Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Income (USD $) | |||||||||||||||||||
In Thousands, except Per Share data | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 | ||||||||||||||||
Revenues: | |||||||||||||||||||
Net product sales | $4,076,665 | $4,196,907 | $3,457,778 | ||||||||||||||||
Net service sales | 418,518 | 366,091 | 326,326 | ||||||||||||||||
Research and development revenue | 20,342 | 42,041 | 29,415 | ||||||||||||||||
Total revenues | 4,515,525 | 4,605,039 | 3,813,519 | ||||||||||||||||
Operating costs and expenses: | |||||||||||||||||||
Cost of products sold | 1,136,937 | 913,267 | 715,504 | ||||||||||||||||
Cost of services sold | 249,139 | 235,295 | 211,826 | ||||||||||||||||
Selling, general and administrative | 1,428,596 | 1,338,190 | 1,187,184 | ||||||||||||||||
Research and development | 865,257 | 1,308,330 | 737,685 | ||||||||||||||||
Amortization of intangibles | 266,305 | 226,442 | 201,105 | ||||||||||||||||
Contingent consideration expense | 65,584 | 0 | 0 | ||||||||||||||||
Charge for impaired intangible assets | 0 | 2,036 | 0 | ||||||||||||||||
Purchase of in-process research and development | 0 | 0 | 106,350 | ||||||||||||||||
Total operating costs and expenses | 4,011,818 | 4,023,560 | 3,159,654 | ||||||||||||||||
Operating income | 503,707 | 581,479 | 653,865 | ||||||||||||||||
Other income (expenses): | |||||||||||||||||||
Equity in income of equity method investments | 201 | 7,398 | |||||||||||||||||
Gain (loss) on investments in equity securities, net | (56) | (3,340) | 13,067 | ||||||||||||||||
Gain on acquisition of business | 24,159 | 0 | |||||||||||||||||
Other | (1,719) | 356 | 3,295 | ||||||||||||||||
Investment income | 17,642 | 51,260 | 70,196 | ||||||||||||||||
Interest expense | 0 | (4,418) | (12,147) | ||||||||||||||||
Total other income | 40,026 | 44,059 | 81,809 | ||||||||||||||||
Income before income taxes | 543,733 | 625,538 | 735,674 | ||||||||||||||||
Provision for income taxes | (121,433) | (204,457) | (255,481) | ||||||||||||||||
Net income | 422,300 | 421,081 | 480,193 | ||||||||||||||||
Net income per share: | |||||||||||||||||||
Basic (in dollars per share) | 1.57 | 1.57 | 1.82 | ||||||||||||||||
Diluted (in dollars per share) | 1.54 | 1.5 | 1.74 | ||||||||||||||||
Weighted average shares outstanding: | |||||||||||||||||||
Basic (in shares) | 268,841 | 268,490 | 263,895 | ||||||||||||||||
Diluted (in shares) | 274,071 | 285,595 | 280,767 | ||||||||||||||||
Comprehensive income (loss), net of tax: | |||||||||||||||||||
Net income | 422,300 | 421,081 | 480,193 | ||||||||||||||||
Other comprehensive income (loss): | |||||||||||||||||||
Foreign currency translation adjustments | 67,879 | (141,936) | 149,425 | ||||||||||||||||
Loss on affiliate sale of stock, net of tax | (72) | ||||||||||||||||||
Pension liability adjustments, net of tax(1) | (14,511) | [1] | 5,772 | [1] | 1,056 | [1] | |||||||||||||
Unrealized gains (losses) on securities, net of tax: | |||||||||||||||||||
Unrealized gains (losses) arising during the period, net of tax | (5,799) | 5,039 | 18,050 | ||||||||||||||||
Reclassification adjustment for gains included in net income, net of tax | (1,622) | (6,742) | (8,586) | ||||||||||||||||
Unrealized gains (losses) on securities, net of tax(2) | (7,421) | [2] | (1,703) | [2] | 9,464 | [2] | |||||||||||||
Other comprehensive income (loss) | 45,947 | (137,867) | 159,873 | ||||||||||||||||
Comprehensive income | $468,247 | $283,214 | $640,066 | ||||||||||||||||
[1](1) Tax amounts for all periods were not significant. | |||||||||||||||||||
[2](2) Net of $4.2 million of tax for the year ended December 31, 2009, $1.0 million of tax for the year ended December 31, 2008 and $(5.2) million of tax for the year ended December 31, 2007. |
Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 |
Current assets: | ||
Cash and cash equivalents | $742,246 | $572,106 |
Short-term investments | 163,630 | 57,507 |
Accounts receivable, net | 899,731 | 1,036,940 |
Inventories | 608,022 | 453,437 |
Other current assets | 210,747 | 208,040 |
Deferred tax assets | 178,427 | 188,105 |
Total current assets | 2,802,803 | 2,516,135 |
Property, plant and equipment, net | 2,809,349 | 2,306,567 |
Long-term investments | 143,824 | 344,078 |
Goodwill | 1,403,363 | 1,401,074 |
Other intangible assets, net | 2,313,262 | 1,654,698 |
Deferred tax assets - noncurrent | 376,815 | 269,237 |
Investments in equity securities | 74,438 | 83,325 |
Other noncurrent assets | 136,870 | 96,162 |
Total assets | 10,060,724 | 8,671,276 |
Current liabilities: | ||
Accounts payable | 189,629 | 127,869 |
Accrued expenses | 696,223 | 765,386 |
Deferred revenue | 24,747 | 13,462 |
Current portion of contingent consideration obligations | 161,365 | 0 |
Current portion of long-term debt and capital lease obligations | 8,166 | 7,566 |
Total current liabilities | 1,080,130 | 914,283 |
Long-term debt and capital lease obligations | 116,434 | 124,341 |
Deferred revenue-noncurrent | 13,385 | 13,175 |
Long-term contingent consideration obligations | 853,871 | 0 |
Other noncurrent liabilities | 313,252 | 313,484 |
Total liabilities | 2,377,072 | 1,365,283 |
Commitments and contingencies (Note N) | ||
Stockholders' equity: | ||
Preferred stock, $0.01 par value | 0 | 0 |
Common stock, $0.01 par value | 2,657 | 2,707 |
Additional paid-in capital | 5,688,741 | 5,779,279 |
Accumulated earnings | 1,670,096 | 1,247,796 |
Accumulated other comprehensive income | 322,158 | 276,211 |
Total stockholders' equity | 7,683,652 | 7,305,993 |
Total liabilities and stockholders' equity | $10,060,724 | $8,671,276 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | ||
Dec. 31, 2009
| Dec. 31, 2008
| |
Consolidated Balance Sheets | ||
Preferred stock, par value per share | 0.01 | 0.01 |
Common stock, par value per share | 0.01 | 0.01 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | |||
In Thousands | 12 Months Ended
Dec. 31, 2009 | 12 Months Ended
Dec. 31, 2008 | 12 Months Ended
Dec. 31, 2007 |
Cash Flows from Operating Activities: | |||
Net income | $422,300 | $421,081 | $480,193 |
Reconciliation of net income to cash flows from operating activities: | |||
Depreciation and amortization | 456,364 | 374,664 | 338,196 |
Stock-based compensation | 204,229 | 187,596 | 190,070 |
Provision for bad debts | 18,856 | 12,983 | 9,665 |
Purchase of in-process research and development | 0 | 0 | 106,350 |
Contingent consideration expense | 65,584 | 0 | 0 |
(Gains) losses on investments in equity securities, net | 56 | 3,340 | (13,067) |
Gain on acquisition of business | (24,159) | 0 | |
Deferred income tax benefit | (95,737) | (195,200) | (106,140) |
Tax benefit from employee stock-based compensation | 15,450 | 59,868 | 51,041 |
Excess tax benefits from stock-based compensation | (3,305) | (18,445) | (13,575) |
Other | 4,270 | 3,903 | (6,199) |
Increase (decrease) in cash from working capital changes (excluding impact of acquired assets and assumed liabilities): | |||
Accounts receivable | 99,374 | (137,273) | (105,230) |
Inventories | 9,976 | (4,700) | (15,011) |
Other current assets | (1,469) | 12,142 | (23,897) |
Accounts payable, accrued expenses and deferred revenue | 7,248 | 39,216 | 26,276 |
Cash flows from operating activities | 1,179,037 | 759,175 | 918,672 |
Cash Flows from Investing Activities: | |||
Purchases of investments | (309,217) | (420,867) | (779,932) |
Sales and maturities of investments | 402,286 | 608,994 | 985,546 |
Purchases of equity securities | (14,844) | (88,656) | (21,994) |
Proceeds from sales of investments in equity securities | 10,478 | 8,594 | 20,712 |
Purchases of property, plant and equipment | (661,713) | (597,562) | (412,872) |
Distributions from equity method investments | 0 | 4,844 | 17,100 |
Acquisitions | (51,336) | (16,561) | (342,456) |
Payment of note receivable from Dyax | 0 | 0 | 7,771 |
Purchases of other intangible assets | (41,883) | (92,183) | (60,350) |
Other | (5,195) | 11,857 | (4,581) |
Cash flows from investing activities | (671,424) | (581,540) | (591,056) |
Cash Flows from Financing Activities: | |||
Proceeds from issuance of common stock | 100,521 | 318,753 | 285,762 |
Repurchases of our common stock | (413,874) | (143,012) | (231,576) |
Excess tax benefits from stock-based compensation | 3,305 | 18,445 | 13,575 |
Payments of debt and capital lease obligations | (7,492) | (693,961) | (5,909) |
Increase (decrease) in bank overdrafts | 896 | 25,760 | (5,910) |
Payment of contingent consideration obligation | (26,417) | 0 | 0 |
Other | 6,445 | 7,772 | 8,681 |
Cash flows from financing activities | (336,616) | (466,243) | 64,623 |
Effect of exchange rate changes on cash | (857) | (6,298) | (17,397) |
Increase (decrease) in cash and cash equivalents | 170,140 | (294,906) | 374,842 |
Cash and cash equivalents at beginning of period | 572,106 | 867,012 | 492,170 |
Cash and cash equivalents at end of period | 742,246 | 572,106 | 867,012 |
Cash paid during the year for: | |||
Interest, net of capitalized interest | 0 | 1,799 | 5,490 |
Income taxes | 185,981 | 427,591 | 447,566 |
Supplemental disclosures of non-cash transactions: | |||
Net cash paid for acquisitions and acquisition costs | (42,425) | (342,456) | |
Contingent consideration obligations | (964,100) | ||
Fair value of assets acquired | 1,030,684 | 226,579 | |
Accrual for dissenting shares | 0 | (16,128) | |
Acquired in-process research and development | 0 | 125,500 | |
Gain on acquisition of business | (24,159) | 0 | |
Goodwill | 0 | 100,393 | |
Liabilities for exit activities and integration | 0 | (2,671) | |
Income taxes payable | 0 | (72,461) | |
Net deferred tax assets (liabilities) | 0 | (8,210) | |
Net liabilities assumed | $0 | $10,546 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (USD $) | |||||||||||||||||||
In Thousands | Common Stock
| Additional Paid-In Capital
| Notes Receivable from Stockholders
| Accumulated Earnings
| Accumulated Other Comprehensive Income
| Total
| |||||||||||||
Balance (in shares) at Dec. 31, 2006 | 263,026 | ||||||||||||||||||
Balance at Dec. 31, 2006 | $2,630 | $5,106,274 | ($15,057) | $312,659 | $254,205 | $5,660,711 | |||||||||||||
Stock issued through stock option and stock purchase plans | 65 | 285,697 | 0 | 0 | 0 | 285,762 | |||||||||||||
Stock issued through stock option and stock purchase plans, shares | 6,482 | 0 | 0 | 0 | 0 | ||||||||||||||
Tax benefit from stock option exercises | 0 | 27,654 | 0 | 0 | 0 | 27,654 | |||||||||||||
Stock-based compensation | 0 | 189,661 | 0 | 0 | 0 | 189,661 | |||||||||||||
Adoption of provisions of ASC 740, "Income Taxes" | 0 | 6,933 | 0 | 33,863 | 0 | 40,796 | |||||||||||||
Repurchases of our common stock | (35) | (231,541) | 0 | 0 | 0 | (231,576) | |||||||||||||
Repurchases of our common stock, shares | (3,500) | ||||||||||||||||||
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | 149,425 | 149,425 | |||||||||||||
Change in unrealized gains and losses on investments, net of tax | 0 | 0 | 0 | 0 | 9,464 | 9,464 | [1] | ||||||||||||
Loss on affiliate sale of stock, net of tax | 0 | 0 | 0 | 0 | (72) | (72) | |||||||||||||
Pension liability adjustment, net of tax | 0 | 0 | 0 | 0 | 1,056 | 1,056 | |||||||||||||
Other | 0 | 476 | (613) | 0 | 0 | (137) | |||||||||||||
Net income | 0 | 0 | 0 | 480,193 | 0 | 480,193 | |||||||||||||
Balance at Dec. 31, 2007 | 2,660 | 5,385,154 | (15,670) | 826,715 | 414,078 | 6,612,937 | |||||||||||||
Balance (in shares) at Dec. 31, 2007 | 266,008 | ||||||||||||||||||
Stock issued through stock option and stock purchase plans | 67 | 318,686 | 0 | 0 | 0 | 318,753 | |||||||||||||
Stock issued through stock option and stock purchase plans, shares | 6,682 | 0 | 0 | 0 | 0 | ||||||||||||||
Tax benefit from stock option exercises | 0 | 31,526 | 0 | 0 | 0 | 31,526 | |||||||||||||
Stock-based compensation | 0 | 187,596 | 0 | 0 | 0 | 187,596 | |||||||||||||
Repurchases of our common stock | (20) | (142,992) | 0 | 0 | 0 | (143,012) | |||||||||||||
Repurchases of our common stock, shares | (2,000) | 0 | 0 | 0 | |||||||||||||||
Conversion of our convertible senior notes | 2,825 | 0 | 0 | 0 | 2,825 | ||||||||||||||
Conversion of our convertible senior notes, shares | 40 | 0 | 0 | 0 | |||||||||||||||
Payments of notes receivable from stockholders | 0 | (1,974) | 14,609 | 0 | 0 | 12,635 | |||||||||||||
Payments of notes receivable from stockholders, shares | (26) | 0 | 0 | 0 | 0 | ||||||||||||||
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | (141,936) | (141,936) | |||||||||||||
Change in unrealized gains and losses on investments, net of tax | 0 | 0 | 0 | 0 | (1,703) | (1,703) | [1] | ||||||||||||
Pension liability adjustment, net of tax | 0 | 0 | 0 | 0 | 5,772 | 5,772 | |||||||||||||
Other | 0 | (68) | (413) | 0 | 0 | (481) | |||||||||||||
Net income | 0 | 0 | 0 | 421,081 | 0 | 421,081 | |||||||||||||
Balance at Dec. 31, 2008 | 2,707 | 5,780,753 | (1,474) | 1,247,796 | 276,211 | 7,305,993 | |||||||||||||
Balance (in shares) at Dec. 31, 2008 | 270,704 | ||||||||||||||||||
Stock issued through stock option and stock purchase plans | 25 | 100,496 | 0 | 0 | 0 | 100,521 | |||||||||||||
Stock issued through stock option and stock purchase plans, shares | 2,516 | 0 | 0 | 0 | 0 | ||||||||||||||
Tax benefit from stock option exercises | 16,749 | 0 | 0 | 0 | 16,749 | ||||||||||||||
Stock-based compensation | 0 | 204,602 | 0 | 0 | 0 | 204,602 | |||||||||||||
Repurchases of our common stock | (75) | (413,799) | 0 | 0 | 0 | (413,874) | |||||||||||||
Repurchases of our common stock, shares | (7,500) | 0 | 0 | 0 | 0 | ||||||||||||||
Payments of notes receivable from stockholders | 0 | (60) | 1,474 | 0 | 0 | 1,414 | |||||||||||||
Payments of notes receivable from stockholders, shares | (1) | 0 | 0 | 0 | 0 | ||||||||||||||
Foreign currency translation adjustments | 0 | 0 | 0 | 0 | 67,879 | 67,879 | |||||||||||||
Change in unrealized gains and losses on investments, net of tax | 0 | 0 | 0 | 0 | (7,421) | (7,421) | [1] | ||||||||||||
Pension liability adjustment, net of tax | 0 | 0 | 0 | 0 | (14,511) | (14,511) | |||||||||||||
Net income | 0 | 0 | 0 | 422,300 | 0 | 422,300 | |||||||||||||
Balance at Dec. 31, 2009 | $2,657 | $5,688,741 | $1,670,096 | $322,158 | $7,683,652 | ||||||||||||||
Balance (in shares) at Dec. 31, 2009 | 265,719 | ||||||||||||||||||
[1](2) Net of $4.2 million of tax for the year ended December 31, 2009, $1.0 million of tax for the year ended December 31, 2008 and $(5.2) million of tax for the year ended December 31, 2007. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Description of Business We are a global biotechnology company dedicated to making a major impact on the lives of people with serious diseases. Our products and services are focused on rare inherited disorders, kidney disease, orthopaedics, cancer, transplant and immune disease, and diagnostic testing. Our commitment to innovation continues today with a substantial development program focused on these fields, as well as cardiovascular disease, neurodegenerative diseases, and other areas of unmet medical need. We are organized into five financial reporting units, which we also consider to be our reporting segments: Personalized Genetic Health, which develops, manufactures and distributes therapeutic products with a focus on products to treat patients suffering from genetic diseases and other chronic debilitating diseases, including a family of diseases known as lysosomal storage disorders, or LSDs, and cardiovascular disease. The unit derives substantially all of its revenue from sales of Cerezyme, Fabrazyme, Myozyme, Aldurazyme and Elaprase and royalties earned on sales of Welchol; Renal and Endocrinology, which develops, manufactures and distributes products that treat patients suffering from renal diseases, including chronic renal failure, and endocrine and immune-mediated diseases. The unit derives substantially all of its revenue from sales of Renagel/Renvela (including sales of bulk sevelamer), Hectorol and Thyrogen; Biosurgery, which develops, manufactures and distributes biotherapeutics and biomaterial-based products, with an emphasis on products that meet medical needs in the orthopaedics and broader surgical areas. The unit derives substantially all of its revenue from sales of Synvisc/Synvisc-One and the Sepra line of products; Hematology and Oncology, which develops, manufactures and distributes products for the treatment of cancer, the mobilization of hematopoietic stem cells and the treatment of transplant rejection and other hematologic and auto-immune disorders. The unit derives substantially all of its revenue from sales of Mozobil, Thymoglobulin, Clolar, Campath, Fludara and Leukine; and Multiple Sclerosis, which is developing a product for the treatment of MS. Based on changes in how we review our business, we re-allocated certain of our business units among our segments and adopted new names for certain of our reporting segments. Specifically: our former Genetic Diseases reporting segment is now referred to as "Personalized Genetic Health," or "PGH," and now includes our cardiovascular business unit, which previously was reported under the caption "Cardiometabolic and Renal," and our Welchol product line, which previously was reported as part of our bulk pharmaceuticals business unit under the caption "Other;" our former Cardiometabolic and Renal reporting segment is now referred to as "Renal and Endocrinology" and now includes our immune-mediated diseases business unit, which previously was reported under the caption "Other," but no longer includes our cardiovascular business unit; and our former Hematologic Oncology segment is now |
NET INCOME PER SHARE
NET INCOME PER SHARE | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
NET INCOME PER SHARE | NOTE B. NET INCOME PER SHARE The following table sets forth our computation of basic and diluted net income per share (amounts in thousands, except per share amounts): For the Years Ended December31, 2009 2008 2007 Net income $ 422,300 $ 421,081 $ 480,193 Effect of dilutive securities: Interest expense and debt fee amortization, net of tax, related to our 1.25% convertible senior notes 6,915 7,543 Net incomediluted $ 422,300 $ 427,996 $ 487,736 Shares used in computing net income per common sharebasic 268,841 268,490 263,895 Effect of dilutive securities(1): Shares issuable upon the assumed conversion of our 1.25% convertible senior notes 8,851 9,686 Stock options(2) 3,719 7,286 7,039 Restricted stock units 1,501 700 11 Other 10 268 136 Dilutive potential common shares 5,230 17,105 16,872 Shares used in computing net income per common sharediluted(1,2) 274,071 285,595 280,767 Net income per share: Basic $ 1.57 $ 1.57 $ 1.82 Diluted $ 1.54 $ 1.50 $ 1.74 (1) Prior to January1, 2009, the shares issuable upon redemption of $690.0million in principal of our 1.25% convertible senior notes were included in diluted weighted average shares outstanding for purposes of computing diluted earnings per share, unless the effect was anti-dilutive. We redeemed these notes, primarily for cash, on December1, 2008. (2) We did not include the securities described in the following table in the computation of diluted earnings per share because these securities were anti-dilutive during each such period (amounts in thousands): For the Years Ended December31, 2009 2008 2007 Shares of Genzyme Stock issuable upon exercise of outstanding options 18,047 3,816 12,262 |
STRATEGIC TRANSACTIONS
STRATEGIC TRANSACTIONS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
STRATEGIC TRANSACTIONS | NOTE C. STRATEGIC TRANSACTIONS Effective January1, 2009, we account for business combinations completed on or after January1, 2009 in accordance with the revised guidance for accounting for business combinations, which modifies the criteria that must be met to qualify as a business combination and prescribes new accounting requirements. Among various other requirements and differences, the following table illustrates how we account for specific elements of our business combinations prior to and on or after January1, 2009: Element Prior to January1, 2009 On or after January1, 2009 Transaction costs Capitalized as cost of acquisition Expensed as incurred Exit/Restructuring costs Capitalized as cost of acquisition if certain criteria were met Expensed as incurred at or subsequent to acquisition date IPRD Measured at fair value and expensed on acquisition date, or capitalized as an intangible asset if certain criteria were met Measured at fair value and capitalized as an intangible asset and tested for impairment until completion of program Amortized from date of completion over estimated useful life Contingent consideration Recorded at acquisition date only to the extent of negative goodwill Measured at fair value and recorded on acquisition date Capitalized as cost of acquisition when contingency was resolved Re-measured in subsequent periods with an adjustment to earnings No subsequent re-measurement Negative goodwill (excess of the value of acquired assets over consideration transferred) Offset other long-lived intangibles acquired Recognized as a gain in earnings Changes in deferred tax assets and valuation allowances Recorded as adjustments to goodwill Recorded as tax expense Adjustments to acquisition accounting Recorded in the current period financial statements Recorded as adjustments to prior period financial statements We classify nonrefundable fees paid outside of a business combination for the acquisition or licensing of products that have not received regulatory approval and have no future alternative use as research and development expense. 2009: Acquisition of Assets from Targeted Genetics Corporation On September8, 2009, we entered into an agreement with Targeted Genetics Corporation to acquire certain gene therapy manufacturing assets for $7.0million. We acquired intellectual property, equipment and materials used in manufacturing AAV vectors. We paid Targeted Genetics Corporation a nonrefundable upfront payment of $3.5million in September 2009 and an additional $2.5million in the fourth quarter of 2009 as certain technology transfer-based milestones were achieved. The remaining $1.0million of technology transfer-based milestone payments were paid in January 2010. The purchased assets did not qualify as a business combination and have not reached technological feasibility, nor have alternative future use. Therefore we recorded a total of $7.0million as a charge to research and development expenses for our Personalized Genetic Health reporting segment in our consolidated statements of operations in 2 |
DERIVATIVE FINANCIAL INSTRUMENT
DERIVATIVE FINANCIAL INSTRUMENTS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
DERIVATIVE FINANCIAL INSTRUMENTS | NOTE D. DERIVATIVE FINANCIAL INSTRUMENTS We periodically enter into foreign exchange forward contracts, all of which have a maturity of less than three years. These contracts have not been designated as hedges and accordingly, unrealized gains or losses on these contracts are reported in current earnings. The net notional settlement value of foreign exchange forward contracts outstanding was $139.1million at December31, 2009, $349.5million at December31, 2008 and $347.1million at December31, 2007. Foreign Exchange Forward Contracts Generally, we enter into foreign exchange forward contracts with maturities of not more than 15months. All foreign exchange forward contracts in effect as of December31, 2009 and December31, 2008 had maturities of 1 to 2months. We report these contracts on a net basis. Net asset derivatives are included in other current assets and net liability derivatives are included in accrued expenses in our consolidated balance sheets. The following table summarizes the balance sheet classification of the fair value of these derivatives on both a gross and net basis as of December31, 2009 and December31, 2008 (amounts in thousands): Unrealized Gain/Loss on Foreign Exchange Forward Contracts As Reported Gross Net Asset Derivatives Liability Derivatives Asset Derivatives Liability Derivatives As of: Other current assets Accrued expenses Other current assets Accrued expenses December31, 2009 $ 9,834 $ 5,550 $ 4,284 $ December31, 2008 $ 2,758 $ 4,192 $ $ 1,434 Total foreign exchange (gains) and losses included in SGA in our consolidated statements of operations includes unrealized and realized (gains) and losses related to both our foreign exchange forward contracts and our foreign currency assets and liabilities. The net impact of our overall unrealized and realized foreign exchange (gains) and losses for 2009 and 2008 was not significant. The following table summarizes the effect of the unrealized and realized losses related to our foreign exchange forward contracts on our consolidated statements of operations for the periods presented (amounts in thousands): Net (Gain)/Loss Reported Statement of Operations Location Derivative Instrument 2009 2008 2007 Foreign exchange forward contracts SGA $ 23,620 $ 9,965 $ 34,278 |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
ACCOUNTS RECEIVABLE | NOTE E. ACCOUNTS RECEIVABLE Our trade receivables primarily represent amounts due from distributors, healthcare service providers, and companies and institutions engaged in research, development or production of pharmaceutical and biopharmaceutical products. We perform credit evaluations of our customers on an ongoing basis and generally do not require collateral. Accounts receivable are booked net of certain allowances for bad debts, chargebacks and prompt pay discounts. The allowances were $69.9million at December31, 2009 and $40.4million at December31, 2008. |
INVENTORIES
INVENTORIES | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
INVENTORIES | NOTE F. INVENTORIES December31, 2009 2008 (Amounts in thousands) Raw materials $ 123,434 $ 96,986 Work-in-process 288,653 141,094 Finished goods 195,935 215,357 Total $ 608,022 $ 453,437 In May 2009, in connection with our acquisition of the worldwide rights to the oncology products Campath, Fludara and Leukine from Bayer, we acquired a total of $136.4million of inventory, including $15.3million of Campath inventory, $22.9million of Fludara inventory and $98.2million of Leukine inventory. We recorded a total of $43.5million of charges to cost of products sold in our consolidated statements of operations in 2009 for the amortization of inventory step-up for these products. In June 2009, we interrupted production of Cerezyme and Fabrazyme, and shipments of Cerezyme, at our Allston facility to sanitize the facility after identifying a virus, Vesivirus 2117, in a bioreactor used for Cerezyme production. We recorded charges totaling $45.5million in 2009 to cost of products sold in our consolidated statements of operations, for costs related to the remediation of this facility, including the sanitization of the facility, idle capacity and overhead expenses and the write off of certain production materials. When we suspended production at our Allston facility, we had significant Cerezyme work-in-process material. We decided not to process this work-in-process material because the material either had expired or we were not sufficiently assured that the material was not contaminated with Vesivirus 2117 and incurred a write off of approximately $11million in 2009. |
PROPERTY, PLANT AND EQUIPMENT
PROPERTY, PLANT AND EQUIPMENT | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
PROPERTY, PLANT AND EQUIPMENT | NOTE G. PROPERTY, PLANT AND EQUIPMENT December31, 2009 2008 (Amounts in thousands) Plant and equipment $ 1,403,719 $ 879,933 Land and buildings 1,239,721 1,006,140 Leasehold improvements 270,003 246,468 Furniture and fixtures 74,023 63,241 Construction in progress 899,687 1,015,497 3,887,153 3,211,279 Less accumulated depreciation (1,077,804 ) (904,712 ) Property, plant and equipment, net $ 2,809,349 $ 2,306,567 Our total depreciation expense was $190.1million in 2009, $148.4million in 2008 and $137.1million in 2007. Our property, plant and equipment includes the following amounts for assets subject to capital leases (amounts in thousands): December31, 2009 BuildingCorporate headquarters in Cambridge, Massachusetts $ 131,031 Less accumulated depreciation (55,429 ) Assets subject to capital leases, net $ 75,602 We capitalize costs we have incurred in validating manufacturing equipment and facilities for products which have reached technological feasibility in plant and equipment. Capitalized validation costs, net of accumulated depreciation, were $19.4million at December31, 2009 and $32.9million at December31, 2008. Net capitalized software costs, which are included in plant and equipment, totaled $44.1million at December31, 2009 and $25.8million at December31, 2008. Capitalized software development costs, a component of construction in progress, were $155.2million at December31, 2009 and $89.8million at December31, 2008. We have capitalized the following amounts of interest costs (amounts in millions): For the Years Ended December31, 2009 2008 2007 $12.3 $19.0 $14.5 As of December31, 2009, the estimated remaining cost to complete our assets under construction is approximately $900million. Under certain lease agreements for our worldwide facilities, we are contractually obligated to return leased space to its original condition upon termination of the lease agreement. At the inception of a lease with such conditions, we record an asset retirement obligation liability and a corresponding capital asset in an amount equal to the estimated fair value of the obligation. In subsequent periods, for each such lease, we record interest expense to accrete the asset retirement obligation liability to full value and depreciate each capitalized asset retirement obligation asset, both over the term of the associated lease agreement. Our asset retirement obligations were not significant as of December31, 2009 or 2008. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE H. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill Formerly, we included our MS business unit under the caption "Other." As a result of our 2009 acquisition of certain products and development programs from Bayer, our MS business unit is now reported separately. As a result of this change, goodwill of $318.1million was transferred from "Other" to the Multiple Sclerosis reporting segment. Prior year balances were revised to conform to our 2009 presentation. The following table contains the change in our goodwill during the years ended December31, 2008 and 2009 (amounts in thousands): Personalized Genetic Health Renal and Endocrinology Biosurgery Hematology and Oncology Multiple Sclerosis Other Total Goodwill $ 339,563 $ 319,882 $ 110,377 $ 375,911 $ 318,059 $ 262,073 $ 1,725,865 Accumulated impairment losses(1) (102,792 ) (219,245 ) (322,037 ) Balance as of December31, 2007 339,563 319,882 7,585 375,911 318,059 42,828 1,403,828 Net exchange differences arising during the period (2,731 ) (2,731 ) Other changes in carrying amounts during the period (1 ) (22 ) (23 ) Balance as of December31, 2008 339,563 319,882 7,584 375,889 318,059 40,097 1,401,074 Net exchange differences arising during the period 1,925 1,925 Other changes in carrying amounts during the period 364 364 Balance as of December31, 2009 $ 339,563 $ 319,882 $ 7,584 $ 375,889 $ 318,059 $ 42,386 $ 1,403,363 Goodwill $ 339,563 $ 319,882 $ 110,376 $ 375,889 $ 318,059 $ 261,631 $ 1,725,400 Accumulated impairment losses(1) (102,792 ) (219,245 ) (322,037 ) Balance as of December31, 2009 $ 339,563 $ 319,882 $ 7,584 $ 375,889 $ 318,059 $ 42,386 $ 1,403,363 (1) Accumulated impairment losses include: a $102.8million pre-tax charge recorded in 2003 to write off the goodwill of our Biosurgery reporting segment's orthopaedics reporting unit; and a $219.2million pre-tax charge recorded in 2006 to write off the goodwill of our genetic testing reporting unit. We are required to perform impairment tests related to our goodwill annually, which we perform in the third quarter of each year, and whenever events or changes in circumstances suggest that the carrying value of an asset may not be recoverable. For 2009, 2008 and 2007, we completed the required annual impairment tests for our $1.4billion of goodwill that had been recorded as of September30, 2009 and 2008 and $1.3billion of goodwill that had been recorded as of September30, 2007 and determined that no impairment charges were required. In December 2008, we filed an IND for our advanced phosphate binder, Genz-644470. However, in November 2009, we disc |
INVESTMENTS IN MARKETABLE SECUR
INVESTMENTS IN MARKETABLE SECURITIES AND EQUITY INVESTMENTS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
INVESTMENTS IN MARKETABLE SECURITIES AND EQUITY INVESTMENTS | NOTE I. INVESTMENTS IN MARKETABLE SECURITIES AND EQUITY INVESTMENTS Fair Value Measurements The following tables set forth our assets and liabilities that were accounted for at fair value on a recurring basis as of December31, 2009 and December31, 2008 (amounts in thousands): Description Balance as of December31, 2009 Level1 Level2 Level3 Fixed income investments(1): Cash equivalents: Money market funds/other $ 603,109 $ 603,109 $ $ Short-term investments: U.S. Treasury notes 41,040 41,040 Non U.S. Governmental notes 4,114 4,114 U.S. Government agency notes 56,810 56,810 Corporate notesglobal 54,825 54,825 Commercial paper 6,841 6,841 Total 163,630 41,040 122,590 Long-term investments: U.S. Treasury notes 29,793 29,793 Non U.S. Governmental notes 4,873 4,873 U.S. Government agency notes 28,015 28,015 Corporate notesglobal 81,143 81,143 Total 143,824 29,793 114,031 Total fixed income investments 910,563 673,942 236,621 Equity holdings(1): Publicly-traded equity securities 40,380 40,380 Derivatives: Foreign exchange forward contracts 4,284 4,284 Contingent liabilities(2): Contingent consideration obligations (1,015,236 ) (1,015,236 ) Total assets (liabilities) at fair value $ (60,009 ) $ 714,322 $ 240,905 $ (1,015,236 ) Description Balance as of December31, 2008 Level1 Level2 Level3 Fixed income investments(1): Cash equivalents: Money market funds/other $ 357,680 $ 357,680 $ $ Short-term investments: U.S. Treasury notes 7,505 7,505 U.S. Government agency notes 10,328 10,328 Corporate notesglobal 39,674 39,674 Total 57,507 7,505 50,002 Long-term investments: U.S. Treasury notes 75,040 75,040 Non U.S. Governmental notes 7,322 7,322 U.S. Government agency notes 121,707 121,707 Corporate notesglobal 140,009 140,009 Total 344,078 75,040 269,038 Total fixed income investments 759,265 440,225 319,040 Equity holdings(1): Publicly-traded equity securities 56,596 56,596 Derivatives: Fore |
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
EQUITY METHOD INVESTMENTS | NOTE J. EQUITY METHOD INVESTMENTS Our equity method investments are included in other noncurrent assets in our consolidated balance sheets and were not significant at both December31, 2009 and 2008. The following tables describe: our portion of the net income (loss) of each equity method investment for the periods presented, which we have recorded as income (charges) to equity in income (loss) of equity method investments in our consolidated statements of operations (amounts in millions); and total net income (loss) of each equity method investment for the periods presented (amounts in millions). Our Portion of the Net Income (Loss) of Our Equity Method Investments Total Income (Loss) of Our Equity Method Investments Equity Method Investment 2009 2008 2007 2009 2008 2007 BioMarin/GenzymeLLC $ $ $ 30.1 $ $ $ 60.2 Bioenvision(1) (21.1 ) (9.6 ) Other 0.2 (1.6 ) 0.4 (9.4 ) Totals $ $ 0.2 $ 7.4 $ $ 0.4 $ 41.2 (1) For the period from July10, 2007 through October22, 2007, we accounted for our initial investment in Bioenvision common stock under the equity method of accounting. We completed the acquisition of Bioenvision effective October23, 2007. Condensed financial information for our equity method investees, excluding Bioenvision, is summarized below in aggregate (amounts in thousands): For the Years Ended December31, 2009 2008 2007 Revenue $ $ $ 124,203 Gross profit 97,092 Operating expenses 326 (46,656 ) Net income 8 370 50,866 December31, 2009 2008 Current assets $ 1,593 $ 1,585 Noncurrent assets Current liabilities 351 351 Noncurrent liabilities BioMarin/GenzymeLLC Through December31, 2007, our portion of the net income of BioMarin/GenzymeLLC was included in equity in income of equity method investments in our consolidated statements of operations. Effective January1, 2008, we restructured the relationship regarding the manufacturing and commercialization of Aldurazyme by entering into several new agreements. BioMarin/GenzymeLLC no longer engages in commercial activities related to Aldurazyme and solely: holds the intellectual property relating to Aldurazyme and other collaboration products; and engages in research and development activities that are mutually selected and funded by BioMarin and us, the costs of which are shared equally. Under the restructured relationship, BioMarin/GenzymeLLC licensed all intellectual property relating to Aldurazyme and other collaboration products on a royalty-free basis to BioMarin and us. BioMarin holds the manufacturing rights and we hold the global marketing rights. We pay BioMarin a tiered payment ranging from 39.5% to 50% of worldwide net product sales of Aldurazyme. As a result of the restructuring of our relationship with BioMarin/GenzymeLLC, effective January1, 2008, we began cons |
ACCRUED EXPENSES
ACCRUED EXPENSES | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
ACCRUED EXPENSES | NOTE K. ACCRUED EXPENSES December31, 2009 2008 (Amounts in thousands) Compensation $ 213,686 $ 232,363 Rebates 134,002 132,905 Bank overdraft 45,918 45,022 License fees 98 65,188 Royalties 63,502 56,501 Other 239,017 233,407 Total $ 696,223 $ 765,386 |
LONG-TERM DEBT AND LEASES
LONG-TERM DEBT AND LEASES | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
LONG-TERM DEBT AND LEASES | NOTE L. LONG-TERM DEBT AND LEASES Long-Term Debt, Capital Lease Obligations and Convertible Debt Our long-term debt, capital lease obligations and convertible debt consist of the following (amounts in thousands): December31, 2009 2008 Notes payable $ 5,847 $ 6,916 Revolving credit facility maturing in July 2011 Mortgage payable 17,509 17,957 Capital lease obligations 101,244 107,034 Long-term debt, capital lease obligations and convertible debt, including current portion 124,600 131,907 Less current portion (8,166 ) (7,566 ) Noncurrent portion $ 116,434 $ 124,341 Over the next five years and thereafter, we will be required to repay the following principal amounts of our long-term debt (excluding capital leases) (amounts in millions): 2010 2011 2012 2013 2014 After 2014 $1.6 $1.6 $1.7 $1.8 $1.8 $14.9 Notes Payable We assumed a $10.0million note payable in July 2005 in connection with our acquisition of Equal Diagnostics. This note bears interest at 3.86% and is payable to three former shareholders of Equal Diagnostics over eight years in equal annual installments of $1.3million. Revolving Credit Facility In July 2006, we entered into our revolving credit facility. The proceeds of loans under our 2006 revolving credit facility can be used to finance working capital needs and for general corporate purposes. We may request that our 2006 revolving credit facility be increased at any time by up to an additional $350.0million in the aggregate, subject to the agreement of the lending banks, as long as no default or event of default has occurred or is continuing and certain other customary conditions are satisfied. Borrowings under our 2006 revolving credit facility will bear interest at various rates depending on the type of loan. We are required to pay a facility fee of between 7 to 20 basis points based on the aggregate commitments under our 2006 revolving credit facility, and in certain circumstances a utilization fee of 10 basis points as follows: revolving loans denominated in U.S. dollars or a foreign currency (other than Euros) bear interest at a variable rate equal to LIBOR for loans in U.S. dollars and a comparable index rate for foreign currency loans, plus an applicable margin; As of December31, 2009, we had approximately $17million of outstanding standby letters of credit issued against this facility and no borrowings, resulting in approximately $333million of available credit under our 2006 revolving credit facility, which matures July14, 2011. The terms of this credit facility include various covenants, including financial covenants that require us to meet minimum interest coverage ratios and maximum leverage ratios. As of December31, 2009 we were in compliance with these covenants. Mortgage Payable In July 2008, we purchased land and a manufacturing facility we formerly leased in Framingham, Massachusetts, for an aggregate purchase price of $38.9million, including fees. We paid $20.8million in cash and a |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
STOCKHOLDERS' EQUITY | NOTE M. STOCKHOLDERS' EQUITY Preferred Stock At December31, 2008and2009 Series Authorized Issued Outstanding SeriesA Junior Participating, $0.01 par value 3,000,000 Undesignated 7,000,000 10,000,000 Our charter permits us to issue shares of preferred stock at any time in one or more series. Our board of directors will establish the preferences, voting powers, qualifications, and special or relative rights or privileges of any series of preferred stock before it is issued. Common Stock The following table describes the number of authorized and outstanding shares of our common stock at December31, 2009 and 2008: Outstanding at December31, Series Authorized 2009 2008 Genzyme Stock, $0.01 par value 690,000,000 265,696,834 270,704,169 Directors' Deferred Compensation Plan Each member of our board of directors who is not also one of our employees may defer receipt of all or a portion of the cash compensation payable to him or her as a director and receive either cash or stock in the future. Under this plan, the director may defer his or her compensation until his or her services as a director cease or until another date specified by the director. Under a deferral agreement, a participant indicates the percentage of deferred compensation to allocate to cash and stock, upon which a cash deferral account and a stock deferral account are established. The cash account bears interest at the rate paid on 90-day Treasury bills with interest accruing quarterly. The stock account is for amounts invested in hypothetical shares of Genzyme Stock. These amounts are converted into hypothetical shares quarterly at the average closing price of Genzyme Stock for all trading days during the quarter. Distributions are paid in a lump sum or in annual installments for up to five years. Payments begin the year following a director's termination of service or, subject to certain restrictions, in a year elected by the participant. As of December31, 2009, five of the eight eligible directors had established accounts under this plan, and three of these directors are currently deferring their compensation. We have reserved 105,962 shares of Genzyme Stock to cover distributions credited to stock accounts under the plan. We had not made any stock distributions under this plan as of December31, 2009. As of December31, 2009, we have made cash distributions totaling $69,492 to one director under the terms of his deferral agreement. Stock Repurchase Program In May 2007, our board of directors authorized a stock repurchase program to repurchase 20,000,000 shares of our outstanding common stock over a three year period that began in June 2007. The board authorized the expenditure of up to $1.5billion to purchase those shares. The repurchases are being made from time to time and can be effectuated through open market purchases, privately negotiated transactions, transactions structured through investment banking institutions, or by other means, subject to management's discret |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
COMMITMENTS AND CONTINGENCIES | NOTE N. COMMITMENTS AND CONTINGENCIES Legal Proceedings Federal Securities Litigation In July 2009 and August 2009, two purported securities class action lawsuits were filed in the U.S. District Court for the District of Massachusetts against us and our President and Chief Executive Officer. The lawsuits were filed on behalf of those who purchased our common stock during the period from June26, 2008 through July21, 2009 and allege violations of Section10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule10b-5 promulgated thereunder. Each of the lawsuits is premised upon allegations that we made materially false and misleading statements and omissions by failing to disclose instances of viral contamination at two of our manufacturing facilities and our receipt of a list of inspection observations from the FDA related to one of the facilities, which detailed observations of practices that the FDA considered to be deviations from GMP. The plaintiffs seek unspecified damages and reimbursement of costs, including attorneys' and experts' fees. In November 2009, the lawsuits were consolidated and a lead plaintiff appointed. We intend to defend this lawsuit vigorously. Shareholder Demand Letters Since August 2009, we have received nine letters from shareholders demanding that our board of directors take action on our behalf of Genzyme Corporation to remedy alleged breaches of fiduciary duty by our directors and certain executive officers. The demand letters are primarily premised on allegations regarding our disclosures to shareholders with respect to manufacturing issues and compliance with GMP and our processes and decisions related to manufacturing at our Allston facility. Several of the letters also assert that certain of our executive officers and directors took advantage of their knowledge of material non-public information about Genzyme to illegally sell stock they personally held in Genzyme. Our board of directors has designated a special committee of three independent directors to oversee the investigation of the allegations made in the demand letters and to recommend to the independent directors of the board whether any action should be instituted on behalf of Genzyme Corporation against any officer or director. The committee has retained independent legal counsel. If the independent members of our board of directors were to make a determination that it was in our best interest to institute an action against any officers or directors, any monetary recovery would be to the benefit of Genzyme Corporation. The special committee's investigation is ongoing. Shareholder Derivative Actions In December 2009, two actions were filed by shareholders derivatively for Genzyme's benefit in the U.S. District Court for the District of Massachusetts against our board of directors and certain of our executive officers after a ninety day period following their respective demand letters had elapsed (the "District Court Actions"). In January 2010, a derivative action was filed in Massachusetts Superior Court by a shareholder who has not issued a demand letter (the "January State Court Action"). In February 2010, a derivative actio |
INCOME TAXES
INCOME TAXES | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
INCOME TAXES | NOTE O. INCOME TAXES Our income (loss) before income taxes and the related income tax provisions are as follows (amounts in thousands): For the Years Ended December31, 2009 2008 2007 Income (loss) before income taxes: Domestic $ 218,744 $ 655,550 $ 753,987 Foreign 324,989 (30,012 ) (18,313 ) Total $ 543,733 $ 625,538 $ 735,674 Currently payable: Federal $ 135,699 $ 347,100 $ 313,136 State 14,736 26,212 19,498 Foreign 66,709 26,345 28,986 Total 217,144 399,657 361,620 Deferred: Federal (111,133 ) (153,183 ) (75,931 ) State (23,005 ) (13,588 ) (10,311 ) Foreign 38,427 (28,429 ) (19,897 ) Total (95,711 ) (195,200 ) (106,139 ) Provision for income taxes $ 121,433 $ 204,457 $ 255,481 Our provisions for income taxes were at rates other than the U.S. federal statutory tax rate for the following reasons: For the Years Ended December31, 2009 2008 2007 Tax provision at U.S. statutory rate 35.0 % 35.0 % 35.0 % Domestic manufacturing benefits (4.3 ) (2.1 ) (0.5 ) Legal settlements 3.0 Audit settlements (1.3 ) 0.5 Stock compensation 2.2 1.5 1.3 Tax credits (5.5 ) (3.9 ) (3.5 ) Foreign rate differential (3.2 ) 1.4 (2.1 ) Other (1.9 ) 2.1 1.0 Effective tax rate 22.3 % 32.7 % 34.7 % Our effective tax rate for 2009 was impacted by: non-deductible stock-based compensation expenses totaling $33.5million; the tax benefits related to tax credits of $30.0million; and domestic manufacturing benefits of $23.5million. Our effective tax rate for 2008 was impacted by: non-deductible stock compensation expenses of $34.0million in 2008; and $5.1million of tax benefits recorded to our income tax provision reflecting the resolution of various issues related to the settlement of IRS audits for the tax years 2004 to 2005. In conjunction with those settlements, we reduced our tax reserves by $4.9million and recorded current and deferred tax benefits for the remaining portion of the settlement amounts. Our effective tax rate for 2007 was impacted by: the charge for IPRD of $106.4million recorded in October 2007 in connection with our acquisition of Bioenvision, of which $100.3million was deductible and taxed at rates other than the U.S. statutory income tax rate and $6.1million was non-deductible; non-deductible stock compensation expenses of $32.0million in 2007; a non-deductible charge of $64.0million for the settlement of the Biosurgery tracking stock suit in August 2007; and In addition, our overall tax rate has changed significantly due to fluctuations in our income before taxes, which was $543.7million in 2009, $625.5million in 2008, and $735.7million in 2007. Effective Janua |
BENEFIT PLANS
BENEFIT PLANS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
BENEFIT PLANS | NOTE P. BENEFIT PLANS Defined Contribution Plans We have two defined contribution plans: the Genzyme Corporation 401(k) Plan, which we refer to as the 401(k) Plan; and the Biomatrix,Inc. Retirement Plan, which we refer to as the Biomatrix Plan. The 401(k) Plan was established effective January1, 1988 to provide a long-range program of systematic savings for eligible employees. Employees of Genzyme Corporation as well as our wholly-owned subsidiaries in the United States are eligible to participate in the 401(k) Plan. For 2009, eligible employees could elect, through salary reduction agreements, to have up to 60% or a maximum of $16,500 of their eligible compensation contributed on a pre-tax basis to the 401(k) Plan. We made bi-weekly matching contributions to the 401(k) Plan equal to 100% of the first 6% of the 401(k) Plan participant's eligible earnings that are contributed as pre-tax contributions. SGA includes the following charges related to the 401(k) Plan, representing our matching contributions incurred in each year: $33.8million in 2009; $33.6million in 2008; and $25.0million in 2007. Effective December31, 2000, the Biomatrix Plan was frozen and the participants in this plan became eligible to participate in the 401(k) Plan. Defined Benefit Plans We have defined benefit pension plans for certain employees in countries outside the United States and a defined benefit post-retirement plan for one of our U.S. subsidiaries, which has been frozen since 1995 and is not significant. These plans are funded in accordance with requirements of the appropriate regulatory bodies governing each plan. The following table sets forth the funded status and the amounts recognized for our defined benefit pension plans outside the United States (amounts in thousands): December31, 2009 2008 Change in benefit obligation: Projected benefit obligation, beginning of year $ 65,322 $ 97,608 Service cost 4,471 6,313 Interest cost 4,642 5,468 Plan participants' contributions 2,024 2,073 Actuarial (gain)/loss 24,687 (21,372 ) Foreign currency exchange rate changes 8,658 (23,150 ) Benefits paid (1,444 ) (1,618 ) Projected benefit obligation, end of year $ 108,360 $ 65,322 Change in plan assets: Fair value of plan assets, beginning of year $ 43,755 $ 72,387 Return on plan assets 10,145 (16,155 ) Employer contribution 4,380 4,486 Plan participants' contributions 2,024 2,073 Foreign currency exchange rate changes 6,053 (17,640 ) Benefits paid (1,246 ) (1,396 ) Fair value of plan assets, end of year $ 65,111 $ 43,755 Funded status at end of year $ (43,249 ) $ (21,567 ) Amounts recognized in our consolidated balance sheets consist of (amounts in thousands): December31, 2009 2008 Accrued expenses $ (1,973 ) $ (1,234 ) Other noncurrent liabilities (41,276 ) (20,333 ) Net amount recognized |
SEGMENT INFORMATION
SEGMENT INFORMATION | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
SEGMENT INFORMATION | NOTE Q. SEGMENT INFORMATION We present segment information in a manner consistent with the method we use to report this information to our management. We changed our segment reporting structure to better reflect the way we manage and measure the performance of our businesses. Under the new reporting structure, we are organized into five reporting segments as described above in NoteA., "Summary of Significant Accounting PoliciesDescription of Business," to these consolidated financial statements. We have revised our 2008 and 2007 segment disclosures to conform to our 2009 presentation. We have provided information concerning the operations of these reportable segments in the following tables (amounts in thousands): For the Years Ended December31, 2009 2008 2007 Revenues: Personalized Genetic Health(1,3) $ 1,849,609 $ 2,296,136 $ 1,826,740 Renal and Endocrinology 1,008,352 954,421 832,109 Biosurgery 561,815 491,100 426,647 Hematology and Oncology(2) 512,920 309,538 251,759 Multiple Sclerosis 12,467 21,709 11,595 Other 568,364 530,874 463,054 Corporate 1,998 1,261 1,615 Total $ 4,515,525 $ 4,605,039 $ 3,813,519 Depreciation and amortization expense: Personalized Genetic Health $ 55,128 $ 47,150 $ 40,776 Renal and Endocrinology 84,342 83,314 83,609 Biosurgery 87,007 76,327 71,512 Hematology and Oncology(2) 102,991 67,784 49,063 Multiple Sclerosis 2,207 592 388 Other 36,788 33,207 34,528 Corporate 87,901 66,290 58,320 Total $ 456,364 $ 374,664 $ 338,196 Equity in income (loss) of equity method investments: Personalized Genetic Health $ $ 185 $ 29,258 Renal and Endocrinology (45 ) Biosurgery Hematology and Oncology (21,101 ) Multiple Sclerosis Other Corporate 16 (714 ) Total $ $ 201 $ 7,398 Income (loss) before income taxes: Personalized Genetic Health(1,3,4) $ 909,882 $ 1,090,514 $ 1,169,371 Renal and Endocrinology(5) 453,322 261,992 297,458 Biosurgery 149,062 99,553 60,082 Hematology and Oncology(2) (80,928 ) (90,854 ) (215,571 ) Multiple Sclerosis(2) (101,295 ) (48,689 ) (20,789 ) Other(6) 36,738 34,529 33,797 Corporate(7) (823,048 ) (721,507 ) (588,674 ) Total $ 543,733 $ 625,538 $ 735,674 (1) Effective January1, 2008, instead of sharing all costs and profits of Aldurazyme equally, we began to record all sales of Aldurazyme and began paying BioMarin a tiered payment ranging from approximately 39.5% to 50% of worldwide net product sales of Aldurazyme. Revenue for our Personalized Genetic Health reporting segment includes Aldurazyme rev |
QUARTERLY RESULTS
QUARTERLY RESULTS (Unaudited) | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
QUARTERLY RESULTS (Unaudited) | NOTE R. QUARTERLY RESULTS (Unaudited) 1stQuarter 2009 2ndQuarter 2009 3rdQuarter 2009 4thQuarter 2009 (Amounts in thousands, except per share amounts) Total revenues $ 1,148,871 $ 1,228,510 $ 1,057,514 $ 1,080,630 Gross profit(1) 842,931 870,595 696,715 698,866 Net income(2) 195,486 187,574 15,995 23,245 Net income per share: Basic $ 0.72 $ 0.69 $ 0.06 $ 0.09 Diluted $ 0.70 $ 0.68 $ 0.06 $ 0.09 1stQuarter 2008 2ndQuarter 2008 3rdQuarter 2008 4thQuarter 2008 (Amounts in thousands, except per share amounts) Total revenues $ 1,100,061 $ 1,171,134 $ 1,160,284 $ 1,173,560 Gross profit(3) 819,819 862,093 865,674 866,850 Net income(4) 145,271 69,564 119,596 86,650 Net income per share: Basic $ 0.54 $ 0.26 $ 0.44 $ 0.32 Diluted $ 0.52 $ 0.25 $ 0.42 $ 0.31 (1) Includes: for the first quarter of 2009, a $9.2million pre-tax charge ($7.2million after tax) for the write off of Myozyme inventory costs related to incomplete production runs at our Belgium facility; for the second quarter of 2009, a $24.1million pre-tax charge ($17.9million after tax) for the initial costs related to the remediation of our Allston facility and the write off of the Cerezyme work-in-process material; for the third quarter of 2009, a $23.7million pre-tax charge ($19.5million after tax) for costs related to the remediation of our Allston facility; and for the fourth quarter of 2009, a $20.9million pre-tax charge ($15.2million after tax) for manufacturing-related costs, including $10.1million related to the remediation of our Allston facility and approximately $11million of other manufacturing-related charges. (2) Includes: for the first quarter of 2009, an $18.2million pre-tax charge ($11.6million after tax) for the acquisition of intellectual property from EXACT Sciences; for the second quarter of 2009, a $24.2 pre-tax gain ($17.6million after tax) on acquisition of business related to our acquisition from Bayer; and for the third quarter of 2009, a $7.0million pre-tax charge ($5.4million after tax) for the acquisition of intellectual property from Targeted Genetics. (3) Includes: for the fourth quarter of 2008, an $18.1million pre-tax charge ($13.4million after tax) for the write off of inventory associated with terminated production runs and validation costs associated with our Belgium facility that were incorrectly capitalized from January to September 2008. (4) Includes: for the first quarter of 2008, a $69.9million pre-tax charge ($56.5million after tax) for a license fee we paid to Isis; for the second quarter of 2008, a $175.0million pre-tax charge ($141.3million after tax) for an additional license fee paid to Isis; for the third quarter of 2008, a $100.0million pre-tax charge ($91.3million after tax) for a license fee we paid to PTC and $14.3million of pre-tax charges ($10.6million after tax) for net losses on invest |
VALUATION AND QUALIFYING ACCOUN
VALUATION AND QUALIFYING ACCOUNTS | |
12 Months Ended
Dec. 31, 2009 | |
Notes To Consolidated Financial Statements | |
VALUATION AND QUALIFYING ACCOUNTS | NOTE S. VALUATION AND QUALIFYING ACCOUNTS The following table provides information about our valuation and qualifying accounts for the years ended December31, 2009, 2008 and 2007: Additions Description Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Accounts Deductions Balance at End of Period Year ended December31, 2009: Accounts receivable allowances $ 40,375,000 $ 18,705,000 $ 58,152,000 $ 47,338,000 $ 69,894,000 Rebates $ 132,905,000 $ $ 235,671,000 $ 234,574,000 $ 134,002,000 Year ended December31, 2008: Accounts receivable allowances $ 40,287,000 $ 12,933,000 $ 14,071,000 $ 26,916,000 $ 40,375,000 Rebates $ 90,437,000 $ $ 203,333,000 $ 160,865,000 $ 132,905,000 Year ended December31, 2007: Accounts receivable allowances $ 52,563,000 $ 9,664,000 $ 10,964,000 $ 32,904,000 $ 40,287,000 Rebates $ 62,166,000 $ $ 149,967,000 $ 121,696,000 $ 90,437,000 |
Document and Entity Information
Document and Entity Information (USD $) | |||
12 Months Ended
Dec. 31, 2009 | Jan. 29, 2010
| Jun. 30, 2009
| |
Document and Entity Information | |||
Entity Registrant Name | GENZYME CORP | ||
Entity Central Index Key | 0000732485 | ||
Document Type | 8-K | ||
Document Period End Date | 2009-12-31 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $14,983,965,792 | ||
Entity Common Stock, Shares Outstanding | 266,100,031 |