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Exhibit 99.1
GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
TO ACCOMPANY 1996 FORM 5500
ANNUAL REPORT OF EMPLOYEE BENEFIT PLAN
UNDER ERISA OF 1974
for the years ended December 31, 1996 and 1995
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Accountants............................................................................. 3
Financial Statements:
Statements of Net Assets Available for Plan Benefits as of December 31, 1996 and 1995...................... 4
Statement of Changes in Net Assets Available for Plan Benefits, with Fund Information for the
Year Ended December 31, 1996............................................................................ 5
Notes to Financial Statements.............................................................................. 6-9
Supplemental Schedules:
Line 27(a) - Schedule of Assets Held for Investment Purposes, December 31, 1996............................ 10
Line 27(d) - Schedule of Reportable Transactions for the Year Ended December 31, 1996...................... 11
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 applicable.
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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,
1996 and 1995 and the related statement of changes in net assets available for
plan benefits, with fund information for the year ended December 31, 1996. 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, 1995, 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 audits 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, 1996 and 1995, and the
changes in its net assets available for plan benefits for the year ended
December 31, 1996, 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 4 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 schedule 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 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.
Boston, Massachusetts
May 29, 1997
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
December 31,
--------------------------
1996 1995
----------- -----------
ASSETS
Investments at market value (Notes A and B):
American Express Trust Income Fund ........... $ 3,749,726 $ 3,798,662
Fidelity Investment Grade Bond Fund .......... 599,574 --
Fidelity Low Priced Stock Fund ............... 3,620,524 --
Fidelity Magellan Fund ....................... 13,343,715 9,991,497
Fidelity Puritan Fund ........................ 9,583,748 7,254,378
Genzyme General Division Stock Fund .......... 3,842,594 4,429,872
Genzyme Tissue Repair Division Stock Fund .... 172,560 --
Participant Loan Fund ........................ 1,316,239 963,790
----------- -----------
Total investments ......................... 36,228,680 26,438,199
Cash and cash equivalents ........................ 53,641 29,237
Receivables:
Employer contribution ........................ 313,466 226,433
Employee contributions ....................... 56,177 286,135
Accrued interest ............................. 3,500 349
Loan repayments .............................. 1,580 15,547
----------- -----------
Total receivables ......................... 374,723 528,464
----------- -----------
Total assets ............................ 36,657,044 26,995,900
----------- -----------
Net assets available for plan benefits (Note E) .. $36,657,044 $26,995,900
=========== ===========
The accompanying notes are an integral part of the financial statements.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS, WITH FUND INFORMATION
for the year ended December 31, 1996
(with comparative totals for the year ended December 31, 1995)
Fund Information
----------------------------------------------------------------------------------------------
American Fidelity Fidelity Genzyme Genzyme
Express Investment Low General Tissue
Trust Grade Priced Fidelity Fidelity Division Repair
Income Bond Stock Magellan Puritan Stock Stock
Fund Fund Fund Fund Fund Fund Fund
----------- --------- ----------- ------------ ----------- ----------- ---------
Additions:
Employer contributions $ 67,241 $ 20,692 $ 103,631 $ 325,574 $ 173,339 $ 156,532 $ 166,386
Employee contributions 551,435 186,726 1,053,483 2,718,975 1,538,784 761,340 --
Rollovers (Note A) 166,180 109,621 232,857 489,753 430,421 224,951 --
Investment income 1,061 23,288 253,723 1,839,119 916,775 1,503 140
Net appreciation
(depreciation) in market
value of investments 222,341 1,761 268,193 (478,519) 159,460 (1,414,174) (163,455)
----------- --------- ----------- ------------ ----------- ----------- ---------
Total additions 1,008,258 342,088 1,911,887 4,894,902 3,218,779 (269,848) 3,071
Deductions:
Benefit payments and
withdrawals (183,486) (8,355) (94,511) (616,688) (382,273) (203,358) (4,144)
----------- --------- ----------- ------------ ----------- ----------- ---------
Total deductions (183,486) (8,355) (94,511) (616,688) (382,273) (203,358) (4,144)
Net increase prior to
interfund transfers 824,772 333,733 1,817,376 4,278,214 2,836,506 (473,206) (1,073)
Interfund transfers (918,594) 277,343 1,850,428 (1,040,996) (589,529) (138,398) 252,119
----------- --------- ----------- ------------ ----------- ----------- ---------
Net increase (93,822) 611,076 3,667,804 3,237,218 2,246,977 (611,604) 251,046
Net assets available for
plan benefits at
beginning of year 3,891,858 -- -- 10,218,647 7,405,515 4,516,090 --
----------- --------- ----------- ------------ ----------- ----------- ---------
Net assets available for
plan benefits at end of
year $ 3,798,036 $ 611,076 $ 3,667,804 $ 13,455,865 $ 9,652,492 $ 3,904,486 $ 251,046
=========== ========= =========== ============ =========== =========== =========
Fund
Information Total
------------ ---------------------------
Participant
Loan Fund 1996 1995
----------- ------------ ------------
Additions:
Employer contributions $ -- $ 1,013,395 $ 753,882
Employee contributions -- 6,810,743 4,644,746
Rollovers (Note A) -- 1,653,783 1,657,931
Investment income 82,381 3,117,990 988,479
Net appreciation
(depreciation) in market
value of investments -- (1,404,393) 4,694,308
----------- ------------ ------------
Total additions 82,381 11,191,518 12,739,346
Deductions:
Benefit payments and
withdrawals (37,559) (1,530,374) (1,187,180)
----------- ------------ ------------
Total deductions (37,559) (1,530,374) (1,187,180)
Net increase prior to
interfund transfers 44,822 9,661,144 11,552,166
Interfund transfers 307,627 -- --
----------- ------------ ------------
Net increase 352,449 9,661,144 11,552,166
Net assets available for
plan benefits at
beginning of year 963,790 26,995,900 15,443,734
----------- ------------ ------------
Net assets available for
plan benefits at end of
year $ 1,316,239 $ 36,657,044 $ 26,995,900
=========== ============ ============
The accompanying notes are an integral part of the financial statements.
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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, with the exception of Deknatel Snowden Pencer,
Inc. ("DSP"), an entity acquired by Genzyme during 1996, which has its own
retirement plans that are still active. The Company expects to integrate
the DSP plans into the Plan during 1997. As of December 31, 1996, all
consolidated subsidiaries of Genzyme Corporation were 100% owned by the
Corporation 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 is the Retirement Savings Plan Committee
of the Genzyme Corporation Retirement Savings Plan.
INVESTMENT OPTIONS
At December 31, 1996, Participants may direct contributions into any of
seven investment fund alternatives. The options are as follows:
The Genzyme General Division Stock Fund is currently invested solely
in shares of common stock of Genzyme General Division Common Stock
("Genzyme General Stock"). Amounts contributed to the Genzyme Stock
Fund may be invested in other short-term investments pending the
purchase of Genzyme General Stock. The Plan held 176,671 and 142,040
shares of Genzyme General Stock with market values of $3,842,594 and
$4,429,872, and historical cost of $3,556,946 and $2,624,171 at
December 31, 1996 and 1995, respectively.
The Genzyme Tissue Repair Division Stock Fund is currently invested
solely in shares of common stock of Genzyme Tissue Repair Division
Common Stock ("GTR Stock"). This fund is available as an investment
option of the company match only. Amounts contributed to the Genzyme
Tissue Repair Division Stock Fund may be invested in other short-term
investments pending the purchase of GTR stock. The Plan began offering
the GTR Stock as an investment alternative as of January 1, 1996. At
December 31, 1996, the Plan held 24,219 shares of GTR Stock with a
market value of $172,560, and historical cost of $326,602.
The American Express Trust Income Fund is a common/collective trust
that invests principally in guaranteed investment contracts. The
American Express Trust Income Fund was invested in 88,301 and 95,278
shares of the American Express Fund with market values of $3,749,726
and $3,798,662, and historical cost of $3,422,326 and $3,623,048 at
December 31, 1996 and 1995, respectively.
The Fidelity Puritan Fund is a mutual fund managed by Fidelity
Investments, holding both stocks and bonds. The investment objective
emphasizes income and stability. The Fidelity Puritan Fund was
invested in 555,902 and 426,472 shares of the Puritan Fund with market
values of $9,583,748 and $7,254,378, and historical cost of
$8,901,650 and $6,653,456 at December 31, 1996 and 1995, respectively.
The Fidelity Magellan Fund is a mutual fund managed by Fidelity
Investments, holding both stocks and bonds. The investment objective
emphasizes long-term appreciation. The Fidelity Magellan Fund was
invested in 165,452 and 116,207 shares of the Magellan Fund with
market values of $13,343,715 and $9,991,497, and historical cost of
$12,302,773 and $8,445,771 at December 31, 1996 and 1995,
respectively.
The Fidelity Investment Grade Bond Fund is a mutual fund managed by
Fidelity Investments. The fund invests at least 80% of its assets in
debt securities of all types. The balance of assets may be invested in
preferred stocks. The plan began offering the Grade Bond Fund to Plan
participants as of January 1, 1996. The Fidelity Investment Grade Bond
Fund was invested in 84,210 shares of the Grade Bond Fund with a
market value of $599,574, and historical cost of $597,763 at
December 31, 1996.
The Fidelity Low Priced Stock Fund is a mutual fund managed by
Fidelity Investments, holding aggressive "small-cap" equities. The
plan began offering the Low Priced Stock Fund to Plan participants as
of January 1, 1996. The Fidelity Low Priced Stock Fund was invested in
169,580 shares of the Low Priced Stock Fund with a market value of
$3,620,524, and historical cost of $3,356,680 at December 31, 1996.
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The American Express Trust Income Fund, the Fidelity Puritan Fund, the
Fidelity Magellan Fund, the Fidelity Low Priced Stock Fund and the Genzyme
General Division Stock Fund are each 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
$9,500 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 $1,013,395 and $753,882 for the years
ended December 31, 1996 and 1995, 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
American Express Trust Income Fund.
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. At December 31, 1996,
the loans bear interest rates between 6% and 9% and mature through June
2016. A written repayment schedule specifies the date and payment amount
necessary to amortize the loan.
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 Fidelity Investment Grade Bond Fund, Fidelity Low Priced
Stock Fund, Fidelity Magellan Fund, Fidelity Puritan Fund, Genzyme General
Division Stock Fund and the Genzyme Tissue Repair Division Stock Fund are
stated at market value, based on quoted market prices in an active market
on the last business day of the plan
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year. The American Express Trust Income Fund investments are stated at net
asset value prices as reported by the American Express Trust Company
Collective Investment Fund. Participant loans are 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 which consists of the realized gains or losses and the
unrealized 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 and interest income are recorded as of the payable 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 the plan's financial statements in conformity with
generally accepted accounting principles requires the plan administrator to
make significant estimates and assumptions that affect the reported amounts
of net assets available for benefits at the date of the financial
statements and the changes in net assets available for benefits during the
reporting period and, when applicable, disclosures of contingent assets and
liabilities at the date of the financial statements. Actual results could
differ from those estimates.
RISKS AND UNCERTAINTIES
The plan provides for various investment options in any combination of
stocks, bonds, fixed income securities, mutual funds, and other investment
securities. Investment securities are exposed to various risks, such as
interest rate, market, and credit risks. Due to the level of risk
associated with certain investment securities, it is at least reasonably
possible that changes in the values of investment securities will occur in
the near term and that such changes could materially affect participants'
account balances and the amounts reported in the statement of net assets
available for plan benefits.
C. ADMINISTRATION FEES
Administration fees associated with the Plan are paid by Genzyme and were
approximately $224,000 and $134,000 in 1996 and 1995, 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 Internal Revenue Code (IRC). The
Plan has been amended since receiving the determination letter. However,
the Plan administrator and the Plan's tax counsel believe that the Plan is
designed and is currently being operated in compliance with the applicable
requirements of the IRC.
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 nonforfeitable 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 an expenses). No
merger, consolidation, or transfers 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.
F. SUBSEQUENT EVENTS
Effective April 1, 1997, the Plan changed its administrator and trustee.
The Plan changed the frequency of the Company match which is now deposited
bi-weekly or semi-monthly based on regular pay, rather than on a quarterly
basis.
Two new investment options were added to the Plan. These consist of a fixed
income fund (CIGNA Guaranteed Income Fund) and an international investment
fund (Templeton Foreign Account). The Plan held no shares of these new
investment options as of December 31, 1996. Additionally, certain
investment options were replaced with new investment options, both the
American Express Trust Income Fund and the Fidelity Investment Grade Bond
Fund were replaced by the CIGNA Guaranteed Securities Separate Fund;
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the Fidelity Magellan Fund was replaced by the CIGNA Stock Market Index
Fund. The Fidelity Low Priced Stock Fund was replaced with the PBHG Growth
Fund; and the Fidelity Puritan Fund remains an investment option in the
Plan.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
LINE 27(a) - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1996
Historical Market
Identity of Issue Description of Investment Shares Cost Value
- ------------------------------------------ --------------------------------------- --------- ---------- -------------
American Express Trust Income Fund Guaranteed Collective Income Fund 88,301 $ 3,422,326 $ 3,749,726
Fidelity Investment Grade Bond Fund Conservative Bond Fund 84,210 597,763 599,574
Fidelity Low Priced Stock Fund Aggressive "Small Cap" Equity Fund 169,580 3,356,680 3,620,524
Fidelity Magellan Fund Aggressive Equity Fund 165,452 12,302,773 13,343,715
Fidelity Puritan Fund Balanced Equity Fund 555,902 8,901,650 9,583,748
*Genzyme General Division Stock Fund Common Stock 176,671 3,556,946 3,842,594
*Genzyme Tissue Repair Division Stock Fund Common Stock 24,219 326,602 172,560
*Participant Loan Fund Loans with interest rates between 6% 1,316,239 1,316,239
and 9% maturing through June 2016 ----------- -----------
$33,780,979 $36,228,680
=========== ===========
* Denotes party-in-interest.
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GENZYME CORPORATION
RETIREMENT SAVINGS PLAN
LINE 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
for the year ended December 31, 1996
Historical Current Value Number of
Purchase Selling Cost of at Date of Gain Transactions
Description of Assets Price Price Assets Transaction (Loss) in the Series
- ------------------------------------------ ---------- --------- --------- ------------- --------- -------------
Series of transactions in excess of 5% of the current value of plan assets at the beginning of the plan year:
American Express Trust Income Fund $1,107,948 $863,585 ** $ 863,585 ** 24
Fidelity Puritan Fund 2,861,602 691,606 691,606 60
Fidelity Magellan Fund 4,724,086 894,225 894,225 61
Fidelity Investment Grade Bond Fund 603,834 6,021 6,021 68
Fidelity Low Priced Stock Fund 3,434,179 81,849 81,849 61
Genzyme General Division Stock Fund 1,099,218 272,323 272,323 36
Genzyme Tissue Repair Division Stock Fund 354,510 18,496 18,496 17
Single transaction in excess of 5% of the current value of plan assets at the beginning of the plan year:
Fidelity Magellan Fund $1,329,466 N/A ** $1,329,466 **
** Historical cost and gain/(loss) information not provided.
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