GENZYME CORPORATION 
By CAMBRIDGE, Mass.,
Full-Year 2007
-- Total revenue in 2007 increased 20 percent to $3.8 billion from $3.2
billion in 2006. The increase was broadly driven by growth across all
segments of the company.
-- GAAP net income was $480.2 million, or $1.74 per diluted share,
compared with a net loss of $16.8 million, or $0.06 per diluted share,
for the previous year.
-- Non-GAAP net income increased 27 percent to $939.9 million, compared
with $742.7 million in 2006.
-- Non-GAAP earnings increased 25 percent to $3.47 per diluted share from
$2.77, exceeding the increased guidance of $3.35-$3.40 that Genzyme
provided in July.
-- The company generated approximately $1 billion in cash from operations
and increased its ending cash position to $1.5 billion while completing
two acquisitions, expanding its manufacturing infrastructure, and
repurchasing approximately 3.5 million shares under a three-year
program to reduce the dilutive effect of equity compensation.
-- Genzyme also continued to make excellent progress in building its
business to drive future growth. The company:
-- Expanded its emerging oncology franchise by securing worldwide
rights to its leukemia drug Clolar(R) (clofarabine) through the
acquisition of Bioenvision Inc.
-- Obtained marketing approval for four new products-Renvela(R)
(sevelamer carbonate) in the United States, Synvisc-ONE(TM) (hylan
G-F 20) and Cholestagel(R) (colesevelam hydrochloride) in the
European Union, and Elaprase(R) (idursulfase) in Japan-and secured
expanded U.S. labeling for Campath(R) (alemtuzumab) and Thyrogen(R)
(thyrotropin alfa for injection).
-- Reported highly encouraging clinical trial results for two key late
stage product candidates: Mozobil(TM) (plerixafor) for stem-cell
transplantation and alemtuzumab for multiple sclerosis.
Fourth-Quarter 2007 Highlights
-- Revenue increased 21 percent in the fourth quarter to $1.04 billion, up
from $854.2 million in the prior fourth quarter.
-- GAAP net income increased to $78.9 million, or $0.29 per diluted share,
compared with an acquisition-related net loss of $268.2 million, or
$1.02 per diluted share, in the prior fourth quarter.
-- Non-GAAP net income increased 19 percent to $249.2 million, compared
with $209.0 million in the previous fourth quarter.
-- Non-GAAP earnings rose 18 percent to $0.91 per diluted share from
$0.77. The increased operating expenses and decreased interest income
associated with Genzyme's fourth-quarter acquisition of Bioenvision
reduced earnings by $0.01 per diluted share. The company had noted
previously that the impact of this transaction would be reflected in
its fourth-quarter results.
-- Individual product sales for the fourth quarter and the year, along
with expectations for the longer-term growth of Genzyme's business
segments, were detailed in a January 8, 2008, press release coinciding
with the company's presentation at the JPMorgan Healthcare Conference.
"We delivered outstanding financial results last year while continuing to build the company to meet our goal of 20 percent compound non-GAAP earnings growth through 2011," said Henri A. Termeer, chairman and chief executive officer. "In the year ahead, we expect to continue this strong performance while investing in our future to ensure that we sustain our growth beyond 2011."
Financial Guidance for 2008
Revenue
-- Genzyme expects revenue to reach $4.5-$4.7 billion in 2008. This
estimate includes sales of Aldurazyme(R) (laronidase), which now will
be reflected in Genzyme's top line under a restructured agreement with
BioMarin Pharmaceutical Inc. Genzyme's goal is to increase its top
line at a compound average rate of 16-17 percent over the five-year
period from 2006-2011. Annual revenue is expected to reach
approximately $7 billion by 2012.
Earnings
-- Genzyme is committed to increasing non-GAAP earnings over this five
year period at a compound average rate of 20 percent. Non-GAAP
earnings are projected to increase to approximately $4.00 per diluted
share in 2008 and to rise to approximately $7.00 per diluted share by
2011.
-- GAAP earnings in 2008 are expected to increase to approximately $2.75
per share. GAAP figures include anticipated amortization and stock-
compensation expenses and the effect of contingent convertible debt.
-- Genzyme expects non-GAAP earnings per share in the first quarter of
this year in the low $0.90s. This estimate reflects several factors:
(1) the continued integration of Bioenvision and the expanded
introduction of Clolar in Europe; (2) investments in late-stage
clinical trials-particularly the phase 3 study of alemtuzumab for
multiple sclerosis; and (3) product launches, including the U.S. launch
of Renvela and associated sales force expansion. This estimate also
reflects the U.S. introduction of Myozyme(R) (alglucosidase alfa),
which has been constrained by limited product supply, as the FDA has
yet to approve the larger scale manufacturing process for this product.
This supply constraint will have an estimated impact of $0.03 per
diluted share during the first quarter.
Product Sales
-- Sales of Myozyme are expected to increase to $320-$330 million this
year, compared with $201 million last year. The launch of this product
has been the most rapid for any of Genzyme's lysosomal storage disorder
treatments. In December, Genzyme announced that its post-marketing
Late-Onset Treatment Study of Myozyme met its co-primary endpoints,
confirming the benefit of the product for patients across the spectrum
of Pompe disease. The company has begun submitting the results of this
study for presentation at medical meetings and will pursue the
inclusion of the trial results in the product's labeling.
-- Sales of Fabrazyme(R) (agalsidase beta) are expected to reach $495-$505
million this year, compared with $424 million in 2007. The European
Commission has granted full marketing authorization for Fabrazyme,
making the product the only Fabry disease treatment to earn this
designation in Europe.
-- Sales of Cerezyme(R) (imiglucerase for injection) are expected to reach
$1.22-$1.24 billion this year, compared with $1.13 billion in 2007.
-- Sales of sevelamer therapies Renagel(R) (sevelamer hydrochloride) and
Renvela(R) (sevelamer carbonate) are expected to rise to $690-$700
million this year, compared with $603 million in 2007. Renvela was
approved by the FDA in October for the treatment of hemodialysis
patients, and Genzyme plans to launch the product on March 1. Genzyme
is currently engaged in active discussions with the FDA to expand the
product's labeling to include chronic kidney disease patients with
hyperphosphatemia who have not progressed to dialysis. Therefore it
will not be necessary for the company to file an sNDA for this
indication. A CKD indication will expand the market for sevelamer and
help sustain the long-term growth of the Renal franchise.
-- Sales of Synvisc(R) (hylan G-F 20) and Synvisc-ONE are expected to
reach $270-$280 million this year, compared with $242 million in 2007.
Synvisc-One received CE Mark approval in the European Union in
December. This single-injection regimen has the potential to redefine
the market for viscosupplementation products and expand the benefits of
this therapeutic approach to a broader set of patients by simplifying
osteoarthritis pain management. Genzyme will pursue marketing
approvals for Synvisc-One in Canada, Asia and Latin America based on
the European CE mark approval. Action on a marketing application in
the United States is expected later this year.
-- Transplant revenue is expected to increase to $210-$220 million this
year, compared with $175 million in 2007, driven by increasing global
demand for Thymoglobulin(R) (Anti-thymocyte Globulin [Rabbit]).
Thymoglobulin's growth is being driven by its launch in new geographic
markets and by publications and clinical studies. The product's
growth over the past several quarters has been affected by
manufacturing challenges resulting in stability issues affecting the
appearance of the product. Genzyme has worked closely with the FDA in
addressing these challenges, and has implemented process changes at its
Thymoglobulin manufacturing plant in Lyon, France. These changes have
resulted in improved stability, and Genzyme continues to work to
optimize its processes. The company is confident that it is making
progress toward fully resolving the production issues that emerged in
mid-2007. In addition, the FDA has accepted the company's responses
to the warning letter issued last year.
-- Total revenue for the Diagnostics/Genetics business is expected to
reach $475-$485 million this year, compared with $411 million in 2007.
The Genetics business has been experiencing particularly strong growth,
driven by an increasing demand for diagnostic testing services. Genzyme
is investing in additional information technology and infrastructure to
continue to strengthen the competitive advantages the Genetics unit has
created.
-- Sales of Aldurazyme are expected to increase to $135-$145 million this
year, compared with $123 million in 2007. Genzyme will record sales of
Aldurazyme and make tiered payments to BioMarin on worldwide product
sales. These payments will be recorded as a cost of goods sold.
Gross Margin
-- Genzyme's recognition of Aldurazyme revenue and the associated payments
to BioMarin will reduce the gross margin by approximately 1 percentage
point without any net impact on the bottom line. The non-GAAP gross
margin for 2008 is expected to be approximately 77 percent of revenue.
Expenses
-- Non-GAAP selling, general and administrative expenses are expected to
represent approximately 27 percent of revenue in 2008, consistent with
SG&A expenses in 2007. SG&A spending reflects the integration of
Bioenvision and the European rollout of Clolar, the ongoing
introduction of Myozyme, the sales force expansion associated with the
launch of Renvela, and the expanded U.S. sales effort for Sepra(R)
products.
-- Non-GAAP research and development spending is expected to represent
approximately 17 percent of revenue in 2008, consistent with R&D
spending in 2007. Genzyme's pipeline is concentrated on programs in
mid- to late-stage development and includes more than 25 phase 2
studies and several major pivotal studies. The company is re-
prioritizing its R&D programs to make space for mipomersen, a lipid-
lowering product currently in phase 3 clinical trials for high-risk
cardiovascular disease patients. Mipomersen, which Genzyme is in the
process of licensing from Isis Pharmaceuticals Inc., will strengthen an
already substantial pipeline. The product will join Mozobil and
alemtuzumab at the forefront of a development portfolio with
significant potential to drive Genzyme's growth beyond 2011.
Tax Rate
-- Genzyme's non-GAAP net tax rate this year is expected to be
approximately 31 percent. The GAAP tax rate is expected to be 30
percent.
Capital Expenditures
-- Capital expenditures are expected to total approximately $500 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.
-- Genzyme is making steady progress toward beginning commercial
production of Myozyme at its Geel, Belgium, manufacturing plant.
Process validation runs for Myozyme production at the site are expected
to occur this year, with approval of commercial production anticipated
next year. Genzyme is beginning the construction of a new
manufacturing facility in Lyon for Thymoglobulin production.
Development Programs
Mozobil for stem-cell transplantation
-- Mozobil is an innovative product intended to facilitate and improve the
outcome of stem-cell transplantation procedures. In two pivotal
clinical studies, Mozobil showed the ability to quickly and predictably
prepare cancer patients for a transplant to treat their disease.
Genzyme plans to file mid year for U.S. and European approval for the
product's use in treating patients with multiple myeloma and patients
with lymphoma. The company plans to launch the product early next year
upon approval and to rapidly expand the product's availability around
the world. The company expects peak annual sales of the product in the
transplant setting of $400 million. Genzyme is also exploring
additional indications for Mozobil, including its near-term potential
use in chemosensitization procedures.
Clolar for adult AML
-- Clolar is approved in the United States and Europe for the treatment of
acute lymphoblastic leukemia in relapsed and refractory pediatric
patients. Genzyme is developing the product for use globally as a
first-line therapy for the treatment of adult acute myeloid leukemia
and myelodysplastic syndromes, significantly larger indications that
the company estimates will drive peak annual sales of the product to
approximately $600 million. The company intends to submit a
supplemental new drug application in the United States later this year
to include an adult AML indication, following the completion of its
CLASSIC II clinical trial involving older adult AML patients. The
company also expects to provide additional clinical data to European
authorities to supplement the regulatory submission filed previously by
Bioenvision.
Mipomersen for high-risk cardiovascular disease
-- Mipomersen is being developed primarily for patients at significant
cardiovascular risk who are unable to achieve target cholesterol levels
with statins alone or who are intolerant of statins. Mipomersen is
currently in phase 3 development for patients with homozygous familial
hypercholesterolemia, and a U.S. marketing application for this
indication is anticipated in 2009. The product offers an innovative
approach to addressing a real, unmet medical need, and Genzyme believes
it could prove to be the most effective lipid-lowering agent for high
risk cardiovascular disease patients for whom conventional therapies
are not sufficient. The product may potentially provide significant
benefit over the standard of care and targets a well-defined and
severely ill patient population.
Alemtuzumab for multiple sclerosis
-- Genzyme is enrolling patients in two phase 3 trials examining the
safety and efficacy of alemtuzumab for the treatment of multiple
sclerosis. One study includes previously untreated patients and one
involves patients whose disease remains active following treatment with
an approved therapy. Alemtuzumab's effect in treating MS, observed in
clinical studies, exceeds that of any currently marketed products and
any products in development. Genzyme believes that alemtuzumab has the
potential to be the best therapy in a market for MS drugs that is
projected to reach $8-9 billion annually when the treatment is expected
to be ready for launch in 2011-2012. Alemtuzumab is being developed in
collaboration with Bayer Schering Pharma AG, Germany.
Genz-112638 for Gaucher disease
-- Genzyme is investing in the development of an innovative, next-
generation product for the treatment of Gaucher disease. The company
has completed enrollment in a phase 2 trial of the small molecule
Genz-112638, a novel oral therapy that could provide an additional
treatment option for physicians and patients. Initial results for the
first group of participants enrolled in the study were encouraging, and
one-year data from the study will be available this year. Final
results from the trial will be available in the first quarter of 2009.
Newborn Screening for lysosomal storage disorders
-- Based on its belief that early diagnosis can lead to improved outcomes
for patients with lysosomal storage disorders, and as part of its
commitment to serve this community, Genzyme has been working with
researchers to develop technologies useful for newborn screening. Last
month, the company provided a first shipment of reagents for newborn
screening to the Centers for Disease Control and Prevention (CDC) for
worldwide distribution to public health laboratories. Several
laboratories in the United States and around the world have begun the
process of implementing LSD newborn screening programs.
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 10,000 employees in locations spanning
the globe and 2007 revenues of
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 diagnostic testing. Genzyme's commitment to innovation continues today with a substantial development program focused on these fields, as well as immune disease, infectious disease, and other areas of unmet medical need.
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This press release contains forward-looking statements regarding Genzyme
financial outlook and business plans and strategies, including without
limitation: its anticipated compound average earnings growth rate from 2006-
2011; its Q1 2008, YE 2008 and YE 2011 EPS guidance; its projected revenue
growth for the company, for the Diagnostics/Genetics business and for certain
products, including Myozyme, Fabrazyme, Cerezyme, Renagel/Renvela,
Synvisc/Synvisc-ONE and Thymoglobulin, as well as the anticipated drivers of
such revenue growth; its gross margin and SG&A estimates and anticipated
growth rates; the expected impact on the Myozyme supply constraint on Q1 2008
EPS; its plans to seek regulatory approvals of existing products for use in
new indications, including Renvela for a CKD indication, the timetables
therefore and the impact of such approvals on the company; its plans and
estimated timetables for new and next-generation product filings, approvals
and launches, including for Mozobil, Clolar, alemtuzumab-MS, mipomersen, Genz-
112638 and Synvisc-ONE and the assessment of the market potential of such
products and product candidates; its projected SG&A and R&D expenses as a
percentage of revenues in 2008; its expected tax rate for 2008; its expected
capital expenditures for 2008; and its expected time line for securing
approval for Myozyme manufacturing at its
Genzyme(R), Myozyme(R), Fabrazyme(R), Cerezyme(R), Renagel(R), Renvela(R), Thymoglobulin(R), Synvisc(R), Campath(R) and Clolar(R) are registered trademarks of and Mozobil(TM) and Synvisc-ONE(TM) are unregistered trademarks of Genzyme or its subsidiaries. Aldurazyme(R) is a registered trademark of BioMarin/Genzyme LLC. All rights reserved.
Genzyme's press releases and other company information are available at
www.genzyme.com and by calling Genzyme's investor information line at 1-800-
905-4369 within the
Media Contact: Investor Contact:
Bo Piela Patrick Flanigan
(617) 768-6579 (617) 768-6563
GENZYME CORPORATION (GENZ)
Consolidated Statements of Operations
(Unaudited, amounts in thousands,
except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Total revenues $1,036,758 $854,241 $3,813,519 $3,187,013
Operating costs and expenses:
Cost of products and
services sold (1,2) 262,657 198,712 927,330 735,671
Selling, general and
administrative (1,3) 307,631 266,551 1,186,438 1,010,400
Research and
development (1,4) 191,588 166,394 731,950 649,951
Amortization of intangibles 51,804 53,238 201,105 209,355
Purchase of in-process
research and
development (5) 106,350 552,900 106,350 552,900
Charge for impaired
goodwill (6) - - - 219,245
Total operating costs
and expenses 920,030 1,237,795 3,153,173 3,377,522
Operating income (loss) 116,728 (383,554) 660,346 (190,509)
Other income (expenses):
Equity in income of equity
method investments (7) 8,489 5,075 7,398 15,705
Minority interest - 2,677 3,932 10,418
Gain (loss) on investments
in equity securities (8) (969) (1,807) 13,067 73,230
Other (9) (7,228) (714) (7,118) (2,045)
Investment income 18,509 16,600 70,196 56,001
Interest expense (2,864) (3,233) (12,147) (15,478)
Total other income
(expenses) 15,937 18,598 75,328 137,831
Income (loss) before
income taxes (1) 132,665 (364,956) 735,674 (52,678)
(Provision for) benefit
from income taxes (1) (53,766) 96,722 (255,481) 35,881
Net income (loss) (1) $78,899 $(268,234) $480,193 $(16,797)
Net income (loss) per share:
Basic $0.30 $(1.02) $1.82 $(0.06)
Diluted (1,10) $0.29 $(1.02) $1.74 $(0.06)
Weighted average shares
outstanding:
Basic 265,418 262,803 263,895 261,124
Diluted (1,10) 283,374 262,803 280,767 261,124
(1) In accordance with the provisions 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," we recorded pre-tax charges for stock-based compensation
expense and related tax benefits of:
Three Months Ended Year Ended
December 31, December 31,
2007 2006 2007 2006
Cost of products and services
sold $(7,137) $(8,537) $(25,677) $(21,430)
Selling, general and
administrative (23,334) (25,262) (106,172) (121,822)
Research and development (13,128) (14,566) (58,101) (65,248)
Total pre-tax charges for
stock-based compensation
expense (43,599) (48,365) (189,950) (208,500)
Tax benefit 12,920 14,094 58,148 66,331
Stock-based compensation
expense, net of tax $(30,679) $(34,271) $(131,802) $(142,169)
Diluted earnings per share and diluted weighted average shares outstanding
for the three months and years ended December 31, 2007 and 2006 were
computed according to the provisions of FAS 123R.
(2) Includes charges of $(9,143)K recorded in December 2007 to write off
five finished lots of our Thymoglobulin inventory which did not meet
our specifications and $(11,773)K recorded in September 2007 to write
off four finished lots of our Thymoglobulin inventory which did not
meet our specifications.
(3) Includes a charge of $(64,000)K recorded in June 2007 to settle the
litigation related to the consolidation of our former tracking
stocks.
(4) Includes a charge of $(25,000)K for an upfront milestone payment paid
to Ceregene Inc. in June 2007 for the development and
commercialization of certain gene therapy products.
(5) Includes charges for the purchase of in-process research and
development of $(106,350)K related to our acquisition of Bioenvision,
Inc. in October 2007 and $(552,900)K related to our acquisition of
AnorMED Inc. in November 2006.
(6) Represents the write off of the goodwill related to our Genetics
reporting unit in September 2006 in accordance with FAS 142,
"Goodwill and Other Intangible Assets."
(7) Includes charges of $(570)K for the three months ended and $(21,102)K
for the year ended December 31, 2007 related to our completion of the
first step of the two step process under which we acquired
Bioenvision. In July 2007, we acquired approximately 22% of the
outstanding shares of Bioenvision common stock on an as-converted
basis, including all of the outstanding shares of Bioenvision
preferred stock for $(72,229)K of cash. Subsequently, in October
2007, following a favorable merger vote by Bioenvision's
shareholders, we completed the second step of the acquisition and,
effective October 23, 2007, acquired the remaining outstanding shares
of Bioenvision common stock for $(245,055)K of cash. In the fourth
quarter of 2007, we also paid $(11,975)K of cash for the outstanding
options to purchase shares of Bioenvision common stock. The full
purchase accounting for the acquisition of Bioenvision, including the
impact of the second step, is reflected in our consolidated financial
statements for the three months and year ended December 31, 2007 and
as of December 31, 2007.
(8) For the year ended December 31, 2007, includes a pre-tax gain of
$10,848K recorded on the sale of our entire investment in the common
stock of Therapeutic Human Polyclonals Inc. in March 2007, which had
a zero cost basis. 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.
(9) Includes charges totaling $(5,735)K recorded in December 2007 to
write off costs associated with the manufacture of tolevamer at our
manufacturing facilities in Ireland and the United Kingdom.
(10) All periods except for the three months and year ended December 31,
2006, 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 $690.0
million in principal of 1.25% convertible senior notes, which were
issued in December 2003, are now included in diluted weighted average
shares outstanding 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 these notes of $1.9
million, net of tax, for the three months ended December 31, 2007 and
$7.5 million, net of tax, for the twelve months ended December 31,
2007, 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.
For the three months and year ended December 31, 2006, excludes: (i)
the dilutive 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 would be anti-dilutive due to our net loss for
both of those periods.
GENZYME CORPORATION (GENZ)
Condensed Consolidated Balance Sheets December 31, December 31,
(Unaudited, amounts in thousands) 2007 2006
Cash and all marketable securities $1,460,394 $1,285,604
Other current assets 1,629,820 1,377,437
Property, plant and equipment, net 1,968,402 1,610,593
Intangibles, net 2,964,810 2,790,819
Other assets (1) 265,282 126,735
Total assets $8,288,708 $7,191,188
Current liabilities $1,462,059 $651,439
Noncurrent liabilities (1) 186,399 879,038
Stockholders' equity 6,640,250 5,660,711
Total liabilities and stockholders' equity $8,288,708 $7,191,188
(1) Other assets as of December 31, 2007 includes $109,221K of net
deferred tax assets, as compared to net deferred tax liabilities of
$10,909K as of December 31, 2006, which were included as a component
of noncurrent liabilities.
GENZYME CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Year to Date as of December 31, 2007
(Amounts in thousands, except per share data)
Dilution
Due to Gain on
Common Invest- Litig-
Stock ments ation Mile- Manufact
Equiv- in Equity Settle- stone -uring
NON-GAAP alents Securities ment Payment Related
Income Statement
Classification:
Total revenues $3,813,519
Cost of products
and services
sold $(880,737) $(20,916)
Selling,
general and
administrative $(1,016,066) $(64,000)
Research and
development $(641,388) $(25,000)
Amortization of
intangibles $-
Purchase of
in-process
research and
development $-
Equity in income
(loss) of equity
method
investments $23,548
Minority interest $101
Gains (losses) on
investments in
equity securities $2,219 $10,848
Other $(1,383) $(5,735)
Investment income $70,196
Interest Expense $(12,147)
Summary:
Income (loss) before
income taxes $1,357,862 $ - $10,848 $(64,000) $(25,000) $(26,651)
(Provision for)
benefit from
income taxes $(417,932) - (2,698) - 9,069 9,702
Net income (loss) $939,930 $ - $8,150 $(64,000) $(15,931) $(16,949)
Net income (loss)
per share:
Basic $3.56 $ - $0.03 $(0.24) $(0.06) $(0.06)
Diluted (1) $3.47 $(0.09) $0.03 $(0.23) $(0.06) $(0.06)
Weighted average
shares outstanding:
Basic 263,895
Diluted (1) 271,081 9,686
Acquisition Amortization FAS 123R Effect of GAAP
Related Expense FIN 46 As Reported
Income Statement
Classification:
Total revenues $3,813,519
Cost of products
and services sold $(25,677) $(927,330)
Selling, general
and administrative $(106,172) $(200) $(1,186,438)
Research and
development $(58,101) $(7,461) $(731,950)
Amortization of
intangibles $(201,105) $(201,105)
Purchase of
in-process
research and
development $(106,350) $(106,350)
Equity in income
(loss) of equity
method
investments $(19,150) $(830) $3,830 $7,398
Minority interest $3,831 $3,932
Gains (losses) on
investments in
equity securities $13,067
Other $(7,118)
Investment income $70,196
Interest Expense $(12,147)
Summary:
Income (loss)
before income
taxes $(125,500) $(201,935) $(189,950) $- $735,674
(Provision for)
benefit from
income taxes 15,781 72,449 58,148 - (255,481)
Net income
(loss) $(109,719) $(129,486) $(131,802) $- $480,193
Net income
(loss) per share:
Basic $(0.41) $(0.49) $(0.50) $- $1.82
Diluted (1) $(0.39) $(0.46) $(0.47) $- $1.74
Weighted average
shares outstanding:
Basic 263,895
Diluted (1) 280,767
(1) Non-GAAP basic and diluted earnings per share reflects the sum of the
quarterly Non-GAAP diluted earnings per share activity for Q1-Q4 2007.
(2) 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 $7,543K, 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
For the Three Months Ended December 31, 2007
(Amounts in thousands, except per share data)
Dilution
Due to
Common Stock Manufacturing Acquisition
NON-GAAP Equivalents Related Related
Income Statement
Classification:
Total revenues $1,036,758
Cost of products and
services sold $(246,377) $(9,143)
Selling, general and
administrative $(284,297)
Research and
development $(178,460)
Amortization of
intangibles $-
Purchase of in-process
research and development $- $(106,350)
Equity in income (loss)
of equity method
investments $9,319
Minority interest $-
Gains (losses) on
investments in
equity securities $(969)
Other $(1,493) $(5,735)
Investment income $18,509
Interest expense $(2,864)
Summary:
Income (loss) before
income taxes $350,126 $- $(14,878) $(106,350)
(Provision for) benefit
from income taxes $(100,918) $- $5,428 $8,819
Net income (loss) $249,208 $- $(9,450) $(97,531)
Net income (loss) per
share:
Basic $0.94 $- $(0.036) $(0.367)
Diluted (1) $0.91 $(0.024) $(0.033) $(0.344)
Weighted average shares
outstanding:
Basic 265,418
Diluted (1) 273,688 9,686
FAS 123R GAAP
Amortization Expense As Reported
Income Statement Classification:
Total revenues $1,036,758
Cost of products and services sold $(7,137) $(262,657)
Selling, general and administrative $(23,334) $(307,631)
Research and development $(13,128) $(191,588)
Amortization of intangibles $(51,804) $(51,804)
Purchase of in-process
research and development $(106,350)
Equity in income (loss) of
equity method investments $(830) $8,489
Minority interest $-
Gains (losses) on investments
in equity securities $(969)
Other $(7,228)
Investment income $18,509
Interest expense $(2,864)
Summary:
Income (loss) before income taxes $(52,634) $(43,599) $132,665
(Provision for) benefit from
income taxes $19,985 $12,920 $(53,766)
Net income (loss) $(32,649) $(30,679) $78,899
Net income (loss) per
share:
Basic $(0.123) $(0.116) $0.30
Diluted (1) $(0.115) $(0.108) $0.29
Weighted average shares
outstanding:
Basic 265,418
Diluted (1) 283,374
(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 $1,884K, 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 2008 GUIDANCE
2008 Guidance
DESCRIPTION Ranges
Renagel / Renvela $690 $700
Total Renal 800 815
Cerezyme 1,215 1,240
Fabrazyme 495 505
Myozyme 320 330
Aldurazyme 135 145
Total Therapeutics 2,325 2,385
Total Transplant 210 220
Synvisc 270 280
Total Biosurgery 490 505
Total Diag/Genetics 475 485
Total Other 260 270
TOTAL REVENUE $4,500 $4,700
**GROSS MARGIN approx. 77%
**SG&A approx. 27%
**R&D approx. 17%
Net Interest / Other approx. 60
TAX RATE - GAAP approx. 30%
*TAX RATE - NON-GAAP approx. 31%
GENZ GAAP EPS approx. $2.75
AMORTIZATION approx. $0.55
FAS123 EXPENSE approx. $0.60
CONTINGENT CONVERTIBLE DEBT approx. $0.10
**GENZ NON-GAAP EPS $4.00
***WTD AVERAGE SHARES O/S approx. 274
CAPITAL EXPENDITURES approx. $500
This financial guidance, which is provided as part of a press release
dated
*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
