Company Provides Confident Outlook for 2007
CAMBRIDGE, Mass., Feb. 14 /PRNewswire-FirstCall/ -- Genzyme Corporation
(Nasdaq: GENZ) today announced fourth-quarter and full-year financial
results for 2006. The company also offered a confident outlook for the
coming year, during which it expects to generate strong revenue and
earnings growth, expand the availability of its products in existing and
new markets, report data from approximately ten pivotal studies, and
continue to make significant investments in research and manufacturing.
"Last year was a productive year in which we delivered strong results
and set the stage for continued future growth," said Henri A. Termeer,
chairman and chief executive officer of Genzyme Corp. "We sustained a
non-GAAP earnings growth rate of approximately 20 percent, launched a very
exciting new product in Myozyme(R), and advanced many promising late-stage
development programs that will become highly visible during the course of
this year. Our cash flow remained particularly strong. This allowed us to
absorb an acquisition that brought us an important new product candidate in
Mozobil(TM), and to continue making substantial investments in
manufacturing facilities, while still increasing our cash position."
Fourth-quarter revenue increased 17 percent to a record $854.2 million,
up from $728.7 million in the same period a year earlier. For the year,
revenue grew 17 percent to $3.2 billion from $2.7 billion in the previous
year. Genzyme's top line has increased at a compound annual rate of 27
percent since 2000, highlighting both the strength and the sustainability
of the company's growth. This year, Genzyme expects revenue to increase to
$3.6-$3.8 billion.
In the fourth quarter, Genzyme recorded a charge related to its
November 2006 acquisition of AnorMED Inc. This charge led to a GAAP net
loss of $268.2 million, or $1.02 per diluted share, compared to net income
of $106.6 million, or $0.39 per diluted share, in the same quarter a year
ago. On a non-GAAP basis, Genzyme's fourth-quarter net income grew 29
percent to $209.0 million, compared with $162.7 million in the fourth
quarter last year. Non-GAAP earnings per diluted share grew 28 percent to
$0.77, compared with $0.60 in last year's fourth quarter.
GAAP figures for the quarter include the following pre-tax items: (1) a
charge of $552.9 million to write off in-process research and development
acquired from AnorMED; (2) an amortization expense of $53.2 million; (3) a
stock-compensation expense of $48.4 million; and (4) a charge of $7.9
million for the settlement of a case before the Competition Appeal Tribunal
relating to Genzyme's homecare business in the United Kingdom.
For the year, Genzyme reported a GAAP net loss of $16.8 million, or
$0.06 per diluted share, reflecting the AnorMED charge. This compares with
2005 net income of $441.5 million, or $1.65 per diluted share. On a
non-GAAP basis, net income increased 23 percent to $742.7 million, compared
with $603.2 million in 2005. Non-GAAP earnings increased 21 percent to
$2.77 per diluted share, compared with $2.28 per diluted share in 2005.
For 2007, Genzyme anticipates GAAP earnings of $1.90-$2.00 per diluted
share. Last month, the company provided non-GAAP EPS guidance of
$3.10-$3.20 per diluted share excluding the impact of the AnorMED
acquisition. Genzyme is raising this guidance by $0.10 to $3.20-$3.30 per
diluted share based on the strength of the fourth quarter.
Genzyme expects the impact of the AnorMED transaction, including
increased operating expenses and decreased interest income, to reduce
earnings by $0.15 per diluted share. Therefore, the company's revised 2007
non-GAAP earnings guidance is $3.05-$3.15 per diluted share. This estimate
excludes an anticipated amortization expense of $0.49 per diluted share, an
anticipated stock-compensation expense of $0.58 per diluted share, and the
expected $0.08 per diluted share impact of contingent convertible debt.
For the first quarter of 2007, Genzyme expects non-GAAP earnings per
diluted share in the low $0.70s.
Product Sales
Genzyme today also provided 2007 revenue guidance for its major
products and businesses:
- Sales of Myozyme(R) (alglucosidase alfa) are expected to increase to
$155-$180 million this year. The product was launched in Europe and
the United States during the second quarter of 2006, and sales last
year were $59 million. Myozyme is the first treatment ever developed
for Pompe disease, a progressive, debilitating and often fatal
neuromuscular disorder. The product has been rapidly adopted by
physicians and consistently supported by reimbursement authorities, and
Genzyme is optimistic about the product's long-term growth potential.
This year, the company expects to launch Myozyme in Japan, Brazil and a
number of additional markets.
- Sales of Fabrazyme(R) (agalsidase beta) are expected to reach $415-$425
million this year, compared with $359 million in 2006. Fabrazyme's
growth is being driven by the number of patients beginning treatment
and by clinical studies that distinguish the product in the market.
Results from the Phase 4 trial of Fabrazyme were published in December
in Annals of Internal Medicine. The trial showed that Fabrazyme
reduced the risk of major clinical events that cause death and
disability in Fabry disease. It is the only major outcomes study to be
conducted involving Fabry patients.
- Sales of Cerezyme(R) (imiglucerase for injection) are expected to reach
$1.060-$1.075 billion this year, compared with $1.0 billion in 2006. A
research study published in the January issue of the Journal of Bone
and Mineral Research demonstrated that long-term use of Cerezyme
significantly improved bone mineral density in patients with Type 1
Gaucher disease. Cerezyme is the standard of care for patients with
Type 1 Gaucher disease. Patients with Gaucher disease are at
increased risk for developing bone complications.
- Sales of Renagel(R) (sevelamer hydrochloride), a phosphate binder for
patients with end-stage renal disease on hemodialysis, are expected to
reach $580-$590 million this year, compared with $515 million in 2006.
The product's growth is being driven by a number of factors, including
the communication of data highlighting the clinical and economic
benefits of the product. Results from the RIND study published last
month in Kidney International showed that patients using Renagel
experienced a significantly lower rate of death compared with patients
using calcium-based phosphate binders. At the American Society of
Nephrology meeting in November, investigators presented three-year
hospitalization and health economic data from the DCOR study showing
that patients using Renagel experienced lower rates of hospitalization,
fewer days in the hospital, and reduced overall health care
expenditures compared to patients treated with calcium-based phosphate
binders.
- Sales of Synvisc(R) (hylan G-F 20) are expected to reach $250-$265
million this year, compared with $234 million in 2006. Synvisc is a
market-leading viscosupplement used to treat pain associated with
osteoarthritis of the knee. The product's near-term growth will be
driven by its clinical advantages over competing products and by the
expanding global market for viscosupplementation products.
- Total revenue for the Diagnostics/Genetics business is expected to
reach $385-$405 million this year, compared with $356 million in 2006.
Gross Margin
Genzyme's non-GAAP gross margin is expected to be approximately 77-78
percent of revenue this year, consistent with the gross margin for 2006.
Expenses
Non-GAAP selling, general and administrative expenses are expected to
be $1.020-$1.040 billion this year and remain relatively consistent as a
percentage of revenue with SG&A expenses in 2006. SG&A spending reflects
the full-year impact of the introduction of Myozyme in Europe and the
United States and the expected launch of the product in additional major
markets; the planned expansion of sales and marketing support for Synvisc;
and the continued growth of Genzyme's international commercial
infrastructure.
Non-GAAP research and development spending is expected to increase to
approximately $640-$650 million this year, compared with $565 million in
2006. Genzyme is conducting more late-stage trials now than at any point in
its history. Over the next year and a half, Genzyme expects to initiate,
conduct or complete 20 pivotal trials for new products or new indications,
which will expand and further diversify the company's portfolio and
contribute to its long-term growth.
Tax Rate
Genzyme's non-GAAP net tax rate this year is expected to be
approximately 32 percent. The GAAP tax rate is expected to be 31 percent.
Capital Expenditures
Capital expenditures are expected to total approximately $325-$375
million this year. Genzyme continues to make a significant investment in
manufacturing capacity to support the growth of existing products and to
prepare for the launch of products in late-stage development. The company
is also completing the construction of two new laboratory buildings to
expand its research and development capacity.
Pipeline Outlook
Genzyme expects to make significant progress this year within its late-
stage clinical pipeline:
Genetic Diseases
- Results from the ongoing post-marketing study of Myozyme involving
patients with late-onset Pompe disease are expected later this year and
will be submitted to regulatory authorities in 2008. The 90-patient
trial is intended to provide further support for Myozyme's use.
- Enrollment is continuing in an international, multi-center phase 2
clinical trial evaluating the safety and efficacy of the small molecule
GENZ-112638 for the treatment of Gaucher disease. The trial will help
determine the potential of this compound as an alternative or adjunct
to enzyme replacement therapy.
- Enrollment has begun in a Phase 1 clinical trial of a potential enzyme
replacement therapy for the treatment of ASM-deficient Niemann Pick
disease.
Kidney Disease
- Genzyme has submitted a New Drug Application to the FDA for sevelamer
carbonate tablets-a next-generation version of Renagel. Genzyme
expects to launch the product commercially in 2008 under the trade name
Renvela(TM). Following the anticipated approval of Renvela for the
control of serum phosphorus in patients with chronic kidney disease on
dialysis, Genzyme plans to submit a supplemental NDA seeking marketing
approval for the product's use in treating hyperphosphatemic patients
with chronic kidney disease who are not on dialysis. The company also
intends to seek approval for a powder form of Renvela to be taken once
per day, which may provide patients with a more convenient formulation
and dosing schedule that could help improve compliance.
Orthopaedics
- Genzyme plans in the first half of this year to request an amendment to
the Synvisc product label in the United States and Europe to include a
single-injection regimen. This change has the potential to
significantly expand the market for the product. In December, Genzyme
reported preliminary results from a study showing that patients who
received Synvisc through a single-injection regimen achieved a
statistically significant improvement in pain from osteoarthritis of
the knee over 26 weeks compared with those using placebo. Currently
Synvisc is delivered through three injections given at one-week
intervals.
- Results from the pivotal trial of Hylastan(TM), a next-generation
viscosupplement, are expected this year, and Genzyme anticipates filing
for U.S. and European approval of the product later this year.
Hylastan is also designed to be administered using a single-injection
regimen.
Immune and Infectious Diseases
- Results from the phase 3 trial of tolevamer are expected to be
available during the second half of this year. Pending a positive
outcome, the first commercial approval is anticipated in 2008.
Tolevamer is a novel polymer therapy that could be the first non-
antibiotic treatment for Clostridium difficile-associated disease, a
widespread and growing global problem primarily affecting patients in
hospitals and nursing homes. The prevalence and impact of Clostridium
difficile are becoming increasingly more visible as public health
officials and others look for new ways to manage this disease.
- Genzyme expects to initiate two phase 3 studies of alemtuzumab
(Campath) for the treatment of relapsing-remitting multiple sclerosis
in 2007, the first in previously untreated patients and the second in
patients who have progressed on other therapies. The company is
currently developing protocols for each of these studies to submit to
the FDA for review and expects to initiate the study in previously
untreated patients during the first half of this year.
Transplant
- Results from two pivotal clinical trials of Mozobil (plerixafor) are
expected mid-year. The first study involves patients with multiple
myeloma, and the second involves patients with non-Hodgkin's lymphoma.
Mozobil is an experimental product in late-stage clinical development
that is designed to improve the outcome of stem cell transplantation in
patients with blood cancers. Genzyme obtained this promising new
product candidate through its acquisition of AnorMED.
Cancer
- Genzyme is working to broaden the indications for its drugs Campath(R)
(alemtuzumab) and Clolar(R) (clofarabine injection) to benefit larger
patient populations. Genzyme and partner Bayer Schering Pharma AG
expect to submit U.S. and European applications this year to expand
Campath's current label to include first-line treatment of B-cell
chronic lymphocytic leukemia. Data from the CAM 307 trial presented at
the annual American Society of Hematology meeting demonstrated that
Campath significantly improved progression-free survival in comparison
to chlorambucil in previously untreated B-CLL patients, with Campath
reducing the risk of disease progression or death by 42 percent.
Campath received accelerated U.S. approval in 2001, and CAM307 was the
primary post-approval commitment study designed to support full
approval. Campath is currently indicated for the treatment of B-CLL in
patients who have been treated with alkylating agents and who have
failed fludarabine therapy.
- Genzyme is seeking to expand Clolar's indication to include adult
patients with acute myelogenous leukemia (AML). The product is
currently indicated for the treatment of pediatric patients with
relapsed or refractory acute lymphoblastic leukemia after at least two
prior regimens. In November, Genzyme began a trial examining the
safety and effectiveness of Clolar in previously untreated, older adult
patients with AML who are unlikely to benefit from standard induction
therapy. This was the second pivotal clinical study of clofarabine in
adult patients with AML to begin last year, and it is expected to
provide substantial support for expanding the current product label,
which Genzyme intends to pursue next year.
About Genzyme
One of the world's leading biotechnology companies, Genzyme is
dedicated to making a major positive impact on the lives of people with
serious diseases. Since 1981, the company has grown from a small start-up
to a diversified enterprise with more than 9,000 employees in locations
spanning the globe and 2006 revenues of $3.2 billion. Genzyme has been
selected by FORTUNE as one of the "100 Best Companies to Work for" in the
United States.
With many established products and services helping patients in nearly
90 countries, Genzyme is a leader in the effort to develop and apply the
most advanced technologies in the life sciences. The company's products and
services are focused on rare inherited disorders, kidney disease,
orthopaedics, cancer, transplant and immune diseases, and diagnostic
testing. Genzyme's commitment to innovation continues today with a
substantial development program focused on these fields, as well as heart
disease and other areas of unmet medical need.
This press release contains forward-looking statements, including:
estimates for earnings, revenues, gross margin, expenses, tax rate and
capital expenditure levels for 2007; anticipated progress of clinical
trials and regulatory filing and action estimates, including for tolevamer,
alemtuzumab- MS, GENZ-112638, sevelamer carbonate, hylastan, Clolar in
adult AML, CAM-307, and Mozobil in multiple myeloma and non-Hodgkin's
lymphoma; expected drivers of Genzyme's future growth, as well as the
growth drivers for certain products, including Synvisc, Renagel, Fabrazyme
and Myozyme; expectations regarding launches of Myozyme in new territories;
plans to seek a Synvisc label change and the timing thereof; an estimate of
the number of clinical trials Genzyme plans to initiate, conduct or
complete in 2007; 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 successfully
complete preclinical and clinical development of its products and services,
Genzyme's ability to expand the use of current products in existing and new
indications; Genzyme's ability to maintain and obtain regulatory approvals
for products and services, and the timing of receipt of such approvals;
Genzyme's ability to maintain and enforce intellectual property rights;
Genzyme's ability to successfully identify and market to new patients; the
scope of third-party reimbursement coverage for Genzyme's products and
services; Genzyme's ability to manufacture products and product candidates
in a timely and cost effective manner; and the risks and uncertainties
described in Genzyme's SEC reports filed under the Securities Exchange Act
of 1934, including the factors discussed under the caption "Factors
Affecting Future Operating Results" in Genzyme's Quarterly Report on Form
10-Q for the period ended September 30, 2006. Genzyme cautions investors
not to place substantial reliance on the forward-looking statements
contained in this press release. These statements speak only as of February
14, 2007 and Genzyme undertakes no obligation to update or revise the
statements.
This press release includes certain non-GAAP financial measures that
involve adjustments to GAAP figures. Genzyme believes that these non-GAAP
financial measures, when considered together with the GAAP figures, can
enhance an overall understanding of Genzyme's past financial performance
and its prospects for the future. The non-GAAP financial measures are
included with the intent of providing both management and investors with a
more complete understanding of underlying operational results and trends.
In addition, these non-GAAP financial measures are among the primary
indicators Genzyme management uses for planning and forecasting purposes
and measuring the company's performance. These non-GAAP financial measures
are not intended to be considered in isolation or as a substitute for GAAP
figures. A reconciliation of the non-GAAP to GAAP figures follows this
press release.
Genzyme(R), Myozyme(R), Fabrazyme(R), Cerezyme(R), Renagel(R),
Synvisc(R), Campath(R) and Clolar(R) are registered trademarks and
Mozobil(TM), Renvela(TM), Hylastan(TM) are trademarks of Genzyme
Corporation or its subsidiaries. All rights reserved.
Conference Call Information
Genzyme Corporation will host a conference call today at 11:00 a.m.
Eastern Time to discuss fourth-quarter and full-year 2006 financial results
and financial guidance for 2007. If you would like to participate in the
call, please dial 706-679-8722. This call will also be Webcast on the
investor events section of http://www.genzyme.com. A replay of the Webcast and
call will be available from 2:15 p.m. Eastern through midnight on February
28, 2007. For the replay, please dial 706-645-9291 and refer to reservation
number 4245727.
Upcoming Events
Genzyme Corporation will host a conference call April 25 at 11:00 a.m.
Eastern Time to discuss first-quarter financial results. To participate in
the call, please dial 773-799-3828 and refer to pass code "Genzyme." A
replay of this call will be available by dialing 402-220-4870. This call
will also be Webcast live on the investor events section of
http://www.genzyme.com. Replays of the call and the Webcast will be available
until midnight on May 2, 2007.
Genzyme's press releases and other company information are available at
http://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.
Media Contact: Investor Contact:
Bo Piela Sally Curley
(617) 768-6579 (617) 768-6140
GENZYME CORPORATION (GENZ)
Consolidated Statements of
Operations
(Unaudited, amounts in
thousands, except per Three Months Ended Year Ended
share amounts) December 31, December 31,
2006 2005 2006 2005
Total revenues $854,241 $728,691 $3,187,013 $2,734,842
Operating costs and
expenses:
Cost of products and
services sold (1) 198,712 188,601 735,671 632,652
Selling, general and
administrative (1) 266,551 207,613 1,010,400 787,839
Research and development
(1) 166,394 138,186 649,951 502,657
Amortization of
intangibles 53,238 49,494 209,355 181,632
Purchase of in-process
research and development
(2) 552,900 7,000 552,900 29,200
Charge for impaired
goodwill (3) - - 219,245 -
Total operating costs and
expenses 1,237,795 590,894 3,377,522 2,133,980
Operating income (loss) (383,554) 137,797 (190,509) 600,862
Other income (expenses):
Equity in income (loss)
of equity method
investments 5,075 1,346 15,705 151
Minority interest 2,677 2,731 10,418 11,952
Gain on investments in
equity securities (4) (1,807) 526 73,230 5,698
Other (714) (707) (2,045) (1,535)
Investment income 16,600 9,194 56,001 31,429
Interest expense (3,233) (4,615) (15,478) (19,638)
Total other income
(expenses) 18,598 8,475 137,831 28,057
Income (loss) before
income taxes (1) (364,956) 146,272 (52,678) 628,919
(Provision for) benefit
from income taxes (1) 96,722 (39,626) 35,881 (187,430)
Net income (loss) (1) $(268,234) $106,646 $(16,797) $441,489
Net income (loss) per share:
Basic $(1.02) $0.41 $(0.06) $1.73
Diluted (1,5) $(1.02) $0.39 $(0.06) $1.65
Weighted average shares
outstanding:
Basic 262,803 258,535 261,124 254,758
Diluted (1,5) 262,803 276,428 261,124 272,224
(1) Reflects the adoption of Financial Accounting Standards Board, or
FASB, Statement of Financial Accounting Standards No., or FAS, 123R,
"Share-Based Payment, an amendment of FASB Statement Nos. 123 and 95,"
using the modified prospective basis effective January 1, 2006. For
the three months ended December 31, 2006, in accordance with the
provisions of FAS 123R, we recorded pre-tax charges for stock
compensation expense totaling $(48,365)K, of which $(8,537)K were
charged to cost of products and services sold, $(25,262)K were charged
to selling, general and administrative expense and $(14,566)K were
charged to research and development expense. In addition, we recorded
$14,094K of related tax benefits. For the year ended December 31,
2006, in accordance with the provisions of FAS 123R, we recorded pre-
tax charges for stock compensation expense totaling $(208,500)K, of
which $(21,430)K were charged to cost of products and services sold,
$(121,822)K were charged to selling, general and administrative
expense and $(65,248)K were charged to research and development
expense. In addition, we recorded $66,331K of related tax benefits.
Diluted earnings per share and diluted weighted average shares
outstanding for the three months ended and the year ended December 31,
2006 were computed in accordance with the provisions of FAS 123R.
(2) Includes charges for the purchase of in-process research and
development of $(552,900)K related to our acquisition of AnorMED, Inc.
in November 2006, $(7,000)K related to our acquisition of gene therapy
assets from Avigen, Inc. in December 2005, $(12,700)K related to our
acquisition of Bone Care International, Inc. in July 2005 and
$(9,500)K related to our acquisition of Verigen AG in February 2005.
(3) Represents the write off of the goodwill related to our Genetics
reporting unit. In accordance with FAS 142, "Goodwill and Other
Intangible Assets," we completed the annual impairment tests for our
$1.3 billion of net goodwill in the third quarter of 2006 and
determined that the fair value of the net assets of our Genetics
reporting unit was lower than the carrying value, indicating potential
impairment. Based on our analysis, we concluded that the goodwill
assigned to our Genetics reporting unit is fully impaired.
(4) For the year ended December 31, 2006, includes pre-tax gains of
$69,359K related to the liquidation of our investment in the common
stock of Cambridge Antibody Technology Group plc in May and June 2006.
(5) Net loss per share on a diluted basis and weighted average shares -
diluted for the three months and the year ended December 31, 2006
exclude: (i) the effect of options, stock purchase rights and warrants
to purchase shares of Genzyme Stock and (ii) the potentially dilutive
effect of the assumed conversion of our convertible senior notes
because the effect of these securities would be anti-dilutive due to
our net loss for each of those periods.
Net income per share on a diluted basis and weighted average shares -
diluted for the three months and the year ended December 31, 2005
reflect the adoption of Emerging Issues Task Force Issue No. 04-8,
"The Effect of Contingently Convertible Debt on Diluted Earnings Per
Share," or EITF 04-8. As a result of the adoption of EITF 04-8, the
9,686K shares issuable upon conversion of our $690,000K in principal
of 1.25% convertible senior notes, which were issued in December 2003,
are now included in diluted weighted average shares for purposes of
computing diluted earnings per share, unless the effect would be anti-
dilutive. In accordance with EITF 04-8, interest and debt fees
related to the notes of $1,874K, net of tax, for the three months
ended December 31, 2005, and $7,496K, net of tax, for the year ended
December 31, 2005, have been added back to net income and 9,686K
shares have been added to diluted weighted average shares outstanding
for each of those periods for purposes of computing diluted earnings
per share.
GENZYME CORPORATION (GENZ)
Condensed Consolidated Balance Sheets December 31, December 31,
(Unaudited, amounts in thousands) 2006 2005
Cash and all marketable securities $1,285,604 $1,089,102
Other current assets 1,370,095 1,179,093
Property, plant and equipment, net 1,610,593 1,320,813
Intangibles, net (1) 2,790,819 3,078,461
Other assets 126,735 211,396
Total assets $7,183,846 $6,878,865
Current liabilities $667,915 $550,023
Noncurrent liabilities 853,779 1,178,975
Stockholders' equity 5,662,152 5,149,867
Total liabilities and
stockholders' equity $7,183,846 $6,878,865
(1) As of December 31, 2006, reflects a charge for impairment of goodwill
of $(219,245)K recorded in the third quarter of 2006 to write off the
goodwill related to our Genetics reporting unit.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Year to Date as of December 31, 2006
(Amounts in thousands, except per share data)
Gain/(Loss)
on
Invest-
ments
in Settle-
OFT Equity ment Impairment
Settle- Securi- of Tax of Amortiza-
NON-GAAP ment ties Audits Goodwill tion
Income Statement
Classification:
Total revenues $3,187,013
Cost of products
and services
sold $(714,241)
Selling, general
and administra-
tive $(879,266) $(7,936)
Research and
development $(565,375)
Amortization of
intangibles $- $(209,355)
Purchase of in-
process research
and development $-
Charge for
impaired goodwill $- $(219,245)
Equity in income
(loss) of equity
method investments $5,357
Minority interest $66
Gains (losses) on
investments in
equity securities $6,764 $66,466
Other $(2,045)
Investment income $55,997
Interest Expense $(15,478)
Summary:
Income (loss)
before income
taxes $1,078,792 $(7,936) $66,466 $- $(219,245) $(209,355)
(Provision for)
benefit from
income taxes $(336,090) 2,920 (24,459) 31,748 69,823 77,043
Net income (loss)
allocated to
Genzyme Stock $742,702 $(5,016) $42,007 $31,748 $(149,422) $(132,312)
Net income (loss)
per share of
Genzyme Stock:
Basic $2.84 (0.02) $0.16 $0.12 $(0.57) $(0.51)
Diluted (1,2) $2.77 (0.02) $0.15 $0.11 $(0.54) $(0.48)
Weighted average
shares
outstanding:
Basic 261,124
Diluted (1,2,3) 268,016
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Year to Date as of December 31, 2006
(Amounts in thousands, except per share data)
Dilution
Due to
Common
FAS 123R Stock Effect of GAAP
Expense Equivalents IPR&D FIN 46 As Reported
Income
Statement
Classification:
Total revenues $3,187,013
Cost of
products and
services sold $(21,430) $(735,671)
Selling,
general and
administra-
tive $(121,822) $(1,376) $(1,010,400)
Research and
development $(65,248) $(19,328) $(649,951)
Amortization of
intangibles $(209,355)
Purchase of in-
process
research and
development $(552,900) $(552,900)
Charge for
impaired
goodwill $(219,245)
Equity in
income (loss)
of equity
method
investments $10,348 $15,705
Minority
interest $10,352 $10,418
Gains (losses)
on investments
in equity
securities $73,230
Other $(2,045)
Investment
income $4 $56,001
Interest
Expense $(15,478)
Summary:
Income (loss)
before income
taxes $(208,500) $- $(552,900) $(0) $(52,678)
(Provision for)
benefit from
income taxes 66,331 - 148,565 0 35,881
Net income(loss)
allocated to
Genzyme Stock $(142,169) $- $(404,335) $(0) $(16,797)
Net income (loss)
per share of
Genzyme Stock:
Basic $(0.54) $- $(1.54) $- $(0.06)
Diluted
(1,2) $(0.52) $- $(1.54) $- $(0.06)
Weighted
average shares
outstanding:
Basic 261,124
Diluted
(1,2,3) 6,892 261,124
(1) GAAP As-Reported diluted net loss per share for the year ended
December 31, 2006 excludes the dilutive effect of options, stock
purchase rights and warrants to purchase shares of Genzyme Stock, and
the potentially dilutive effect of our 1.25% convertible notes because
the effect would be anti-dilutive to our net loss for the period.
(2) Non-GAAP basic and diluted earnings per share reflects the sum of
the quarterly Non-GAAP diluted earnings per share activity for Q1-Q4
2006.
(3) Common stock equivalents are included in the diluted earnings per
share to the extent they are considered to be dilutive. Due to the
significant IPR&D charge for AnorMED of $552,900K, Genzyme had a GAAP
net loss for the year ended December 31, 2006 and therefore the common
stock equivalents are excluded from GAAP earnings as they would be
anti-dilutive. Conversely, on a Non-GAAP basis, Genzyme produced a
net profit and, therefore, the common stock equivalents are included
in the Non-GAAP diluted earnings per share as they would be dilutive.
Non-GAAP diluted earnings per share excludes the potentially dilutive
effect of our 1.25% convertible notes.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
For the Three Months Ended December 31, 2006
(Amounts in thousands, except per share data)
Dilution
Due to
Common
Stock
Equiva- OFT Amortiz-
NON-GAAP lents Settlement ation IPR&D
Income Statement
Classification:
Total revenues $854,241
Cost of products and
services sold $(190,175)
Selling, general and
administrative $(233,001) $(7,936)
Research and development $(146,957)
Amortization of
intangibles $- $(53,238)
Purchase of in-process
research and
development $- $(552,900)
Charge for impaired
goodwill $-
Equity in income (loss)
of equity method
investments $2,465
Minority interest $66
Gains (losses) on
investments in equity
securities $(1,807)
Other $(714)
Investment income $16,598
Interest expense $(3,233)
Summary:
Income (loss) before
income taxes $297,483 $- $(7,936) $(53,238) $(552,900)
(Provision for) benefit
from income taxes (88,449) - 2,920 19,592 148,565
Net income (loss) $209,034 $- $(5,016) $(33,646) $(404,335)
Net income (loss) per
share of Genzyme Stock:
Basic $0.80 $- $(0.02) $(0.13) $(1.54)
Diluted (1) $0.77 $0.02 $(0.02) $(0.13) $(1.54)
Weighted average shares
outstanding:
Basic 262,803
Diluted (1,2) 269,732 6,929
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
For the Three Months Ended December 31, 2006
(Amounts in thousands, except per share data)
NON-GAAP
FAS 123R Before Effect Effect of GAAP
Expense of FIN 46 FIN 46 As Reported
Income Statement
Classification:
Total revenues $854,241 $854,241
Cost of products and
services sold $(8,537) $(198,712) $(198,712)
Selling, general and
administrative $(25,262) $(266,199) $(352) $(266,551)
Research and
development $(14,566) $(161,523) $(4,871) $(166,394)
Amortization of
intangibles $(53,238) $(53,238)
Purchase of in-process
research and
development $(552,900) $(552,900)
Charge for impaired
goodwill $- $-
Equity in income (loss)
of equity method
investments $2,465 $2,610 $5,075
Minority interest $66 $2,611 $2,677
Gains (losses) on
investments in equity
securities $(1,807) $(1,807)
Other $(714) $(714)
Investment income $16,598 $2 $16,600
Interest expense $(3,233) $(3,233)
Summary:
Income (loss) before
income taxes $(48,365) $(364,956) $- $(364,956)
(Provision for) benefit
from income taxes 14,094 96,722 - 96,722
Net income (loss) $(34,271) $(268,234) $- $(268,234)
Net income (loss) per
share of Genzyme Stock:
Basic $(0.13) $(1.02) $- $(1.02)
Diluted (1) $(0.13) $(1.02) $- $(1.02)
Weighted average shares
outstanding:
Basic 262,803 - 262,803
Diluted (1,2) 262,803 - 262,803
(1) GAAP As-Reported diluted net loss per share for the three months
ended December 31, 2006 excludes the dilutive effect of options, stock
purchase rights and warrants to purchase shares of Genzyme Stock, and
the potentially dilutive effect of our 1.25% convertible notes
because the effect would be anti-dilutive to our net loss for the
period.
(2) Common stock equivalents are included in the diluted earnings per
share to the extent they are considered to be dilutive. Due to the
significant IPR&D charge for AnorMED of $552,900K, Genzyme had a GAAP
net loss for the quarter and therefore the common stock
equivalents are excluded from GAAP earnings as they would be anti-
dilutive. Conversely, on a Non-GAAP basis, Genzyme produced a net
profit and, therefore, the common stock equivalents are included in
the Non-GAAP diluted earnings per share as they would be dilutive.
Non-GAAP diluted earnings per share excludes the potentially dilutive
effect of our 1.25% convertible notes.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended September 30, 2006
(Amounts in thousands, except per share data)
Dilution
Due to
Contingently Settle-
Convertible ment Impair-
Debt of Tax ment of Amortiz-
Non-GAAP (EITF 04-8) Audits Goodwill ation
Income Statement
Classification:
Total revenues $808,574
Cost of products and
services sold $(179,013)
Selling, general and
administrative $(214,944)
Research and development $(142,981)
Amortization of
intangibles $- $(50,542)
Charge for impaired
goodwill $- $(219,245)
Purchase of in-process
research and
development $-
Equity in income (loss)
of equity method
investments $1,985
Minority interest $-
Gains on sales of
investments in equity
securities $128
Other $(873)
Investment income $16,759
Interest expense $(3,772)
Summary:
Income (loss) before
income taxes $285,863 $- $- $(219,245) $(50,542)
Provision for income
taxes $(89,952) $- 31,748 69,823 18,599
Net income allocated to
Genzyme Stock $195,911 $- $31,748 $(149,422) $(31,943)
Net income per share of
Genzyme Stock:
Basic $0.75 $- $0.12 $(0.57) $(0.12)
Diluted (1) $0.73 $(0.02) $0.11 $(0.54) $(0.11)
Weighted average shares
outstanding:
Basic 261,541
Diluted (1) 268,585 9,686
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended September 30, 2006
(Amounts in thousands, except per share data)
NON-GAAP
FAS 123R Before Effect Effect of GAAP
Expense of FIN 46 FIN 46 As Reported
Income Statement
Classification:
Total revenues $808,574 $808,574
Cost of products and
services sold $(5,663) $(184,676) $(184,676)
Selling, general and
administrative $(24,421) $(239,365) $(335) $(239,700)
Research and
development $(14,556) $(157,537) $(4,756) $(162,293)
Amortization of
intangibles $(50,542) $(50,542)
Charge for impaired
goodwill $(219,245) $(219,245)
Purchase of in-process
research and
development $- $-
Equity in income (loss)
of equity method
investments $1,985 $2,545 $4,530
Minority interest $- $2,545 $2,545
Gains on sales of
investments in equity
securities $128 $128
Other $(873) $(873)
Investment income $16,759 $1 $16,760
Interest expense $(3,772) $(3,772)
Summary:
Income (loss) before
income taxes $(44,640) $(28,564) $- $(28,564)
Provision for income
taxes 14,312 $44,530 44,530
Net income allocated to
Genzyme Stock $(30,328) $15,966 $- $15,966
Net income per share of
Genzyme Stock:
Basic $(0.12) $0.06 $- $0.06
Diluted (1) $(0.11) $0.06 $- $0.06
Weighted average shares
outstanding:
Basic 261,541 261,541 261,541
Diluted (1) 278,271 278,271 278,271
(1) GAAP As-Reported diluted earnings per share and diluted weighted
average shares outstanding reflect the adoption of EITF 04-8. In
accordance with the provisions of EITF 04-8, interest and debt fees
related to our 1.25% convertible senior notes of $1,874K, net of
tax, have been added back to net income and approximately 9,686K
shares have been added to diluted weighted average shares for
purposes of computing GAAP As-Reported diluted earnings per share.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended June 30, 2006
(Amounts in thousands, except per share data)
Dilution
Due to Gain/(Loss)
Contingently on Invest-
Convertible ments in
Debt Equity Amortiz-
NON-GAAP (EITF 04-8) Securities ation
Income Statement
Classification:
Total revenues $793,356
Cost of products and services
sold $(180,406)
Selling, general and
administrative $(220,395)
Research and development $(138,565)
Amortization of intangibles $- $(52,883)
Purchase of in-process
research and development $-
Equity in loss of equity
method investments $1,105
Minority interest $-
Gains on investments in equity
securities $501 $66,466
Other $(319)
Investment income $12,562
Interest expense $(4,035)
Summary:
Income (loss) before income
taxes $263,804 $- $66,466 $(52,883)
Provision for income taxes $(82,581) - (24,459) 19,461
Net income allocated to
Genzyme Stock $181,223 $- $42,007 $(33,422)
Net income per share of
Genzyme Stock:
Basic $0.70 $- $0.16 $(0.13)
Diluted (1) $0.68 $(0.02) $0.15 $(0.12)
Weighted average shares
outstanding:
Basic 260,444
Diluted (1) 266,626
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended June 30, 2006
(Amounts in thousands, except per share data)
NON-GAAP
FAS 123R Before Effect Effect of GAAP
Expense of FIN 46 FIN 46 As Reported
Income Statement
Classification:
Total revenues $793,356 $793,356
Cost of products and
services sold $(4,927) $(185,333) $(185,333)
Selling, general and
administrative $(52,692) $(273,087) $(393) $(273,480)
Research and
development $(25,269) $(163,834) $(5,107) $(168,941)
Amortization of
intangibles $(52,883) $(52,883)
Purchase of in-process
research and
development $- $-
Equity in loss of equity
method investments $1,105 $2,749 $3,854
Minority interest $- $2,750 $2,750
Gains on investments in
equity securities $66,967 $66,967
Other $(319) $(319)
Investment income $12,562 $1 $12,563
Interest expense $(4,035) $(4,035)
Summary:
Income (loss) before
income taxes $(82,888) $194,499 $(0) $194,499
Provision for income
taxes 27,577 (60,002) - (60,002)
Net income allocated to
Genzyme Stock $(55,311) $134,497 $(0) $134,497
Net income per share of
Genzyme Stock:
Basic $(0.21) $0.52 $- $0.52
Diluted (1) $(0.20) $0.49 $- $0.49
Weighted average shares
outstanding:
Basic 260,444 - 260,444
Diluted (1) 276,312 - 276,312
(1) GAAP As-Reported diluted earnings per share and diluted weighted
average shares outstanding reflect the adoption of EITF 04-8. In
accordance with the provisions of EITF 04-8, interest and debt fees
related to our 1.25% convertible senior notes of $1,874K, net of
tax, have been added back to net income and approximately 9,686K
shares have been added to diluted weighted average shares for
purposes of computing GAAP As-Reported diluted earnings per share.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended March 31, 2006
(Amounts in thousands, except per share data)
Dilution
Due to
Contingently
Convertible
Debt Amortiz- FAS 123R
NON-GAAP (EITF 04-8) ation Expense
Income Statement
Classification:
Total revenues $730,842
Cost of products and services
sold $(164,647) $(2,303)
Selling, general and
administrative $(210,926) $(19,447)
Research and development $(136,872) $(10,857)
Amortization of intangibles $- $(52,692)
Purchase of in-process
research and development $-
Equity in loss of equity
method investments $(198)
Minority interest $-
Gains on investments in equity
securities $7,942
Other $(139)
Investment income $10,078
Interest expense $(4,438)
Summary:
Income (loss) before income
taxes $231,642 $- $(52,692) $(32,607)
Provision for income taxes (75,108) - 19,391 10,348
Net income allocated to
Genzyme Stock $156,534 $- $(33,301) $(22,259)
Net income per share of
Genzyme Stock:
Basic $0.60 $- $(0.13) $(0.09)
Diluted (1) $0.59 $(0.01) $(0.12) $(0.08)
Weighted average shares
outstanding:
Basic 259,709
Diluted (1) 267,123
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended March 31, 2006
(Amounts in thousands, except per share data)
NON-GAAP
Before
Effect Effect of GAAP
of FIN 46 FIN 46 As Reported
Income Statement
Classification:
Total revenues $730,842 $730,842
Cost of products and services
sold $(166,950) $(166,950)
Selling, general and
administrative $(230,373) $(296) $(230,669)
Research and development $(147,729) $(4,594) $(152,323)
Amortization of intangibles $(52,692) $(52,692)
Purchase of in-process
research and development $- $-
Equity in loss of equity
method investments $(198) $2,444 $2,246
Minority interest $- $2,446 $2,446
Gains on investments in equity
securities $7,942 $7,942
Other $(139) $- $(139)
Investment income $10,078 $- $10,078
Interest expense $(4,438) $(4,438)
Summary:
Income (loss) before income
taxes $146,343 $- $146,343
Provision for income taxes (45,369) - (45,369)
Net income allocated to
Genzyme Stock $100,974 $- $100,974
Net income per share of
Genzyme Stock:
Basic $0.39 $- $0.39
Diluted (1) $0.37 $- $0.37
Weighted average shares
outstanding:
Basic 259,709 - 259,709
Diluted (1) 276,809 - 276,809
(1) GAAP As-Reported diluted earnings per share and diluted weighted
average shares outstanding reflect the adoption of EITF 04-8. In
accordance with the provisions of EITF 04-8, interest and debt fees
related to our 1.25% convertible senior notes of $1,874K, net of
tax, have been added back to net income and approximately 9,686K
shares have been added to diluted weighted average shares for
purposes of computing GAAP As-Reported diluted earnings per share.
GENZYME 2007 GUIDANCE
($ millions except per share)
2007 Guidance
DESCRIPTION Ranges
Renagel $580 $590
Total Renal 685 705
Cerezyme 1,060 1,075
Fabrazyme 415 425
Myozyme 155 180
Total Therapeutics 1,730 1,790
Total Transplant 185 200
Synvisc 250 265
Total Biosurgery 435 460
Total Diag/Genetics 385 405
Total Other 180 190
TOTAL REVENUE $3,600 $3,800
**GROSS MARGIN 77% 78%
**SG&A (1,020) (1,040)
**R&D (640) (650)
Net Interest / Other 55 60
TAX RATE - GAAP approx. 31%
*TAX RATE - NON-GAAP approx. 32%
GENZ GAAP EPS $1.90 $2.00
AMORTIZATION approx. $0.49
FAS123 EXPENSE approx. $0.58
CONTINGENT CONVERTIBLE DEBT approx. $0.08
**GENZ NON-GAAP EPS $3.05 $3.15
***WTD AVERAGE SHARES O/S 272 275
CAPITAL EXPENDITURES $325 $375
This financial guidance, which is provided as part of a press release
dated February 14, 2007, is subject to all of the qualifications and
limitations described therein. Actual results may differ from these
forward-looking statements due to the numerous factors described in the
press release.
* Non-GAAP tax rate excludes the impact of amortization, one-time
events, FIN 46, FAS123 expense and EITF 04-08.
** Non-GAAP excludes the impact of amortization, one-time events,
FIN 46, FAS123 expense and EITF 04-08.
*** WTD Average Shares Outstanding excludes the impact of EITF 04-08 .
SOURCE Genzyme Corporation
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Related links:
http://www.genzyme.com/
http://www.prnewswire.com/comp/113803.html /
CONTACT:
Media, Bo Piela, +1-617-768-6579, or
Investors, Sally Curley, +1-617-768-6140, both of Genzyme
Corporation
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