FINAL
| For Immediate Release April 16, 2003 | Media Contact: Bo Piela 617-252-7785 | Investor Contact: Sally Curley 617-591-7140 |
Genzyme General Reports 30 Percent Increase in First-Quarter Revenues
CAMBRIDGE, MA—Genzyme Corp. today announced first-quarter financial results for its Genzyme General division (Nasdaq: GENZ). Revenues for the quarter rose 30 percent to $314.0 million, compared to $242.1 million for the same period last year.
Reported net income allocated to Genzyme General stock was $61.9 million, or $.28 per diluted share, approximately double net income of $30.7 million, or $.14 per diluted share, recorded for the first quarter a year ago. Excluding amortization of $9.7 million, or $.03 per share, net income increased 49 percent to $68.0 million, or $.31 per diluted share, compared with $45.5 million, or $.21 per diluted share, prior to amortization and special items in the first quarter of last year.
The effective net tax rate allocated to Genzyme General in the first quarter was 26 percent, and was 27 percent excluding amortization. Genzyme General ended the first quarter with approximately $1.2 billion in cash and equivalents.
Selling, general and administrative expenses in the quarter were $85.2 million, in line with Genzyme's expectations and reflective of ongoing global activities to expand the markets for Fabrazyme® (agalsidase beta) and Renagel® (sevelamer hydrochloride).
"We had a very strong quarter and are pleased that all of our businesses are focused and moving forward," said Henri A. Termeer, chairman and chief executive officer of Genzyme Corporation. "Our Renagel franchise is on track, with end-user demand driving solid growth in product sales. We are also generating excellent growth and momentum within our therapeutics franchise, which we expect will continue with product launches in a number of major markets during the second half of this year."
Guidance Update
Earnings allocated to Genzyme General stock in the second quarter of 2003 are expected to be in the range of $.28-$.30 per diluted share. Excluding anticipated amortization of approximately $9.7 million, or $.03 per diluted share, taxed at the 36 percent corporate rate, earnings for the quarter are expected to be in the range of $.31-$.33 per share.
For the year, earnings allocated to Genzyme General stock are expected to be in the range of $1.14-$1.24 per diluted share. Genzyme General confirmed its full-year 2003 earnings guidance of $1.25-$1.35 per diluted share, excluding amortization of approximately $39 million, or $.11 per diluted share, taxed at the 36 percent corporate rate.
Genzyme General anticipates that it will end the year with approximately 221 million shares outstanding, including approximately 1.7 million new shares created during the second half of this year upon the exercise of long-term management retention stock options scheduled to expire on December 8, 2003, and January 7, 2004. These options were issued in 1993 and vest on June 30 of this year.
Business Update
First-quarter sales of Renagel® (sevelamer hydrochloride), a phosphate binder for patients with end-stage renal disease on hemodialysis, were $58.8 million, nearly double sales of $29.5 million recorded for the first quarter last year when Genzyme began its program to reduce product inventory at U.S. wholesalers. Included in this total is $3.0 million in sales of bulk sevelamer to Chugai
Pharmaceutical Co. Ltd. at margins well below finished product margins. Inventory levels at U.S. wholesalers remain at the 4-5 week level.
End-user demand for Renagel in the United States continues to be solid. In addition, the global introduction of Renagel is making good progress. During the first quarter, Genzyme obtained reimbursement approval for 800 mg Renagel tablets in France, the last major European market where this most popular form of the product was unavailable. It also began receiving orders from state governments in Brazil, one of the larger markets for the product outside the United States and Europe. In Japan, Renagel is scheduled for launch around the end of the second quarter. Chugai Pharmaceutical and Kirin Brewery Co. Ltd. are commercializing Renagel in Japan, and Genzyme will continue to sell them bulk sevelamer for tableting and will receive royalties on finished product sales.
On March 25, Genzyme began shipping Renagel tablets to the European market from its new cGMP manufacturing facility in Waterford, Ireland, following the approval of Renagel production at the plant by the European Medicines Evaluation Agency. The FDA is expected to approve Renagel production at the plant around mid-year.
Genzyme continues to support a range of clinical research in the field of renal disease. The largest study it is sponsoring is the Dialysis Clinical Outcomes Revisited (D-CORSM) trial, comparing morbidity and mortality outcomes for patients receiving Renagel and those receiving calcium-based phosphate binders. The protocol for this study, which began in November 2001, required an interim analysis by a data monitoring board composed of independent physicians and biostatisticians. This analysis was performed recently on the first twelve months of data. The board found that the study's aggregate mortality rate was lower than anticipated and, to increase the possibility of demonstrating a statistically significant difference in mortality between the trial's treatment groups, it recommended that Genzyme extend the duration of treatment from the end of 2003 to the end of 2004. Genzyme has accepted this recommendation and now anticipates reporting results from this study in mid-2005. No data was provided to Genzyme on either morbidity or mortality.
Sales of Cerezyme® (imiglucerase for injection), used in enzyme replacement therapy for patients with Type 1 Gaucher disease, grew 13 percent to $167.2 million, up from $148.1 million in the first quarter of last year. Genzyme continues to introduce Cerezyme in new markets throughout the world. It recently began selling the product in Russia, a potentially significant market given the size of the population.
Sales of Fabrazyme® (agalsidase beta), an enzyme replacement therapy for patients with Fabry disease, were $11.8 million in the first quarter, nearly three times greater than sales of $4.0 million in the same quarter a year ago. Fabrazyme is now approved in 27 countries. In the United States, Genzyme expects the FDA to take action on the biologics license application for Fabrazyme by April 24. The agency had previously identified April 23 as the PDUFA date for the submission, but recently corrected its error. In Japan, Genzyme expects to receive approval for Fabrazyme during the second half of this year.
Revenues from the sales of diagnostic products and services increased 16 percent to $47.7 million, compared to $41.0 million for same period a year ago. Genzyme's genetic testing business had a strong quarter, with 53 percent growth in cystic fibrosis testing volumes and 41 percent growth in overall DNA testing volumes. The unit introduced three new hematology/oncology cancer tests in the first quarter.
Revenues from other products and services—including Thyrogen® (thyrotropin alfa for injection), WelChol® (colesevelam hydrochloride) and pharmaceutical intermediates—rose 47 percent to $28.5 million in the first quarter, compared to $19.5 million for the same quarter last year.
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Near-Term Pipeline Update
Genzyme and partner BioMarin Pharmaceutical Inc. expect the FDA to take action on the biologics license application for Aldurazyme® (laronidase) by April 30, the official PDUFA date. They have submitted information related to post-marketing commitments and product labeling that the agency requested in its complete response letter of January 28. In addition, the inspection process for the Aldurazyme manufacturing facility has been completed. The companies are seeking to market Aldurazyme for the treatment of MPS I, a rare, progressive, and debilitating genetic disorder. They recently established a global patient registry as part of broad-ranging preparations in anticipation of product launch.
The companies expect European Commission action on their marketing application for Aldurazyme in the next two months, following the issuance of a positive opinion by the Committee for Proprietary Medicinal Products on February 21. The CPMP opinion, while not binding on the commission, is the final step before formal approval to market Aldurazyme in the 15 countries of the European Union can be granted.
Genzyme has begun patient enrollment in the first of two clinical studies planned for this year evaluating the use of its Myozyme™ recombinant human alpha-Glucosidase for Pompe disease. This study will include up to 16 children between the ages of six months and three years with the infantile-onset form of the disease, in which symptoms manifest themselves during the first year of life. A second study in infants less than six months of age is planned to begin this spring. Genzyme expects to complete enrollment in both studies this year, and plans to seek product registrations globally based on results from these trials and prior studies of enzyme replacement therapy for Pompe disease.
Genzyme General develops and markets therapeutic products and diagnostic products and services. Genzyme General has five therapeutic products on the market, and a strong pipeline of therapeutic products in development focused on the treatment of genetic disorders and other chronic debilitating diseases with well-defined patient populations. Genzyme General is a division of the biotechnology company Genzyme Corporation.
This press release contains forward-looking statements, including statements about: expectations concerning product launches; Genzyme General's anticipated financial results for the second quarter of 2003 and the full year, including earnings per share, amortization, tax rate, shares outstanding and stock option exercises; the expected timing of marketing approvals and launch of Renagel and Fabrazyme in Japan; the continued supply of bulk sevelamer to Chugai and Kirin and the anticipated receipt of royalties; the anticipated timing of FDA approval of Renagel production in facilities in Ireland; the expected timing of results from the DCOR trial and the anticipated impact of the extension of the trial; beliefs concerning the significance of certain product markets; the expected timing of regulatory responses or actions in the United States and Europe on marketing applications for Fabrazyme and Aldurazyme; the expected timing and design of clinical trials for Myozyme; and plans regarding regulatory submissions for Myozyme. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. These risks and uncertainties include, among others: Genzyme General's actual results of operations for the second quarter of 2003 and the full year; the accuracy of Genzyme General's expectations concerning Renagel wholesaler inventory levels; whether end-user growth of Renagel is achieved in a manner consistent with Genzyme General's assumptions; compliance levels with Renagel wholesaler inventory management arrangements; the accuracy of estimates concerning the payor mix for Renagel; the timing and impact of the publication of KDOQI guidelines; the ability to improve patient compliance and optimize dosing of Renagel; the actual timing and results of clinical trials, including the DCOR trial; the actual impact of the CPMP opinion regarding Aldurazyme on the final decision by the European Commission; the FDA's response to the additional information submitted pursuant to the complete response letter for Aldurazyme; the actual timing and content of
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submissions to and decisions made by regulatory authorities in the U.S., Europe and Japan regarding facilities and marketing applications for Fabrazyme, Aldurazyme, Renagel and other products; the impact, if any, of war and terrorist activities on the operations and activities of Genzyme Corporation and third parties, including regulatory authorities; the ability to manufacture sufficient quantities of products for development and commercialization activities and to do so in a timely and cost efficient manner; the scope, validity and enforceability of patents and other proprietary rights held by third parties and the actual impact of such patents and other rights, if any, on our ability to commercialize products; our ability to obtain and maintain agreements with sublicensees, distributors and fill/finish facilities; the continued operation and funding of our joint venture with BioMarin; the availability and extent of reimbursement from third-party payers for Genzyme General's products and services; the accuracy of Genzyme General's information concerning the markets for its products and services and the competitive environment; and the risks and uncertainties described in reports filed by Genzyme Corporation with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including without limitation Exhibit 99.2 to Genzyme's 2002 Annual Report on Form 10-K. Genzyme General Division common stock is a series of common stock of Genzyme Corporation. Therefore, holders of Genzyme General Division common stock are subject to all of the risks and uncertainties described in the those reports. We caution investors not to place undue reliance on the forward-looking statements contained in this press release. These statements speak only as of the date of this press release, and we undertake no obligation to update or revise the statements.
Genzyme®, Cerezyme®, Fabrazyme® and Thyrogen® are registered trademarks of Genzyme Corporation. Renagel® is a registered trademark and DCORSM is a service mark of GelTex Pharmaceuticals, Inc. Welchol™ is a trademark of Sankyo Pharma Inc. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. All rights reserved.
# # #
There will be a conference call today at 11:00 a.m. ET to discuss Genzyme General's first quarter financial results. If you would like to participate in the call, please dial 719-457-2642. A replay of this call will be available from 1:30 p.m. ET through midnight on April 23 by dialing 719-457-0820. Please refer to reservation number 202390. This call will also be webcast live at http://www.genzyme.com/corp/investors/events_home.asp
Genzyme Corp. will report second-quarter 2003 financial results on July 16 for its three divisions. If you would like to participate in any of these calls, please dial 719-457-2642 at 11:00 a.m. for Genzyme General, at 1:00 p.m. for Genzyme Molecular Oncology, and 3:00 p.m. for Genzyme Biosurgery. No passcode is necessary. Please refer to www.genzyme.com one week prior to the financial reporting date for any updates to this information. These calls will also be webcast live at http://www.genzyme.com/corp/investors/events_home.asp
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GENZYME GENERAL(A Division of Genzyme Corporation)
Combined Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)
| | Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | |||||||
| Total revenues | $ | 314,045 | $ | 242,147 | |||||
| Operating costs and expenses: | |||||||||
| Cost of products and services sold | 83,040 | 59,465 | |||||||
| Selling, general and administrative | 85,246 | 76,390 | |||||||
| Research and development | 56,329 | 63,836 | |||||||
| Amortization of intangibles | 9,736 | 9,718 | |||||||
| Total operating costs and expenses | 234,351 | 209,409 | |||||||
| Operating income | 79,694 | 32,738 | |||||||
| Other income (expenses): | |||||||||
| Equity in net loss of unconsolidated affiliates | (4,194 | ) | (4,094 | ) | |||||
| Gain on investments in equity securities | — | 166 | |||||||
| Other | 780 | (897 | ) | ||||||
| Investment income | 11,281 | 12,952 | |||||||
| Interest expense | (4,277 | ) | (4,541 | ) | |||||
| Total other income (expenses) | 3,590 | 3,586 | |||||||
| Income before income taxes | 83,284 | 36,324 | |||||||
| Provision for income taxes | (25,491 | ) | (12,015 | ) | |||||
| Division net income | 57,793 | 24,309 | |||||||
| Allocated tax benefits (1) | 4,085 | 6,429 | |||||||
| Net income allocated to Genzyme General Stock | $ | 61,878 | $ | 30,738 | |||||
| Net income per share of Genzyme General Stock: | |||||||||
| Basic | $ | 0.29 | $ | 0.14 | |||||
| Diluted (2) | $ | 0.28 | $ | 0.14 | |||||
| Weighted average shares outstanding: | |||||||||
| Basic | 215,091 | 213,332 | |||||||
| Diluted (2) | 220,432 | 221,064 | |||||||
Condensed Combined Balance Sheets
(Unaudited, amounts in thousands)
| | March 31, 2003 | December 31, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Cash and all marketable securities | $ | 1,205,571 | $ | 1,149,145 | |||
| Other current assets | 643,290 | 633,501 | |||||
| Property, plant and equipment, net | 779,199 | 749,840 | |||||
| Intangibles, net | 923,640 | 933,360 | |||||
| Other assets | 98,689 | 89,955 | |||||
| Total assets | $ | 3,650,389 | $ | 3,555,801 | |||
| Current liabilities | $ | 280,779 | $ | 274,872 | |||
| Noncurrent liabilities | 692,436 | 695,045 | |||||
| Division equity | 2,677,174 | 2,585,884 | |||||
| Total liabilities and division equity | $ | 3,650,389 | $ | 3,555,801 | |||
Genzyme General(A Division of Genzyme Corporation)
Analyst Schedule
(Unaudited, amounts in thousands, except percentage and per share amounts)
| | Q1-02 | Q2-02 | Q3-02 | Q4-02 | Q1-03 | Q1-03 vs. Q1-02 % B/(W) | FY 2001 | FY 2002 | YTD 3/31/03 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Product and service revenue: | |||||||||||||||||||||||||||||
| Cerezyme and Ceredase | $ | 148,066 | $ | 154,717 | $ | 157,471 | $ | 158,930 | $ | 167,187 | 13 | % | $ | 569,887 | $ | 619,184 | $ | 167,187 | |||||||||||
| Renagel | 29,532 | 39,543 | 36,954 | 50,835 | 58,766 | 99 | % | 176,921 | 156,864 | 58,766 | |||||||||||||||||||
| Diagnostic Products and Services | 41,059 | 43,111 | 43,241 | 45,399 | 47,698 | 16 | % | 151,045 | 172,810 | 47,698 | |||||||||||||||||||
| Other | 20,981 | 27,805 | 34,335 | 42,033 | 39,843 | 90 | % | 74,934 | 125,154 | 39,843 | |||||||||||||||||||
| Total product and service revenue | 239,638 | 265,176 | 272,001 | 297,197 | 313,494 | 31 | % | 972,787 | 1,074,012 | 313,494 | |||||||||||||||||||
| R&D revenue | 2,509 | 1,992 | 822 | 850 | 551 | (78 | %) | 9,139 | 6,173 | 551 | |||||||||||||||||||
| Total revenues | 242,147 | 267,168 | 272,823 | 298,047 | 314,045 | 30 | % | 981,926 | 1,080,185 | 314,045 | |||||||||||||||||||
| Total product and service gross profit | 180,173 | 201,557 | 206,504 | 219,960 | 230,454 | 28 | % | 735,445 | 808,194 | 230,454 | |||||||||||||||||||
| SG&A expense | 76,390 | 80,519 | 86,221 | 80,553 | 85,246 | (12 | %) | 295,068 | 323,683 | 85,246 | |||||||||||||||||||
| R&D expense | 63,836 | 56,477 | 54,407 | 55,323 | 56,329 | 12 | % | 187,502 | 230,043 | 56,329 | |||||||||||||||||||
| Amortization of intangibles | 9,718 | 9,723 | 9,814 | 9,743 | 9,736 | (0 | %) | 74,296 | 38,998 | 9,736 | |||||||||||||||||||
| IPR&D | — | — | — | — | — | — | 95,568 | — | — | ||||||||||||||||||||
| Charge for impaired assets | — | — | — | 13,986 | — | — | — | 13,986 | — | ||||||||||||||||||||
| Operating profit | 32,738 | 56,830 | 56,884 | 61,205 | 79,694 | 143 | % | 92,150 | 207,657 | 79,694 | |||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||||||||
| Equity in net loss of unconsolidated affiliates | (4,094 | ) | (3,948 | ) | (2,387 | ) | (6,429 | ) | (4,194 | ) | (2 | %) | (34,365 | ) | (16,858 | ) | (4,194 | ) | |||||||||||
| Gain (loss) on investments in equity securities | 166 | 343 | 29 | (15,035 | ) | — | (100 | %) | (25,996 | ) | (14,497 | ) | — | ||||||||||||||||
| Minority interest | — | — | — | — | — | — | 2,259 | — | — | ||||||||||||||||||||
| Other | (897 | ) | 1,749 | (274 | ) | (730 | ) | 780 | 187 | % | (2,117 | ) | (152 | ) | 780 | ||||||||||||||
| Investment income | 12,952 | 12,079 | 12,430 | 11,483 | 11,281 | (13 | %) | 47,806 | 48,944 | 11,281 | |||||||||||||||||||
| Interest expense | (4,541 | ) | (4,678 | ) | (4,258 | ) | (4,370 | ) | (4,277 | ) | 6 | % | (23,192 | ) | (17,847 | ) | (4,277 | ) | |||||||||||
| Profit before income taxes | 36,324 | 62,375 | 62,424 | 46,124 | 83,284 | 129 | % | 56,545 | 207,247 | 83,284 | |||||||||||||||||||
| Tax provision | (12,015 | ) | (17,964 | ) | (17,906 | ) | (8,631 | ) | (25,491 | ) | (112 | %) | (52,666 | ) | (56,516 | ) | (25,491 | ) | |||||||||||
| Division net income | 24,309 | 44,411 | 44,518 | 37,493 | 57,793 | 138 | % | 3,879 | 150,731 | 57,793 | |||||||||||||||||||
| Cumulative effect of change in accounting for derivative financial instruments, net of tax (1) | — | — | — | — | — | — | 4,167 | — | — | ||||||||||||||||||||
| Division net income before allocated tax benefits | 24,309 | 44,411 | 44,518 | 37,493 | 57,793 | 138 | % | 8,046 | 150,731 | 57,793 | |||||||||||||||||||
| Allocated tax benefits | 6,429 | 5,229 | 8,898 | 7,239 | 4,085 | (36 | %) | 36,497 | 27,795 | 4,085 | |||||||||||||||||||
| Net income allocated to Genzyme General Stock | $ | 30,738 | $ | 49,640 | $ | 53,416 | $ | 44,732 | $ | 61,878 | 101 | % | $ | 44,543 | $ | 178,526 | $ | 61,878 | |||||||||||
| Net income per share of Genzyme General Stock—diluted (2) | $ | 0.14 | $ | 0.23 | $ | 0.25 | $ | 0.20 | $ | 0.28 | 100 | % | $ | 0.21 | $ | 0.81 | $ | 0.28 | |||||||||||
| Weighted average shares outstanding—diluted (4) | 221,064 | 219,634 | 217,541 | 219,313 | 220,432 | 0 | % | 211,176 | 219,388 | 220,432 | |||||||||||||||||||
Notes:
Genzyme General(A Division of Genzyme Corporation)
Analyst Schedule
(Unaudited, amounts in thousands, except percentage amounts)
| | Q1-02 | Q2-02 | Q3-02 | Q4-02 | Q1-03 | FY 2001 | FY 2002 | YTD 3/31/03 | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total revenues | $ | 242,147 | $ | 267,168 | $ | 272,823 | $ | 298,047 | $ | 314,045 | $ | 981,926 | $ | 1,080,185 | $ | 314,045 | ||||||||||
| As a % of total product and service revenue: | ||||||||||||||||||||||||||
| Cerezyme and Ceredase | 62 | % | 58 | % | 58 | % | 54 | % | 53 | % | 59 | % | 58 | % | 53 | % | ||||||||||
| Renagel | 12 | % | 15 | % | 13 | % | 17 | % | 19 | % | 18 | % | 14 | % | 19 | % | ||||||||||
| Diagnostic Products and Services | 17 | % | 16 | % | 16 | % | 15 | % | 15 | % | 15 | % | 16 | % | 15 | % | ||||||||||
| Other | 9 | % | 11 | % | 13 | % | 14 | % | 13 | % | 8 | % | 12 | % | 13 | % | ||||||||||
| Total product and service gross margin | 75 | % | 76 | % | 76 | % | 74 | % | 74 | % | 76 | % | 75 | % | 74 | % | ||||||||||
| SG&A expense as % of total revenue | 32 | % | 30 | % | 32 | % | 27 | % | 27 | % | 30 | % | 30 | % | 27 | % | ||||||||||
| R&D expense as % of total revenue | 26 | % | 21 | % | 20 | % | 19 | % | 18 | % | 19 | % | 21 | % | 18 | % | ||||||||||
| Operating profit as % of total revenue | 14 | % | 21 | % | 21 | % | 21 | % | 25 | % | 9 | % | 19 | % | 25 | % | ||||||||||
| Tax provision (benefit) as % of profit before tax | 15 | % | 20 | % | 14 | % | 3 | % | 26 | % | 29 | % | 14 | % | 26 | % | ||||||||||
| | Q1-02 | Q2-02 | Q3-02 | Q4-02 | Q1-03 | FY 2001 | FY 2002 | Q1-03 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Other selected financial data: | |||||||||||||||||||||||||
| Cash and all marketable securities | $ | 1,060,771 | $ | 1,080,332 | $ | 1,121,022 | $ | 1,149,145 | $ | 1,205,571 | $ | 1,041,500 | $ | 1,149,145 | $ | 1,205,571 | |||||||||
| Working capital | 605,317 | 638,283 | 680,873 | 825,573 | 848,955 | 473,870 | 825,573 | 848,955 | |||||||||||||||||
| Property, plant & equipment, net | 609,275 | 663,220 | 704,579 | 749,840 | 779,199 | 581,401 | 749,840 | 779,199 | |||||||||||||||||
| Goodwill and other intangible assets | 972,544 | 963,248 | 954,051 | 933,360 | 923,640 | 981,468 | 933,360 | 923,640 | |||||||||||||||||
| Total assets | 3,236,540 | 3,348,856 | 3,418,299 | 3,555,801 | 3,650,389 | 3,225,254 | 3,555,801 | 3,650,389 | |||||||||||||||||
| Long-term debt, convertible notes and long-term capital leases | 600,045 | 600,044 | 600,040 | 600,038 | 600,026 | 600,085 | 600,038 | 600,026 | |||||||||||||||||
| Division equity | 2,326,273 | 2,431,852 | 2,491,892 | 2,585,884 | 2,677,174 | 2,280,352 | 2,585,884 | 2,677,174 | |||||||||||||||||
GENZYME GENERAL
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended March 31, 2003
(Amounts in thousands, except per share data)
| | NON-GAAP Before Amortization | Amortization | GAAP As Reported | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement Classification: | |||||||||||
| Amortization of intangibles | $ | — | $ | (9,736 | ) | $ | (9,736 | ) | |||
| Summary: | |||||||||||
| Pretax profit | $ | 93,020 | $ | (9,736 | ) | $ | 83,284 | ||||
| Provision for income taxes | (24,989 | ) | 3,583 | (21,406 | ) | ||||||
| Net income allocated to Genzyme General Stock | $ | 68,031 | $ | (6,153 | ) | $ | 61,878 | ||||
| Net income per share of Genzyme General Stock: | |||||||||||
| Basic | $ | 0.32 | $ | (0.03 | ) | $ | 0.29 | ||||
| Diluted | $ | 0.31 | $ | (0.03 | ) | $ | 0.28 | ||||
| Weighted average shares outstanding: | |||||||||||
| Basic | 215,091 | 215,091 | 215,091 | ||||||||
| Diluted | 220,432 | 220,432 | 220,432 | ||||||||
GENZYME GENERAL
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended March 31, 2002
(Amounts in thousands, except per share data)
| | NON-GAAP Before Gains (Charges) & Amortization | Novazyme Restructuring | Diagnostics Restructuring | Pompe CHO/Synpac Program | Amortization | GAAP As Reported | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Income Statement Classification: | ||||||||||||||||||||
| Gross margin | $ | 183,028 | $ | (2,856 | ) | $ | 180,172 | |||||||||||||
| Research and development expense | $ | (53,082 | ) | $ | (1,968 | ) | $ | (8,786 | ) | $ | (63,836 | ) | ||||||||
| Amortization of intangibles | $ | — | $ | (9,718 | ) | $ | (9,718 | ) | ||||||||||||
| Summary: | ||||||||||||||||||||
| Pretax profit | $ | 59,652 | $ | (1,968 | ) | $ | (2,856 | ) | $ | (8,786 | ) | $ | (9,718 | ) | $ | 36,324 | ||||
| Provision for income taxes | (14,170 | ) | 724 | 1,051 | 3,233 | 3,576 | (5,586 | ) | ||||||||||||
| Net income allocated to Genzyme General Stock | $ | 45,482 | $ | (1,244 | ) | $ | (1,805 | ) | $ | (5,553 | ) | $ | (6,142 | ) | $ | 30,738 | ||||
| Net income per share of Genzyme General Stock: | ||||||||||||||||||||
| Basic | $ | 0.21 | $ | (0.006 | ) | $ | (0.008 | ) | $ | (0.026 | ) | $ | (0.029 | ) | $ | 0.14 | ||||
| Diluted | $ | 0.21 | $ | (0.006 | ) | $ | (0.008 | ) | $ | (0.025 | ) | $ | (0.028 | ) | $ | 0.14 | ||||
| Weighted average shares outstanding: | ||||||||||||||||||||
| Basic | 213,332 | 213,332 | 213,332 | 213,332 | 213,332 | 213,332 | ||||||||||||||
| Diluted | 221,064 | 221,064 | 221,064 | 221,064 | 221,064 | 221,064 | ||||||||||||||
GENZYME CORPORATION
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)
| | Three Months Ended March 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| | 2003 | 2002 | ||||||||
| Total revenues | $ | 381,859 | $ | 297,940 | ||||||
| Operating costs and expenses: | ||||||||||
| Cost of products and services sold | 111,812 | 87,172 | ||||||||
| Selling, general and administrative | 114,224 | 102,958 | ||||||||
| Research and development | 75,631 | 82,141 | ||||||||
| Amortization of intangibles | 17,505 | 17,597 | ||||||||
| Total operating costs and expenses | 319,172 | 289,868 | ||||||||
| Operating income | 62,687 | 8,072 | ||||||||
| Other income (expenses): | ||||||||||
| Equity in net loss of unconsolidated affiliates | (4,194 | ) | (4,094 | ) | ||||||
| Gain on investments in equity securities | — | 166 | ||||||||
| Other | 750 | (864 | ) | |||||||
| Investment income | 11,614 | 13,437 | ||||||||
| Interest expense | (6,490 | ) | (6,806 | ) | ||||||
| Total other income (expenses) | 1,680 | 1,839 | ||||||||
| Income before income taxes | 64,367 | 9,911 | ||||||||
| Provision income taxes | (18,998 | ) | (3,138 | ) | ||||||
| Net income (loss) before cumulative effect of change in accounting for goodwill | 45,369 | 6,773 | ||||||||
| Cumulative effect of change in accounting for goodwill (1) | — | (98,270 | ) | |||||||
| Net income (loss) (1) | $ | 45,369 | $ | (91,497 | ) | |||||
| Net income (loss) per share: | ||||||||||
| Allocated to Genzyme General Stock: | ||||||||||
| Genzyme General division net income | $ | 57,793 | $ | 24,309 | ||||||
| Tax benefit allocated from Genzyme Biosurgery | 2,322 | 4,299 | ||||||||
| Tax benefit allocated from Genzyme Molecular Oncology | 1,763 | 2,130 | ||||||||
| Net income allocated to Genzyme General Stock | $ | 61,878 | $ | 30,738 | ||||||
| Net income per share of Genzyme General Stock: | ||||||||||
| Basic | $ | 0.29 | $ | 0.14 | ||||||
| Diluted (2) | $ | 0.28 | $ | 0.14 | ||||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 215,091 | 213,332 | ||||||||
| Diluted (2) | 220,432 | 221,064 | ||||||||
| Allocated to Biosurgery Stock: | ||||||||||
| Genzyme Biosurgery net loss before cumulative effect of change in accounting for goodwill | $ | (14,102 | ) | $ | (20,382 | ) | ||||
| Cumulative effect of change in accounting for goodwill (1) | — | (98,270 | ) | |||||||
| Genzyme Biosurgery division net loss | (14,102 | ) | (118,652 | ) | ||||||
| Allocated tax benefit | 2,408 | 2,448 | ||||||||
| Net loss allocated to Biosurgery Stock (1) | $ | (11,694 | ) | $ | (116,204 | ) | ||||
| Net loss per share of Biosurgery Stock—basic and diluted: | ||||||||||
| Net loss per share before cumulative effect of change in accounting for goodwill | $ | (0.29 | ) | $ | (0.46 | ) | ||||
| Per share cumulative effect of change in accounting for goodwill (1) | — | (2.48 | ) | |||||||
| Net loss per share of Biosurgery Stock—basic and diluted (1) | $ | (0.29 | ) | $ | (2.94 | ) | ||||
| Weighted average shares outstanding | 40,578 | 39,564 | ||||||||
| Allocated to Molecular Oncology Stock: | ||||||||||
| Net loss | $ | (4,815 | ) | $ | (6,031 | ) | ||||
| Net loss per share of Molecular Oncology Stock-basic and diluted | $ | (0.28 | ) | $ | (0.36 | ) | ||||
| Weighted average shares outstanding | 16,939 | 16,763 | ||||||||
GENZYME CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
| | March 31, 2003 | December 31, 2002 | |||||
|---|---|---|---|---|---|---|---|
| Cash and all marketable securities | $ | 1,234,318 | $ | 1,195,004 | |||
| Other current assets | 693,277 | 676,231 | |||||
| Property, plant and equipment, net | 831,040 | 802,448 | |||||
| Intangibles, net | 1,309,049 | 1,326,553 | |||||
| Other assets | 93,115 | 82,813 | |||||
| Total assets | $ | 4,160,799 | $ | 4,083,049 | |||
| Current liabilities | $ | 616,028 | $ | 607,800 | |||
| Noncurrent liabilities | 770,703 | 777,402 | |||||
| Stockholders' equity | 2,774,068 | 2,697,847 | |||||
| Total liabilities and stockholders' equity | $ | 4,160,799 | $ | 4,083,049 | |||
