UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
X ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission file number: 1-9813
GENENTECH, INC. TAX REDUCTION INVESTMENT PLAN
(Full title of the Plan)
GENENTECH, INC.
(Name of issuer of the securities held pursuant to the Plan)
1 DNA Way, South San Francisco, California 94080-4990
(Address of principal executive offices and zip code)
Genentech, Inc. Tax Reduction Investment Plan
Index to Financial Statements
Item Page No.
- ---------------------------------------------------------------- --------
Statements of Net Assets Available for Benefits at
December 31, 2000 and 1999 3
Statement of Changes in Net Assets Available for
Benefits for the Year Ended December 31, 2000 4
Notes to Financial Statements 5-9
Report of Ernst & Young LLP, Independent Auditors 10
Signatures 11
Supplemental Schedule for the Year Ended December 31, 2000:
Schedule H, Line 4i - Schedule of Assets (Held at End of Year) 12
In this report, "Genentech," "we," "us" and "our" refer to Genentech, Inc.
"Common Stock" refers to Genentech's Common Stock, par value $0.02 per share.
All numbers related to the number of shares, price per share and per share
amounts of Common Stock give effect to the two-for-one split of our Common
Stock in October 2000.
Page 2
Genentech, Inc. Tax Reduction Investment Plan
Statements of Net Assets Available for Benefits
December 31,
2000 1999
------------ ------------
ASSETS:
Investments, at fair value $317,410,543 $310,035,087
Receivables:
Contribution receivable from Genentech, Inc. 10,127,033 8,639,467
Investment income receivable 1,090 -
Amounts due from broker 285,548 -
------------ ------------
Total receivables 10,413,671 8,639,087
Total assets 327,824,214 318,674,554
LIABILITIES:
Amounts due to broker (143,460) -
------------ ------------
Net assets available for benefits $327,680,754 $318,674,554
============ ============
See accompanying notes.
Page 3
Genentech, Inc. Tax Reduction Investment Plan
Statement of Changes in Net Assets Available for Benefits
Year Ended
December 31, 2000
-----------------
ADDITIONS:
Investment income (loss):
Interest and dividends $ 21,363,657
Realized and unrealized loss, net (37,583,106)
------------
Total investment loss (16,219,449)
Contributions:
Basic 24,305,970
Rollover 3,281,256
Employer match 10,199,957
------------
Total contributions 37,787,183
Total additions 21,567,734
DEDUCTIONS:
Benefit payments 12,553,109
Administrative expenses 8,425
------------
Total deductions 12,561,534
Net increase 9,006,200
Net assets available for benefits:
Beginning of year 318,674,554
------------
End of year $327,680,754
============
See accompanying notes.
Page 4
Genentech, Inc. Tax Reduction Investment Plan
Notes to Financial Statements
(1) Description of the Plan
General
The following description of the Genentech, Inc. Tax Reduction Investment
Plan, or the Plan, provides only general information. Participants should
refer to the Plan document for a more complete description of the Plan's
provisions.
The Plan is a defined contribution plan and was established, effective
January 1, 1985, by Genentech, Inc. for the benefit of its eligible employees
in order to provide them with a means of supplementing their retirement
income on a tax-favored basis, an incentive to continue and increase their
efforts to contribute to our success and an opportunity to acquire an equity
interest in Genentech. The Plan accomplishes this through a savings program
that is based on systematic salary reductions. The employee's salary is
reduced by the amount elected to be saved on a pre-tax basis, or salary
deferral contributions, and is then invested by the Plan based on the
employee's investment elections. An individual employee's account is
credited with earnings or losses on a pro rata basis as the actual investment
funds report their earnings performance.
Individuals eligible to participate under the Plan must be employees of
Genentech or employees of an affiliate of Genentech that adopts the Plan with
the approval of the Board of Directors. However, the following employees or
classes of employees are not eligible to participate: (i) any employee who is
classified as temporary by Genentech, unless such employee has completed at
least 1,000 hours of service in a 12-month period beginning on his or her
hire date or any anniversary thereof; (ii) any part-time employee normally
scheduled to work less than 20 hours per week, unless such employee has
completed at least 1,000 hours of service in a 12-month period beginning on
his or her hire date or any anniversary thereof; (iii) any employee who is a
member of a collective bargaining unit and who is covered by a collective
bargaining agreement where retirement benefits were the subject of good faith
bargaining, unless the agreement specifically provides coverage of such
employee under the Plan; (iv) any individual employed by any corporation or
other business entity that is merged or liquidated into Genentech, unless
Genentech designates such employees as eligible employees; (v) any employee
paid from a non-U.S. payroll; or (vi) any employee classified or treated as
an independent contractor, consultant, leased employee (as defined under the
Internal Revenue Code of 1986, as amended (the Code)), or an employee of an
employment agency or other entity, even if subsequently determined to have
been a common-law employee of Genentech.
Contributions
We match a portion of employee contributions, up to a maximum of 4% of a
participant's eligible compensation, or the Match. The Match is effective
December 31st of each year, or the Effective Date, and contributions under
the Match are fully vested at that time. The Match is funded in the first
quarter of the subsequent year to all participants employed by Genentech on
the Effective Date.
Salary deferral contributions, or basic contributions, are accrued and vested
when deducted from employee pay; the Match is accrued and fully (100%) vested
Page 5
on the Effective Date; and qualified rollover contributions are recorded and
vested when received by Fidelity Management Trust Company, or the Plan
Trustee. All contributions are invested pursuant to participants' directions
to the Plan Trustee after receipt of contributions by the Plan Trustee.
Participants may change the amount of contributions (as a percentage
reduction of pre-tax eligible compensation) at any time by contacting the
Plan Trustee. Transfers between funds and changes in investment allocations
can be made at any time, up to ten times per year, effective upon direction
by the participant to the Plan Trustee.
Subject to limitations of the Code, each participant in the Plan could elect
to defer up to the lower of $10,500 or 15% in 2000 and $10,000 or 15% in 1999
of his or her eligible compensation. For the plan years 2000 and 1999, each
participant was required to direct the investment of his or her contributions
to any available investment funds of the Plan (or any combination thereof).
A more detailed description of these investment funds is provided in the Plan
document.
Investment Options
Effective February 1, 2000, the Genentech Common Stock Fund was made
available as an investment option under the Plan. This fund will consist of
shares of our Common Stock and short-term liquid investments, including
Fidelity Institutional Cash Portfolios and Money Market Portfolio, as agreed
to by us and the Plan Trustee, necessary to satisfy the fund's cash needs for
transfers and payments.
Participant Accounts
Each participant's account is credited with the participant's
contribution, the Match and Plan earnings. All amounts contributed to the
Plan are deposited in a trust account with the Plan Trustee. The Plan
Trustee has blanket bond insurance covering the full market value of the
securities and investments of which it has custody. Generally, the Plan
Trustee's fees and expenses are paid by us and are not charged to the Plan.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Participant Loans
Loans are made to Plan participants at fixed interest rates (presently
2% above the then-current bank prime interest rate), subject to certain
restrictions, principally related to a participant's account balance,
permissible loan amount, and repayment through payroll withholding. Loans
are repaid through monthly payroll deductions over three or five years, or
fifteen years if the purpose of the loan is to purchase a participant's
principal residence.
Conditions of Withdrawal
Distributions under the Plan are made upon a participant's death,
disability, retirement or other termination of employment with us, attainment
of age 70-1/2 (applicable only to participants who own 5% or more of the
Company's stock), or authorized exercise of his or her withdrawal rights
under the Plan. Upon termination, a participant must consent to a
distribution unless the balance credited to his or her account under the Plan
does not exceed and has not exceeded $5,000. Distributions are made upon
receipt of the participant's or beneficiary's election directing the method
of distribution.
Anytime prior to termination of employment with us, the Plan administrative
Page 6
committee may grant a participant's request for a withdrawal from the
participant's account if the Plan administrative committee makes a
determination that such withdrawal is necessary in light of the immediate and
heavy financial needs of the participant and is in accordance with the
requirements of the Code and regulations promulgated thereunder. In
addition, a Plan participant may withdraw up to the entire balance of his or
her Plan account if over age 59-1/2 at the time of withdrawal.
Plan Termination
Our Board of Directors has the right under the Plan to alter, amend or
terminate the Plan, or any part thereof, in such a manner as it may
determine. If the Plan is terminated, the interests of all Plan members
would remain fully (100%) vested and nonforfeitable. The balances credited
to their accounts would remain with the Plan Trustee until they become
distributable in accordance with the Plan.
(2) Summary of Significant Accounting Policies:
Investment Valuation and Income Recognition
Investments are stated at fair market value at year end. Investments in
mutual funds are valued at the last quoted price on the last business day of
the year, which for the mutual funds represents the net asset values of
shares held by the Plan at year end. Money market funds are valued on the
basis of historical cost plus accrued interest that approximates fair value.
Participant loans are valued at their outstanding balance, which approximates
fair value. Genentech Common Stock is valued at the quoted market price on
the last day of the plan year.
All security transactions are recorded on the trade date. Gains and
losses on the disposals of investments are determined based on the average
cost of all securities. Dividend income is recorded on the effective date of
a declared dividend. Income from other investments is recorded as earned on
an accrual basis.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
(3) Investments
The Plan Trustee holds the Plan's investments and executes all
investment transactions. During 2000, the Plan's investments (including
investments purchased, sold, as well as held during the year) appreciated
(depreciated) in fair value as determined by quoted market prices as follows:
Net Realized and Unrealized
Appreciation (Depreciation) in
Fair Value of Investments
------------------------------
Common stock $ 2,352,732
Mutual funds (39,935,838)
------------
$(37,583,106)
============
Page 7
The fair value of individual investments that represent 5% or more of
the Plan's net assets is as follows:
December 31,
2000 1999
----------- -----------
Janus Worldwide Fund $20,505,009 -
Genentech Common Stock 16,598,127 -
Fidelity Magellan Fund 68,732,912 $77,834,461
Fidelity Growth Company Fund 66,659,833 59,767,969
Fidelity Growth & Income Portfolio 49,667,493 57,530,416
Fidelity Balanced Fund 16,484,757 18,643,174
Fidelity Retirement Money Market Portfolio 27,430,817 27,337,812
Fidelity Spartan U.S. Equity Index Portfolio 21,833,668 27,629,622
(4) Income Tax Status
The Plan has received a determination letter from the Internal Revenue
Service dated September 25, 1995, stating that the Plan is qualified under
Section 401(a) of the Code and, therefore, the related trust is exempt from
taxation. Subsequent to this issuance of the determination letter, the Plan
was amended. Once qualified, the Plan is required to operate in conformity
with the Code to maintain its qualification. The plan administrator believes
the Plan is being operated in compliance with the applicable requirements of
the Code and, therefore, believes that the Plan, as amended, is qualified and
the related trust is tax exempt.
(5) Related Party Transactions
Transactions in shares of Genentech Common Stock qualify as party-in-
interest transactions under the provisions of ERISA. During 2000, the Plan
made purchases of approximately $26 million and sales of approximately $9
million of Genentech Common Stock.
(6) Reconciliation to Form 5500
The following is a reconciliation of net assets available for benefits per
the financial statements to the Form 5500 as of December 31, 2000:
Net assets available for benefits per the
financial statements $327,680,754
Less: Amounts allocated to withdrawn participants 36,676
------------
Net assets available for benefits per the Form 5500 $327,644,078
============
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500 for the year ended December 31, 2000:
Benefit payments per the financial statements $12,553,109
Add: Amounts allocated to withdrawn participants
as of December 31, 2000 36,676
-----------
Benefit payments per the Form 5500 $12,589,785
===========
Amounts allocated to withdrawn participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
year-end but not yet paid.
Page 8
(7) Subsequent Event
The Plan Administrative Committee is currently reviewing an amendment and
restatement of the Plan, incorporating legislative and technical changes,
that will be retroactively effective to January 1, 2000. The proposed
amendment and restatement will not have a material effect on the financial
statements as of December 31, 2000.
Page 9
Report of Ernst & Young LLP, Independent Auditors
To the Participants and Plan Administrative Committee of the
Genentech, Inc. Tax Reduction Investment Plan
We have audited the accompanying statements of net assets available for
benefits of the Genentech, Inc. Tax Reduction Investment Plan as of December
31, 2000 and 1999, and the related statement of changes in net assets
available for benefits for the year ended December 31, 2000. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental
schedule of assets (held at end of year) as of December 31, 2000, is
presented for purposes of additional analysis and is not a required part of
the financial statements but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedule is the responsibility of the Plan's management. The supplemental
schedule has been subjected to the auditing procedures applied in our audits
of the financial statements and, in our opinion, is fairly stated in all
material respects in relation to the financial statements taken as a whole.
ERNST & YOUNG LLP
Palo Alto, California
May 31, 2001
Page 10
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Plan administrator has duly caused this annual report to be signed by the
undersigned hereunto duly authorized.
Genentech, Inc. Tax Reduction Investment Plan
by Genentech, Inc., Plan Administrator
By: /S/LOUIS J. LAVIGNE, JR. Date: June 15, 2001
---------------------------------------
Louis J. Lavigne, Jr.
Executive Vice President and
Chief Financial Officer
and Plan Administrative Committee
Member for Genentech, Inc.
Tax Reduction Investment Plan
By: /S/DAVID NAGLER Date: June 15, 2001
---------------------------------------
David Nagler
Vice President, Human Resources
and Plan Administrative Committee
Member for Genentech, Inc.
Tax Reduction Investment Plan
Page 11
Genentech, Inc. Tax Reduction Investment Plan
EIN: 94-2347624, Plan #001
Schedule H, Line 4i - Schedule of Assets (Held At End of Year)
December 31, 2000
(b) (c) (e)
Description of investment
Identity of issue, borrower, including maturity date, rate
lessor or of interest, collateral, par, Current
similar party or maturity value (2) Value
- ------------------------------------------------- ----------------------------- ------------
MUTUAL FUNDS:
* Fidelity Magellan Fund ........................ 576,135 shares $ 68,732,912
* Fidelity Growth Company Fund .................. 933,219 shares 66,659,833
* Fidelity Growth & Income Portfolio ............ 1,179,750 shares 49,667,493
* Fidelity Intermediate Bond Fund ............... 234,408 shares 2,353,458
* Fidelity Overseas Fund ........................ 127,572 shares 4,384,647
* Fidelity Balanced Fund ........................ 1,085,237 shares 16,484,757
* Fidelity Asset Manager Fund ................... 75,727 shares 1,273,725
* Fidelity Asset Manager: Growth Fund ........... 158,546 shares 2,522,460
* Fidelity Asset Manager: Income Fund ........... 38,329 shares 449,603
* Fidelity Spartan U.S. Equity Index Portfolio .. 466,432 shares 21,833,668
PIMCO Total Return Fund ....................... 315,959 shares 3,282,819
MAS High Yield Portfolio ...................... 104,753 shares 710,226
Neuberger & Berman Genesis Trust .............. 108,724 shares 2,908,377
RS Emerging Growth Fund ....................... 43,063 shares 1,895,208
INVESCO Total Return Fund ..................... 197,005 shares 5,206,851
Janus Worldwide Fund .......................... 360,623 shares 20,505,009
Domini Social Equity Fund...................... 7,001 shares 242,026
MONEY MARKET FUNDS:
* Fidelity Retirement Money Market Portfolio .... 27,430,817 shares 27,430,817
* Interest bearing cash 84,796 shares 84,796
COMMON STOCK:
* Genentech Common Stock Fund.................... 203,658 shares 16,598,127
* Participant Loans ............................. (1) 4,183,731
------------
Total Investments ............................... $317,410,543
============
(1) Maturing at various dates through 2015 at interest rates ranging from
8.25 to 11.50%.
(2) Cost information is not provided as all investments are participant
directed.
* Indicates party-in-interest to the Plan.
Page 12
Genentech, Inc. Tax Reduction Investment Plan
Index of Exhibits Filed with Form 11-K
For the Year Ended December 31, 2000
Exhibit Sequential
Number Description Page Numbers
- ------- --------------------------------------------------- ------------
23 Consent of Ernst & Young LLP, Independent Auditors,
filed with this document 23
Page 13
1999 Form 11-K (Skeleton) 06/15/2001 @ 1:12 PM
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