1
GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
----------
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
TO ACCOMPANY 1995 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
for the years ended December 31, 1995 and 1994
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Accountants ................................... 15
Financial Statements:
Statements of Net Assets Available for Plan Benefits
as of December 31, 1995 and 1994 ................................... 16
Statements of Changes in Net Assets Available for
Plan Benefits, with Fund Information for the Year
Ended December 31, 1995 ............................................ 17
Notes to Financial Statements ....................................... 18-22
Supplemental Schedules:
Item 27a - Schedule of Assets Held for Investment
Purposes, December 31, 1995 .................................... 23
Item 27d - Schedule of Reportable Transactions for the
Year Ended December 31, 1995 ................................... 24
Certain supplemental schedules required by the regulations of the Employee
Retirement Income Security Act of 1974 have been omitted for the reason that
they are not required or not applicable.
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3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Retirement Savings Plan Committee of the
Genzyme Corporation Retirement Savings Plan:
We have audited the accompanying statements of net assets available for
plan benefits of the Genzyme Corporation Retirement Savings Plan as of December
31, 1995 and 1994 and the related statement of changes in net assets available
for plan benefits, with Fund Information for the year ended December 31, 1995.
We previously audited and reported on the statement of changes in net assets
available for plan benefits, with Fund Information for the year ended December
31, 1994, which condensed statement is presented for comparative purposes. These
financial statements are the responsibility of the Plan Administrator. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 plan benefits of
the Genzyme Corporation Retirement Savings Plan as of December 31, 1995 and 1994
and the changes in its net assets available for plan benefits for the year ended
December 31, 1995, in conformity with generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules listed
in the index on page 14 are presented for purposes of additional analysis and
are not a required part of the basic financial statements, but are 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 Fund Information in the statement of changes in net assets available
for plan benefits is presented for purposes of additional analysis rather than
to present the changes in net assets available for plan benefits of each fund.
The supplemental schedules and Fund Information have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
The schedule of assets held for investment purposes and the schedule of
reportable transactions that accompany the Plan's financial statements do not
disclose the historical cost of certain plan assets held by the plan trustee.
Disclosure of this information is required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
May 17, 1996
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31,
---------------------------
1995 1994
---- ----
ASSETS
Investments at market value (Notes A and B):
American Express Collective Trust Fund ........ $ 3,798,662 $ 2,863,066
Fidelity Puritan Fund ......................... 7,254,378 4,406,406
Fidelity Magellan Fund ........................ 9,991,497 5,311,344
Genzyme General Division Stock ................ 4,429,872 1,761,272
Participant loans ............................. 963,790 737,750
----------- -----------
Total investments .......................... 26,438,199 15,079,838
Cash and cash equivalents ......................... 29,237 37,857
Receivables:
Employer contribution ......................... 226,433 144,521
Employee contributions ........................ 286,135 168,650
Accrued interest .............................. 349 368
Rollovers ..................................... 0 8
Loan receivables from participants ............ 15,547 12,492
----------- -----------
Total receivables .......................... 528,464 326,039
----------- -----------
Total assets ............................. 26,995,900 15,443,734
----------- -----------
Net assets available for plan benefits (Note E) ... $26,995,900 $15,443,734
=========== ===========
The accompanying notes are an integral part of the financial statements.
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5
GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS,
WITH FUND INFORMATION
for the year ended December 31, 1995
(with comparative totals for the year ended December 31, 1994)
Fund Information Total
-----------------------------------------------------------------------------------------
Balanced Aggressive Genzyme
Guaranteed Equity Equity Stock Loan
Fund Fund Fund Fund Fund 1995 1994
---- ---- ---- ---- ---- ---- ----
Additions:
Employee contributions $ 112,726 $ 210,310 $ 296,489 $ 134,357 $ - $ 753,882 $ 613,156
Employer contributions 789,218 1,497,335 1,881,860 476,333 - 4,644,746 3,778,808
Rollovers (Note A) 252,417 520,022 736,985 140,048 8,459 1,657,931 743,560
Investment income 2,742 357,364 564,408 1,699 62,266 988,479 673,147
Net appreciation (depreciation)
in market value of investments 220,865 766,207 1,647,808 2,059,428 - 4,694,308 (351,060)
---------- ---------- ----------- ---------- -------- ----------- -----------
Total additions 1,377,968 3,351,238 5,127,550 2,811,865 70,725 12,739,346 5,457,611
Deductions:
Benefit payments and
withdrawals (200,547) (433,367) (398,137) (128,343) (26,786) (1,187,180) (832,267)
---------- ---------- ----------- ---------- -------- ----------- -----------
Total deductions (200,547) (433,367) (398,137) (128,343) (26,786) (1,187,180) (832,267)
Net increase prior to interfund
transfers 1,177,421 2,917,871 4,729,413 2,683,522 43,939 11,552,166 4,625,344
Interfund transfers (210,075) (35,331) 33,791 29,514 182,101 - -
---------- ---------- ----------- ---------- -------- ----------- -----------
Net increase 967,346 2,882,540 4,763,204 2,713,036 226,040 11,552,166 4,625,344
Net assets available for plan
benefits at beginning of year 2,924,512 4,522,975 5,455,443 1,803,054 737,750 15,443,734 10,818,390
---------- ---------- ----------- ---------- -------- ----------- -----------
Net assets available for plan
benefits at end of year $3,891,858 $7,405,515 $10,218,647 $4,516,090 $963,790 $26,995,900 $15,443,734
========== ========== =========== ========== ======== =========== ===========
The accompanying notes are an integral part of the financial statements.
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6
GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. Plan Description:
The following description of the Genzyme Corporation Retirement
Savings Plan (the "Plan") provides only general information.
Participants should refer to the plan agreement for a more complete
description of the Plan's provisions.
General:
The Plan, a defined contribution plan pursuant to the
authorization of the Board of Directors of Genzyme Corporation
("Genzyme" or the "Company"), was established effective January 1, 1988
to provide a long-range program of systematic savings for eligible
employees ("Participants"). Employees of all Genzyme's wholly-owned
United States subsidiaries are eligible to participate in the Plan.
As of December 31, 1995, all participating employers under the Plan
were 100% owned by Genzyme therefore making the Plan a plan for a
controlled group of corporations. Employees who are 21 years of age or
older become eligible to participate on their first day of employment.
The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"). The plan administrator (the
"Plan Administrator") is the Retirement Savings Plan Committee of the
Genzyme Corporation Retirement Savings Plan.
Certain former employees have elected to retain their investments
in the net assets of the Plan. As of December 31, 1995 and 1994, Plan
assets of inactive participants totaled approximately $3,069,681 and
$1,706,883, respectively. The increase is largely attributable to the
change in the status of Genzyme Transgenics Corporation ("GTC")
employees who, as of January 1, 1995, became participants in the plan
of an acquired corporation and were therefore no longer eligible to
contribute to the Plan.
Effective April 1, 1995, Genzyme Tissue Repair ("GTR") employees
previously participating in the 401(k) Plan of BioSurface Technology,
Inc. ("BioSurface"), a company acquired by Genzyme in December 1994,
became eligible to rollover their investments into the Plan and became
participants in the Plan. Assets rolled over from BioSurface into the
Plan and included in `Rollovers' on the Statement of Changes in Net
Assets Available for the Plan Benefits amounted to $735,398 at April 7,
1995.
As of December 31, 1995, Participants in the Genzyme Stock Fund,
the Guaranteed Fund, the Balanced Equity Fund, and the Aggressive
Equity Fund numbered 1,286, 1,268, 2,203 and 2,735, respectively.
Investment Options:
At December 31, 1995, Participants may direct contributions into
any of four investment fund alternatives. The options are as follows:
Contributions to the Genzyme Stock Fund may be invested in
shares of Genzyme's General Division Common Stock ("General Division
Stock") and Tissue Repair Division Common Stock ("TR Stock"). Amounts
contributed to the Genzyme Stock Fund may be invested in other
short-term investments pending the purchase of General Division Stock
or TR Stock. At December 31, 1995, the Genzyme Stock Fund was invested
solely in 71,020 shares of General Division Stock with a market value
of $4,429,872 (See "Note F - Subsequent Events"). On December 16,
1994, the outstanding shares of Genzyme common stock were redesignated
as General Division Stock on a share-for-share basis and a second
class of common stock, designated as TR Stock, was distributed on the
basis of .135 of one share of TR Stock for each share of Genzyme's
previous common stock held by stockholders of record on December 16,
1994. As of December 31, 1994, the Genzyme Stock Fund held 55,029 and
7,429 shares of General Division Stock and TR Stock, respectively,
with market values of $1,733,414 and $27,858, respectively.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. Plan Description (continued):
Investment Options (continued):
The Guaranteed Fund is invested in the American Express Trust
Company Collective Investment Fund ("American Express Fund"), which is
a mutual fund that invests principally in guaranteed investment
contracts. The Guaranteed Fund was invested in 95,278 and 76,614 shares
of the American Express Fund with market values of $3,798,662 and
$2,863,066 at December 31, 1995 and 1994, respectively.
The Balanced Equity Fund is invested in the Puritan Fund, a
mutual fund managed by Fidelity Investments, holding both stocks and
bonds. The investment objective emphasizes income and stability. The
Balanced Equity Fund was invested in 426,472 and 297,529 shares of the
Puritan Fund with market values of $7,254,378 and $4,406,406 at
December 31, 1995 and 1994, respectively.
The Aggressive Equity Fund is invested in the Magellan Fund, a
mutual fund managed by Fidelity Investments, holding both stocks and
bonds. The investment objective emphasizes long-term appreciation. The
Aggressive Equity Fund was invested in 116,207 shares and 79,511 shares
of the Magellan Fund with market values of $85.98 and $66.80 per share,
or a total value of $9,991,497 and $5,311,344 at December 31, 1995 and
1994, respectively. As of May 17, 1996, the Magellan Fund closed at
$75.45 per share, which would reduce the valuation of the 116,207
shares invested at December 31, 1995 by $1,223,660.
Each of the above investments is greater than 5% of the Plan's
net assets.
Employee Contributions:
The Plan is a defined contribution plan. Eligible employees may
elect, through salary reduction agreements, to have up to 18.75% or a
maximum of $9,240 of their compensation contributed on a pre-tax basis
to the Plan each year on their behalf.
A Participant's salary reduction contribution for a plan year may
be further limited by the administration rules of the Internal Revenue
Code (the "Code") if the Participant is considered to be a highly
compensated employee within the meaning of the Code.
Employer Contributions:
Genzyme makes contributions to the Plan on behalf of a
Participant for each quarter in an amount equal to at least 25% of the
Participant's contribution through salary reductions in that quarter;
however, employer matching contributions will not be made for
contributions that exceed, in the aggregate, 5% of the Participant's
annual compensation. Certain employees of one subsidiary are limited to
4% of annual compensation. Genzyme's contributions amounted to $753,882
and $613,156 for the years ended December 31, 1995 and 1994,
respectively.
Eligible Participants may invest their contributions in any fund
or funds in increments determined at their own discretion. Employer
contributions are invested as directed by the Participants. If a
Participant does not provide direction with respect to the investment
of the Participant's contribution, all contributions will automatically
be invested in the Guaranteed Fund.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
A. Plan Description (continued):
Vesting:
Participants have a 100% non-forfeitable interest in both
employee and employer contributions at all times. Upon termination of
employment or total and permanent disability, a Participant, or a
Participant's beneficiary in the case of the Participant's death, is
entitled to receive the full amount in the Participant's account.
Benefits:
Distributions upon retirement at age 65 or later, or death, are
either made in a lump-sum payment or installments. If the benefits are
distributed in installments, the installments may not extend over a
period of time longer than the life expectancy of the Participant or,
if longer, the joint and last survivor life expectancy of the
Participant and designated beneficiary. Distributions upon termination
are made in lump-sum payments.
Changes in allocation of future investments and reallocation of
account balances among investment funds are permitted as of the last
day of each quarter of the Plan year. Contributions may be withdrawn
from the Plan only upon a demonstration of hardship, as defined, unless
the Participant requesting such withdrawal has attained age 59 1/2. New
employees with funds held under a previous employer's qualified plan
are permitted to invest such funds into the Plan. These investments are
classified as "rollovers."
Loans:
Participants may obtain a loan from the Plan collateralized by
the Participant's vested interest in the Plan. No loan may exceed the
lesser of one half of the vested interest of a Participant, or $50,000,
and must be at least $1,000. A Participant may not obtain a loan unless
the Plan Administrator approves the transaction. All loans bear
interest determined by the Plan Administrator at the time of the loan.
A written repayment schedule specifies the date and payment amount
necessary to amortize the loan. Because the loan is secured by 401(k)
deferrals, the interest is not deductible to the Participant.
B. Summary of Significant Accounting Policies:
Cash Equivalents:
The Plan considers cash equivalents to be short-term, highly
liquid investments, with initial maturities of less than three months.
Investment Valuation and Income Recognition:
Investments in the Genzyme Stock Fund, the Balanced Equity Fund,
and the Aggressive Equity Fund are stated at market value, based on
quoted market prices in an active market on the last business day of
the plan year. The Guaranteed Fund's investments are stated at net
asset value prices as reported by the American Express Trust Company
Collective Investment Fund. The Loan Fund is valued at cost which
approximates fair value.
The Plan presents, in the statement of changes in net assets
available for plan benefits, the net appreciation (depreciation) in the
fair value of its investments that consists of the realized gains or
losses and the unrealized
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
B. Summary of Significant Accounting Policies (continued):
Investment Valuation and Income Recognition (continued):
appreciation (depreciation) on those investments.
Security transactions are accounted for on the trade date. Gain
or loss on sales of investments is based on average cost.
Investment Income:
Dividend income is recorded on the ex-dividend date. Interest
income is recorded as earned on the accrual basis.
Contributions and Benefit Payments:
Employee contributions and matching employer contributions are
recorded in the period the payroll deductions are made. Benefits are
recorded when paid.
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
certain estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of additions and deductions during the reported period. Actual
results could differ from those estimates.
C. Administration Fees:
Administration fees associated with the Plan are paid by Genzyme
and were approximately $134,000 and $128,000 in 1995 and 1994,
respectively.
D. Qualification under the Internal Revenue Code:
The Internal Revenue Service has determined and informed the
Company by a letter dated May 25, 1995, that the Plan and related trust
are designed in accordance with applicable sections of the Code. The
Plan has been amended since receiving the determination letter. The
Plan administrator and the Plan's tax counsel believe, however, that
the Plan is designed and is currently being operated in compliance with
the applicable requirements of the Code.
E. Amendment or Termination:
Genzyme intends to continue the Plan indefinitely but reserves
the right to terminate it at any time or amend it in any manner
advisable. No amendment may adversely affect the non-forfeitable
interests of Participants in their accounts or permit the use or
diversion of any part of the Plan other than for the exclusive benefit
of the Participants or their beneficiaries (subject to Plan provisions
permitting payment of fees and expenses). No merger, consolidation or
transfer of assets or liabilities of the Plan may reduce any
Participant's interest accrued to the date of the merger, consolidation
or transfer. If Genzyme discontinues its contributions or if the Plan
is fully or partially terminated, the affected Participants' rights to
benefits will remain fully vested.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
F. Subsequent Events:
Effective January 1, 1996, three new investment options were
added to the Plan. These consist of two additional Fidelity mutual
funds, an Investment Grade Bond Fund and a Low Priced Stock Fund and a
Genzyme Tissue Repair ("GTR") Stock Fund. The Genzyme Stock Fund sold
all its holdings in GTR during 1995 in anticipation of creating the
GTR Stock Fund. The Plan held no shares of these new investment
options at December 31, 1995. Accordingly, effective January 1, 1996,
employees chose to reallocate their investments, which resulted in the
following increases (decreases) to the preexisting funds: $(747,446)
to the Guaranteed Fund; $(682,409) to the Balanced Equity Fund;
$89,562 to the Aggressive Equity Fund; and $(288,282) to the Genzyme
Stock Fund. The following amounts were allocated to the new investment
options: $252,326 to the Investment Grade Bond Fund; $1,144,686 to the
Low Priced Stock Fund; and $231,563 to the GTR Stock Fund.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1995
Market
Identity of Issue Description of Investment Shares Cost Value
- ------------------------------- --------------------------------- ------- ---- -----------
American Express Trust Guaranteed Collective Income Fund 95,278 ** $ 3,798,662
Fidelity Puritan Conservative Equity Fund 426,472 7,254,378
Fidelity Magellan Fund Aggressive Equity Fund 116,207 9,991,497
*Genzyme General Division Stock Common Stock 71,020 4,429,872
Employee Loans Loans with interest rates
between 6% and 9%
maturing through
June 2015 963,790
-----------
$26,438,199
===========
* Denotes party-in-interest.
** Historical cost information not provided.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1995
Series of transactions in excess of 5% of the current value of Plan assets at
the beginning of the Plan year:
Current Value Number of
Purchase Selling Cost of at Date of Gain Transactions
Description of Assets Price Price Assets Transaction (Loss) in the Series
- ---------------------------------------- ---------- --------- ------- ------------- ------ -------------
American Express Collective Income Fund $ 964,952 $250,221 ** $250,221 ** 25
Balanced Equity Fund 2,369,827 288,149 288,149 41
Aggressive Equity Fund 3,218,280 185,934 185,934 35
*Genzyme General Division Stock 881,964 272,790 272,790 27
* Denotes party-in-interest.
** Historical cost information not provided.
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