Exhibit 99.1
For Immediate Release | Media Contact: | Investor Contact: |
October 20, 2004 | Bo Piela | Sally Curley |
| (617) 768-6579 | (617) 768-6140 |
Genzyme Reports Strong Third-Quarter Results
CAMBRIDGE, Mass. – Genzyme Corp. (Nasdaq: GENZ) reported today that its third-quarter revenue grew 30 percent compared with the same period a year ago, rising to $569.2 million from $437.0 million. This increase was driven by growth across the company’s diversified range of innovative healthcare products and services.
GAAP net income for the third quarter was $97.8 million, or $0.42 per diluted share, compared with a net loss of $95.7 million, or $0.43 per diluted share, for the same quarter last year.
Excluding amortization and special items, net income increased 37 percent to $115.9 million, or $0.49 per diluted share, from $84.6 million, or $0.37 per diluted share, in the third quarter last year. Amortization amounted to $27.7 million, or $0.07 per diluted share. Earnings before amortization exceeded Genzyme’s guidance of $0.42-$0.44 per share due to higher product sales, expense control, and the delay in the expected closing of the company’s merger with ILEX Oncology Inc. from the third to the fourth quarter.
“We had another very strong quarter and are comfortable that we will reach the high end of our earnings guidance of $1.65-$1.75 per share for this year,” said Henri A. Termeer, chairman and chief executive of Genzyme Corp. “These results lead us to
(more)
reiterate our goal for earnings growth of approximately 20 percent for 2005, despite the near-term dilutive impact of the ILEX merger. We continue to focus on building and investing in the company so that we can grow at a sustainable rate into the future.”
Selling, general and administrative expenses in the third quarter totaled $147.9 million. SG&A spending was down from the second quarter of this year, reflecting efficiencies gained in the integration of SangStat Medical Corp., IMPATH Inc.’s oncology testing unit, and the consolidation of Genzyme’s former tracking stocks.
Research and development spending totaled $92.2 million. Compared with previous quarters, spending was down as a percentage of revenue, primarily for two reasons. First, Genzyme began capitalizing the costs associated with manufacturing inventory of Myozyme® (alglucosidase alfa), its product in late-stage development for Pompe disease. Second, the company deferred spending on certain early stage R&D programs during the third quarter in anticipation of adding several oncology programs from ILEX.
The gross margin for the quarter was 73 percent, consistent with recent quarters. Genzyme has been able to absorb the shift in its overall product mix with continued margin improvements for certain products.
Genzyme ended the third quarter with $823.4 million in cash and marketable securities.
2
Product Revenues
Revenues are grouped within six areas: Renal, Therapeutics, Biosurgery, Transplant, Diagnostics/Genetics, and Other.
Within the Renal area, revenue for Renagel® (sevelamer hydrochloride) grew 24 percent to $93.3 million, up from $75.5 million in the third quarter last year. Revenue includes product sales, royalties, and sales of bulk sevelamer. Renagel, a phosphate binder for patients with end-stage renal disease, is well-positioned competitively, and its sales and margins continue to expand.
Genzyme is working to accelerate access to Renagel for the approximately 30 percent of U.S. dialysis patients who lack an oral drug benefit, primarily those covered by Medicare. The company recently launched the Renagel REACH Program, which will provide access to Renagel for Medicare beneficiaries significantly earlier than they would obtain coverage through new Medicare prescription benefits that take effect in 2006. Under Genzyme’s program, Medicare beneficiaries are eligible to receive Renagel for either $5 or $25 per month, depending on income, by using a participating Medicare-approved drug discount card. As the REACH program takes effect, the number of prescriptions for Renagel is expected to increase, though this will not result in a corresponding increase in revenue given the substantial discounts offered by the program through 2005.
Therapeutics revenues increased 27 percent for the third quarter, rising to $282.4 million from $222.6 million in the same quarter a year ago.
Within the Therapeutics area, sales of Fabrazyme® (agalsidase beta) enzyme replacement therapy for Fabry disease were $58.0 million, up 170 percent from $22.1 million in the same quarter last year. U.S. sales increased to $21.9 million in the third quarter, and sales outside the U.S. reached $36.1 million. The product is experiencing
3
fast growth in the United States and Japan, where it was launched relatively recently. In Europe, the number of patients on therapy continues to increase steadily three years into Fabrazyme’s introduction there.
Genzyme will meet soon with the FDA to discuss the successfully completed Phase 4 study designed to verify the clinical benefit of Fabrazyme. Genzyme released positive top-line results from this study last month, and the full results will be presented at three scientific meetings this month. The company plans to file a BLA supplement with the FDA early next year to obtain labeling changes that incorporate the findings of this study, and it will also provide the study results to regulatory authorities in Europe and certain other regions to fulfill post-approval commitments.
Sales of Cerezyme® (imiglucerase for injection) enzyme replacement therapy for Type 1 Gaucher disease were $208.4 million in the third quarter, up 10 percent from $189.2 million in the same period a year ago. Cerezyme sales continue to decrease as a proportion of Genzyme’s revenue, underscoring the benefits of diversification. In the third quarter, they represented 37 percent of revenue, down from 46 percent in the same period two years ago.
Sales of Aldurazyme® (laronidase) enzyme replacement therapy for patients with MPS I were $10.3 million in the third quarter, compared with $3.4 million in the same quarter last year. Aldurazyme sales are not included within Genzyme’s revenues because the company is commercializing the product through a joint venture with BioMarin Pharmaceutical Inc.
Genzyme remains on track to submit a marketing application in the European Union in December for Myozyme for the treatment of Pompe disease. The company plans to submit marketing applications in the United States and Japan next year. Nearly 90 Pompe patients are currently receiving Myozyme in clinical studies or through Genzyme’s expanded access program. Patients in France will soon begin receiving Myozyme under the temporary authorization program (ATU) supported by the French government. Governments in several other European countries have provided access to Myozyme through similar pre-approval mechanisms.
Earlier in October, a committee of the American College of Medical Genetics met to begin developing treatment guidelines for Pompe disease. These guidelines are expected to be published early next year and will play an important role in building awareness of this ultra-orphan disease among physicians.
Sales of Thyrogen® (thyrotropin alfa for injection) increased 35 percent to $15.4 million, compared with $11.4 million in last year’s third quarter. Genzyme plans to file
4
an NDA supplement in the fourth quarter seeking U.S. approval to market Thyrogen for use in the ablation of thyroid cancer remnants.
Revenue for the Biosurgery business unit was $56.8 million for the third quarter, compared with revenue of $59.4 million for the third quarter a year ago.
Sales of the Biosurgery unit’s largest product, Synvisc® (hylan G-F 20), which is used to treat knee pain from osteoarthritis, were $24.6 million in the quarter, compared with $29.8 million in last year’s third quarter, primarily because of competitive pressures in the U.S. market. Synvisc continues to be an important product in Genzyme’s portfolio, and the company believes Synvisc has excellent growth potential within the expanding global market for products to treat the pain associated with osteoarthritis of the knee and eventually other joints.
Revenue for the Transplant unit was $41.3 million for the third quarter. Genzyme began working in this medical area when it acquired SangStat near the end of the third quarter last year. Combined sales of Thymoglobulin® (anti-thymocyte globulin, rabbit) and Lymphoglobuline® (anti-thymocite-globulin, equine), were $28.3 million in the quarter. These products are used in kidney transplant procedures.
Revenue for Genzyme’s Diagnostics/Genetics business grew 66 percent to $77.6 million, up from $46.6 million in last year’s third quarter. Within this area, revenue for diagnostic testing services reached $55.9 million, more than double revenue of $25.5 million in the third quarter last year. This increase was driven largely by the addition of IMPATH’s oncology testing business. Genetic testing revenues grew significantly despite being affected by the severe weather in the Southeast, which temporarily closed hospitals and physician offices served by Genzyme’s laboratories.
5
Other revenue—including sales of WelChol® (colesevelum hydrochloride) and pharmaceutical intermediates—totaled $17.9 million in the third quarter, compared with $25.6 million for the same period last year.
6
About Genzyme
Genzyme Corp. is a global biotechnology company dedicated to making a major positive impact on the lives of people with serious diseases. The company’s broad product portfolio is focused on rare genetic disorders, renal disease, osteoarthritis and immune-mediated diseases, and includes an industry-leading array of diagnostic products and services. Genzyme’s commitment to innovation continues today with research into novel approaches to cancer, heart disease, and other areas of unmet medical need. More than 6,400 Genzyme employees in offices around the globe serve patients in over 80 countries. Genzyme’s press releases and other company information are available at www.genzyme.com and by calling Genzyme’s investor information line at 1-800-905-4369 within the United States or 1-703-797-1866 outside the United States.
Safe-Harbor Statement
This press release contains forward-looking statements, including statements regarding fiscal year 2004 and 2005 earnings guidance, the expected financial impact of the ILEX merger, plans to seek labeling changes in the U.S. for Fabrazyme, presentation of clinical trial results for Fabrazyme, filing of an NDA supplement seeking U.S. approval to market Thyrogen for use in the ablation of thyroid cancer and the timing thereof, Synvisc growth potential, submission of marketing applications to various regulatory authorities for Myozyme and the timing thereof, anticipated publication of treatment guidelines related to Pompe disease and other statements regarding Genzyme’s future performance and strategy. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those forecast in these forward-looking statements. These risks and uncertainties include, among others, Genzyme’s ability to consummate the ILEX merger and it’s ability to successfully integrate that business; Genzyme’s ability successfully to complete preclinical and clinical development of its product candidates, including Myozyme; Genzyme’s ability to expand the use of current products in existing and new indications, including Renagel, Synvisc, Thymoglobulin and Thyrogen; Genzyme’s ability to maintain and obtain regulatory approvals for products and services; Genzyme’s ability to successfully identify and market to new patients; the accuracy of Genzyme’s estimates regarding patient populations; Genzyme’s success in marketing its products and services against new and existing competitive products and services; the availability and amount of reimbursement for Genzyme’s products and services from third-party payors; Genzyme’s ability to manufacture products and product candidates in a timely and cost effective manner; Genzyme’s ability to effectively manage inventory levels; changes in legislation and regulations affecting the sale of Genzyme’s products
7
and services; and the other factors described in Genzyme’s periodic filings with the Securities and Exchange Commissions. Please see the disclosure under the heading “Factors Affecting Future Operating Results” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the Genzyme Quarterly Report on Form 10-Q for the quarter ending June 30, 2004, for a more complete discussion of these and other risk factors. Furthermore, in the past Genzyme has engaged in acquisitions and capital raising transactions. The financial guidance included in this press release does not reflect the potential impact of any mergers and acquisitions or financing activity beyond what Genzyme has publicly announced prior to October 20, 2004. Genzyme cautions investors not to place substantial reliance on the forward-looking statements contained in this press release. These statements speak only as of October 20, 2004, and Genzyme undertakes no obligation to update or revise the statements.
Conference Call Information
There will be a conference call today at 11:00 a.m. Eastern to discuss Genzyme Corporation’s third quarter 2004 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 2:30 p.m. Eastern today through midnight on October 27 by dialing 719-457-0820. Please refer to reservation number 205889. This call will also be Webcast live on the investor events section of www.genzyme.com.
Upcoming Events
Genzyme will report its fourth-quarter and year-end financial results on February 17, 2005. If you would like to participate in the 11:00 a.m. Eastern conference call, please dial 719-457-2642. Please check www.genzyme.com one week prior to the reporting date for any changes to this information.
8
GENZYME GENERAL (GENZ)
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)
|
| Three Months Ended |
| Nine Months Ended |
| |||||||||||||
|
| 2004(1) |
| 2003(1) |
| 2004(1) |
| 2003(1) |
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| |||||||||
Total revenues |
| $ | 569,229 |
| $ | 436,978 |
| $ | 1,610,068 |
| $ | 1,098,686 |
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| |||||||||
Operating costs and expenses: |
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| |||||||||
Cost of products and services sold |
| 154,859 |
| 114,863 |
| 424,689 |
| 289,577 |
| |||||||||
Selling, general and administrative |
| 147,886 |
| 127,340 |
| 443,956 |
| 307,789 |
| |||||||||
Research and development |
| 92,188 |
| 82,974 |
| 284,374 |
| 198,137 |
| |||||||||
Amortization of intangibles |
| 27,657 |
| 19,267 |
| 81,147 |
| 38,876 |
| |||||||||
Purchase of in-process research and development (2) |
| — |
| 158,000 |
| — |
| 158,000 |
| |||||||||
Charge for impaired assets (3) |
| — |
| 7,996 |
| — |
| 7,996 |
| |||||||||
Total operating costs and expenses |
| 422,590 |
| 510,440 |
| 1,234,166 |
| 1,000,375 |
| |||||||||
Operating income (loss) |
| (146,639 | ) | (73,462 | ) | 375,902 |
| 98,311 |
| |||||||||
|
|
|
|
|
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|
|
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| |||||||||
Other income (expenses): |
|
|
|
|
|
|
|
|
| |||||||||
Equity in loss of equity method investments |
| (4,362 | ) | (5,503 | ) | (12,467 | ) | (14,501 | ) | |||||||||
Minority interest |
| 1,589 |
| — |
| 3,715 |
| — |
| |||||||||
Gain (loss) on investments in equity securities |
| (2,706 | ) | 1,183 |
| (2,282 | ) | (2,437 | ) | |||||||||
Other |
| (19 | ) | (338 | ) | (733 | ) | 1,216 |
| |||||||||
Investment income |
| 4,566 |
| 11,422 |
| 17,845 |
| 34,761 |
| |||||||||
Interest expense (4) |
| (5,429 | ) | (4,382 | ) | (33,250 | ) | (12,987 | ) | |||||||||
Total other income (expenses) |
| (6,361 | ) | 2,382 |
| (27,172 | ) | 6,052 |
| |||||||||
Income (loss) before income taxes |
| (140,278 | ) | (71,080 | ) | 348,730 |
| 104,363 |
| |||||||||
Provision for income taxes |
| (42,479 | ) | (24,653 | ) | (104,861 | ) | (67,382 | ) | |||||||||
Net income (loss) |
| $ | (97,799 | ) | $ | (95,733 | ) | $ | 243,869 |
| $ | 36,981 |
| |||||
|
|
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| |||||||||
Allocated to Genzyme Stock (1): |
|
|
|
|
|
|
|
|
| |||||||||
Net income (loss) |
| $ | (97,799 | ) | $ | (95,733 | ) | $ | 243,869 |
| $ | 24,841 |
| |||||
Tax benefit allocated from Genzyme Biosurgery |
| — |
| — |
| — |
| 8,720 |
| |||||||||
Tax benefit allocated from Genzyme Molecular Oncology |
| — |
| — |
| — |
| 3,420 |
| |||||||||
Net income (loss) allocated to Genzyme Stock |
| $ | (97,799 | ) | $ | (95,733 | ) | $ | 243,869 |
| $ | 36,981 |
| |||||
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| |||||||||
Net income (loss) per share of Genzyme Stock: |
|
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| |||||||||
Basic |
| $ | (0.43 | ) | $ | (0.43 | ) | $ | 1.08 |
| $ | 0.17 |
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Diluted (5,6) |
| $ | (0.42 | ) | $ | (0.43 | ) | $ | 1.05 |
| $ | 0.17 |
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| |||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| |||||||||
Basic |
| 228,156 |
| 222,000 |
| 226,815 |
| 217,801 |
| |||||||||
|
|
|
|
|
|
|
|
|
| |||||||||
Diluted (5,6) |
| 234,720 |
| 222,000 |
| 232,727 |
| 223,972 |
| |||||||||
(1) Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those stocks and are not affected by the elimination of our tracking stock structure.
From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of shareholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of common stock, which we refer to as Genzyme Stock.
(2) Represents a charge for in-process research and development of $(158,000)K related to our acquisition of SangStat Medical Corporation in September 2003.
(3) Represents an impairment charge of $(7,996)K recorded in September 2003 to write down the assets related to our FocalSeal business.
(4) In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium. Interest expense for the nine months ended September 30, 2004 includes charges of $(4,313)K for the premium paid upon redemption and $(5,329)K to write off the unamortized debt fees associated with these debentures.
(5) Net income per share on a diluted basis and weighted average shares-diluted for the three and nine months ended September 30, 2004 include the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock, but exclude: (i) for the three months ended September 30, 2004, the assumed conversion of our convertible notes; and (ii) for the nine months ended September 30, 2004, the assumed conversion of our convertible notes and debentures because the conditions for conversion in each such period had not been met.
(6) Net loss per share on a diluted basis and weighted average shares-diluted for the three months ended September 30, 2003 exclude: (i) the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock because the effect would be anti-dilutive due to our net loss for the period; and (ii) the potentially dilutive effect of the assumed conversion of our convertible debentures because the conditions for conversion had not been met. Net income per share for the nine months ended September 30, 2003 includes the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock but excludes the potentially dilutive effect of the assumed conversion of our convertible debentures because the conditions for conversion had not been met.
GENZYME GENERAL (GENZ)
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
|
| September 30, |
| December 31, |
| ||||
|
|
|
|
|
| ||||
Cash and all marketable securities (2) |
| $ | 823,446 |
| $ | 1,227,460 |
| ||
Other current assets |
| 990,570 |
| 909,490 |
| ||||
Property, plant and equipment, net |
| 1,231,775 |
| 1,151,133 |
| ||||
Intangibles, net |
| 1,669,358 |
| 1,517,791 |
| ||||
Other assets |
| 196,116 |
| 198,654 |
| ||||
Total assets |
| $ | 4,911,265 |
| $ | 5,004,528 |
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|
|
|
|
|
| ||||
Current liabilities |
| $ | 526,189 |
| $ | 392,025 |
| ||
Noncurrent liabilities (2) |
| 1,072,245 |
| 1,676,091 |
| ||||
Stockholders’ equity |
| 3,312,831 |
| 2,936,412 |
| ||||
Total liabilities and stockholders’ equity |
| $ | 4,911,265 |
| $ | 5,004,528 |
| ||
(1) Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating assets and liabilities to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our assets and liabilities are allocated to Genzyme General.
(2) In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium. Upon redemption, we also recorded a non-cash charge of $5.3 million to interest expense to write off the unamortized debt fees associated with these debentures.
GENZYME GENERAL
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended September 30, 2004
(Amounts in thousands, except per share data)
|
| NON-GAAP |
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|
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| |||||||||||||
|
| Before |
| Sangstat |
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| NON-GAAP |
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| Gains (Charges) |
| Acquisition-Related |
|
|
| Before Effect |
| Effect of |
| GAAP |
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|
| & Amortization |
| Costs |
| Amortization |
| of FIN 46 |
| FIN 46 |
| As Reported |
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Income Statement Classification: |
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Total revenue |
| $ | 569,229 |
|
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|
|
| $ | 569,229 |
|
|
| $ | 569,229 |
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Cost of products and services sold |
| $ | (153,808 | ) | $ | (1,051 | ) |
|
| $ | (154,859 | ) |
|
| $ | (154,859 | ) | |||||||||
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Selling, general and administrative |
| $ | (147,754 | ) |
|
|
|
| $ | (147,754 | ) | $ | (132 | ) | $ | (147,886 | ) | |||||||||
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Research and development |
| $ | (89,143 | ) |
|
|
|
| $ | (89,143 | ) | $ | (3,045 | ) | $ | (92,188 | ) | |||||||||
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Amortization of intangibles |
| $ | — |
|
|
| $ | (27,657 | ) | $ | (27,657 | ) |
|
| $ | (27,657 | ) | |||||||||
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Equity in loss of equity method investments |
| $ | (5,950 | ) |
|
|
|
| $ | (5,950 | ) | $ | 1,588 |
| $ | (4,362 | ) | |||||||||
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Minority interest |
| $ | — |
|
|
|
|
| $ | — |
| $ | 1,589 |
| $ | 1,589 |
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Gain (loss) on investments in equity securities |
| $ | (2,706 | ) |
|
|
|
| $ | (2,706 | ) | $ | — |
| $ | (2,706 | ) | |||||||||
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Investment income |
| $ | 4,566 |
|
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|
|
| $ | 4,566 |
| $ | — |
| $ | 4,566 |
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Interest expense |
| $ | (5,429 | ) |
|
|
|
| $ | (5,429 | ) | $ | — |
| $ | (5,429 | ) | |||||||||
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Summary: |
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Pretax profit |
| $ | 168,986 |
| $ | (1,051 | ) | $ | (27,657 | ) | $ | 140,278 |
| $ | — |
| $ | 140,278 |
| |||||||
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Provision for income taxes |
| (53,044 | ) | 387 |
| 10,178 |
| $ | (42,479 | ) | $ | — |
| $ | (42,479 | ) | ||||||||||
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Net income allocated to Genzyme General Stock |
| $ | 115,942 |
| $ | (664 | ) | $ | (17,479 | ) | $ | 97,799 |
| $ | — |
| $ | 97,799 |
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Net income per share of Genzyme General Stock: |
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| |||||||||||||
Basic |
| $ | 0.51 |
| $ | (0.00 | ) | $ | (0.08 | ) | $ | 0.43 |
| $ | — |
| $ | 0.43 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Diluted |
| $ | 0.49 |
| $ | (0.00 | ) | $ | (0.07 | ) | $ | 0.42 |
| $ | — |
| $ | 0.42 |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Basic |
| 228,156 |
| 228,156 |
| 228,156 |
| 228,156 |
| 228,156 |
| 228,156 |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Diluted |
| 234,720 |
| 234,720 |
| 234,720 |
| 234,720 |
| 234,720 |
| 234,720 |
| |||||||||||||
Genzyme General (GENZ)
Analyst Schedule
(Unaudited, amounts in thousands, except percentage amounts)
|
|
|
|
|
|
|
|
|
|
|
| Q3-04 |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
| vs. |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
| Q3-03 |
|
|
|
|
| YTD |
| ||||||||
|
| Q3-03(1) |
| Q4-03(1) |
| Q1-04(1) |
| Q2-04(1) |
| Q3-04(1) |
| % B/(W) |
| FY 2002 |
| FY 2003(1) |
| 09/30/04(1) |
| ||||||||
Total revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Renal |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Renagel phosphate binder (including Sevelamer) |
| $ | 75,468 |
| $ | 81,465 |
| $ | 83,523 |
| $ | 87,617 |
| $ | 93,308 |
| 24 | % | $ | 156,864 |
| $ | 281,701 |
| $ | 264,448 |
|
Other Renal |
| — |
| — |
| — |
| — |
| — |
|
|
| — |
| — |
| — |
| ||||||||
Total Renal product and service revenue |
| 75,468 |
| 81,465 |
| 83,523 |
| 87,617 |
| 93,308 |
| 24 | % | 156,864 |
| 281,701 |
| 264,448 |
| ||||||||
Renal R&D revenue |
| — |
| — |
| — |
| — |
| — |
|
|
| — |
| — |
| — |
| ||||||||
Total Renal |
| 75,468 |
| 81,465 |
| 83,523 |
| 87,617 |
| 93,308 |
| 24 | % | 156,864 |
| 281,701 |
| 264,448 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Therapeutics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cerezyme enzyme |
| 189,223 |
| 192,683 |
| 202,970 |
| 209,371 |
| 208,378 |
| 10 | % | 619,184 |
| 733,817 |
| 620,719 |
| ||||||||
Fabrazyme enzyme |
| 21,452 |
| 31,889 |
| 38,103 |
| 49,620 |
| 57,996 |
| 170 | % | 26,101 |
| 80,617 |
| 145,719 |
| ||||||||
Thyrogen hormone |
| 11,405 |
| 12,529 |
| 13,997 |
| 16,298 |
| 15,428 |
| 35 | % | 28,270 |
| 43,438 |
| 45,723 |
| ||||||||
Other Therapeutics |
| 499 |
| 448 |
| 39 |
| 1,193 |
| 575 |
| 15 | % | 871 |
| 1,802 |
| 1,807 |
| ||||||||
Total Therapeutics product and service revenue |
| 222,579 |
| 237,549 |
| 255,109 |
| 276,482 |
| 282,377 |
| 27 | % | 674,426 |
| 859,674 |
| 813,968 |
| ||||||||
Therapeutics R&D revenue |
| — |
| — |
| — |
| — |
| — |
|
|
| 834 |
| 1 |
| — |
| ||||||||
Total Therapeutics |
| 222,579 |
| 237,549 |
| 255,109 |
| 276,482 |
| 282,377 |
| 27 | % | 675,260 |
| 859,675 |
| 813,968 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Transplant |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Thymoglobulin/Lymphoglobuline |
| 4,898 |
| 25,055 |
| 25,012 |
| 25,260 |
| 28,342 |
| 479 | % | — |
| 29,953 |
| 78,614 |
| ||||||||
Other Transplant |
| 2,421 |
| 11,946 |
| 11,222 |
| 11,235 |
| 12,669 |
| 423 | % | — |
| 14,367 |
| 35,126 |
| ||||||||
Total Transplant product and service revenue |
| 7,319 |
| 37,001 |
| 36,234 |
| 36,495 |
| 41,011 |
| 460 | % | — |
| 44,320 |
| 113,740 |
| ||||||||
Transplant R&D revenue |
| — |
| — |
| — |
| — |
| 261 |
|
|
| — |
| — |
| 261 |
| ||||||||
Total Transplant |
| 7,319 |
| 37,001 |
| 36,234 |
| 36,495 |
| 41,272 |
| 464 | % | — |
| 44,320 |
| 114,001 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Biosurgery |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Synvisc viscosupplementation product and services |
| 29,754 |
| 25,825 |
| 22,363 |
| 27,520 |
| 24,630 |
| (17 | )% | — |
| 55,579 |
| 74,513 |
| ||||||||
Sepra products |
| 11,951 |
| 14,008 |
| 14,212 |
| 15,579 |
| 15,085 |
| 26 | % | — |
| 25,959 |
| 44,876 |
| ||||||||
Other Biosurgery |
| 12,969 |
| 13,003 |
| 10,807 |
| 14,178 |
| 16,814 |
| 30 | % | 12,828 |
| 32,414 |
| 41,799 |
| ||||||||
Total Biosurgery product and service revenue |
| 54,674 |
| 52,836 |
| 47,382 |
| 57,277 |
| 56,529 |
| 3 | % | 12,828 |
| 113,952 |
| 161,188 |
| ||||||||
Biosurgery R&D revenue |
| 4,721 |
| 406 |
| 321 |
| 2,302 |
| 227 |
| (95 | )% | — |
| 5,127 |
| 2,850 |
| ||||||||
Total Biosurgery |
| 59,395 |
| 53,242 |
| 47,703 |
| 59,579 |
| 56,756 |
| (4 | )% | 12,828 |
| 119,079 |
| 164,038 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Diagnostics/Genetics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Diagnostic Products |
| 21,116 |
| 21,722 |
| 23,370 |
| 22,917 |
| 21,667 |
| 3 | % | 83,065 |
| 88,588 |
| 67,954 |
| ||||||||
Genetic Testing |
| 25,530 |
| 26,736 |
| 28,744 |
| 48,809 |
| 55,915 |
| 119 | % | 89,745 |
| 102,147 |
| 133,468 |
| ||||||||
Total Diagnostics/Genetics product and service revenue |
| 46,646 |
| 48,458 |
| 52,114 |
| 71,726 |
| 77,582 |
| 66 | % | 172,810 |
| 190,735 |
| 201,422 |
| ||||||||
Diagnostic/Genetics R&D revenue |
| — |
| — |
| — |
| — |
| — |
|
|
| — |
| — |
| — |
| ||||||||
Total Diagnostics/Genetics |
| 46,646 |
| 48,458 |
| 52,114 |
| 71,726 |
| 77,582 |
| 66 | % | 172,810 |
| 190,735 |
| 201,422 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Other |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Other product and service revenue |
| 21,487 |
| 16,242 |
| 14,784 |
| 16,444 |
| 15,935 |
| (26 | )% | 57,084 |
| 71,710 |
| 47,163 |
| ||||||||
Other R&D revenue |
| 4,084 |
| 2,174 |
| 1,784 |
| 1,245 |
| 1,999 |
| (51 | )% | 5,339 |
| 7,597 |
| 5,028 |
| ||||||||
Total Other |
| 25,571 |
| 18,416 |
| 16,568 |
| 17,689 |
| 17,934 |
| (30 | )% | 62,423 |
| 79,307 |
| 52,191 |
| ||||||||
Total revenues |
| $ | 436,978 |
| $ | 476,131 |
| $ | 491,251 |
| $ | 549,588 |
| $ | 569,229 |
| 30 | % | $ | 1,080,185 |
| $ | 1,574,817 |
| $ | 1,610,068 |
|
Genzyme General (GENZ)
Analyst Schedule
(Unaudited, amounts in thousands, except percentage and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
| Q3-04 |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
| vs. |
|
|
|
|
|
|
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
| Q3-03 |
|
|
|
|
| YTD |
| ||||||||
|
| Q3-03(1) |
| Q4-03(1) |
| Q1-04(1) |
| Q2-04(1) |
| Q3-04(1) |
| % B/(W) |
| FY 2002 |
| FY 2003(1) |
| 09/30/04(1) |
| ||||||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total product and service revenue |
| $ | 428,173 |
| $ | 473,551 |
| $ | 489,146 |
| $ | 546,041 |
| $ | 566,742 |
| 32 | % | $ | 1,074,012 |
| $ | 1,562,092 |
| $ | 1,601,929 |
|
Total R&D revenue |
| 8,805 |
| 2,580 |
| 2,105 |
| 3,547 |
| 2,487 |
| (72 | )% | 6,173 |
| 12,725 |
| 8,139 |
| ||||||||
Total revenues |
| 436,978 |
| 476,131 |
| 491,251 |
| 549,588 |
| 569,229 |
| 30 | % | 1,080,185 |
| 1,574,817 |
| 1,610,068 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total product and service gross profit |
| 313,310 |
| 344,159 |
| 362,184 |
| 403,173 |
| 411,883 |
| 31 | % | 808,194 |
| 1,143,123 |
| 1,177,240 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
SG&A expense |
| 127,340 |
| 147,606 |
| 143,220 |
| 152,850 |
| 147,886 |
| (16 | )% | 323,683 |
| 455,395 |
| 443,956 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
R&D expense |
| 82,974 |
| 97,588 |
| 92,816 |
| 99,370 |
| 92,188 |
| (11 | )% | 230,043 |
| 295,725 |
| 284,374 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Amortization of intangibles |
| 19,267 |
| 25,844 |
| 26,245 |
| 27,245 |
| 27,657 |
| (44 | )% | 38,998 |
| 64,720 |
| 81,147 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Purchase of in-process research and development (2) |
| 158,000 |
| — |
| — |
| — |
| — |
| 100 | % | — |
| 158,000 |
| — |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Charge for impaired assets (3) |
| 7,996 |
| — |
| — |
| — |
| — |
| 100 | % | 13,986 |
| 7,996 |
| — |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Operating income (loss) |
| (73,462 | ) | 75,701 |
| 102,008 |
| 127,255 |
| 146,639 |
| 300 | % | 207,657 |
| 174,012 |
| 375,902 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Other income (expenses): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Equity in loss of equity method investments |
| (5,503 | ) | (2,242 | ) | (3,831 | ) | (4,274 | ) | (4,362 | ) | 21 | % | (16,858 | ) | (16,743 | ) | (12,467 | ) | ||||||||
Minority interest |
| — |
| 2,232 |
| 1,162 |
| 964 |
| 1,589 |
|
|
| — |
| 2,232 |
| 3,715 |
| ||||||||
Gain (loss) on investments in equity securities |
| 1,183 |
| 1,236 |
| 353 |
| 71 |
| (2,706 | ) | (329 | )% | (14,497 | ) | (1,201 | ) | (2,282 | ) | ||||||||
Gain on sale of product line (4) |
| — |
| 1,709 |
| — |
| — |
| — |
|
|
| — |
| 1,709 |
| — |
| ||||||||
Other |
| (338 | ) | (222 | ) | (324 | ) | (390 | ) | (19 | ) | 94 | % | (152 | ) | 994 |
| (733 | ) | ||||||||
Investment income |
| 11,422 |
| 7,551 |
| 7,676 |
| 5,603 |
| 4,566 |
| (60 | )% | 48,944 |
| 42,312 |
| 17,845 |
| ||||||||
Interest expense (5) |
| (4,382 | ) | (9,393 | ) | (10,326 | ) | (17,495 | ) | (5,429 | ) | (24 | )% | (17,847 | ) | (22,380 | ) | (33,250 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Income (loss) before income taxes |
| (71,080 | ) | 76,572 |
| 96,718 |
| 111,734 |
| 140,278 |
| 297 | % | 207,247 |
| 180,935 |
| 348,730 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Provision for income taxes |
| (24,653 | ) | (19,270 | ) | (28,824 | ) | (33,558 | ) | (42,479 | ) | (72 | )% | (56,516 | ) | (98,792 | ) | (104,861 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Division net income (loss) before allocated tax benefits |
| (95,733 | ) | 57,302 |
| 67,894 |
| 78,176 |
| 97,799 |
| 202 | % | 150,731 |
| 82,143 |
| 243,869 |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Allocated tax benefits |
| — |
| — |
| — |
| — |
| — |
|
|
| 27,795 |
| 12,140 |
| — |
| ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) allocated to Genzyme Stock (1) |
| $ | (95,733 | ) | $ | 57,302 |
| $ | 67,894 |
| $ | 78,176 |
| $ | 97,799 |
| 202 | % | $ | 178,526 |
| $ | 94,283 |
| $ | 243,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) per share of Genzyme Stock-diluted (1,6) |
| $ | (0.43 | ) | $ | 0.25 |
| $ | 0.29 |
| $ | 0.34 |
| $ | 0.42 |
| 198 | % | $ | 0.81 |
| $ | 0.41 |
| $ | 1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares outstanding-diluted (6) |
| 222,000 |
| 229,970 |
| 231,917 |
| 231,544 |
| 234,720 |
| 6 | % | 219,388 |
| 232,727 |
| 232,727 |
| ||||||||
Genzyme General (GENZ)
Analyst Schedule
(Unaudited, amounts in thousands, except percentage amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| YTD |
| ||||||||
|
| Q3-03(1) |
| Q4-03(1) |
| Q1-04(1) |
| Q2-04(1) |
| Q3-04(1) |
| FY 2002 |
| FY 2003(1) |
| 09/30/04(1) |
| ||||||||
Total product and service revenue |
| $ | 428,173 |
| $ | 473,551 |
| $ | 489,146 |
| $ | 546,041 |
| $ | 566,742 |
| $ | 1,074,012 |
| $ | 1,562,092 |
| $ | 1,601,929 |
|
As a % of total product and service revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Renagel (including Sevelamer) |
| 17 | % | 17 | % | 17 | % | 16 | % | 16 | % | 15 | % | 18 | % | 16 | % | ||||||||
Cerezyme enzyme |
| 44 | % | 41 | % | 41 | % | 38 | % | 37 | % | 58 | % | 47 | % | 39 | % | ||||||||
Fabrazyme enzyme |
| 5 | % | 7 | % | 8 | % | 9 | % | 10 | % | 2 | % | 5 | % | 9 | % | ||||||||
Thyrogen hormone |
| 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | ||||||||
Thymoglobulin/Lymphoglobuline |
| 1 | % | 5 | % | 5 | % | 5 | % | 5 | % | 0 | % | 2 | % | 5 | % | ||||||||
Synvisc viscosupplementation product and services |
| 7 | % | 5 | % | 5 | % | 5 | % | 4 | % | 0 | % | 3 | % | 4 | % | ||||||||
Sepra products |
| 3 | % | 3 | % | 3 | % | 3 | % | 3 | % | 0 | % | 2 | % | 3 | % | ||||||||
Diagnostics/Genetics |
| 11 | % | 10 | % | 11 | % | 13 | % | 14 | % | 16 | % | 12 | % | 13 | % | ||||||||
Other |
| 9 | % | 9 | % | 7 | % | 8 | % | 8 | % | 6 | % | 8 | % | 8 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total product and service gross margin |
| 73 | % | 73 | % | 74 | % | 74 | % | 73 | % | 75 | % | 73 | % | 73 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenues |
| $ | 436,978 |
| $ | 476,131 |
| $ | 491,251 |
| $ | 549,588 |
| $ | 569,229 |
| $ | 1,080,185 |
| $ | 1,574,817 |
| $ | 1,610,068 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
SG&A expense as % of total revenue |
| 29 | % | 31 | % | 29 | % | 28 | % | 26 | % | 30 | % | 29 | % | 28 | % | ||||||||
R&D expense as % of total revenue |
| 19 | % | 20 | % | 19 | % | 18 | % | 16 | % | 21 | % | 19 | % | 18 | % | ||||||||
Operating income (loss) as % of total revenue |
| (17 | )% | 16 | % | 21 | % | 23 | % | 26 | % | 19 | % | 11 | % | 23 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Provision for income taxes as % of profit (loss) before tax |
| (35 | )% | 25 | % | 30 | % | 30 | % | 30 | % | 14 | % | 48 | % | 30 | % | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
|
| 9/30/03(7) |
| 12/31/03(7) |
| 03/31/04(7) |
| 06/30/04(7) |
| 09/30/04(7) |
| 12/31/02 |
| 12/31/03(7) |
| 09/30/04(7) |
| ||||||||
Balance sheet trends: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Cash and all marketable securities |
| $ | 869,912 |
| $ | 1,227,460 |
| $ | 1,235,859 |
| $ | 657,047 |
| $ | 823,446 |
| $ | 1,149,145 |
| $ | 1,227,460 |
| $ | 823,446 |
|
Other current assets |
| 842,180 |
| 909,490 |
| 907,286 |
| 944,828 |
| 990,570 |
| 633,501 |
| 909,490 |
| 990,570 |
| ||||||||
Property, plant and equipment, net |
| 926,569 |
| 1,151,133 |
| 1,156,083 |
| 1,202,580 |
| 1,231,775 |
| 749,840 |
| 1,151,133 |
| 1,231,775 |
| ||||||||
Intangibles, net |
| 1,537,571 |
| 1,517,791 |
| 1,537,411 |
| 1,698,415 |
| 1,669,358 |
| 933,360 |
| 1,517,791 |
| 1,669,358 |
| ||||||||
Other assets |
| 151,084 |
| 198,654 |
| 208,805 |
| 201,885 |
| 196,116 |
| 89,955 |
| 198,654 |
| 196,116 |
| ||||||||
Total assets |
| $ | 4,327,316 |
| $ | 5,004,528 |
| $ | 5,045,444 |
| $ | 4,704,755 |
| $ | 4,911,265 |
| $ | 3,555,801 |
| $ | 5,004,528 |
| $ | 4,911,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Current liabilities |
| $ | 735,976 |
| $ | 392,025 |
| $ | 922,995 |
| $ | 497,503 |
| $ | 526,189 |
| $ | 274,872 |
| $ | 392,025 |
| $ | 526,189 |
|
Noncurrent liabilities |
| 815,637 |
| 1,676,091 |
| 1,082,140 |
| 1,083,563 |
| 1,072,245 |
| 695,045 |
| 1,676,091 |
| 1,072,245 |
| ||||||||
Stockholders’ equity |
| 2,775,703 |
| 2,936,412 |
| 3,040,309 |
| 3,123,689 |
| 3,312,831 |
| 2,585,884 |
| 2,936,412 |
| 3,312,831 |
| ||||||||
Total liabilities and stockholders’ equity |
| $ | 4,327,316 |
| $ | 5,004,528 |
| $ | 5,045,444 |
| $ | 4,704,755 |
| $ | 4,911,265 |
| $ | 3,555,801 |
| $ | 5,004,528 |
| $ | 4,911,265 |
|
Notes:
(1) Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those divisions and are not affected by the elimination of our tracking stock structure.
From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of shareholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of common stock, which we refer to as Genzyme Stock.
(2) Represents a charge for the purchase of in-process research and development of $(158,000)K related to our acquisition of SangStat Medical Corporation in September 2003.
(3) Includes impairment charges of $(7,996)K recorded in September 2003 to write down the assets of our FocalSeal business and $(13,986)K recorded in December 2002 to write off engineering costs related to a proposed manufacturing facility in Framingham, Massachusetts.
(4) Represents the final adjustment to the net loss on the sale of our cardiothoracic devices business to Teleflex Inc. in accordance with the sale agreement. We recorded an estimated net loss of $(29,367)K in June 2003, which we allocated to the Biosurgery division. However, as a result of the elimination of our tracking stock capital structure effective July 1, 2003, the final adjustment to the net loss is allocated to Genzyme General.
(5) In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium. Interest expense for the three months ended June 30, 2004 and nine months ended September 30, 2004 include charges of $(4,313)K for the premium paid upon redemption and $(5,329)K to write off the unamortized debt fees associated with these debentures.
(6) For all periods except Q3-03 and Q3-04, includes the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock but excludes the dilutive effect of the assumed conversion of our convertible subordinated notes and debentures because the conditions for conversion had not been met.
In Q3-03, excludes: (i) the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock because the effect would be anti-dilutive due to the net loss for the period; and (ii) the potentially dilutive effect of the assumed conversion of our convertible subordinated debentures because the conditions for conversion had not been met.
In Q3-04, includes the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock but excludes the potentially dilutive effect of the assumed conversion of our convertible notes because the conditions for conversion had not been met.
(7) Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating assets and liabilities to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our assets and liabilities are allocated to Genzyme General.
GENZYME CORPORATION
Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||||||
|
| 2004 |
| 2003 |
| 2004 |
| 2003 |
| ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Total revenues |
| $ | 569,229 |
| $ | 436,978 |
| $ | 1,610,068 |
| $ | 1,237,740 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
Operating costs and expenses: |
|
|
|
|
|
|
|
|
| ||||||||
Cost of products and services sold |
| 154,859 |
| 114,863 |
| 424,689 |
| 346,252 |
| ||||||||
Selling, general and administrative |
| 147,886 |
| 127,340 |
| 443,956 |
| 372,371 |
| ||||||||
Research and development |
| 92,188 |
| 82,974 |
| 284,374 |
| 237,668 |
| ||||||||
Amortization of intangibles |
| 27,657 |
| 19,267 |
| 81,147 |
| 54,413 |
| ||||||||
Purchase of in-process research and development (1) |
| — |
| 158,000 |
| — |
| 158,000 |
| ||||||||
Charge for impairment of goodwill (2) |
| — |
| — |
| — |
| 102,792 |
| ||||||||
Charge for impaired assets (3) |
| — |
| 7,996 |
| — |
| 10,894 |
| ||||||||
Total operating costs and expenses |
| 422,590 |
| 510,440 |
| 1,234,166 |
| 1,282,390 |
| ||||||||
Operating income (loss) |
| 146,639 |
| (73,462 | ) | 375,902 |
| (44,650 | ) | ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Other income (expenses): |
|
|
|
|
|
|
|
|
| ||||||||
Equity in loss of equity method investments |
| (4,362 | ) | (5,503 | ) | (12,467 | ) | (14,501 | ) | ||||||||
Minority interest |
| 1,589 |
| — |
| 3,715 |
| — |
| ||||||||
Gain (loss) on investments in equity securities |
| (2,706 | ) | 1,183 |
| (2,282 | ) | (2,437 | ) | ||||||||
Loss on sale of product line (4) |
| — |
| — |
| — |
| (29,367 | ) | ||||||||
Other |
| (19 | ) | (338 | ) | (733 | ) | 1,181 |
| ||||||||
Investment income |
| 4,566 |
| 11,422 |
| 17,845 |
| 35,464 |
| ||||||||
Interest expense (5) |
| (5,429 | ) | (4,382 | ) | (33,250 | ) | (17,207 | ) | ||||||||
Total other income (expenses) |
| (6,361 | ) | 2,382 |
| (27,172 | ) | (26,867 | ) | ||||||||
Income (loss) before income taxes |
| 140,278 |
| (71,080 | ) | 348,730 |
| (71,517 | ) | ||||||||
Provision for income taxes |
| (42,479 | ) | (24,653 | ) | (104,861 | ) | (53,377 | ) | ||||||||
Net income (loss) |
| $ | 97,799 |
| $ | (95,733 | ) | $ | 243,869 |
| $ | (124,894 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) per share: |
|
|
|
|
|
|
|
|
| ||||||||
Allocated to Genzyme Stock (6): |
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) |
| $ | 97,799 |
| $ | (95,733 | ) | $ | 243,869 |
| $ | 24,841 |
| ||||
Tax benefit allocated from Genzyme Biosurgery |
| — |
| — |
| — |
| 8,720 |
| ||||||||
Tax benefit allocated from Genzyme Molecular Oncology |
| — |
| — |
| — |
| 3,420 |
| ||||||||
Net income (loss) allocated to Genzyme Stock |
| $ | 97,799 |
| $ | (95,733 | ) | $ | 243,869 |
| $ | 36,981 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
Net income (loss) per share of Genzyme Stock: |
|
|
|
|
|
|
|
|
| ||||||||
Basic |
| $ | 0.43 |
| $ | (0.43 | ) | $ | 1.08 |
| $ | 0.17 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
Diluted (7,8) |
| $ | 0.42 |
| $ | (0.43 | ) | $ | 1.05 |
| $ | 0.17 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||||||
Basic |
| 228,156 |
| 222,000 |
| 226,815 |
| 217,801 |
| ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Diluted (7,8) |
| 234,720 |
| 222,000 |
| 232,727 |
| 223,972 |
| ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Allocated to Biosurgery Stock (6): |
|
|
|
|
|
|
|
|
| ||||||||
Net loss |
| — |
| — |
| — |
| $ | (166,656 | ) | |||||||
Allocated tax benefit |
| — |
| — |
| — |
| 14,005 |
| ||||||||
Net loss allocated to Biosurgery Stock |
| — |
| — |
| — |
| $ | (152,651 | ) | |||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Net loss per share of Biosurgery Stock - basic and diluted: |
|
|
|
|
|
|
| $ | (3.76 | ) | |||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares outstanding |
| — |
| — |
| — |
| 40,630 |
| ||||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Allocated to Molecular Oncology Stock (6): |
|
|
|
|
|
|
|
|
| ||||||||
Net loss allocated to Molecular Oncology Stock |
| — |
| — |
| — |
| $ | (9,224 | ) | |||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Net loss per share of Molecular Oncology Stock - basic and diluted |
| — |
| — |
| — |
| $ | (0.54 | ) | |||||||
|
|
|
|
|
|
|
|
|
| ||||||||
Weighted average shares outstanding |
| — |
| — |
| — |
| 16,958 |
| ||||||||
(1) Represents a charge for in-process research and development of $(158,000)K related to our acquisition of SangStat Medical Corporation in September 2003.
(2) Represents the write off of the goodwill allocated to our orthopaedics reporting unit in June 2003 in accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets.”
(3) Includes impairment charges of $(7,996)K in September 2003 to write down the assets related to our FocalSeal business and $(2,898)K in June 2003 to write down the carrying value of our cardiothoracic devices manufacturing facility in Fall River, Massachusetts to fair value.
(4) Represents the estimated net loss on the sale of our cardiothoracic devices business to Teleflex Inc. in June 2003, which we allocated to the Biosurgery division.
(5) In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium. Interest expense for the nine months ended September 30, 2004 includes charges of $(4,313)K for the premium paid upon redemption and $(5,329)K to write off the unamortized debt fees associated with these debentures.
(6) Effective July 1, 2003, in connection with the elimination of our tracking stock structure, we ceased allocating earnings to Genzyme Biosurgery and Genzyme Molecular Oncology. From that date forward, all of our earnings are allocated to Genzyme General. Earnings or losses allocated to Genzyme Biosurgery and Genzyme Molecular Oncology prior to July 1, 2003 remain allocated to those stocks and are not affected by the elimination of our tracking stock structure.
From July 1, 2003 through May 27, 2004, we referred to our outstanding series of common stock as Genzyme General Stock. At our annual meeting of shareholders on May 27, 2004, our shareholders approved an amendment to our charter that eliminated the designation of separate series of common stock, resulting in 690,000,000 authorized shares of a single series of common stock, which we refer to as Genzyme Stock.
(7) Net income per share on a diluted basis and weighted average shares-diluted for the three and nine months ended September 30, 2004 include the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock, but exclude: (i) for the three months ended September 30, 2004, the assumed conversion of our convertible notes; and (ii) for the nine months ended September 30, 2004, the assumed conversion of our convertible notes and debentures because the conditions for conversion in each such period had not been met.
(8) Net loss per share on a diluted basis and weighted average shares-diluted for the three months ended September 30, 2003 exclude: (i) the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock because the effect would be anti-dilutive due to our net loss for the period; and (ii) the potentially dilutive effect of the assumed conversion of our convertible debentures because the conditions for conversion had not been met. Net income per share for the nine months ended September 30, 2003 includes the dilutive effect of options, stock purchase rights and warrants to purchase shares of Genzyme Stock but excludes the potentially dilutive effect of the assumed conversion of our convertible debentures because the conditions for conversion had not been met.
GENZYME CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited, amounts in thousands)
|
| September 30, |
| December 31, |
| ||||
|
|
|
|
|
| ||||
Cash and all marketable securities (1) |
| $ | 823,446 |
| $ | 1,227,460 |
| ||
Other current assets |
| 990,570 |
| 909,490 |
| ||||
Property, plant and equipment, net |
| 1,231,775 |
| 1,151,133 |
| ||||
Intangibles, net |
| 1,669,358 |
| 1,517,791 |
| ||||
Other assets |
| 196,116 |
| 198,654 |
| ||||
Total assets |
| $ | 4,911,265 |
| $ | 5,004,528 |
| ||
|
|
|
|
|
| ||||
Current liabilities |
| $ | 526,189 |
| $ | 392,025 |
| ||
Noncurrent liabilities (1) |
| 1,072,245 |
| 1,676,091 |
| ||||
Stockholders’ equity |
| 3,312,831 |
| 2,936,412 |
| ||||
Total liabilities and stockholders’ equity |
| $ | 4,911,265 |
| $ | 5,004,528 |
| ||
(1) In June 2004, we completed the redemption of our 3% convertible subordinated debentures for cash, including $575.0 million in principal, accrued interest of approximately $0.8 million and $4.3 million in premium. Upon redemption, we also recorded a non-cash charge of $5.3 million to interest expense to write off the unamortized debt fees associated with these debentures.