement and attached Schedules I and II shall be deemed a separate payment for purposes of Code Section 409A.

13. Construction . This Agreement and the Award evidenced hereby are made and granted pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. In the event of any conflict between the provisions of this Agreement and the terms of the Plan, the terms of the Plan shall be controlling. All decisions of the Administrator with respect to any question or issue arising under the Plan or this Agreement shall be conclusive and binding on all persons having an interest in the Award.

14. Governing Law . The interpretation, performance and enforcement of this Agreement shall be governed by the laws of the State of California without resort to that State's conflict-of-laws rules.

15. Employment at Will . Nothing in this Agreement or in the Plan shall confer upon Participant any right to remain in Continuous Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Corporation (or any Related Entity employing or retaining Participant) or of Participant, which rights are hereby expressly reserved by each, to terminate Participant's Continuous Service at any time for any reason, with or without Cause.

Exhibit 10.51

16. Plan Prospectus . The official prospectus for the Plan is available on the Corporation's intranet at: http://gnet/ HR/stocks_new.asp . Participant may also obtain a printed copy of the prospectus by contacting Stock Plan Services at stockadministration@gilead.com .

17. Participant Acceptance . Participant must accept the terms and conditions of this Agreement either electronically through the electronic acceptance procedure established by the Corporation or through a written acceptance delivered to the Corporation in a form satisfactory to the Corporation. In no event shall any shares of Common Stock be issued (or other securities or property distributed) under this Agreement in the absence of such acceptance.

IN WITNESS WHEREOF , Gilead Sciences, Inc. has caused this Agreement to be executed on its behalf by its duly-authorized officer on the day and year first indicated above.



GILEAD SCIENCES, INC.

By:
Title:

Exhibit 10.51

APPENDIX A

DEFINITIONS

The following definitions shall be in effect under the Agreement:

A. Administrator shall mean the Compensation Committee of the Board acting in its capacity as administrator of the Plan.

B. Agreement shall mean this Performance Share Award Agreement.

C. Applicable Laws shall mean the legal requirements related to the Plan and the Award under applicable provisions of the federal securities laws, state corporate and securities laws, the Code, the rules of any applicable Stock Exchange on which the Common Stock is listed for trading, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.

D. Award shall mean the award of Performance Shares made to Participant pursuant to the terms of this Agreement.

E. Award Date shall mean the date the Performance Shares are awarded to Participant pursuant to the Agreement and shall be the date indicated in Paragraph 1 of the Agreement.

F. Board shall mean the Corporation's Board of Directors.

G. Cause shall have the meaning assigned to such term in Section 11(c) of the Plan.

H. Change in Control shall mean a change in ownership or control of the Corporation effected through the consummation of any of the following transactions:

(i) a merger, consolidation or other reorganization approved by the Corporation's stockholders, unless securities representing more than fifty percent (50%) of the total combined voting power of the voting securities of the successor corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation's outstanding voting securities immediately prior to such transaction;

(ii) a sale, transfer or other disposition of all or substantially all of the Corporation's assets;

(iii) the closing of any transaction or series of related transactions pursuant to which any person or any group of persons comprising a “group” within the meaning of Rule 13d-5(b)(1) of the 1934 Act (other than the Corporation or a person that, prior to such transaction or series of related transactions, directly or indirectly controls, is controlled by or is under common control with, the Corporation) becomes directly or indirectly (whether as a result of a single acquisition or by reason of one or more acquisitions within the twelve (12)-month period ending with the most recent acquisition) the beneficial owner (within the meaning of Rule 13d-3 of the 1934 Act) of securities possessing (or convertible into or exercisable for securities possessing) more than fifty percent (50%) of the total combined voting power of the Corporation's outstanding securities (as measured in terms of the power

Exhibit 10.51

to vote with respect to the election of Board members) outstanding immediately after the consummation of such transaction or series of related transactions, whether such transaction involves a direct issuance from the Corporation or the acquisition of outstanding securities held by one or more of the Corporation's existing stockholders; or

(iv) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

In no event, however, shall a Change in Control be deemed to occur upon a merger, consolidation or other reorganization effected primarily to change the State of the Corporation's incorporation or to create a holding company structure pursuant to which the Corporation becomes a wholly-owned subsidiary of an entity whose outstanding voting securities immediately after its formation are beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Corporation's outstanding voting securities immediately prior to the formation of such entity. Should such holding company structure or other Parent entity be established for the Corporation, then subparagraph (iv) shall be applied solely to the board of directors of that holding company or Parent entity.

A. Code shall mean the Internal Revenue Code of 1986, as amended.

B. Common Stock shall mean shares of the Corporation's common stock.

C. Constructive Termination shall have the meaning assigned to such term in Section 11(d) of the Plan.

D. Consultant shall mean any person, including an advisor, who is compensated by the Corporation or any Related Entity for services performed as a non-employee consultant; provided, however , that the term “Consultant” shall not include non-employee Directors serving in their capacity as Board members. The term “Consultant” shall include a member of the board of directors of a Related Entity.

E. Continuous Service shall mean the performance of services for the Corporation or a Related Entity (whether now existing or subsequently established) by a person in the capacity of an Employee, Director or Consultant. For purposes of this Agreement, Participant shall be deemed to cease Continuous Service immediately upon the occurrence of either of the following events: (i) Participant no longer performs services in any of the foregoing capacities for the Corporation or any Related Entity or (ii) the entity for which Participant is performing such services ceases to remain a Related Entity of the Corporation, even though Participant may subsequently continue to perform services for that entity. In jurisdictions requiring notice in advance of an effective termination of Participant's service as an Employee, Director or Consultant, Continuous Service shall be deemed to terminate upon the actual cessation of such service to the Corporation or a Related Entity notwithstanding any required notice period that must be fulfilled before Participant's termination as an Employee, Director or Consultant can be effective under Applicable Laws.

F. Corporation shall mean Gilead Sciences, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of Gilead Sciences, Inc. which shall by appropriate action adopt the Plan.

Exhibit 10.51

G. Director shall mean a member of the Board.

H. Employee shall mean an individual who is in the employ of the Corporation (or any Related Entity), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.

I. Employer shall mean the Corporation or any Related Entity employing Participant.

J. Fair Market Value per share of Common Stock on any relevant date shall be the closing price per share of Common Stock (or the closing bid, if no sales were reported) on that date, as quoted on the Stock Exchange that is at the time serving as the primary trading market for the Common Stock; provided, however, that if there is no reported closing price or closing bid for that date, then the closing price or closing bid, as applicable, for the last trading date on which such closing price or closing bid was quoted shall be determinative of such Fair Market Value. The applicable quoted price shall be as reported in The Wall Street Journal or such other source as the Administrator deems reliable.

K. 1934 Act shall mean the Securities Exchange Act of 1934, as amended from time to time.

L. Participant shall mean the person to whom the Award is made pursuant to the Agreement.

M. Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

N. Performance Goal shall, with respect to Tranche One, mean the performance goal specified on attached Schedule I (the “ Tranche One Performance Goal ”) that must be attained in order to satisfy the performance-vesting requirement for the shares of Common Stock allocated to Tranche One and shall, with respect to each separate Subtranche of Tranche Two, mean the performance goal established or to be established for that Subtranche in accordance with the provisions of attached Schedule II (the “ Subtranche Performance Goal ”) that must be subsequently attained in order to satisfy the performance-vesting requirement for the shares of Common Stock allocated to that particular Subtranche.

O. Performance Period shall mean the (i) period specified on attached Schedule I over which the attainment of the Performance Goal for Tranche One is to be measured (the “ Tranche One Performance Period ”) and (ii) the period specified on attached Schedule II for each separate Subtranche of Tranche Two over which the attainment of the Performance Goal applicable to that particular Subtranche is to be measured.

P. Performance-Qualified Shares shall, with respect to Tranche One and each separate Subtranche of Tranche Two, mean the maximum number of shares of Common Stock in which Participant can vest based on the level at which the Performance Goal applicable to that Tranche or Subtranche is attained and shall be calculated in accordance with the provisions of attached Schedule I with respect to Tranche One and the provisions of attached Schedule II with respect to each separate Subtranche of Tranche Two.

Q. Performance Share shall mean the phantom shares of Common Stock awarded under this Agreement which will entitle Participant to receive one or more actual shares of Common Stock pursuant to this Award upon the satisfaction of the performance and Continuous Service vesting requirements applicable to each Tranche or Subtranche of this Award.

Exhibit 10.51

R. Permanent Disability shall mean the inability of Participant to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment expected to result in death or to be of continuous duration of twelve (12) months or more.

S. Plan shall mean the Corporation's 2004 Equity Incentive Plan, as amended.

T. Qualifying Change in Contro l shall mean a change in control of ownership of the Company effected by one or more of the following transactions:

(i) a merger or consolidation in which the Company is not the surviving entity and in which one person or a group of related persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) acquires ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities or constituting more than fifty percent (50%) of the total fair market value of the Company's outstanding securities;

(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company in complete liquidation or dissolution of the Corporation;

(iii) any reverse merger in which the Company is the surviving entity but in which one person or a group of related persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) acquires ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities or constituting more than fifty percent (50%) of the total fair market value of the Company's outstanding securities;

(iv) the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities or constituting more than fifty percent (50%) of the total fair market value of the Company's outstanding securities pursuant to a tender or exchange offer made directly to the Company's stockholders; or

(v) a change in the composition of the Board over a period of twelve (12) consecutive months or less such that a majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination.

The foregoing definition of Qualifying Change in Control shall in all instances be applied and interpreted in such manner that the applicable Qualifying Change in Control transaction that serves as an issuance event for the shares of Common Stock subject to this Award (or distribution event for any amounts relating to those shares) that vest upon the occurrence of a Change in Control and are otherwise at the time subject to the issuance or distribution restrictions of Code Section 409A will also qualify as: (i) a change in the ownership of the Corporation, as determined in accordance with Section 1.409A-3(i)(5)(v) of the Treasury Regulations, (ii) a change in the effective control of the Corporation, as determined in accordance with Section 1.409A-3(i)(5)(vi) of the Treasury Regulations, or (iii) a change in the ownership of a substantial

Exhibit 10.51

portion of the assets of the Corporation, as determined in accordance with Section 1.409A-3(i)(5)(vii) of the Treasury Regulations.

U. Related Entity shall mean any Parent or Subsidiary of the Corporation and (ii) any corporation in an unbroken chain of corporations beginning with the Corporation and ending with the corporation in the chain for which Participant provides services as an Employee, Director or Consultant, provided each corporation in such chain owns securities representing at least fifty percent (50%) of the total outstanding voting power of the outstanding securities of another corporation or entity in such chain.

V. Retirement shall mean Participant's cessation of Employee status on or after the date on which his or her combined age and years of Continuous Service equal or exceed seventy (70) years.

W. Separation from Service shall mean Participant's cessation of Employee status by reason of his or her death, retirement or termination of employment. Participant shall be deemed to have terminated employment for such purpose at such time as the level of his or her bona fide services to be performed as an Employee (or as a consultant or independent contractor) permanently decreases to a level that is not more than twenty percent (20%) of the average level of services he or she rendered as an Employee during the immediately preceding thirty-six (36) months (or such shorter period for which he or she may have rendered such services). Solely for purposes of determining when a Separation from Service occurs, Participant will be deemed to continue in “Employee” status for so long as he or she remains in the employ of one or more members of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. “Employer Group” means the Corporation and any Parent or Subsidiary and any other corporation or business controlled by, controlling or under common control with, the Corporation, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) of the Code for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations. Any such determination as to Separation from Service, however, shall be made in accordance with the applicable standards of the Treasury Regulations issued under Section 409A of the Code.

X. Service Period shall, with respect to Tranche One, mean the period coincident with the Performance Period applicable to Tranche One (plus the additional period between the last day of that Performance Period and the date the Administrator certifies the attained level of the Tranche One Performance Goal) over which the Continuous Service vesting requirement in effect for Tranche One is to be measured and shall, with respect to each separate Subtranche of Tranche Two, mean the applicable service period specified for that Subtranche in attached Schedule II over which the Continuous Service vesting requirement in effect for that Subtranche is to be measured.

Y. Stock Exchange shall mean the American Stock Exchange, the Nasdaq Global or Global Select Market or the New York Stock Exchange.

Z. Subsidiary shall mean any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Exhibit 10.51

AA. Tranche shall mean the two separate tranches ( Tranche One and Tranche Two ) into which the Performance Shares subject to this Award are divided in accordance with the provisions of Paragraph 1 of this Agreement. Tranche Two shall in turn be divided into _____ separate subtranches (“ Subtranche ”), each equal to ________ of the number of Performance Shares allocated to Tranche Two in accordance with the provisions of Paragraph 1 of this Agreement.

AB. Withholding Taxes shall mean the federal, state and local income taxes and the employee portion of the federal, state and local employment taxes required to be withheld by the Corporation in connection with the vesting and issuance of the shares of Common Stock which vest under of the Award, any phantom dividend equivalents distributed with respect to those shares and any other amounts distributable in replacement or substitution of such shares.

Exhibit 10.51

SCHEDULE I

PERFORMANCE GOAL AND PERFORMANCE PERIOD FOR TRANCHE ONE

PERFORMANCE PERIOD

The measurement period for the Performance Shares allocated to Tranche One shall be the period beginning _____________ and ending _______________ (the “ Tranche One Performance Period ”).

PERFORMANCE GOAL FOR PERFORMANCE VESTING

Performance Goal: The performance-vesting requirement for the Performance Shares allocated to Tranche One shall be tied to:

[Designate Applicable Performance Goal]

Should a Change in Control occur during the Tranche One Performance Period, then the Tranche One Performance Goal will be measured over an abbreviated Tranche One Performance Period ending with the Corporation's last complete fiscal quarter coincident with or immediately preceding the effective date of that Change in Control.

Performance-Qualified Shares: Within sixty-five (65) days after the completion of the Tranche One Performance Period, the Administrator shall determine and certify the actual level at which the Tranche One Performance Goal is attained. The actual number of Performance-Qualified Shares that results from such certification (the “ Tranche One Performance-Qualified Shares ”) may range from 0% to 200% of the number of Performance Shares allocated to Tranche One in accordance with Paragraph 1 of this Agreement, with the actual percentage to be determined on the basis of the percentile level at which the Administrator certifies that the Tranche One Performance Goal has been attained; provided, however , that the maximum number of the shares of Common Stock that may qualify as Tranche One Performance-Qualified Shares may not exceed 200% of the number of Performance Shares allocated to Tranche One in accordance with Paragraph 1 of this Agreement.

Payout Slope for Determining Number of Performance-Qualified Shares Based on Attained Levels of Tranche One Performance Goal: The number of shares of Common Stock that may qualify as Tranche One Performance-Qualified Shares on the basis of the certified level of Tranche One Performance Goal attainment shall be calculated by multiplying the number of Performance Shares allocated to Tranche One in accordance with Paragraph 1 of this Agreement by the applicable percentage determined in accordance with the following payout slope for the Tranche One Performance Goal:

Tranche One Performance Goal Payout Slope

[Insert Payout Slope]

CONTINUOUS SERVICE VESTING REQUIREMENT FOR TRANCHE ONE PERFORMANCE-QUALIFIED SHARES

The number of shares of Common Stock in which Participant may actually vest on the basis of the number of Tranche One Performance-Qualified Shares certified by the Administrator in accordance with the foregoing shall be tied to his or her completion of the following Continuous Service vesting requirement applicable to Tranche One:

Exhibit 10.51

- If Participant remains in Continuous Service through the date following the completion of the Tranche One Performance Period on which the Administrator certifies the attained level of the Tranche One Performance Goal for the Tranche One Performance Period, Participant shall vest in one hundred percent (100%) of the Tranche One Performance-Qualified Shares.

- If Participant's Continuous Service terminates prior to the completion of the Tranche One Performance Period (or after the completion of the Tranche One Performance Period but before the date the Administrator certifies the attained level of the TSR Performance Goal) by reason of death or Permanent Disability, then Participant shall, following the completion of the Tranche One Performance Period, vest in that number of shares of Common Stock (if any) determined by multiplying the maximum number of Tranche One Performance-Qualified Shares in which Participant could vest, based on the actual level at which the TSR Performance Goal is attained and certified for the Tranche One Performance Period, by a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in the Tranche One Performance Period (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) constituting the entire Tranche One Performance Period.

- If Participant's Continuous Service terminates by reason of his or her Retirement at any time after the completion of the first twelve (12) months of the Tranche One Performance Period but prior to the completion of that Performance Period (or after the completion of the Tranche One Performance Period but before the date the Administrator certifies the attained level of the Tranche One Performance Goal for the Tranche One Performance Period), then Participant shall, following the completion of the Tranche One Performance Period, vest in that number of shares of Common Stock (if any) determined by multiplying the maximum number of Tranche One Performance-Qualified Shares in which Participant could vest, based on the actual level at which the TSR Performance Goal is attained and certified for the Tranche One Performance Period, by a fraction, the numerator of which is the number of months of Continuous Service actually completed by Participant in the Tranche One Performance Period prior to his or her Retirement (rounded to the closest whole month), and the denominator of which is the number of months (rounded to the closest whole number) constituting the entire Tranche One Performance Period.

- If (i) Participant's Continuous Service terminates by reason of an involuntary termination other than for Cause, or his or her resignation due to Constructive Termination, at any time after the completion of the Tranche One Performance Period but before the date the Administrator certifies the attained level of the Tranche One Performance Goal for that Performance Period and (ii) such termination of Continuous Service also occurs during a period while there is in effect a definitive executed agreement for the Change in Control transaction, then Participant shall vest in the maximum number of Tranche One Performance-Qualified Shares in which Participant could vest, based on the actual level at which the Tranche One Performance Goal is attained and certified for the Tranche One Performance Period, had Participant remained in Continuous Service through such certification date.

- If Participant's Continuous Service ceases for any other reason (including, without limitation, any deemed cessation of Continuous Service under Paragraph 9) prior to the completion of the Tranche One Performance Period or prior to the date on which the Administrator certifies the attained level of the Tranche One Performance Goal for

Exhibit 10.51

the Tranche One Performance Period, then Participant shall not vest in any of the Tranche One Performance-Qualified Shares, and all of Participant's right, title and interest to the shares of Common Stock subject to Tranche One of this Award shall immediately terminate; provided, however , that should a Change in Control occur prior to the completion of the Tranche One Performance Period, then the provisions of Paragraph 4 shall govern the vesting of the Performance Shares allocated to Tranche One.

Exhibit 10.51

SCHEDULE II

PERFORMANCE GOALS AND PERFORMANCE PERIODS FOR TRANCHE TWO

ESTABLISHMENT OF SEPARATE SUBTRANCHES

The number of Performance Shares allocated to Tranche Two in accordance with Paragraph 1 of this Agreement shall be subdivided into _____ (__) separate Subtranches. Each such separate Subtranche shall cover _____ of the number of shares of Common Stock allocated to Tranche Two and shall have its own separate Performance Period and Service Period.

PERFORMANCE PERIOD FOR SUBTRANCHE ONE

The measurement period for the Performance Goal for the Performance Shares allocated to Subtranche One shall be the period commencing _____________ and ending __________ (the “ Sub t ranche One Performance Period ”).

SERVICE PERIOD FOR SUBTRANCHE ONE

The applicable Service Period to which the Performance Goal for Subtranche One relates shall be the period beginning ____________ and ending ____________.

PERFORMANCE GOAL FOR PERFORMANCE VESTING FOR SUBTRANCHE ONE

Performance Goal for Subtranche One: The performance-vesting requirement for the Performance Shares allocated to Subtranche One shall be: [specify applicable goal].

Performance-Qualified Shares: Within sixty-five (65) days after the completion of the Subtranche One Performance Period, the Administrator shall determine and certify the actual level at which the Subtranche One Performance Goal has been attained. The actual number of Performance-Qualified Shares that results from such certification (the “ Subtranche One Performance-Qualified Shares ”) may range from 0% to 200% of the number of Performance Shares allocated to Subtranche One in accordance with Paragraph 1 of this Agreement, with the actual percentage to be determined on the basis of the level at which the Administrator certifies that the Subtranche One Performance Goal has been attained; provided, however , that the maximum number of the shares of Common Stock that may qualify as Subtranche One Performance-Qualified Shares may not exceed 200% of the number of Performance Shares allocated to Subtranche One in accordance with Paragraph 1 of this Agreement.

Payout Slope for Determining Number of Performance-Qualified Shares Based on Attained Level of Subtranche One Performance Goal: The number of shares of Common Stock that may qualify as Subtranche One Performance-Qualified Shares on the basis of the certified level of Subtranche One Performance Goal attainment shall be calculated by multiplying the number of Performance Shares allocated to Subtranche One in accordance with Paragraph 1 of this Agreement by the applicable percentage determined in accordance with the following payout slope for the Subtranche One Performance Goal:

Subtranche One Payout Slope

[Insert Payout Slope]

Exhibit 10.51

PERFORMANCE PERIOD FOR SUBTRANCHE TWO

The measurement period for the Performance Goal for the Performance Shares allocated to Subtranche Two shall be the period commencing _____________ and ending __________ (the “ Sub t ranche Two Performance Period ”).

SERVICE PERIOD FOR SUBTRANCHE TWO

The applicable Service Period to which the Performance Goal for Subtranche Two relates shall be the period beginning ____________ and ending ____________.

PERFORMANCE GOAL FOR PERFORMANCE VESTING FOR SUBTRANCHE TWO

Performance Goal for Subtranche Two: The performance-vesting requirement for the Performance Shares allocated to Subtranche Two shall be set by the Administrator no later than ninety (90) days after the start of the Subtranche Two Performance Period. As soon as practical following the Administrator's establishment of the applicable Subtranche Two Performance Goal, Participant shall be provided with written notice of that goal and the applicable payout slope approved by the Administrator with respect to that goal.

Performance-Qualified Shares: Within sixty-five (65) days after the completion of the Subtranche Two Performance Period, the Administrator shall determine and certify the actual level at which the Subtranche Two Performance Goal has been attained. The actual number of Performance-Qualified Shares that results from such certification (the “ Subtranche Two Performance-Qualified Shares ”) may range from 0% to 200% of the number of Performance Shares allocated to Subtranche Two in accordance with Paragraph 1 of this Agreement, with the actual percentage to be determined on the basis of the level at which the Administrator certifies that the Subtranche Two Performance Goal has been attained; provided, however , that the maximum number of the shares of Common Stock that may qualify as Subtranche Two Performance-Qualified Shares may not exceed 200% of the number of Performance Shares allocated to Subtranche Two in accordance with Paragraph 1 of this Agreement.

Payout Slope for Determining Number of Performance-Qualified Shares Based on Attained Level of Subtranche Two Performance Goal: The number of shares of Common Stock that may qualify as Subtranche Two Performance-Qualified Shares on the basis of the certified level of Subtranche Two Performance Goal attainment shall be calculated by multiplying the number of Performance Shares allocated to Subtranche Two in accordance with Paragraph 1 of this Agreement by the applicable percentage determined in accordance with the payout slope approved by the Administrator at the same time it establishes the applicable Performance Goal for the Subtranche Two Performance Period.

REPEAT SIMILAR PROVISIONS FOR ANY ADDITIONAL SUBTRANCHES

Exhibit 10.51

CONTINUOUS SERVICE VESTING REQUIREMENT FOR TRANCHE TWO PERFORMANCE-QUALIFIED SHARES

The number of shares of Common Stock in which Participant may actually vest on the basis of the number of Performance-Qualified Shares certified by the Administrator for each separate Subtranche of Tranche Two in accordance with the foregoing shall be tied to his or her completion of the following Continuous Service vesting requirement applicable to each such Subtranche:

- If Participant remains in Continuous Service through the last day of the applicable Service Period specified above for that Subtranche, Participant shall vest in one hundred percent (100%) of the Performance-Qualified Shares certified by the Administrator for that Subtranche.

- If Participant's Continuous Service terminates prior to the last day of the applicable Service Period specified above for that Subtranche by reason of Retirement, death or Permanent Disability, then Participant shall, following the completion of the applicable Service Period for that Subtranche, vest in that number of shares of Common Stock (if any) determined by multiplying the maximum number of Performance-Qualified Shares in which Participant could vest under that particular Subtranche, based on the actual level at which the Performance Goal for that Subtranche is attained and certified, by a fraction the numerator of which is the number of months of Continuous Service actually completed by Participant in the applicable Service Period for that Subtranche (rounded to the closest whole month) and the denominator of which is the number of months (rounded to the closest whole number) constituting the Service Period specified above for that Subtranche.

- If Participant's Continuous Service ceases for any other reason (including, without limitation, any deemed cessation of Continuous Service under Paragraph 9) prior to the completion of the applicable Service Period specified above for that Subtranche, then Participant shall not vest in any of the Performance-Qualified Shares covered by that Subtranche, and all of Participant's right, title and interest to the shares of Common Stock subject to that Subtranche shall immediately terminate; provided, however , that should a Change in Control occur prior to the completion of the applicable Service Period for that Subtranche, then the provisions of Paragraph 5 shall govern the vesting of the Performance Shares allocated to that Subtranche.

- Notwithstanding anything to the contrary in the foregoing provisions of this Continuous Service section, should Participant's Continuous Service cease for any reason prior to the start of the Service Period specified above for any Subtranche of Tranche Two, then Participant shall not vest in any of the Performance Shares allocated to that Subtranche, and all of Participant's right, title and interest to the shares of Common Stock subject to that Subtranche shall immediately terminate.

Exhibit 10.62

GILEAD SCIENCES, INC.

SEVERANCE PLAN

Adopted on March 23, 2004,

to be effective January 29, 2003

Amended and Restated on May 9, 2006,

to be effective January 1, 2005

Amended and Restated on May 8, 2007

to be effective May 8, 2007

Amended on February 8, 2008

to be effective January 1, 2008

Amended on May 7, 2008

to be effective May 7, 2008

Amended on December 15, 2008

to be effective January 1, 2009

Amended on December 14, 2009

to be effective January 1, 2010

Amended on January 28, 2010

to be effective January 28, 2010

Amended on January 26, 2012

to be effective January 1, 2012

GILEAD SCIENCES, INC.

SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

(As Amended and Restated Effective January 1, 2012)


I.	INTRODUCTION

The Gilead Sciences, Inc. Severance Plan (the “Plan”) was originally adopted by the Company effective January 29, 2003, and was subsequently amended and restated effective January 1, 2005, on May 9, 2006. The Plan was further amended and restated on May 8, 2007 and subsequently amended in February and May 2008 in order to effect the following: (i) bring the Plan into documentary compliance with Section 409A of the Code and the final Treasury Regulations thereunder and (ii) incorporate certain transitional relief in accordance with (A) Treasury Notice 2005-1, Q&A-19, as modified by the preamble to the proposed and the final regulations pursuant to Section 409A of the Code, published in the Federal Register on October 4, 2005 and April 17, 2007, respectively, and (B) Treasury Notice 2007-86. This Plan and Summary Plan Description as so amended and restated effects such full documentary compliance under Section 409A of the Code and the applicable Treasury Regulations, effective January 1, 2009, and replaces all severance or similar plans or programs of the Company previously in effect. The Company has no severance or similar plan or program other than this Plan. ¹

The May 7, 2008 restatement of the Plan also revised the bonus component of the Severance Pay Benefit formulas in Appendix A, Appendix B and Appendix C to comply with Revenue Ruling 2008-13. Such amendment was effective as of May 7, 2008.

The Plan was further amended on December 15, 2008 to provide, effective as of January 1, 2009, that (i) the cash severance benefits to which individuals covered by Appendix D may become entitled under the Plan shall be paid in a lump sum and (ii) the COBRA coverage costs that Participants may incur for the applicable period specified in Appendix A, B, C or D following their termination of employment shall be paid in the form of a lump sum prepayment, subject to the Company's collection of the applicable withholding taxes.

The Plan was amended on December 14, 2009 to provide, effective as of January 1, 2010, that the bonus component of the severance benefit formula in effect under Appendix A and Appendix B of the Plan for the covered Participants thereunder whose qualifying termination occurs in a non-change in control situation will no longer calculated by applying the specified multiple in such situation to a pro-rated portion of their average actual bonus for the three-year or shorter period preceding the fiscal year of their termination but will instead be calculated by applying that multiple to one hundred percent of such average actual annual bonus.

¹ The Triangle Pharmaceuticals, Inc. Severance Plan remained in effect until January 23, 2004 and provided benefits to employees of Triangle who were involuntarily terminated.

The Plan was further amended on January 28, 2010 to limit the class of participants eligible to qualify for the potential tax gross-up payment under Appendicies A through C to the Plan that is designed to cover any excise tax liability they might incur under Section 4999 of the Code in connection with the severance benefits provided to them under the Plan and to implement a greatest after-tax benefit limitation for participants whose benefits under the Plan may constitute parachute payments under Section 280G of the Code but who are not otherwise eligible for any tax gross-up payment under the Plan that would cover any resulting tax liability to which they might otherwise become subject under Section 4999 of the Code.

The Plan was further amended on January 26, 2012 to (i) revise the Continuous Service definition with respect to any participant who is reemployed by the Company following an earlier termination of employment with the Company that resulted in his or her receipt of a severance pay benefit under the Plan so that such individual will not be entitled to any continuous service credit for his or her prior period of employment or service with the Company or for any bridge period between the period of such prior service and the date of his or her re-employment and (ii) effect certain other clarifying changes to facilitate the administration of the Plan and assure that the Plan continues to comply with applicable laws and regulations.

The purpose of the Plan is to provide a Severance Pay Benefit to certain Eligible Employees whose employment with the Company terminates under certain prescribed circumstances. The Company is the Plan Administrator for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to comply with the requirements of Section 409A of the Code.

Capitalized terms used in this Plan shall have the meaning set forth in Section XVII.


II.	COMMENCEMENT OF PARTICIPATION

An Eligible Employee shall commence participation in the Plan upon the later of (i) January 29, 2003 or (ii) his or her date of hire.


III.	TERMINATION OF PARTICIPATION

A Participant's participation in the Plan shall terminate upon the occurrence of the earliest of the following:


(a)	The Participant's employment terminates without meeting the requirements of Section IV(a)(i)(1).


(b)	The Participant's employment terminates with a provision of Section IV(a)(ii) being applicable.


(c)	The Participant fails to meet the requirements of Section IV(a)(i)(2).


(d)	The Participant has received a complete distribution of his or her Severance Pay Benefit.


(e)	The Participant ceases to be an Eligible Employee (other than by reason of termination of his or her employment with the Company).


(f)	The Plan terminates.


IV.	SEVERANCE PAY BENEFIT


(a)	Eligibility for Severance Pay Benefit.


(i)	Subject to Section IV(a)(ii), a Participant shall be eligible for a Severance Pay Benefit only

if the Participant meets the requirements of Section IV(a)(i)(1) and Section IV(a)(i)(2).

(1)

The Participant incurs a Separation from Service as a result of an involuntary termination of his or her Employee status by the Company because of a Company-wide or departmental reorganization or a significant restructuring of the Participant's job duties; provided, however, that a Participant's Employee status shall also be deemed to have been involuntarily terminated by the Company if he or she resigns because of (A) a transfer to a new work location that is more than 50 miles from his or her previous work location, and (B) in the case of a Participant whose Severance Pay Benefit is determined with reference to Appendix A, B or C, a Constructive Termination (as defined in Section 11(d) of the 2004 Equity Incentive Plan) in conjunction with a Change in Control and within the time specified in Appendix A, B or C, as applicable.

(2)

The Participant executes and delivers to the Company the Release within the time frame prescribed by the Company therein, but in no event later than the forty-fifth (45th) day following his or her Separation from Service, and the period (if any such period is prescribed by the Company in the Release) for revoking the execution of the Release under the Older Workers' Benefit Protection Act, 29 U.S.C. § 626(f), expires without the Participant's revocation of such Release. A Participant's failure to comply on a timely basis with such Release requirement shall render such individual ineligible to receive any Separation Pay Benefit under the Plan.

Under no circumstances shall a Participant be eligible for a Severance Pay Benefit under the Plan if he or she terminates Employee status for the purpose of accepting employment with the entity that effectuates a Change in Control, its subsidiaries or affiliates.


(ii)	Notwithstanding Section IV(a)(i), a Participant shall be disqualified from receiving a Severance Pay Benefit upon the occurrence of any of the following:


(1)	The Participant voluntarily terminates Employee status for any reason prior to the termination date set by the Company;


(2)	The Participant's Employee status is terminated by death or for cause (including, without limitation, gross misconduct or dereliction of duty) or for failure to meet performance goals or objectives as determined by the Company;


(3)	If the Participant is receiving short-term sick leave benefits on the date his or her Employee status terminates, the Participant fails to execute and deliver to the Company, within thirty (30) days after his or her Separation from Service, a written waiver of any short-term sick leave benefits that might otherwise be payable after such termination of Employee status;


(4)	The Participant terminates Employee status in order to accept employment with an organization that is wholly or partly owned (directly or indirectly) by the Company or an Affiliate;


(5)	The Participant accepts any job with a Buyer or Outsourcing Supplier;


(6)	The Participant is offered full-time employment with a Buyer or Outsourcing Supplier at a new work location 50 miles or less from his or her previous work location with

the Company and taking such position would not result in a reduction in his or her Regular Earnings;


(7)	Except in the case of a Severance Pay Benefit payable on account of a Change in Control of the Company, the Participant received a severance benefit in connection with an acquisition effected by the Company within 24 months prior to his or her Separation from Service; or


(8)	Except for a Severance Pay Benefit payable on account of a Change in Control of the Company, the Participant has not completed six months of Continuous Service as of the date of his or her termination of Employee status; provided, however, that, effective May 8, 2007, such service requirement shall not be applicable to Employees who are Vice Presidents or in Grades 21 through 34.

The business decisions that may result in a Participant qualifying for a Severance Pay Benefit are decisions to be made by the Company in its sole discretion. In making these decisions, similarly situated organizations, locations, functions, classifications, and/or Participants need not be treated in the same manner. Each Participant remains an employee at will, and the date selected by the Company to terminate the Participant's Employee status is within its sole discretion.


(b)	Amount of Severance Pay Benefit.


(i)	Subject to Section IV(b)(ii), the Severance Pay Benefit payable to a Participant shall be as set forth in the applicable Appendix:


(1)	Appendix A - Chief Executive Officer.


(2)	Appendix B - Executive Vice Presidents and Senior Vice Presidents.


(3)	Appendix C - Vice Presidents and Senior Advisors.


(4)	Appendix D - All Eligible Employees not covered by Appendix A, B, or C.

Senior Advisors covered under Appendix C shall only be eligible for a Severance Pay Benefit in connection with a Change in Control.


(ii)	Notwithstanding Section IV(b)(i), the total Severance Pay Benefit otherwise payable to a Participant under the Plan shall be subject to reduction (but not below zero) as follows:

(1)

If a Participant is reemployed by the Company or an Affiliate within the number of weeks after his or her Separation from Service that is equal to the number of weeks taken into consideration in calculating the Regular Earnings component of his or her Severance Pay Benefit, the total Severance Pay Benefit payable to such Participant shall be reduced to the dollar amount that the Participant's Regular Earnings would have been for the period from the date of termination to the date of reemployment. In all cases, the reduced benefit will be based on the Participant's Regular Earnings used to calculate such Participant's Severance Pay Benefit under the Plan. A Participant will be considered “reemployed” under the Plan for purposes of the foregoing repayment provision if he or she is rehired as an Employee or if he or she is retained at a Company facility as or through a contractor for more than a full-time equivalent of more than 45 work days.

(2)

If a Participant is employed by a Buyer or Outsourcing Vendor within the number of weeks after his or her Separation from Service that is equal to the number of weeks taken into consideration in calculating the Regular Earnings component of his or her Severance Pay Benefit, the total Severance Pay Benefit payable to such Participant shall be reduced to the dollar amount that the Participant's Regular Earnings would have been for the period from the date of termination to the date of employment with the Buyer or Outsourcing Vendor.

Section IV(b)(ii)(2) may be waived in writing by the Company in its sole discretion.

(3)

The Severance Pay Benefit shall be reduced by severance pay or other similar benefits payable under any other plan or policy of the Company or an Affiliate or government required payment (other than unemployment compensation under United States law), including, but not limited to, any benefit enhancement program adopted as part of a pension plan, but only to the extent the time and form of such alternative payments do not otherwise result in an impermissible acceleration or deferral under Code Section 409A of the Severance Pay Benefit payable under this Plan.

(4)

The Severance Pay Benefit shall be reduced by any amounts payable pursuant to the Worker Adjustment and Retraining Notification Act (“WARN”) or any other similar federal, state or local statute, but such reduction shall be effected in a manner that does not otherwise result in an impermissible acceleration or deferral under Code Section 409A of the Severance Pay Benefit payable under this Plan.


(5)	The Severance Pay Benefit shall be reduced by the amount of any indebtedness owed to the Company, but only to the extent such offset would not otherwise contravene any applicable limitations of Code Section 409A.


(c)	Repayment of the Severance Pay Benefit.

If the Participant has received payment under the Plan in excess of the Severance Pay Benefit, as reduced in accordance with Section IV(b)(ii), the Participant must agree as a condition of reemployment that such excess will be repaid to the Company within sixty (60) days after the date his or her reemployment commences.


V.	TIME AND FORM OF SEVERANCE PAY BENEFIT

(a)

The Severance Pay Benefit (other than the Lump Sum Health Care Payment) for each Participant, other than a Participant whose Severance Pay Benefit is determined pursuant to Appendix D, shall be paid in equal periodic installments over the total number of weeks taken into account in calculating the Regular Earnings component of the Severance Pay Benefit to which such Participant is entitled. Except as set forth below, such installments shall be payable over the applicable period on the regularly scheduled pay dates in effect for the Company's salaried employees, beginning with the first such pay date within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or beginning on such subsequent date thereafter as the Company may determine in its

sole discretion, but in no event shall the first such installment be paid later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the first such installment of the Severance Pay Benefit shall be paid during the portion of that sixty (60)-day period that occurs in the second calendar year.


(b)	For purposes of Section 409A of the Code, the Severance Pay Benefit payable pursuant to Section V(a) above shall be deemed to be a series of separate payments, with each installment of the Severance Pay Benefit to be treated as a separate payment.

(c)

The Severance Pay Benefit for each Participant whose Severance Pay Benefit is determined pursuant to Appendix D shall be paid in a lump sum on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such lump sum payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then such lump sum payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year.

(d)

N otwithstanding any provision to the contrary in this Section V or any other Section of the Plan, other than Section V(e) and (f) below, no Severance Pay Benefit (or component thereof) that is deemed to constitute “nonqualified deferred compensation” within the meaning of and subject to Section 409A of the Code shall commence with respect to a Participant until the earlier of (i) the first day of the seventh (7th) month following the date of such Participant's Separation from Service or (ii) the date of his or her death, if the Participant is deemed at the time of such Separation from Service to be a Specified Employee and such delayed commencement is otherwise required in order to avoid a prohibited distribution under Code Section 409A(a)(2). Upon the expiration of the applicable deferral period, all payments deferred pursuant to this Section V(d), whether they were otherwise payable in installments or a lump sum, shall be paid in a lump sum to the Participant, and any remaining Severance Pay Benefit shall be paid in accordance with the schedule described in Section V(a) above or in a lump sum to the extent such Severance Pay Benefit is to be paid pursuant to Section V(c) above.

(e)

Notwithstanding Section V(d), should a Participant who is a Specified Employee at the time of his or her Separation from Service become entitled to a General Severance Pay Benefit prior to the occurrence of a Change in Control, then the portion of that Severance Pay Benefit that does not exceed the dollar limit described below and is otherwise scheduled to be paid no later than the last day of the second calendar year following the calendar year in which his or her Separation from Service occurs will not be subject to any deferred commencement date under Section V(d) and shall be paid to such Participant as it becomes due under Section V(a), provided and only if such portion qualifies as an involuntary separation pay plan in accordance with the requirements set forth in Section 1.409A-1(b)(9)(iii) of the Treasury Regulations. For purposes of this Section V(e), the applicable

dollar limitation will be equal to two (2) times the lesser of (A) the Participant's annualized compensation (based on his or her annual rate of pay for the taxable year preceding the taxable year of his or her Separation from Service, adjusted to reflect any increase during that taxable year which was expected to continue indefinitely had such Separation from Service not occurred) or (B) the compensation limit under Section 401(a)(17) of the Code as in effect in the year of the Separation from Service. To the extent the portion of the Severance Pay Benefit to which such Participant would otherwise be entitled under Section V(a) during the deferral period under Section V(d) exceeds the foregoing dollar limitation, such excess shall be paid in a lump sum upon the expiration of that deferral period, in accordance with the payment delay provisions of Section V(d), and the remainder of the Severance Pay Benefit (if any) shall be paid in accordance with the schedule described in Section V(a). In no event, however, shall this Section V(e) be applicable to any Severance Pay Benefit (or any portion thereof) which does not qualify as an involuntary separation pay plan under Section 1.409A-(b)(9)(iii) of the Treasury Regulations.


(f)	Section V(d) shall not apply to the lump sum prepayment of COBRA Coverage Costs under Appendix A through D to the extent the dollar amount of that prepayment does not exceed the applicable dollar amount in effect under Section 402(g)(1)(B) of the Code for the calendar year in which the Participant's Separation form Service occurs.


(g)	Notwithstanding any other provision of the Plan to the contrary, no distribution shall be made from the Plan that would constitute an impermissible acceleration of payment as defined in Section 409A(3) of the Code and the Treasury Regulations thereunder.


(h)	No interest shall be paid on a Severance Pay Benefit required to be deferred in accordance with the foregoing.


VI.	DEATH OF A PARTICIPANT

If a Participant dies after qualifying for a Severance Pay Benefit but before such benefit is completely paid, the balance of the Severance Pay Benefit shall be paid in a lump sum to the Participant's Beneficiary not later than the later of (i) December 31 of the year in which the Participant's death occurred or (ii) the fifteenth (15th) day of the third (3rd) calendar month following the date of the Participant's death.


VII.	AMENDMENT AND TERMINATION


(a)	General Rule.

Although the Company expects to continue the Plan indefinitely, inasmuch as future conditions cannot be foreseen, (subject to Sections VII(b) and (c)) the Company reserves the right to amend or terminate the Plan at any time by action of its Board of Directors or by action of a committee or individual(s) acting pursuant to a valid delegation of authority of the Board of Directors. However, no amendment or termination shall adversely affect the right of a Participant who incurs a Separation from Service prior to the date of such amendment or termination to:


(i)	receive the unpaid balance of any Severance Pay Benefit that has become payable in accordance with the foregoing provisions of the Plan, with such balance to be paid in accordance with the provisions of the Plan in effect immediately prior to such amendment or termination; or


(ii)	qualify for a Severance Pay Benefit upon the timely execution and delivery of the requisite

Release after the date of such amendment or termination.


(b)	Restrictions on Amendments.

Notwithstanding Section VII(a) of the Plan, and except to the extent required to comply with applicable law, no termination of the Plan and no amendment described below shall be effective if adopted within six months before or at any time after the public announcement of an event or proposed transaction which would constitute a Change in Control (as such term is defined prior to such amendment); provided, however, that such an amendment or termination of the Plan may be effected, even if adopted after such a public announcement, if (a) the amendment or termination is adopted after any plans have been abandoned to cause the event or effect the transaction which, if effected, would have constituted the Change in Control, and the event which would have constituted the Change in Control has not occurred, and (b) within a period of six months after such adoption, no other event constituting a Change in Control has occurred, and no public announcement of a proposed transaction which would constitute a Change in Control has been made, unless thereafter any plans to effect the Change in Control have been abandoned and the event which would have constituted the Change in Control has not occurred.

The amendments prohibited by this Section VII(b) include any amendment which is executed (or would otherwise become effective) at the request of a third party who effectuates a Change in Control or any amendment which, if adopted and given effect would:


(i)	For any individual who is an Eligible Employee as of the Change in Control, deprive such individual of coverage under the Plan as in effect at the time of such amendment;


(ii)	Limit eligibility for or reduce the amount of any Severance Pay Benefit; or


(iii)	Amend Section VII, IX, or the definitions of the terms “Change in Control” or “Successors and Assigns” in Section XVII of the Plan.

No person shall take any action that would directly or indirectly have the same effect as any of the prohibited amendments or termination described in this Section VII(b).

Under no circumstances shall any amendment or termination of the Plan affect or modify the payment schedule in effect for a Participant's Severance Pay Benefit in a manner which would otherwise result in an impermissible acceleration or deferral of that payment schedule under Code Section 409A.

(d) Amendments to Comply with Section 409A of the Code.

Notwithstanding any provision of Section VII to the contrary, the Company reserves the right, to the extent the Company deems necessary or advisable in its sole discretion, to unilaterally amend or modify this Plan as may be necessary to ensure the Severance Pay Benefits provided under this Plan are made in a manner that qualifies for exemption from, or otherwise complies with, Section 409A of the Code; provided, however, that the Company makes no representation that the Severance Pay Benefit provided under this Plan will be exempt from or comply with Section 409A of the Code and makes no undertaking to preclude Section 409A of the Code from applying to the Severance Pay Benefits provided under this Plan.

To the extent there is any ambiguity as to whether any provision of this Plan would otherwise

contravene one or more requirements or limitations of Code Section 409A applicable to the Plan, such provision shall be interpreted and applied in a manner that does not result in a violation of the applicable requirements or limitations of Code Section 409A and the Treasury Regulations thereunder.


VIII.	NON-ALIENATION OF BENEFITS

To the full extent permitted by law and except as expressly provided in the Plan, no Severance Pay Benefit shall be subject to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void.


IX.	SUCCESSORS AND ASSIGNS

The Plan shall be binding upon the Company, its Successors and Assigns. Notwithstanding that the Plan may be binding upon such Successors and Assigns by operation of law, the Company shall require any Successor or Assign to expressly assume and agree to be bound by the Plan in the same manner and to the same extent that the Company would be if no succession or assignment had taken place.


X.	LEGAL CONSTRUCTION

This Plan is governed by and shall be construed in accordance with the Code and ERISA and, to the extent not preempted by ERISA, with the laws of the State of California.


XI.	ADMINISTRATION AND OPERATION OF THE PLAN


(a)	Plan Sponsor and Plan Administrator.

The Company is the “Plan Sponsor” and the “Plan Administrator” of the Plan as such terms are used in ERISA.


(b)	Administrative Power and Responsibility.

The Company in its capacity as Plan Administrator of the Plan is the named fiduciary that has the authority to control and manage the operation and administration of the Plan. The Company shall make such rules, regulations, interpretations, and computations and shall take such other action to administer the Plan as it may deem appropriate. The Company shall have the sole discretion to interpret the provisions of the Plan and to determine eligibility for benefits pursuant to the objective criteria set forth in the Plan. In administering the Plan, the Company shall at all times discharge its duties with respect to the Plan in accordance with the standards set forth in section 404(a)(l) of ERISA. The Company may engage the services of such persons or organizations to render advice or perform services with respect to its responsibilities under the Plan as it shall determine to be necessary or appropriate. Such persons or organizations may include (without limitation) actuaries, attorneys, accountants and consultants.


(c)	Review Panel.

Upon receipt of a request for review, the Company shall appoint a Review Panel that shall consist of three or more individuals. The Review Panel shall be the named fiduciary that shall have authority to act with respect to appeals from denial of benefits under the Plan.


(d)	Service in More Than One Fiduciary Capacity.

Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan.


(e)	Performance of Responsibilities.

The responsibilities of the Company under the Plan shall be carried out on its behalf by its officers, employees, and agents. The Company may delegate any of its fiduciary responsibilities under the Plan to another person or persons pursuant to a written instrument that specifies the fiduciary responsibilities so delegated to each such person.


(f)	Employee Communications and Other Plan Activities.

In communications with its employees and in any other activities relating to the Plan, the Company shall comply with the rules, regulations, interpretations, computations, and instructions that were issued to administer the Plan. With respect to matters relating to the Plan, directors, officers, and employees of the Company shall act on behalf or in the name of the Company in their capacity as directors, officers, and employees and not as individual fiduciaries.


XII.	CLAIMS, INQUIRIES AND APPEALS


(a)	Claims for Benefits and Inquiries.

All claims for benefits and all inquiries concerning the Plan or present or future rights to benefits under the Plan, shall be submitted to the Plan Administrator in writing and addressed as follows: “Gilead Sciences, Inc., Plan Administrator under the Gilead Sciences, Inc. Severance Plan, 333 Lakeside Drive, Foster City, CA 94404 ” or such other location as communicated to the Participant. A claim for benefits shall be signed by the Participant, or if a Participant is deceased, by such Participant's spouse or registered domestic partner, designated beneficiary or estate, as the case may be.


(b)	Denials of Claims.

In the event that any claim for benefits is denied, in whole or in part, the Plan Administrator shall notify the claimant in writing of such denial and of the right to a review thereof. Such written notice shall set forth in a manner calculated to be understood by the claimant, specific reasons for such denial, specific references to the Plan provision on which such denial is based, a description of any information or material necessary to perfect the claim, an explanation of why such material is necessary, an explanation of the Plan's review procedure which includes information on how to appeal the denial and a statement regarding the claimant's right to bring a civil action under ERISA section 502(a) following an adverse benefit determination on review. Such written notice shall be given to the claimant within 90 days after the Plan Administrator receives the claim, unless special circumstances require an extension of time of up to an additional 90 days for processing the claim. If such an extension of time for processing is required, written notice of the extension shall be furnished to the claimant prior to the termination of the initial 90-day period. This notice of extension shall indicate the special circumstances requiring the extension of time and the date by which the Plan Administrator expects to render its decision on the claim for benefits. The claimant shall be permitted to appeal such denial in accordance with the Review Procedure set forth below.


(c)	Review Panel.

The Plan Administrator shall appoint a “Review Panel,” consisting of three or more individuals who

may (but need not) be employees of the Company. The Review Panel shall be the named fiduciary that has the authority to act with respect to any appeal from a denial of benefits.


(d)	Requests for a Review.

Any person whose claim for benefits is denied in whole or in part, or such person's duly authorized representative, may appeal from such denial by submitting a request for a review of the claim to the Review Panel within 60 days after receiving written notice of such denial from the Plan Administrator. A request for review shall be in writing and shall be addressed as follows: “Review Panel under the Gilead Sciences, Inc. Severance Plan, 333 Lakeside Drive, Foster City, CA 94404” or such other location as communicated to the Participant. A request for review shall set forth all of the grounds on which it is based, all facts in support of the request and any other matters that the claimant deems pertinent. As part of the review procedure, the claimant or the claimant's duly authorized representative may submit written comments, documents, records and other information related to the claim. The Review Panel will consider all comments, documents, records and other information submitted by the claimant or the claimant's duly authorized representative relating to the claim, without regard to whether such information was submitted or considered in the initial benefit determination. The claimant will be provided, upon request and free of charge, reasonable access to and copies of all documents, records or other information (all of which must not be privileged) relevant to the benefit claim. The Review Panel may require the claimant to submit such additional facts, documents or other material as it may deem necessary or appropriate in making its review.


(e)	Decision on Review.

The Review Panel shall act on each request for review and notify the claimant within 60 days after receipt thereof unless special circumstances require an extension of time, up to an additional 60 days, for processing the request. If such an extension for review is required, written notice of the extension shall be furnished to the claimant within the initial 60-day period. The Review Panel shall give prompt, written notice of its decision to the claimant and to the Plan Administrator. In the event that the Review Panel confirms the denial of the claim for benefits, in whole or in part, such notice shall set forth, in a manner calculated to be understood by the claimant, the specific reasons for such denial, specific references to the Plan provisions on which the decision is based, a statement that the claimant is entitled to receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the benefit claim, a statement describing any voluntary appeal procedures offered by the Plan and the claimant's right to obtain information about such procedures, and a statement informing the claimant of his or her right to bring a civil action under ERISA section 502(a).


(f)	Rules and Procedures.

The Review Panel shall establish such rules and procedures, consistent with the Plan and with ERISA, as it may deem necessary or appropriate in carrying out its responsibilities under this Section XII. The Review Panel may require a claimant who wishes to submit additional information in connection with an appeal from the denial of benefits to do so at the claimant's own expense.


(g)	Exhaustion of Remedies.

No legal action for benefits under the Plan shall be brought unless and until the claimant:


(i)	has submitted a written claim for benefits in accordance with Section XII(a);


(ii)	has been notified by the Plan Administrator that the claim is denied;


(iii)	has filed a written request for a review of the claim in accordance with Section XII(d); and


(iv)	has been notified in writing that the Review Panel has affirmed the denial of the claim.


XIII.	BASIS OF PAYMENTS TO AND FROM PLAN

All Severance Pay Benefits under the Plan shall be paid by the Company. The Plan shall be unfunded and benefits hereunder shall be paid only from the general assets of the Company.


XIV.	OTHER PLAN INFORMATION


(a)	Plan Identification Numbers.

The Employer Identification Number (EIN) assigned to the Plan Sponsor (Gilead Sciences, Inc.) by the Internal Revenue Service is 94-3047598. The Plan Number (PN) assigned to the Plan by the Plan Sponsor pursuant to instructions of the Internal Revenue Service is 508.


(b)	Ending Date of the Plan's Fiscal Year.

The date of the end of the year for the purpose of maintaining the Plan's fiscal records is December 31.


(c)	Agent for the Service of Legal Process.

The agent for the service of legal process with respect to the Plan is the Secretary of Gilead Sciences, Inc., 333 Lakeside Drive, Foster City, CA 94404. The service of legal process may also be made on the Plan by serving the Plan Administrator.


(d)	Plan Sponsor and Administrator.

The “Plan Sponsor” and the “Plan Administrator” of the Plan is Gilead Sciences, Inc., 333 Lakeside Drive, Foster City, CA 94404; 650-522-5800 or such other location as communicated to the Participant. The Plan Administrator is the named fiduciary charged with responsibility for administering the Plan.


XV.	STATEMENT OF ERISA RIGHTS

As a participant in this Plan (which is a welfare plan sponsored by the Company), you are entitled to the following rights and protection under ERISA:


(a)	Examine, without charge, at the Plan Administrator's office and at other specified locations such as work sites, all Plan documents, collective bargaining agreements and copies of all documents filed by the Plan with the U.S. Department of Labor and available at the Public Disclosure of the Employee Benefits Security Administration.


(b)	Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies.


(c)	In addition to creating rights for Plan Participants, ERISA imposes duties upon the people responsible for the operation of the employee benefit Plan. The people who operate your Plan, called “fiduciaries”

of the Plan, have a duty to do so prudently and in the interest of you and other Plan Participants and Beneficiaries.

(d)

No one, including your employer, your union, nor any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA. If your claim for a Plan benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the claim reviewed and reconsidered.

(e)

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that the Plan fiduciaries misuse the Plan's money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

(f)

If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Labor, listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration.


XVI.	AVAILABILITY OF PLAN DOCUMENTS FOR EXAMINATION

ERISA requires Gilead Sciences, Inc., as the Plan Administrator of a benefit plan sponsored by the Company, to make available for your examination the Plan documents under which the Plan is established and operated.

The pertinent Plan documents include official Plan texts and any other documents under which the Plan is established or operated, and applicable collective bargaining agreements.

These Plan documents are available for your examination at the Plan Administrator's office, 333 Lakeside Drive, Foster City, CA 94404, and at certain other locations such as the Company's Human Resources offices.


XVII.	DEFINITIONS


(a)	“Affiliate” means a member of the Affiliated Group other than Gilead Sciences, Inc. and any Subsidiary.


(b)	“Affiliated Group” means the Company and each member of the group of commonly controlled corporations or other businesses that include the Company, as determined in accordance with Section 414(b) and (c) of the Code and the Treasury Regulations issued thereunder.

(c)

“Beneficiary” means the person or persons so designated by a Participant. A Participant may change or revoke a designation of a Beneficiary at any time. To be effective, any designation of a Beneficiary, or any change or revocation thereof, must be made in writing on the prescribed form and must be received by the Company (in a form acceptable to the Company) before the Participant's death. If a Participant fails to make a valid designation of a Beneficiary, or if the validly designated Beneficiary is not living when a payment is to be made to such Beneficiary hereunder, the Participant's Beneficiary shall be the Participant's spouse or registered domestic partner if then living or, if not, the Participant's estate.

(d)

“Buyer” means an entity that purchases (or has purchased) some or all of the Affiliated Group's interest applicable to the operation in which the Participant is employed, or an entity that is a direct or indirect successor in ownership or management of the operation in which the Participant is employed. Notwithstanding the above, Buyer shall not include the entity that effectuates a Change in Control.


(e)	“Change in Control” means an event which constitutes a change in control of the Company as defined in Section 2(i) of the Gilead Sciences, Inc. 2004 Equity Incentive Plan, as it may be amended from time to time or any successor to such provision.


(f)	“Code” means the Internal Revenue Code of 1986, as amended from time to time, and the regulations promulgated thereunder.


(g)	“Company” means Gilead Sciences, Inc. Where the context requires, “Company” also includes its Subsidiaries, and any of their Successors and Assigns.


(h)	“Continuous Service” means the sum of the following:


(i)	Any period of time during which a person qualifies as an Eligible Employee or, having once so qualified, is on a leave of absence with pay, a paid vacation or holiday or is receiving benefits under the Company's short-term disability plan; or;


(ii)	Any other period that constitutes Continuous Service under written rules or procedures adopted from time to time by the Company, subject to such terms and conditions as the Company may establish; and any period of time while employed by the Company's Successor or Assigns that that would have constituted Continuous Service if the service had been with the Company prior to the Change in Control.

If an Eligible Employee's Continuous Service is interrupted and the Eligible Employee subsequently returns to a status that constitutes Continuous Service, such prior Continuous Service shall be disregarded for all purposes of the Plan. However, should an Eligible Employee terminate employment under circumstances that do not result in his or her receipt of a Severance Pay Benefit under the Plan and such individual be reemployed by the Company (or any entity that is at the time a Subsidiary of the Company) within one year following his or her termination of Continuous Service without the receipt of a Severance Pay Benefit hereunder, then both his or her Continuous Service prior to such termination and the time period between the date of such termination and the date of such subsequent reemployment will be considered Continuous Service. An Eligible Employee whose termination of employment and concurrent cessation of Continuous Service results in his or her receipt of a Severance Pay Benefit under the Plan shall not, upon his or her subsequent re-employment by the Company (or any entity that is at the time a Subsidiary of the Company), be entitled to any Continuous Service credit for any prior period of employment or service with the Company or any

Subsidiary or for the bridge period between the period of such prior service and the date of his or her re-employment.


(i)	“Determination Date” means each December 31.

(j)

“Eligible Employee” means any common law employee on the U.S. dollar payroll of the Company or any Subsidiary who (i) is not on the payroll of a person other than the Company or such Subsidiary and is for any reason deemed by the Company or any Subsidiary to be a common law employee of the Company or such Subsidiary; (ii) is not considered by the Company or any Subsidiary in its sole discretion to be an independent contractor, regardless of whether the individual is in fact a common law employee of the Company or such Subsidiary; and (iii) who at the time of his or her Separation from Service with the Company or such Subsidiary is not on a Leave of Absence Without Pay. An individual's status as an Eligible Employee shall be determined by the Company in its sole discretion, and such determination shall be conclusively binding on all persons. Notwithstanding the foregoing, “Eligible Employee” does not include an employee or former employee of an entity the stock or assets of which are acquired by the Company or any Subsidiary, unless and until the Company's management determines that the Plan shall be applicable to such employees or former employees.

(k)

“Employer Group” means the Company and each other member of the group of commonly controlled corporations or other businesses that include the Company, as determined in accordance with Sections 414(b) and (c) of the Code and the Treasury Regulations thereunder, except that in applying Sections 1563(1), (2) and (3) of the Code for purposes of determining the controlled group of corporations under Section 414(b), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in such sections, and in applying Section 1.414(c)-2 of the Treasury Regulations for purposes of determining trades or businesses that are under common control for purposes of Section 414(c), the phrase “at least 50 percent” shall be used instead of “at least 80 percent” each place the latter phrase appears in Section 1.414(c)-2 of the Treasury Regulations.


(l)	“Employee” means an individual for so long as he or she is in the employ of at least one member of the Employer Group, subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance.


(m)	“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time-to-time.


(n)	“Family Leave” means a leave under the Company's family leave policy.


(o)	“Leave of Absence Without Pay” means a leave of absence without pay under the Company's leave of absence policy.


(p)	“Outsourcing Supplier” means an entity to whom the Company outsources a function performed by Eligible Employees where the Company agrees with such entity in the outsourcing agreement that it will offer jobs to current Eligible Employees performing that function for the Company.


(q)	“Participant” means any Eligible Employee who has commenced participation in the Plan pursuant to Section II and whose participation has not terminated pursuant to Section III.


(r)	“Plan” means the Gilead Sciences, Inc. Severance Plan.


(s)	“Plan Administrator” means the Company.

(t)

“Regular Earnings” means straight-time wages or salary paid to a Participant by any entity within the Employer Group for working a regular work schedule or for a leave of absence with pay, and shall include any amount that is contributed to any employee benefit plan on behalf of the Participant by any entity within the Employer Group under a salary reduction agreement entered into pursuant to such plan and that is excluded from the Participant's gross income under section 125, 132(f), or 402(g) of the Code.

(u)

“Release” means a Release in the form prescribed by the Company in its sole discretion, pursuant to which the Participant shall waive all employment-related claims in connection with his or her employment with the Employer Group and the termination of that employment, other than claims for benefits under the actual terms of an employee benefit plan and worker's compensation. For employees subject to the Age Discrimination in Employment Act, such Release shall be structured so as to comply with the requirements of the Older Workers' Benefit Protection Act, 29 U.S.C. § 626(f). The form of Release may vary among categories of employees and from employee to employee within any category of employees.


(v)	“Severance Pay Benefit” means a benefit provided by the Plan, as determined pursuant to Section IV.


(w)	“Specified Employee” shall mean a “key employee” (within the meaning of that term under Code Section 416(i)). Effective as of January 1, 2005, a Specified Employee is an Eligible Employee who, at any time during the twelve (12)-month period ending with the applicable Determination Date, is:

(i)

An officer of the Company or any other member of the Affiliated Group having aggregate annual compensation from the Company and/or one or more other members of the Affiliated Group greater than the compensation limit in effect at the time under Section 416(i)(1)(A)(i) of the Code, provided that no more than fifty officers of the Company shall be determined to be Specified Employees as of any Determination Date;


(ii)	A five percent owner of the Company or any other member of the Affiliated Group; or


(iii)	A one percent owner of the Company or any other member of the Affiliated Group who has aggregate annual compensation from the Company and/or one or more other members of the Affiliated Group of more than $150,000.

If an Eligible Employee is determined to be a Specified Employee on a Determination Date, then such Eligible Employee shall be considered a Specified Employee for purposes of the Plan during the period beginning on the first April 1 following the Determination Date and ending on the next March 31.

For purposes of determining an officer's compensation when identifying Specified Employees, compensation is defined in accordance with Treas. Reg. §1.415(c)-2(a), without applying any safe harbor, special timing or other special rules described in Treas. Reg. §§ 1.415(c)-2(d), 2(e) and 2(g).


(x)	“Subsidiary” means any corporation with respect to which Gilead Sciences, Inc., one or more Subsidiaries, or Gilead Sciences, Inc., together with one or more Subsidiaries, own not less than 80% of the total combined voting power of all classes of stock entitled to vote, or not less than 80% of the total value of all shares of all outstanding classes of stock.


(y)	“Successors and Assigns” means a corporation or other entity acquiring all or substantially all the assets and business of the Company (including the Plan) whether by operation of law or otherwise.


(z)	“Separation from Service” means the Participant's cessation of Employee status. For purposes of the Plan, a Separation from Service shall be determined in accordance with the following standards:

A Separation from Service will not be deemed to have occurred if the Participant continues to provide services to one or more members of the Employer Group (whether as a common-law employee or non-employee consultant or contractor) at an annual rate that amounts to 50% or more of the services rendered, on average, during the immediately preceding 36-months of employment with the Employer Group (or if employed by the Employer Group less than 36 months, such lesser period).

A Separation from Service will be deemed to have occurred if the Participant's service with the Employer Group (whether as a common-law employee or non-employee consultant or contractor) is permanently reduced to an annual rate that amounts to 20% or less of the services rendered, on average, during the immediately preceding 36 months of employment with the Employer Group (or if employed by the Employer Group less than 36 months, such lesser period).

If such services are permanently reduced to more than 20% but less than 50% of the average over the prior 36 months (or lesser period), a Separation from Service may be deemed to occur based on the facts and circumstances, including, but not limited to, whether the Participant is treated as an employee for other purposes, such as participation in employee benefit programs, and whether the Participant is able to perform services for other unrelated entities.

In addition to the foregoing, a Separation from Service will not be deemed to have occurred while the Participant is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months or any longer period for which such Participant's right to reemployment with one or more members of the Employer Group is provided either by statute or contract; provided, however, that in the event of a Participant's leave of absence due to any medically determinable physical or mental impairment that can be expected to result in death or to last for a continuous period of not less than six (6) months and that causes such individual to be unable to perform his or her duties as an Employee, no Separation from Service shall be deemed to occur during the first twenty-nine (29) months of such leave. If the period of leave exceeds six (6) months (or twenty-nine (29) months in the event of disability as indicated above) and the Participant's right to reemployment is not provided either by statute or contract, then such Participant will be deemed to have a Separation from Service on the first day immediately following the expiration of such six (6)-month or twenty-nine (29)-month period.

This definition of Separation from Service shall not be interpreted as limiting the right of the Company or any other member of the Employer Group to terminate the employment of an individual while on military leave, sick leave or other bona fide leave of absence, to the extent permissible under applicable law.


(aa)	“2004 Equity Incentive Plan” means the Gilead Sciences, Inc. 2004 Equity Incentive Plan, as it may be amended from time to time or any successor to such provision.


(ab)	“Year of Continuous Service” means the number of days (as defined by the Company in written rules adopted by it from time to time) of Continuous Service, divided by 365. A Participant's Severance Pay Benefit calculation shall include both full and any partial Years of Continuous Service.


XVIII.	EXECUTION

The Company has caused its duly-authorized officer to execute the foregoing Plan as amended and restated effective as of January 1, 2012.

GILEAD SCIENCES, INC.

By: Kristen M. Metza

Senior Vice President, Human Resources

Date: ____________________, 2012

APPENDIX A

Chief Executive Officer

Severance Benefits


A.	Change in Control Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) in connection with a Separation from Service occurring either within the 24-month period following a Change in Control or within the applicable period, as specified in the definition thereof in Section 11(d) of the 2004 Equity Incentive Plan, that precedes such Change in Control (the “Change in Control Period”), the Severance Pay Benefit shall be:

Three times annual Regular Earnings plus three times the average of the actual bonuses paid to the Participant (or otherwise earned but deferred in whole in part) under the Company's annual bonus plan applicable to the Participant for the three fiscal years (or such fewer number of complete fiscal years of employment) immediately preceding the fiscal year in which the Participant's employment terminates.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in an amount equal to thirty-six (36) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. . Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1)of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such

withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


3.	Outplacement services for 12 months following the date of Separation from Service.

Subject to the limitation set forth in section A.5 of this Appendix A, an additional payment in an amount such that after payment by the Participant of all taxes (including, without limitation, any income and employment taxes and any interest and penalties imposed thereon) and the excise tax imposed on such additional payment pursuant to Section 4999 of the Code, there remains an amount equal to the excise tax imposed pursuant to Section 4999 of the Code on the Severance Pay Benefit and any other payment in the nature of compensation that constitutes a “parachute payment” under Section 280G of the Code (the “Excise Tax”). All calculations required pursuant to this provision shall be performed by an independent registered public company accounting firm retained by the Company for such purpose and shall be based on information supplied by the Company and the Participant. For any parachute payments occurring at the time of the Change in Control, the relevant calculations shall be completed within ten (10) business days after the effective date of such Change in Control, and for any parachute payments attributable to the Participant's Separation from Service, the calculations shall be completed within ten (10) business days after the effective date of such Separation from Service. Such calculations shall be conclusive and binding on all interested persons. The additional payment resulting from such calculations shall be made to the Participant within ten (10) business days following the completion of such calculations or (if later) at the time the related Excise Tax is remitted to the appropriate tax authorities. In the event that the Participant's actual Excise Tax liability is determined by a Final Determination to be greater than the Excise Tax liability taken into account for purposes of the additional payment initially made to the Participant pursuant to the preceding provisions of this section A.4, then within forty-five (45) days following that Final Determination, the Participant shall notify the Company of such determination, and a new Excise Tax calculation based upon that Final Determination shall be made within the next forty-five (45) days. The Company shall make a supplemental tax gross up payment (as calculated in the same manner as the initial payment hereunder) to the Participant attributable to that excess Excise Tax liability within ten (10) business days following the completion of the applicable calculations or (if later) at the time such excess tax liability is remitted to the appropriate tax authorities. In the event that the Participant's actual Excise Tax liability is determined by a Final Determination to be less than the Excise Tax liability taken into account for purposes of the additional payment made to him or her pursuant to the preceding provisions of this section A.4, then the Participant shall refund to the Company, promptly upon receipt, any federal or state tax refund attributable to the Excise Tax overpayment. For purposes of this section A.4, a “Final Determination” means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Participant and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Participant and the Company concur or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed. Notwithstanding anything to the contrary in the foregoing, the additional payment and any supplemental payments under this section A.4 shall be subject to the hold-back provisions of Section V(d) of the Plan, to the extent those payments relate to any amounts and benefits provided hereunder that constitute parachute payments attributable to the Participant's Separation from Service. In addition, such additional payment and any supplemental payments

shall in no event be made later than the end of the calendar year that follows the calendar year in which the related taxes are remitted to the appropriate tax authorities, or such other specified time or schedule that may be permitted under Section 409A of the Code.

A Participant shall only be eligible for the additional payments provided by section A.4 above, if such Participant is, as of January 28, 2010, employed in a position with the Company that is covered under Appendicies A through C to the Plan. If the Participant does not meet such eligibility standard, then any Severance Pay Benefit to which he or she becomes entitled under the Plan as a result of a Separation from Service during the Change in Control Period, together with any other payment in the nature of compensation to which he or she may become entitled that constitutes a “parachute payment” under Section 280G of the Code, shall be subject to the following limitation (the “Benefit Limitation”):

a. If the parachute value of the Severance Pay Benefit and the other payments, as calculated in accordance with the parachute payment determination and valuation provisions of Section 280G of the Code and the applicable Treasury Regulations thereunder, does not exceed in the aggregate 110% of the safe harbor amount allowable under Section 280G of the Code without triggering a parachute payment under Section 280G(b)(2)(A) of the Code (the “Safe Harbor Amount”), then the aggregate amount of the Severance Pay Benefit and such other payments shall be reduced to the extent (if any) necessary to assure that they do not exceed the Safe Harbor Amount.

b. If the parachute value of the Severance Pay Benefit and the other payments, as calculated in accordance with the parachute payment determination and valuation provisions of Section 280G of the Code and the applicable Treasury Regulations thereunder, exceeds in the aggregate 110% of the Safe Harbor Amount, then the Severance Pay Benefit and any other amounts in the nature of a parachute payment under Code Section 280G payable to the Participant shall be limited to the greater of (x) the Safe Harbor Amount or (y) the amount that yields the Participant the greatest after-tax aggregate amount of such Severance Pay Benefit and other payments due the Participant after taking into account any excise tax imposed on those amounts under Code Section 4999.

c. All calculations required under this section A.5 shall be made by an independent registered public accounting firm (the “ Auditor ”) selected by the Company, and the fees of such Auditor shall be paid by the Company. Unless the Participant agrees otherwise in writing, the Auditor selected by the Company shall be a nationally recognized United States registered public accounting firm that has not during the two years preceding the date of its selection, acted in any way on behalf of the Company. The required calculations shall be provided to the Participant and the Company within ten (10) business days following the Participant's Separation from Service during the Change in Control Period under circumstances entitling the Participant to a Severance Pay Benefit under the Plan and within ten (10) days following the occurrence of any other event triggering a parachute payment for the Participant.

d. If a reduction in the payments or benefits constituting a parachute payment under Code Section 280G is required pursuant to the Benefit Limitation imposed under this section A.5, then such reduction shall be effected in the following order: first, the Participant's salary and bonus continuation payments under section A.1 of this Appendix A to the Plan shall be reduced (with such reduction to be applied pro-rata to each such payment and without any change to the payment dates), then the amount of the Participant's Lump Sum Health Care

Payment shall be reduced, and finally any accelerated vesting of the Participant's equity awards under one or more of the Company's stock compensation plans, including (without limitation) the 2004 Equity Incentive Plan and any predecessor plans, shall be reduced (based on the amount of the parachute payment calculated for each such award in accordance with the Treasury Regulations under Code Section 280G), with such reduction to occur in the same chronological order in which those awards were made.


B.	Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) after completion of six or more months of Continuous Service in connection with a subsequent Separation from Service occurring at any time other than within the Change in Control Period as defined in paragraph A of the Appendix A, then the Severance Pay Benefit shall be:

Two times annual Regular Earnings plus two times the average of the actual bonuses paid to the Participant (or otherwise earned but deferred in whole in part) under the Company's annual bonus plan applicable to the Participant for the three fiscal years (or such fewer number of complete fiscal years of employment) immediately preceding the fiscal year in which the Participant's employment terminates.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in an amount equal to twenty-four (24) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant

shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


3.	Outplacement services for 12 months following the date of Separation from Service.

APPENDIX B

Executive Vice President and

Senior Vice President

Severance Benefits


A.	Change in Control Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) in connection with a Separation from Service occurring either within the 18-month period following a Change in Control or within the applicable period, as specified in the definition thereof in Section 11(d) of the 2004 Equity Incentive Plan, that precedes such Change in Control (the “Change in Control Period”), the Severance Pay Benefit shall be:

2.5 times annual Regular Earnings, plus 2.5 times the average of the actual bonuses paid to the Participant (or otherwise earned but deferred in whole in part) under the Company's annual bonus plan applicable to the Participant for the three fiscal years (or such fewer number of complete fiscal years of employment) immediately preceding the fiscal year in which the Participant's employment terminates.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in an amount equal to thirty (30) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant


3.	Outplacement services for 6 months following the date of Separation from Service.

Subject to the limitation set forth in section A.5 of this Appendix B, an additional payment in an amount such that after payment by the Participant of all taxes (including, without limitation, any income and employment taxes and any interest and penalties imposed thereon) and the excise tax imposed on such additional payment pursuant to Section 4999 of the Code, there remains an amount equal to the excise tax imposed pursuant to Section 4999 of the Code on the Severance Pay Benefit and any other payment in the nature of compensation that constitutes a “parachute payment” under Section 280G of the Code (the “Excise Tax”). All calculations required pursuant to this provision shall be performed by an independent registered public company accounting firm retained by the Company for such purpose and shall be based on information supplied by the Company and the Participant. For any parachute payments occurring at the time of the Change in Control, the relevant calculations shall be completed within ten (10) business days after the effective date of such Change in Control, and for any parachute payments attributable to the Participant's Separation from Service, the calculations shall be completed within ten (10) business days after the effective date of such Separation from Service. Such calculations shall be conclusive and binding on all interested persons. The additional payment resulting from such calculations shall be made to the Participant within ten (10) business days following the completion of such calculations or (if later) at the time the related Excise Tax is remitted to the appropriate tax authorities. In the event that the Participant's actual Excise Tax liability is determined by a Final Determination to be greater than the Excise Tax liability taken into account for purposes of the additional payment initially made to the Participant pursuant to the preceding provisions of this section A.4, then within forty-five (45) days following that Final Determination, the Participant shall notify the Company of such determination, and a new Excise Tax calculation based upon that Final Determination shall be made within the next forty-five (45) days. The Company shall make a supplemental tax gross up payment (as calculated in the same manner as the initial payment hereunder) to the Participant attributable to that excess Excise Tax liability within ten (10) business days following the completion of the applicable calculations or (if later) at the time such excess tax liability is remitted to the appropriate tax authorities. In the event that the Participant's actual Excise Tax liability is determined by a Final Determination to be less than the Excise Tax liability taken into account for purposes of the additional payment made to him or her pursuant to the preceding provisions of this section A.4, then the Participant shall refund to the Company, promptly upon receipt, any federal or state tax refund attributable to the Excise Tax overpayment. For purposes of this section A.4, a “Final Determination” means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Participant and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Participant and the Company concur or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed. Notwithstanding anything to the contrary in the foregoing, the additional payment and any supplemental payments under this section A.4 shall be subject to the hold-back provisions of Section V(d) of the Plan, to the extent those payments relate to any amounts and benefits provided hereunder that constitute parachute payments attributable to the Participant's

Separation from Service. In addition, such additional payment and any supplemental payments shall in no event be made later than the end of the calendar year that follows the calendar year in which the related taxes are remitted to the appropriate tax authorities, or such other specified time or schedule that may be permitted under Section 409A of the Code.

A Participant shall only be eligible for the additional payments provided by section A.4 above, if such Participant is, as of January 28, 2010, employed in a position with the Company that is covered under Appendicies A through C to the Plan. If the Participant does not meet such eligibility standard, then any Severance Pay Benefit to which he or she becomes entitled under the Plan as a result of a Separation from Service during the Change in Control Period, together with any other payments in the nature of compensation to which he or she may become entitled that constitute a “parachute payment” under Section 280G of the Code, shall be subject to the following limitation (the “Benefit Limitation”):

d. If a reduction in the payments or benefits constituting a parachute payment under Code Section 280G is required pursuant to the Benefit Limitation imposed under this section A.5, then such reduction shall be effected in the following order: first, the Participant's salary and bonus continuation payments under section A.1 of this Appendix B to the Plan shall be reduced (with such reduction to be applied pro-rata to each such payment and without

any change to the payment dates), then the amount of the Participant's Lump Sum Health Care Payment shall be reduced, and finally any accelerated vesting of the Participant's equity awards under one or more of the Company's stock compensation plans, including (without limitation) the 2004 Equity Incentive Plan and any predecessor plans, shall be reduced (based on the amount of the parachute payment calculated for each such award in accordance with the Treasury Regulations under Code Section 280G), with such reduction to occur in the same chronological order in which those awards were made.


B.	Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) after completion of six or more months of Continuous Service in connection with a subsequent Separation from Service occurring at any time other than within the Change in Control Period as defined in paragraph A of this Appendix B, then the Severance Pay Benefit shall be:

1.5 times annual Regular Earnings plus 1.0 times the average of the actual bonuses paid to the Participant (or otherwise earned but deferred in whole in part) under the Company's annual bonus plan applicable to the Participant for the three fiscal years (or such fewer number of complete fiscal years of employment) immediately preceding the fiscal year in which the Participant's employment terminates.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in an amount equal to eighteen (18) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant


3.	Outplacement services for 6 months following the date of Separation from Service.

APPENDIX C

Vice President and Senior Advisor

Severance Benefits


A.	Change in Control Severance Pay Benefit - For All Vice Presidents and Senior Advisors.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) in connection with a Separation from Service occurring either within the 12-month period following a Change in Control or within the applicable period, as specified in the definition thereof in Section 11(d) of the 2004 Equity Incentive Plan, that precedes such Change in Control (the “Change in Control Period”), the Severance Pay Benefit shall be:

1.5 times annual Regular Earnings, plus 1.5 times the average of the actual bonuses paid to the Participant (or otherwise earned but deferred in whole in part) under the Company's annual bonus plan applicable to the Participant for the three fiscal years (or such fewer number of complete fiscal years of employment) immediately preceding the fiscal year in which the Participant's employment terminates.


3.	Outplacement services for 6 months following the date of Separation from Service.

Subject to the limitation set forth in section A.5 of this Appendix C, an additional payment in an amount such that after payment by the Participant of all taxes (including, without limitation, any income and employment taxes and any interest and penalties imposed thereon) and the excise tax imposed on such additional payment pursuant to Section 4999 of the Code, there remains an amount equal to the excise tax imposed pursuant to Section 4999 of the Code on the Severance Pay Benefit and any other payment in the nature of compensation that constitutes a “parachute payment” under Section 280G of the Code (the “Excise Tax”). All calculations required pursuant to this provision shall be performed by an independent registered public company accounting firm retained by the Company for such purpose and shall be based on information supplied by the Company and the Participant. For any parachute payments occurring at the time of the Change in Control, the relevant calculations shall be completed within ten (10) business days after the effective date of such Change in Control, and for any parachute payments attributable to the Participant's Separation from Service, the calculations shall be completed within ten (10) business days after the effective date of such Separation from Service. Such calculations shall be conclusive and binding on all interested persons. The additional payment resulting from such calculations shall be made to the Participant within ten (10) business days following the completion of such calculations or (if later) at the time the related Excise Tax is remitted to the appropriate tax authorities. In the event that the Participant's actual Excise Tax liability is determined by a Final Determination to be greater than the Excise Tax liability taken into account for purposes of the additional payment initially made to the Participant pursuant to the preceding provisions of this section A.4, then within forty-five (45) days following that Final Determination, the Participant shall notify the Company of such determination, and a new Excise Tax calculation based upon that Final Determination shall be made within the next forty-five (45) days. The Company shall make a supplemental tax gross up payment (as calculated in the same manner as the initial payment hereunder) to the Participant attributable to that excess Excise Tax liability within ten (10) business days following the completion of the applicable calculations or (if later) at the time such excess tax liability is remitted to the appropriate tax authorities. In the event that the Participant's actual Excise Tax liability is determined by a Final Determination to be less than the Excise Tax liability taken into account for purposes of the additional payment made to him or her pursuant to the preceding provisions of this section A.4, then the Participant shall refund to the Company, promptly upon receipt, any federal or state tax refund attributable to the Excise Tax overpayment. For purposes of this section A.4, a “Final Determination” means an audit adjustment by the Internal Revenue Service that is either (i) agreed to by both the Participant and the Company (such agreement by the Company to be not unreasonably withheld) or (ii) sustained by a court of competent jurisdiction in a decision with which the Participant and the Company concur or with respect to which the period within which an appeal may be filed has lapsed without a notice of appeal being filed. Notwithstanding anything to the contrary in the foregoing, the additional payment and any supplemental payments under this section A.4 shall be subject to the hold-back provisions of Section V(d) of the Plan, to the extent those payments relate to any amounts and benefits provided hereunder that constitute parachute payments attributable to the Participant's Separation from Service. In addition, such additional payment and any supplemental payments

d. If a reduction in the payments or benefits constituting a parachute payment under Code Section 280G is required pursuant to the Benefit Limitation imposed under this section A.5, then such reduction shall be effected in the following order: first, the Participant's salary and bonus continuation payments under section A.1 of this Appendix C to the Plan shall be reduced (with such reduction to be applied pro-rata to each such payment and without any change to the payment dates), then the amount of the Participant's Lump Sum Health

Care Payment shall be reduced, and finally any accelerated vesting of the Participant's equity awards under one or more of the Company's stock compensation plans, including (without limitation) the 2004 Equity Incentive Plan and any predecessor plans, shall be reduced (based on the amount of the parachute payment calculated for each such award in accordance with the Treasury Regulations under Code Section 280G), with such reduction to occur in the same chronological order in which those awards were made.


B.	Severance Pay Benefit for Vice Presidents with at least Six Months of Continuous Service.

For Vice Presidents who have completed six or more months of Continuous Service at the time they become eligible for a severance benefit under Section IV (a)(i), if the Severance Pay Benefit becomes payable in connection with a Separation from Service occurring at any time other than the Change in Control Period as defined in paragraph A of this Appendix C, then the Severance Pay Benefit shall be:


1.	1.0 times annual Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in an amount equal to twelve (12) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


3.	Outplacement services for 6 months following the date of Separation from Service.


C.	Severance Pay Benefit for Vice Presidents with less than Six Months of Continuous Service.

For Vice Presidents who have not completed six or more months of Continuous Service but are otherwise eligible for a severance benefit under Section IV(a)(i), if the Severance Pay Benefit becomes payable in connection with a Separation from Service occurring at any time other than the Change in Control Period as defined in paragraph A of this Appendix C, then the Severance Pay Benefit shall be:


1.	4 months of Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in an amount equal to four (4) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump

Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


3.	Outplacement services for 1 month following the date of Separation from Service.

Senior Advisors shall not be entitled to any benefits under Sections B and C of this Appendix C.

APPENDIX D

Severance Benefits for Eligible Employees

other than Chief Executive Officer,

Executive Vice President, Senior Vice President,

Vice President and Senior Advisor

This Appendix is effective for covered individuals who cease Employee status on or after May 8, 2007, unless they have a pre-existing contract providing a different level of severance pay.


A.	Change in Control Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) in connection with a Separation from Service occurring within the 12-month period following a Change in Control (the “Change in Control Period”), then regardless of the period of Continuous Service the Severance Pay Benefit shall be:


1.	Eligible Employees in Grades 31 through 34:


a.	Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 52 weeks of Regular Earnings and a minimum of 22 weeks of Regular Earnings.

from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


c.	Outplacement services for 6 months following the date of Separation from Service.


2.	Eligible Employees in Grades 25 through 30:


a.	Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 39 weeks of Regular Earnings and a minimum of 13 weeks of Regular Earnings.

A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph A.2.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant's termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred

payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


c.	Outplacement services for 3 months following the date of Separation from Service.


3.	Eligible Employees in Grades 21 through 24:


a.	Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 26 weeks of Regular Earnings and a minimum of 9 weeks of Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph A.3.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant's termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's

collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


c.	Outplacement services for 1week following the date of Separation from Service.


B.	General Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) after completion of six or more months of Continuous Service in connection with a subsequent Separation from Service occurring at any time other than within the Change in Control Period as defined in paragraph A of this Appendix D, then the Severance Pay Benefit shall be:


1.	Eligible Employees in Grades 31 through 34.


a.	Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 39 weeks of Regular Earnings and a minimum of 13 weeks of Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph B.1.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant's termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds

the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


c.	Outplacement services for 3 months following the date of Separation from Service.


1.	Eligible Employees in Grades 25 through 30:


a.	Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 39 weeks of Regular Earnings and a minimum of 13 weeks of Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph B.2.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant's termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only

the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


c.	Outplacement services for 3 months following the date of Separation from Service.


2.	Eligible Employees in Grades 21 through 24:


a.	Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 26 weeks of Regular Earnings and a minimum of 9 weeks of Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph B.3.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant's termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


c.	Outplacement services for 1 week following the date of Separation from Service.


C.	General Severance Pay Benefit Without Six Months of Continuous Service.

For Eligible Employees in Grades 21 through 34 who have not completed six or more months of Continuous Service but are eligible for a severance benefit under Section IV(a)(i), if the Severance Pay Benefit becomes payable in connection with a Separation from Service occurring at any time other than within the Change Control Period as defined in paragraph A of this Appendix D, then the Severance Pay Benefit shall be:


1.	4 weeks of Regular Earnings.

A lump sum cash payment (the “ Lump Sum Health Care Payment ”) in the amount equal to one (1) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company's employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant's termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant's former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant's Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant's Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant's Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company's collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company's group health care plan.


3.	Outplacement services for 1 week following the date of Separation from Service.

TABLE OF CONTENTS



I.	INTRODUCTION	1

II.	COMMENCEMENT OF PARTICIPATION	2

III.	TERMINATION OF PARTICIPATION	2

IV.	SEVERANCE PAY BENEFIT	3

V.	TIME AND FORM OF SEVERANCE PAY BENEFIT	6

VI.	DEATH OF A PARTICIPANT	8

VII.	AMENDMENT AND TERMINATION	8

VIII.	NON-ALIENATION OF BENEFITS	10

IX.	SUCCESSORS AND ASSIGNS	10

X.	LEGAL CONSTRUCTION	10

XI.	ADMINISTRATION AND OPERATION OF THE PLAN	10

XII.	CLAIMS, INQUIRIES AND APPEALS	12

XIII.	BASIS OF PAYMENTS TO AND FROM PLAN	14

XIV.	OTHER PLAN INFORMATION	14

XV.	STATEMENT OF ERISA RIGHTS	14

XVI.	AVAILABILITY OF PLAN DOCUMENTS FOR EXAMINATION	15

XVII.	DEFINITIONS	16

XVIII.	EXECUTION	21



APPENDIX A Chief Executive Officer Severance Benefits	22

APPENDIX B Executive Vice President and Senior Vice President Severance Benefits	28

APPENDIX C Vice President and Senior Advisor Severance Benefits	34

APPENDIX D Severance Benefits for Eligible Employees other than Chief Executive Officer, Executive Vice President, Senior Vice President, Vice President and Senior Advisor	37

Exhibit 31.1

CERTIFICATION

I, John C. Martin, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gilead Sciences, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2012

/s/ J OHN C. M ARTIN

John C. Martin, Ph.D.

Chairman and Chief Executive Officer

Exhibit 31.2

CERTIFICATION

I, Robin L. Washington, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gilead Sciences, Inc.;

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 4, 2012

/ S / R OBIN L. W ASHINGTON

Robin L. Washington

Senior Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATIONS

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350, as adopted), John C. Martin, Ph.D., the Chairman and Chief Executive Officer of Gilead Sciences, Inc. (the Company), and Robin L. Washington, the Senior Vice President and Chief Financial Officer of the Company, each hereby certifies that, to the best of his or her knowledge:

1. The Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2012 , to which this Certification is attached as Exhibit 32 (the Periodic Report), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Company at the end of the periods covered by the Periodic Report and results of operations of the Company for the periods covered by the Periodic Report.

Dated: May 4, 2012



/s/ J OHN C. M ARTIN		/s/ R OBIN L. W ASHINGTON
John C. Martin, Ph.D. Chairman and Chief Executive Officer		Robin L. Washington Senior Vice President and Chief Financial Officer

This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.