-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gq1qCPrAiZgoRQWb5Q2oo73RGCaU98zchvc0IgCnkFM+grJYN2dZLO7PlB7Rlirx Q5h20PsEuk1qQ9hNN/+IPA== 0000318771-96-000007.txt : 19960629 0000318771-96-000007.hdr.sgml : 19960629 ACCESSION NUMBER: 0000318771-96-000007 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960627 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENENTECH INC CENTRAL INDEX KEY: 0000318771 STANDARD INDUSTRIAL CLASSIFICATION: MEDICINAL CHEMICALS & BOTANICAL PRODUCTS [2833] IRS NUMBER: 942347624 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09813 FILM NUMBER: 96587281 BUSINESS ADDRESS: STREET 1: 460 POINT SAN BRUNO BLVD CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 BUSINESS PHONE: 4152251000 MAIL ADDRESS: STREET 1: 460 POINT SAN BRUNO BLVD STREET 2: . CITY: SOUTH SAN FRANCISCO STATE: CA ZIP: 94080 11-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended: December 31, 1995 ___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________ to ___________. Commission file number: 1-9813 GENENTECH, INC. TAX REDUCTION INVESTMENT PLAN (Full title of the Plan) GENENTECH, INC. (Name of issuer of the securities held pursuant to the Plan) 460 Point San Bruno Boulevard South San Francisco, California 94080 (address of principal executive office) Genentech, Inc. Tax Reduction Investment Plan Index to Financial Statements
Item Page No. __________________________________________________________ _________ Statement Of Net Assets Available For Benefits With Fund Information at December 31, 1995 and 1994 3-4 Statement Of Changes in Net Assets Available For Benefits With Fund Information for Years Ended December 31, 1995 and 1994 5-8 Notes to Financial Statements 9-14 Report of Ernst & Young LLP, Independent Auditors 15 Signatures 16
Page 2 Genentech, Inc. Tax Reduction Investment Plan Statement Of Net Assets Available For Benefits With Fund Information December 31, 1995
FIDELITY FIDELITY GROWTH FIDELITY FIDELITY GENENTECH MAGELLAN COMPANY GROWTH & INTERMEDIATE STOCK FUND FUND FUND INCOME FUND BOND FUND ___________ ___________ ___________ ___________ ___________ ASSETS: Investments, at fair value $ 9,153,498 $30,153,976 $11,291,205 $18,106,286 $ 2,428,446 Contribution receivable from Genentech, Inc. 459,360 1,493,479 719,731 994,786 159,680 ___________ ___________ ___________ ___________ ___________ Net assets available for benefits $ 9,612,858 $31,647,455 $12,010,936 $19,101,072 $ 2,588,126 =========== =========== =========== =========== =========== FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY ASSET ASSET ASSET OVERSEAS BALANCED MANAGER MANAGER: MANAGER: FUND FUND FUND GROWTH FUND INCOME FUND ___________ ___________ __________ ___________ ___________ ASSETS: Investments, at fair value $ 3,238,236 $13,340,101 $ 719,994 $ 576,120 $ 193,856 Contribution receivable from Genentech, Inc. 272,473 646,863 63,926 66,657 20,398 ___________ ___________ __________ ___________ ___________ Net assets available for benefits $ 3,510,709 $13,986,964 $ 783,920 $ 642,777 $ 214,254 =========== =========== ========== =========== =========== FIDELITY RETIREMENT FIDELITY MONEY U.S. EQUITY PARTICIPANT MARKET FUND INDEX FUND LOANS TOTAL ___________ ___________ ___________ ____________ ASSETS: Investments, at fair value $ 9,077,890 $ 2,653,009 $ 2,439,890 $103,372,507 Contribution receivable from Genentech, Inc. 526,864 166,368 - 5,590,585 ___________ ___________ ___________ ____________ Net assets available for benefits $ 9,604,754 $ 2,819,377 $ 2,439,890 $108,963,092 =========== =========== =========== ============ See accompanying notes.
Page 3 Genentech, Inc. Tax Reduction Investment Plan Statement Of Net Assets Available For Benefits With Fund Information December 31, 1994
FIDELITY FIDELITY GROWTH FIDELITY FIDELITY GENENTECH MAGELLAN COMPANY GROWTH & INTERMEDIATE STOCK FUND FUND FUND INCOME FUND BOND FUND ___________ ___________ ___________ __________ ____________ ASSETS: Investments, at fair value $ 9,090,200 $18,511,180 $ 4,725,960 $ 9,837,949 $ 1,567,685 Contribution receivable from Genentech, Inc. 560,300 1,211,006 433,460 782,252 130,119 ___________ ___________ ___________ ___________ ___________ Net assets available for benefits $ 9,650,500 $19,722,186 $ 5,159,420 $10,620,201 $ 1,697,804 =========== =========== =========== =========== =========== FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY ASSET ASSET ASSET OVERSEAS BALANCED MANAGER MANAGER: MANAGER: FUND FUND FUND GROWTH FUND INCOME FUND ___________ ___________ __________ ___________ ___________ ASSETS: Investments, at fair value $ 3,079,304 $12,769,920 $ 379,027 $ 479,134 $ 100,471 Contribution receivable from Genentech, Inc. 302,190 760,508 31,127 47,757 10,507 ___________ ___________ __________ ___________ ___________ Net assets available for benefits $ 3,381,494 $13,530,428 $ 410,154 $ 526,891 $ 110,978 =========== =========== ========== =========== =========== FIDELITY RETIREMENT FIDELITY MONEY U.S. EQUITY PARTICIPANT MARKET FUND INDEX FUND LOANS TOTAL ___________ ___________ ___________ ___________ ASSETS: Investments, at fair value $7,476,596 $ 766,488 $ 2,108,168 $70,892,082 Contribution receivable from Genentech, Inc. 695,091 72,703 - 5,037,020 ___________ ___________ ___________ ___________ Net assets available for benefits $8,171,687 $ 839,191 $ 2,108,168 $75,929,102 =========== =========== =========== =========== See accompanying notes.
Page 4 Genentech, Inc. Tax Reduction Investment Plan Statement Of Changes In Net Assets Available For Benefits With Fund Information Year Ended December 31, 1995
FIDELITY FIDELITY GROWTH FIDELITY FIDELITY GENENTECH MAGELLAN COMPANY GROWTH & INTERMEDIATE STOCK FUND FUND FUND INCOME FUND BOND FUND ___________ ___________ ___________ ___________ ___________ Investment income: Interest and dividends $ - $ 1,715,515 $ 502,859 $ 850,049 $ 132,127 Realized/unrealized gain 1,344,329 5,870,835 1,972,702 3,470,977 118,389 ___________ ___________ ___________ ___________ ___________ Total investment income 1,344,329 7,586,350 2,475,561 4,321,026 250,516 Contributions: Basic 1,143,846 2,910,678 1,273,734 1,946,677 310,787 Rollover 261,754 333,612 216,167 229,046 34,878 Match 459,360 1,493,959 720,374 995,699 159,680 ___________ ___________ ___________ ___________ ___________ Total contributions 1,864,960 4,738,249 2,210,275 3,171,422 505,345 Distributions (423,696) (1,801,816) (541,503) (619,711) (56,264) Administrative fees - (483) (312) (837) (388) Transfers between funds (2,823,235) 1,402,969 2,707,495 1,608,971 191,113 ___________ ___________ ___________ ___________ ___________ Net change during the year (37,642) 11,925,269 6,851,516 8,480,871 890,322 Net assets available for benefits: Beginning of year 9,650,500 19,722,186 5,159,420 10,620,201 1,697,804 ___________ ___________ ___________ ___________ ___________ End of year $ 9,612,858 $31,647,455 $12,010,936 $19,101,072 $ 2,588,126 =========== =========== =========== =========== =========== FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY ASSET ASSET ASSET OVERSEAS BALANCED MANAGER MANAGER: MANAGER: FUND FUND FUND GROWTH FUND INCOME FUND ___________ ___________ ___________ ___________ ___________ Investment income: Interest and dividends $ 75,747 $ 591,831 $ 18,933 $ 8,503 $ 7,705 Realized/unrealized gain 227,256 1,308,728 82,033 95,392 15,324 ___________ ___________ ___________ ___________ ___________ Total investment income 303,003 1,900,559 100,966 103,895 23,029 Contributions: Basic 701,074 1,497,445 137,436 172,501 41,767 Rollover 46,623 72,763 53,228 51,973 16,076 Match 272,473 647,176 63,926 66,657 20,398 ___________ ___________ ___________ ___________ ___________ Total contributions 1,020,170 2,217,384 254,590 291,131 78,241 Distributions (198,043) (789,539) (15,891) (1,712) (1,239) Administrative fees - (1,938) - (25) - Transfers between funds (995,915) (2,869,930) 34,101 (277,403) 3,245 ___________ ___________ ___________ ___________ ___________ Net change during the year 129,215 456,536 373,766 115,886 103,276 Net assets available for benefits: Beginning of year 3,381,494 13,530,428 410,154 526,891 110,978 ___________ ___________ ___________ ___________ ___________ End of year $ 3,510,709 $13,986,964 $ 783,920 $ 642,777 $ 214,254 =========== =========== =========== =========== ===========
Page 5 Genentech, Inc. Tax Reduction Investment Plan Statement Of Changes In Net Assets Available For Benefits With Fund Information Year Ended December 31, 1995
FIDELITY RETIREMENT FIDELITY MONEY U.S. EQUITY PARTICIPANT MARKET FUND INDEX FUND LOANS TOTAL ___________ ___________ ___________ ____________ Investment income: Interest and dividends $ 499,820 $ 52,206 $ 202,900 $ 4,658,195 Realized/unrealized gain - 442,105 - 14,948,070 ___________ ___________ ___________ ____________ Total investment income 499,820 494,311 202,900 19,606,265 Contributions: Basic 1,167,442 289,759 - 11,593,146 Rollover 32,259 78,812 - 1,427,191 Match 536,574 166,368 - 5,602,644 ___________ ___________ ___________ ____________ Total contributions 1,736,275 534,939 - 18,622,981 Distributions (643,106) (37,321) (57,769) (5,187,610) Administrative fees (3,450) (213) - (7,646) Transfers between funds (156,472) 988,470 186,591 - ___________ ___________ ___________ ____________ Net change during the year 1,433,067 1,980,186 331,722 33,033,990 Net assets available for benefits: Beginning of year 8,171,687 839,191 2,108,168 75,929,102 ___________ ___________ ___________ ____________ End of year $ 9,604,754 $ 2,819,377 $ 2,439,890 $108,963,092 =========== =========== =========== ============ See accompanying notes.
Page 6 Genentech, Inc. Tax Reduction Investment Plan Statement Of Changes In Net Assets Available For Benefits With Fund Information Year Ended December 31, 1994
FIDELITY FIDELITY GROWTH FIDELITY FIDELITY GENENTECH MAGELLAN COMPANY GROWTH & INTERMEDIATE STOCK FUND FUND FUND INCOME FUND BOND FUND ___________ ___________ ___________ ___________ ___________ Investment income: Interest and dividends $ - $ 714,604 $ 184,569 $ 685,781 $ 114,297 Realized/unrealized loss (866,955) (1,093,888) (291,449) (510,850) (149,764) ___________ ___________ ___________ ___________ ___________ Total investment income (loss) (866,955) (379,284) (106,880) 174,931 (35,467) Contributions: Basic 1,071,061 2,667,629 970,509 1,573,614 290,105 Rollover 210,014 329,653 152,702 133,718 61,131 Match 560,300 1,211,006 433,460 782,252 130,119 ___________ ___________ ___________ ___________ ___________ Total contributions 1,841,375 4,208,288 1,556,671 2,489,584 481,355 Distributions (296,105) (1,122,164) (214,079) (462,304) (63,090) Administrative fees - (263) (138) (488) (213) Transfers between funds 575,378 (123,045) 20,576 81,786 (320,668) ___________ ___________ ___________ ___________ ___________ Net change during the year 1,253,693 2,583,532 1,256,150 2,283,509 61,917 Net assets available for benefits: Beginning of year 8,396,807 17,138,654 3,903,270 8,336,692 1,635,887 ___________ ___________ ___________ ___________ ___________ End of year $9,650,500 $19,722,186 $5,159,420 $10,620,201 $1,697,804 =========== =========== =========== =========== =========== FIDELITY FIDELITY FIDELITY FIDELITY FIDELITY ASSET ASSET ASSET OVERSEAS BALANCED MANAGER MANAGER: MANAGER: FUND FUND FUND GROWTH FUND INCOME FUND ___________ ____________ ___________ ___________ ___________ Investment income: Interest and dividends $ 51,194 $ 415,428 $ 6,639 $ 11,389 $ 2,387 Realized/unrealized loss (89,011) (1,161,346) (17,164) (27,207) (3,234) ___________ ____________ ___________ ___________ __________ Total investment income (loss) (37,817) (745,918) (10,525) (15,818) (847) Contributions: Basic 558,867 1,710,194 35,174 46,145 7,013 Rollover 115,244 129,549 17,876 26,360 15,792 Match 302,190 760,508 31,127 47,757 10,507 ___________ ____________ ___________ ___________ __________ Total contributions 976,301 2,600,251 84,177 120,262 33,312 Distributions (95,208) (426,289) (11) (222) - Administrative fees - (1,075) - - - Transfers between funds 1,089,094 (1,695,378) 336,513 422,669 78,513 ___________ ____________ ___________ ___________ __________ Net change during the year 1,932,370 (268,409) 410,154 526,891 110,978 Net assets available for benefits: Beginning of year 1,449,124 13,798,837 - - - ___________ ____________ ___________ ___________ __________ End of year $3,381,494 $13,530,428 $ 410,154 $ 526,891 $ 110,978 =========== ============ =========== =========== ==========
Page 7 Genentech, Inc. Tax Reduction Investment Plan Statement Of Changes In Net Assets Available For Benefits With Fund Information Year Ended December 31, 1994
FIDELITY RETIREMENT FIDELITY MONEY U.S. EQUITY PARTICIPANT MARKET FUND INDEX FUND LOANS TOTAL ___________ ___________ ___________ ___________ Investment income: Interest and dividends $ 284,770 $ 22,532 $ 164,622 $2,658,212 Realized/unrealized loss - (19,448) - (4,230,316) ___________ ___________ ___________ ___________ Total investment income (loss) 284,770 3,084 164,622 (1,572,104) Contributions: Basic 1,064,080 169,751 - 10,164,142 Rollover 105,180 59,664 - 1,356,883 Match 695,091 72,703 - 5,037,020 ___________ ___________ ___________ ___________ Total contributions 1,864,351 302,118 - 16,558,045 Distributions (265,257) (15,510) (37,377) (2,997,616) Administrative fees (2,369) (125) - (4,671) Transfers between funds (424,179) (89,826) 48,567 - ___________ ___________ ___________ ___________ Net change during the year 1,457,316 199,741 175,812 11,983,654 Net assets available for benefits: Beginning of year 6,714,371 639,450 1,932,356 63,945,448 ___________ ___________ ___________ ___________ End of year $ 8,171,687 $ 839,191 $ 2,108,168 $75,929,102 =========== =========== =========== =========== See accompanying notes.
Page 8 Genentech, Inc. Tax Reduction Investment Plan Notes to Financial Statements (1) Description of the Plan: The following description of the Genentech, Inc. Tax Reduction Investment Plan ("Plan") provides only general information. Participants should refer to the Plan document for a more complete description of the Plan's provisions. See footnote (6) for a summary of Plan amendments subsequent to December 31, 1995. The Plan was established, effective January 1, 1985, by Genentech, Inc. ("Company") for the benefit of eligible employees of the Company in order to provide them with a means of supplementing their retirement income on a tax- favored basis, an incentive to continue and increase their efforts to contribute to the success of the Company, and an opportunity to acquire an equity interest in the Company. The Plan accomplishes this through a savings program which is based on systematic salary reductions. The employee's salary is reduced by the amount elected to be saved on a pre-tax basis. The "deferred" part of the employee's salary is then invested in the Plan. An individual employee's account is credited with earnings or losses on a pro rata basis as the actual investment funds report their earnings performance. Individuals eligible to participate under the Plan must be employees of the Company or employees of an affiliate of the Company that adopts the Plan with the approval of the Board of Directors. However, the following employees or classes of employees are not eligible to participate: (i) any employee who is classified as temporary by the Company, unless such employee has completed at least 1,000 hours of service in a 12-month period; (ii) any part-time employee normally scheduled to work less than 20 hours per week, unless such employee has completed at least 1,000 hours of service in a 12-month period; (iii) any employee who is a member of a collective bargaining unit and who is covered by a collective bargaining agreement where retirement benefits were the subject of good faith bargaining; (iv) any individual employed by any corporation or other business entity that is merged or liquidated into the Company, unless the Company designates such employees as eligible employees; (v) any employee paid from a non-U.S. payroll; or (vi) any leased employee as defined under the Internal Revenue Code of 1986, as amended ("Code"). The Board of Directors of the Company has the right under the Plan to alter, amend or terminate the Plan, or any part thereof, in such a manner as it may determine. If the Plan is terminated, the interests of all Plan members remain fully (100%) vested and nonforfeitable. The balances credited to their accounts shall remain with the plan trustee until they become distributable in accordance with the Plan. The Company matches a portion of employee contributions, up to a maximum of 4% of a participant's eligible compensation ("Match"). The Match is effective December 31st of each year ("Effective Date") and contributions under the Match are fully vested at that time. The Match is funded in the first quarter of the subsequent year. In the first quarter of 1996 and 1995, the Company contributed approximately $5.6 million and $5.0 million, respectively, to the Plan in accordance with the terms of the Match. The plan trustee is Fidelity Management Trust Company ("Plan Trustee"). All amounts contributed to the Plan are deposited in a trust account with the Plan Trustee. The Plan Trustee's fees and expenses are paid by the Company and are not charged to the Plan. Accounts of terminated employees are charged an annual fee of $50.00 by the Company. The Plan Trustee has blanket bond insurance covering the full market value of the securities and investments of which it has custody. Page 9 Genentech, Inc. Tax Reduction Investment Plan Notes to Financial Statements In 1995 and 1994, each participant in the Plan could elect to defer up to the lower of $9,240 or 15% of his or her eligible compensation, except that highly compensated employees were limited to the lower of $9,240 or 9% of eligible compensation in both years in accordance with the Code. For the plan years 1995 and 1994, each participant directs the investment of his or her contributions in any of the following twelve investment funds of the Plan (or any combination thereof): Genentech Stock Fund This fund invests primarily in the callable putable common stock of the Company, which is purchased at full market price. The callable putable common stock of the Company does not currently pay dividends; therefore the return on this fund is dependent solely on the performance of the stock. Fidelity Magellan Fund The Fidelity Magellan Fund is a mutual fund managed by Fidelity Management and Research Company ("FMR"). The fund invests primarily in the stocks of domestic and foreign growth companies. Fidelity Growth Company Fund The Fidelity Growth Company Fund is a mutual fund managed by FMR. It invests primarily in common stock and securities convertible into common stock of companies which it believes have above-average growth characteristics. Fidelity Growth & Income Fund The Fidelity Growth & Income Fund is a mutual fund managed by FMR, which invests primarily in securities of companies that offer growth of earnings potential while paying current dividends. Fidelity Intermediate Bond Fund The Fidelity Intermediate Bond Fund is a mutual fund managed by FMR. The fund invests in high and upper-medium grade corporate debt obligations with intermediate maturities, as well as obligations of the U.S. government and its agencies and U.S. banks. Fidelity Overseas Fund The Fidelity Overseas Fund is a mutual fund managed by FMR. The fund invests in foreign securities including common stock, securities convertible to common stock and debt instruments of foreign businesses and governments. Fidelity Balanced Fund The Fidelity Balanced Fund is a mutual fund managed by FMR that invests in high-quality bonds and high-yielding stocks. It is a growth and income fund that seeks a high level of income while preserving capital. Fidelity Asset Manager Fund The Fidelity Asset Manager Fund is a mutual fund managed by FMR. The Asset Manager Fund allocates its assets among domestic and foreign equities, bonds and short-term instruments, attempting to achieve a high total return with reduced risk over the long-term. Page 10 Genentech, Inc. Tax Reduction Investment Plan Notes to Financial Statements Fidelity Asset Manager: Growth Fund The Fidelity Asset Manager: Growth mutual fund, managed by FMR, invests in domestic and foreign stocks, bonds and short-term instruments, and seeks to maximize its total long-term return. Fidelity Asset Manager: Income Fund The Fidelity Asset Manager: Income Fund is a mutual fund managed by FMR which invests in income-producing domestic and foreign stocks, bonds and short-term instruments, with the goal of achieving a high level of current income. Fidelity Retirement Money Market Fund The Fidelity Retirement Money Market Fund is a mutual fund managed by FMR. It invests in high-quality United States dollar-denominated money market instruments of U.S. and foreign issuers, including short-term corporate obligations, U.S. government obligations and certificates of deposit. Fidelity U.S. Equity Index Fund The Fidelity U.S. Equity Index Fund, a mutual fund managed by FMR, invests mostly in the common stocks of the 500 companies that make up the Standard & Poor's 500 Index. Participant Loans Loans are made only to Plan participants, at fixed interest rates 2% above the then current bank prime interest rate, subject to certain restrictions, principally related to a participant's account balance, permissible loan amount, and repayment through payroll withholding. Loans are repaid through monthly payroll deductions over three or five years. Conditions of Withdrawal Distributions under the Plan will be made upon a participant's death, disability, retirement or other termination of employment with the Company, attainment of age 70-1/2, or authorized exercise of his or her withdrawal rights under the Plan (subject in all cases to regulation under the Code requiring the participant's consent to distribution unless he or she has attained age 62 or the balance credited to his or her account under the Plan does not exceed $3,500). Distributions are made upon receipt by the Plan administrator of the participant's or beneficiary's election directing the method of distribution. Prior to termination of employment with the Company, the Plan administrator may grant a participant's request for a withdrawal if either (i) the Plan administrator makes a determination that such withdrawal is necessary in light of the immediate and heavy financial needs of the participant and is in accordance with the requirements of the Code and regulations promulgated thereunder; or (ii) the participant is over age 59-1/2 at the time of withdrawal. (2) Summary of Significant Accounting Policies: Investment Valuation Investments are stated at market value at year end. Market values are determined as follows: The Genentech Stock Fund, Fidelity Magellan Fund, Fidelity Growth Company Fund, Fidelity Growth & Income Fund, Fidelity Intermediate Bond Fund, Fidelity Overseas Fund, Fidelity Balanced Fund, Fidelity Asset Manager Fund, Fidelity Asset Manager: Growth Fund, Fidelity Asset Manager: Income Fund, and Fidelity U.S. Equity Index Fund securities are Page 11 Genentech, Inc. Tax Reduction Investment Plan Notes to Financial Statements valued at the last reported sales price on the last business day of the year, which represent the net asset values of shares held by the Plan at year end; the Fidelity Retirement Money Market Fund portfolio instruments are valued on the basis of historical cost which approximates fair value; and the Participant Loans are valued on the basis of cost, which approximates fair value. Contributions Basic contributions are accrued and vested when deducted from employee pay; the Match is accrued and vested on the Effective Date; and qualified rollover contributions are vested when received by the Plan Trustee. Contributions are invested pursuant to participants' directions to the Plan Trustee after receipt of contributions by the Plan Trustee. Participants may change the amount of contributions (as a percentage reduction of pre-tax eligible compensation) on a quarterly basis. Transfers between funds and changes in investment allocations can be made up to ten times per year on a daily basis effective upon request by the participant to Plan Trustee, except that transfers in and out of the Genentech Stock Fund are effected on a monthly cycle. Distributions Distributions are recorded when paid. Other All security transactions are recorded on the trade date. Gains and losses on the disposals of investments are determined based on the average cost of all securities. Dividend income is recorded on the effective date of a declared dividend. Income from other investments is recorded as earned on an accrual basis. Administrative costs of the Plan incurred by the Company are paid by the Company and are not charged to the Plan, with the exception of a $50.00 annual fee which is charged to the accounts of terminated employees who remain Plan participants. (3) Income Tax Status: The Internal Revenue Service ruled on April 29, 1988 that the December 21, 1984 Plan, as amended, qualified in form under Section 401(a) of the Code and the underlying trust is, therefore, exempt from federal income taxes under Section 501(a) of the Code. The Plan is required to operate in conformity with the Code to maintain its qualification. The Plan was subsequently audited and accepted by the Internal Revenue Service with no change through December 31, 1990. In December, 1990, an amended and restated Plan, effective as of January 1, 1991, was adopted by the Board of Directors of the Company. Effective as of June 30, 1991 and October 7, 1993, the first and second amendments, respectively, to the amended and restated Plan were adopted. In January 1994, the second restatement of the Plan was adopted effective January 1, 1994. On September 25, 1995, the Internal Revenue Service issued a favorable determination letter, ruling that the current restated Plan and related trust meet the requirements of Section 401(a) of the Internal Revenue Code, as amended, and, as such, are exempt from federal income tax. The Company is not aware of any events which would cause the Plan to become disqualified in operation. (4) Related Party Transactions: Certain of the investment funds are managed by FMR, an affiliate of the Plan Trustee. Because of this relationship, transactions involving these funds qualify as party-in-interest transactions. Page 12 Genentech, Inc. Tax Reduction Investment Plan Notes to Financial Statements
(5) Assets held for investment at December 31, 1995 were as follows: Number of Name of Issuer Shares or Fair and Title of Principal Amount Cost Value __________________________________________ ___________ ____________ ___________ GENENTECH STOCK FUND Genentech, Inc. - Callable Putable Common Stock......... 172,708 $ 6,577,632 $ 9,153,498 FIDELITY MAGELLAN FUND Fidelity Magellan Fund.................. 350,709 25,097,253 30,153,976 FIDELITY GROWTH COMPANY FUND Fidelity Growth Company Fund ........... 311,138 9,642,678 11,291,205 FIDELITY GROWTH & INCOME FUND Fidelity Growth & Income Fund .......... 669,364 14,823,959 18,106,286 FIDELITY INTERMEDIATE BOND FUND Fidelity Intermediate Bond Fund......... 233,280 2,409,803 2,428,446 FIDELITY OVERSEAS FUND Fidelity Overseas Fund ................. 111,394 3,029,842 3,238,236 FIDELITY BALANCED FUND Fidelity Balanced Fund ................. 986,694 12,505,533 13,340,101 FIDELITY ASSET MANAGER FUND Fidelity Asset Manager Fund ............ 45,425 658,356 719,994 FIDELITY ASSET MANAGER: GROWTH FUND Fidelity Asset Manager: Growth Fund .... 37,978 518,314 576,120 FIDELITY ASSET MANAGER: INCOME FUND Fidelity Asset Manager: Income Fund ... 16,712 184,620 193,856 FIDELITY RETIREMENT MONEY MARKET FUND Retirement Money Market Fund............ 9,077,890 9,077,890 9,077,890 FIDELITY U.S. EQUITY INDEX FUND Fidelity U.S. Equity Index Fund ........ 117,546 2,217,233 2,653,009 PARTICIPANT LOANS Loans receivable from participants ..... $2,439,890 2,439,890 2,439,890 ___________ ____________ TOTAL INVESTMENTS ........................ $89,183,003 $103,372,507 =========== ============
Page 13 (6) Subsequent Event: On May 8, 1996, the Plan was restated. The most significant amendments to the Plan are summarized here. Many of the administrative functions related to the Plan, including loan processing, changing deferral percentages, stopping or starting salary deferrals, and processing distributions are now performed by the Trustee rather than the Company. The term of a loan from a participant's account may now extend up to 15 years if the loan proceeds are used to purchase a principal residence. There is no longer a limit on the number of times employees may change their salary deferral percentage. The Genentech Stock Fund now invests a small percentage of the fund (approximately 2%, although the percentage may vary over time) in a short-term money market investment fund to provide liquidity for the timely settlement of trades. Participants may now transfer in or out of the Genentech Stock Fund as frequently, and on the same basis, as they can transfer in and out of the other funds of the Plan. Page 14 Report of Ernst & Young LLP, Independent Auditors To the Participants and Plan Administration Committee of the Genentech, Inc. Tax Reduction Investment Plan We have audited the accompanying statements of net assets available for benefits of the Genentech, Inc. Tax Reduction Investment Plan as of December 31, 1995 and 1994, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Genentech, Inc. Tax Reduction Investment Plan at December 31, 1995 and 1994, and the changes in its net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. The accompanying supplemental schedules of assets held for investment purposes as of December 31, 1995 and of reportable transactions for the year then ended are presented for purposes of complying with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, and are not a required part of the basic financial statements. The Fund Information in the statement of net assets available for benefits and the statement of changes in net assets available for benefits is presented for purposes of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of each fund. The supplemental schedules and Fund Information have been subjected to the auditing procedures applied in our audit 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. ERNST & YOUNG LLP San Jose, California June 5, 1996 Page 15 Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan administrator has duly caused this annual report to be signed by the undersigned hereunto duly authorized. Genentech, Inc. Tax Reduction Investment Plan by Genentech, Inc., Plan Administrator By: /S/MARTY GLICK Date: June 27, 1996 ___________________________________ Marty Glick Vice President and Treasurer and Plan Administration Committee Member for Genentech, Inc. Tax Reduction Investment Plan By: /S/LOUIS J. LAVIGNE, JR. Date: June 27, 1996 ___________________________________ Louis J. Lavigne, Jr. Senior Vice President and Chief Financial Officer and Plan Administration Committee Member for Genentech, Inc. Tax Reduction Investment Plan Page 16 Index of Supplemental Schedules Filed with Form 11-K For the Year Ended December 31, 1995
Sequential Schedule Description Page Numbers ________ ___________________________________ ____________ I Assets Held for Investment Purposes 18 II Schedule of Reportable Transactions 19
Page 17 SCHEDULE I Genentech, Inc. Tax Reduction Investment Plan Item 27a Schedule of Assets Held For Investment Purposes December 31, 1995
Description Current Identity of Issue of Investment Cost Value ________________________________________ _________________ ____________ ___________ * GENENTECH STOCK FUND Genentech, Inc. - Common stock - Callable Putable Common Stock ....... 172,708 shares $ 6,577,632 $ 9,153,498 * FIDELITY MAGELLAN FUND Mutual fund - Fidelity Magellan Fund ............... 350,709 shares 25,097,253 30,153,976 * FIDELITY GROWTH COMPANY FUND Mutual fund - Fidelity Growth Company Fund ......... 311,138 shares 9,642,678 11,291,205 * FIDELITY GROWTH & INCOME FUND Mutual fund - Fidelity Growth & Income Portfolio ... 669,364 shares 14,823,959 18,106,286 * FIDELITY INTERMEDIATE BOND FUND Mutual fund - Fidelity Intermediate Bond Fund ...... 233,280 shares 2,409,803 2,428,446 * FIDELITY OVERSEAS FUND Mutual fund - Fidelity Overseas Fund ............... 111,394 shares 3,029,842 3,238,236 * FIDELITY BALANCED FUND Mutual fund - Fidelity Balanced Fund ............... 986,694 shares 12,505,533 13,340,101 * FIDELITY ASSET MANAGER FUND Mutual fund - Fidelity Asset Manager Fund .......... 45,425 shares 658,356 719,994 * FIDELITY ASSET MANAGER: GROWTH FUND Mutual fund - Fidelity Asset Manager: Growth Fund .. 37,978 shares 518,314 576,120 * FIDELITY ASSET MANAGER: INCOME FUND Mutual fund - Fidelity Asset Manager: Income Fund .. 16,712 shares 184,620 193,856 * FIDELITY RETIREMENT MONEY MARKET FUND Mutual fund - Retirement Money Market Fund ......... 9,077,890 shares 9,077,890 9,077,890 * FIDELITY U.S. EQUITY INDEX FUND Mutual fund - Fidelity U.S. Equity Index Portfolio . 117,546 shares 2,217,233 2,653,009 * PARTICIPANT LOANS Loans receivable from participants ... (1) 2,439,890 2,439,890 ___________ ____________ TOTAL INVESTMENTS ...................... $89,183,003 $103,372,507 =========== ============ (1) Maturing at various dates through 2000 at interest rates ranging from 7.25% to 12.0%. * Party-in-interest.
Page 18 SCHEDULE II Genentech, Inc. Tax Reduction Investment Plan Item 27d Schedule of Reportable Transactions For the Year ended December 31, 1995
Purchases Sales _________________________ _________________________________________________ Number of Dollar Number of Purchase Selling Realized Description Transactions Value Transactions Price Price Gain/Loss of Asset ____________________________ __________ ____________ __________ __________ _________ Genentech Stock 95 $2,783,639 55 $3,291,872 $4,059,871 $767,999 Fidelity Magellan Fund 194 9,993,394 132 3,484,039 4,221,432 737,393 Fidelity Growth Company Fund 184 5,688,058 102 942,371 1,095,515 153,144 Fidelity Growth & Income Fund 187 6,902,144 116 1,879,111 2,104,784 225,673 Fidelity Balanced Fund 167 3,349,575 133 3,974,829 4,088,122 113,293 Fidelity Retirement Money Market Fund 163 4,992,588 142 3,391,294 3,391,294 - Reportable transactions include any series of transactions that in the aggregate exceed five percent of the fair market value of Plan assets at the beginning of the year. The transactions can occur on a daily basis. These transactions represent Category (iii) reportable transactions in accordance with Department of Labor regulations. There were no other reportable transactions during 1995.
Page 19 Genentech, Inc. Tax Reduction Investment Plan Index of Exhibits Filed with Form 11-K For the Year Ended December 31, 1995
Sequential Exhibit Number Description Page Numbers ________________ ______________________________________________ ____________ 23 Consent of Ernst & Young LLP, Independent Auditors, filed with this document 21
Page 20 EX-23 2 EXHIBIT 23 Consent of Ernst & Young LLP, Independent Auditors We consent to the incorporation by reference in the Registration Statement on Form S-8 pertaining to the Genentech, Inc. Tax Reduction Investment Plan of our report dated June 5, 1996, with respect to the financial statements and supplemental schedules of the Genentech, Inc. Tax Reduction Investment Plan included in this Annual Report (Form 11-K) for the year ended December 31, 1995. ERNST & YOUNG LLP San Jose, California June 27, 1996 -----END PRIVACY-ENHANCED MESSAGE-----