-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, DzaNij0YOMb+PrM0O//C8ExV72G1FSGiYxA4XVJdVKj/VLVPY4uBdUUXDbQdO6zm m15sNjNJi/q+cWuEH1F5zA== 0000318771-95-000008.txt : 19950516 0000318771-95-000008.hdr.sgml : 19950516 ACCESSION NUMBER: 0000318771-95-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950515 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: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09813 FILM NUMBER: 95539410 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 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q (Mark One) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. For the quarterly period ended March 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. (Exact name of registrant as specified in its charter) Delaware 94-2347624 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification number) 460 Point San Bruno Boulevard, South San Francisco, California 94080 (Address of principal executive offices and zip code) (415) 225-1000 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock $.02 par value 67,133,409 Class Outstanding at March 31, 1995 Redeemable Common Stock $.02 par value 50,447,727 Class Outstanding at March 31, 1995 GENENTECH, INC. INDEX PART I. FINANCIAL INFORMATION PAGE NO. Condensed Consolidated Statements of Income - for the three months ended March 31, 1995 and 1994 3 Condensed Consolidated Statements of Cash Flows - for the three months ended March 31, 1995 and 1994 4 Condensed Consolidated Balance Sheets - March 31, 1995 and December 31, 1994 5 Notes to Condensed Consolidated Financial Statements 6-8 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 Independent Accountants' Review Report 13 PART II. OTHER INFORMATION 14 SIGNATURES 15 Page 2 PART I. FINANCIAL INFORMATION GENENTECH, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (thousands, except per share amounts) (unaudited)
Three Months Ended March 31 ---------------------- 1995 1994 ---------- ---------- Revenues: Product sales $ 162,067 $ 147,798 Royalties 47,149 33,679 Contract and other 16,222 7,527 Interest 13,529 9,866 ---------- ---------- Total revenues 238,967 198,870 Costs and expenses: Cost of sales 26,750 22,131 Research and development 94,959 74,376 Marketing, general and administrative 64,323 60,111 Interest 1,871 1,778 ---------- ---------- Total costs and expenses 187,903 158,396 Income before taxes 51,064 40,474 Income tax provision 7,660 1,619 ---------- ---------- Net income $ 43,404 $ 38,855 ========== ========== Net income per share $ .36 $ .33 ========== ========== Weighted average number of shares used in computing per share amounts 120,493 118,806 ========== ========== > See notes to condensed consolidated financial statements.
Page 3 GENENTECH, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (thousands) (unaudited)
Three Months Ended March 31 ----------------------- 1995 1994 ---------- ---------- Cash flows from operating activities: Net income $ 43,404 $ 38,855 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 14,345 12,394 Gain on sales of securities available-for-sale (4,034) - Writedown of a security available-for-sale 427 - Net loss on fixed asset dispositions 2 99 Changes in assets and liabilities: Receivables and other current assets (27,272) 5,250 Inventories 8,900 (6,998) Accounts payable, other current liabilities and other long-term liabilities (16,754) (3,010) ---------- ---------- Net cash provided by operating activities 19,018 46,590 Cash flows from investing activities: Purchases of securities held-to-maturity (154,860) (316,849) Proceeds from maturities of securities held-to-maturity 316,319 220,917 Purchases of securities available-for-sale (139,276) - Proceeds from sales of securities available-for-sale 5,053 - Capital expenditures (9,558) (21,600) Increase in other assets (27,771) (186) ---------- ---------- Net cash used in investing activities (10,093) (117,718) Cash flows from financing activities: Stock issuances 9,062 13,003 Additions to long-term debt and short-term borrowings 25,624 - Repayment of long-term debt, including current portion (211) (191) ---------- ---------- Net cash provided by financing activities 34,475 12,812 ---------- ---------- Net increase (decrease) in cash and cash equivalents 43,400 (58,316) Cash and cash equivalents at beginning of period 66,713 117,473 ---------- ---------- Cash and cash equivalents at end of period $ 110,113 $ 59,157 ========== ========== See notes to condensed consolidated financial statements.
Page 4 GENENTECH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (thousands)
March 31, December 31, 1995 1994 ------------ ------------ ASSETS (unaudited) Current assets: Cash and cash equivalents $ 110,113 $ 66,713 Short-term investments 612,261 652,461 Accounts receivable, net 166,143 146,267 Inventories 94,300 103,200 Prepaid expenses and other current assets 33,386 28,475 ------------ ------------ Total current assets 1,016,203 997,116 Long-term marketable securities 219,975 201,726 Property, plant and equipment, less accumulated depreciation (1995-$232,844; 1994-$215,255) 482,117 485,293 Other assets 88,551 60,989 ------------ ------------ Total assets $ 1,806,846 $ 1,745,124 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts and notes payable $ 24,593 $ 30,963 Other current liabilities 181,209 189,536 ------------ ------------ Total current liabilities 205,802 220,499 Long-term debt 175,140 150,358 Other long-term liabilities 23,658 25,483 ------------ ------------ Total liabilities 404,600 396,340 Stockholders' equity: Preferred stock - - Redeemable common stock 1,009 1,002 Common stock 1,343 1,343 Other stockholders' equity 1,399,894 1,346,439 ------------ ------------ Total stockholders' equity 1,402,246 1,348,784 ------------ ------------ Total liabilities and stockholders' equity $ 1,806,846 $ 1,745,124 ============ ============ See notes to condensed consolidated financial statements.
Page 5 GENENTECH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1. Statement of Accounting Presentation In the opinion of Genentech, Inc. (the Company), the accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of adjustments of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three-month periods ended March 31, 1995 and 1994 are not necessarily indicative of the results that may be expected for the year ending December 31, 1995. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report to Stockholders for the year ended December 31, 1994. Note 2. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents. These debt instruments are recorded at amortized cost which approximates fair value. Note 3. Inventories Inventories at March 31, 1995 and December 31, 1994 are summarized below:
1995 1994 ---------- ---------- (thousands) Raw materials $ 13,697 $ 13,145 Work in process 66,275 76,974 Finished goods 14,328 13,081 ---------- ---------- Total $ 94,300 $ 103,200 ========== ========== Inventories are stated at the lower of cost or market. Cost is determined using a weighted-average approach which approximates the first-in, first-out method.
Note 4. Quasi-Reorganization On February 18, 1988 the Company's Board of Directors approved the elimination of the Company's accumulated deficit through an accounting reorganization of its stockholders' equity accounts (a quasi-reorganization) effective October 1, 1987 that did not involve any revaluation of assets or liabilities. The quasi-reorganization did not involve any revaluation of assets or liabilities because for similar classes of assets their fair values were no less than their book values and for similar classes of liabilities their book values were no less than their fair values. The accumulated deficit of $329.5 million was eliminated by a transfer from additional paid-in capital in an amount equal to the accumulated deficit. Simultaneously with the quasi- reorganization, the Company adopted Financial Accounting Standards Board Page 6 GENENTECH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Statement (FAS) 96. FAS 96 provided for recognition of the tax benefits of operating loss and tax credit carryforward items that arose prior to a quasi- reorganization involving only the elimination of a deficit in retained earnings being reported in the income statement and then being reclassified from retained earnings to additional paid-in capital. Subsequently, in September 1989, the staff of the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) 86 which states that a quasi- reorganization cannot involve only an elimination of a deficit in retained earnings and, therefore, the tax benefits of prior operating loss and tax credit carry-forwards must be reported as a direct addition to additional paid-in capital rather than being recorded in the income statement. In February 1992, the Financial Accounting Standards Board issued FAS 109, which supersedes FAS 96. FAS 109 requires companies that have previously both adopted FAS 96 and effected a quasi-reorganization that involves only a deficit elimination, as did the Company, to continue to report the tax benefits of prior operating losses and tax credit carryforwards in a manner consistent with FAS 96. FAS 109 also provides that companies effecting a quasi-reorganization after February 1992 that involves only a deficit elimination shall report the tax benefits of prior operating losses and tax credit carryforwards in a manner consistent with SAB 86. The Company will continue to report in income the recognition of operating loss and tax credit carryforward items arising prior to the quasi- reorganization due to the Company's adoption of its quasi-reorganization in the context of its interpretation of FAS 96 and the quasi-reorganization literature existing at the date the quasi-reorganization was effected. The SEC staff has indicated that it would not object to the Company's accounting for such tax benefits. If the provisions of SAB 86 had been applied, net income for the three months ended March 31, 1995 would have been reduced by approximately $10.0 million or $.08 per share (1994 - net income reduced by $13.6 million or $.11 per share). Note 5. Legal Proceedings The Company is a party to various legal proceedings including patent infringement cases involving human growth hormone, Activase and antibodies to IgE (a protein central to allergic reactions), and product liability cases involving Activase. The Company and its directors are defendants in two suits filed in California challenging their actions in connection with the Company's 1990 merger with a wholly owned subsidiary of Roche Holdings, Inc. (Roche). In addition, the Company, its directors, a former director and Roche are defendants in a number of suits filed in Delaware by certain individual shareholders purporting to represent shareholders as a class alleging, in general, breach of their fiduciary duties to the Company in connection with the proposed extension of Roche's option to cause the Company to redeem its Redeemable Common Stock and transactions related thereto. See also Note 6 - Subsequent Event - Roche Holdings, Inc. Based upon the nature of the claims made and the investigation completed to date by the Company and its counsel, the Company believes the outcome of the above actions will not have a material adverse effect on the financial position, results of operations or cash flows of the Company. Page 7 GENENTECH, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 6. Subsequent Event - Roche Holdings, Inc. On May 1, 1995 the Company announced a proposed agreement with Roche, subject to the approval of a majority of shares not held by Roche or its affiliates, to extend for four years Roche's option to cause Genentech to redeem the outstanding redeemable common stock of the Company at a predetermined price. The option price is set at $61.25 per share on July 1, 1995, increasing by $1.25 per share each quarter through June 30, 1997, and thereafter escalating at $1.50 per share each quarter, to $82.00 per share at the end of the option period on June 30, 1999. If Roche does not cause the redemption as of June 30, 1999, or the Company is insolvent, Genentech's stockholders will have the option to cause the Company to redeem some or all of their shares (and Roche will concurrently purchase a like number of shares of common stock at $60.00 per share) at $60.00 per share within thirty business days following July 1, 1999 and sixty business days in an insolvency situation. Under the agreement Roche may increase its ownership of the Company up to 79.9% by making purchases on the open market. Roche currently holds approximately 65% of the outstanding common equity of the Company. As part of the agreement, Roche will be granted an option at terms discussed below for ten years for licenses to use and sell certain of Genentech's products in non-U.S. markets. As a general matter, such option for a Genentech product must be exercised at, or prior to, the conclusion of Phase II clinical trials. If Roche exercises such an option, the Company and Roche will split equally all development expenses, including preclinical, clinical, process development and related expenses, both prospectively, and retroactively, incurred by the Company with respect to the development of the product in the United States. Roche will pay all non-U.S. development expenses. In general, Roche will pay a royalty of 12.5% until a product reaches $100 million in aggregate sales outside of the U.S., when the royalty rate increases to 15%. As part of the agreement, Roche will have exclusive rights to, and pay the Company 20% royalties on, Canadian sales of the Company's existing products, as well as European sales of Pulmozyme. The Company will supply its products to Roche for sales outside of the U.S. at cost plus 20 percent. Roche retains its right to cause the Company to redeem all of its redemmable common stock on or prior to June 30, 1995 at $60.00 per share. Note 7. Subsequent Event - Research and Development Arrangements In December 1994, the Company entered into a collaboration with Scios Nova Inc. (Scios Nova) for the development of Scios Nova's Auriculin for the treatment of acute renal failure, as previously disclosed. In May 1995, the preliminary results of the drug's Phase III clinical trials were announced, indicating that, except for a subpopulation of acute renal failure patients, the drug did not either decrease the need for dialysis or decrease mortality in the population studied. Subsequent to the announcement, the market price of Scios Nova's common stock lost approximately 46% of its value. Upon further analysis of the clinical data, Scios Nova and the Company will determine the next appropriate steps for the development of Auriculin. Subject to the outcome of this analysis, and the stock market's reaction to it, the decline in the market value of Scios Nova's common stock may be deemed to be other than temporary. If so, and based upon the current value of the shares of Scios Nova, the Company could record a loss on its investment in Scios Nova's stock of approximately $6 million in future periods. Page 8 GENENTECH, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL As discussed in Note 6 in the Notes to Condensed Consolidated Financial Statements, under the proposed agreement with Roche, Roche will have exclusive rights to Canadian sales of the Company's existing products, and European sales of Pulmozyme. In return the Company will receive royalties at the rate of 20% of sales. Roche will receive at commercial terms an option to collaborate on the development and sales of future drugs. Subject to stockholder approval of the agreement and Roche's exercise of rights to develop or sell the Company's products, product sales, royalties and contract revenue, as well as R & D and other expenses, could be significantly affected in future periods. RESULTS OF OPERATIONS (dollars in millions, except per share amounts)
Three Months Ended March 31 ------------------------------- REVENUES 1995 1994 % Change - --------- -------- -------- --------- Revenues $239.0 $198.9 20% ======== ======== ========= PRODUCT SALES - ---------------------- Activase $ 78.2 $ 70.2 11% Protropin and Nutropin 54.4 53.6 1 Pulmozyme 28.5 22.4 27 Actimmune 1.0 1.6 (38) -------- -------- --------- Total product sales $162.1 $147.8 10% ======== ======== =========
Sales of Activase, registered trademark, (Alteplase, recombinant) tissue- plasminogen activator increased 11% in the quarter ended March 31, 1995 compared to the quarter ended March 31, 1994. Total Activase sales in 1995 included $3.8 million of sales to Japanese licensees. Sales in the U.S. and Canada were higher due to an increase in the number of patients receiving thrombolytic therapy and the continued positive impact of the results of the worldwide Global Utilization of Activase and Streptokinase in Occluded Coronary Arteries (GUSTO) clinical trial. This international trial showed that a new accelerated infusion regimen for Activase was superior compared to another clot-dissolving agent for the management of acute myocardial infarction (heart attack). In April 1995, the Food and Drug Administration (FDA) approved for marketing the accelerated infusion of Activase, allowing revised labeling for the product incorporating data from the GUSTO study. Page 9 Sales of the Company's two growth hormone products - Protropin, registered trademark, (somatrem for injection) and Nutropin, registered trademark, (somatropin [rDNA origin] for injection)- increased to $54.4 million in the first quarter of 1995 from $53.6 million in the first quarter of 1994. In May 1995, a competitor received Food and Drug Administration approval to market its growth hormone product in the United States. Decreases in sales may occur as competitors enter the market. Sales of Pulmozyme, registered trademark, (dornase alfa), increased 27% in the first three months of 1995 over the comparable period in the prior year. The product was launched in the United States and Canada during the first quarter of 1994, and launched in Europe at the end of that quarter. The increase between quarters reflects market launches in additional European countries and continued adoption of this new therapy by physicians to treat cystic fibrosis patients. The Company currently markets the drug in the United States and, through its Canadian subsidiary, in Canada. Under the existing collaboration with F. Hoffmann-LaRoche, Ltd. (HLR), Genentech Europe Limited and its affiliates promote Pulmozyme in the United Kingdom, Ireland, the Netherlands and Germany, while HLR is responsible for promoting the product in the remaining Western European countries in the collaboration.
Three Months Ended March 31 ROYALTIES, CONTRACT AND ------------------------------ OTHER, AND INTEREST INCOME 1995 1994 % Change - ----------------------------- -------- -------- -------- Royalties $ 47.1 $33.7 40% Contract and other 16.2 7.5 116 Interest income 13.6 9.9 37
Royalty income increased primarily as a result of increases in licensees' net sales subject to royalties and the recognition of $7.5 million of royalties in the first quarter of 1995 relating to the December 1994 settlement with Eli Lilly and Company. The impact on total royalties of changes in foreign currency translation rates, net of gains and losses recognized on foreign exchange hedging instruments and the amortization of expense related to foreign currency options outstanding during the period, was not material. Contract revenues increased between quarters due to variations in the timing of contract benchmark achievements, varying payment amounts and the initiation of new arrangements. Other revenues in 1995 included $4.0 million of gains recorded from the sales of biotechnology equity securities owned by the Company. The increase in interest income occurred due to higher available interest rates and a larger investment portfolio in 1995. The total investment portfolio, consisting of cash, cash equivalents, short-term marketable securities and long-term marketable securities increased from $780.7 million as of March 31, 1994 to $942.3 million as of March 31, 1995. Page 10
Three Months Ended March 31 ------------------------------ COSTS AND EXPENSES 1995 1994 % Change - -------------------------- -------- -------- -------- Cost of sales $ 26.8 $ 22.1 21% Research and development 94.9 74.4 28 Marketing, general and administrative 64.3 60.1 7 Interest expense 1.9 1.8 6 -------- -------- -------- Total costs and expenses $187.9 $158.4 19% ======== ======== ======== Cost of sales increased in the first quarter of 1995 due to a change in product mix, a 10% increase in product sales and inventory write offs in 1995.
R&D expenses for the first three months of 1995 increased over the comparable period in 1994 due to increased production of products for clinical trials and higher in-licensing expenses. In-licensing expenses in the first quarter of 1995 included $4.0 million paid to IDEC Pharmaceutical Corporation (IDEC) under the previously disclosed collaboration to develop IDEC's anti-CD20 monoclonal antibody, IDEC-C2B8. Marketing, general and administrative expenses increased in the first quarter of 1995 due to higher marketing and selling expenses in Europe, as Pulmozyme is now sold in more European countries than in the first quarter of 1994, and due to an overall increase in other corporate expenses. Interest expense relates primarily to interest on the Company's 5% convertible subordinated debentures, net of capitalized interest, and interest on a new $25.0 million long-term borrowing arrangement of the Company's Canadian subsidary.
Three Months Ended March 31 ------------------------------ INCOME TAXES 1995 1994 % Change - ------------- -------- -------- --------- Income taxes $ 7.7 $ 1.6 381%
The increase in income tax expense was due to higher income before taxes and an increase in the effective income tax rate, from 4% in the first quarter of 1994 to 15% in the first quarter of 1995. The increase in the effective tax rate was primarily related to a higher alternative minimum tax (AMT) in 1995, due to the complete utilization of available AMT loss carryforwards in 1994. Page 11
Three Months Ended March 31 ------------------------------ NET INCOME 1995 1994 % Change - ------------------- -------- -------- -------- Net income $43.4 $38.9 12% Earnings per share .36 .33 9 Net income increased in 1995 due to overall higher revenues from all sources, partially offset by increases in research and development and other expenses, including income taxes.
LIQUIDITY AND CAPITAL RESOURCES March 31, 1995 December 31, 1994 - -------------------------- ---------------- ------------------- Cash, cash equivalents, short-term investments and long-term marketable securities $942.3 $920.9 Working capital 810.4 776.6
Cash generated from operations, maturities of short-term investments, stock issuances and proceeds from borrowings, was used to make investments in long- term marketable securities, other assets and capital expenditures. Cash and cash equivalents at March 31, 1995 increased $43.4 million compared to December 31, 1994. Working capital increased $33.8 million. The Company believes that its cash, cash equivalents, and short-term and long-term investments, together with funds provided by operations and leasing arrangements, will be sufficient to meet its operating cash requirements. Page 12 GENENTECH, INC. INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors and Stockholders Genentech, Inc. We have reviewed the accompanying condensed consolidated balance sheet of Genentech, Inc. as of March 31, 1995, and the related condensed consolidated statements of income and cash flows for the three-month periods ended March 31, 1995 and 1994. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Genentech, Inc. as of December 31, 1994, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated January 17, 1995, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1994, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. ERNST & YOUNG LLP San Jose, California April 10, 1995 Page 13 GENENTECH, INC. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In May 1995, a number of purported shareholder class action lawsuits were filed in Delaware's Chancery Court against the Company, its directors, a former director, and Roche alleging, in general, breach of their fiduciary duties to the Company in connection with the proposed extension of Roche's option to cause the Company to redeem its redeemable common stock and transactions related thereto. See also Note 5, "Legal Proceedings" in Part I, "Notes to Consolidated Financial Statements." ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 15.1 Letter re: Unaudited Interim Financial Information 27.1 Financial Data Schedule (b) Reports on Form 8-K There were no reports on Form 8-K filed for the quarter ended March 31, 1995. Page 14 GENENTECH, INC. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: May 15, 1995 GENENTECH, INC. /S/G. KIRK RAAB /S/LOUIS J. LAVIGNE, JR. ----------------------------- ----------------------------- G. Kirk Raab Louis J. Lavigne, Jr. President and Chief Executive Officer Senior Vice President and Chief Financial Officer /S/BRADFORD S. GOODWIN ----------------------------- Bradford S. Goodwin Vice President and Controller Page 15 Exhibit 15.1 May 15, 1995 Securities and Exchange Commission Washington, DC 20549 We are aware of the incorporation by reference in the Registration Statements pertaining to the 1994 Stock Option Plan, the 1991 Employee Stock Plan, the 1990 Stock Option/Stock Incentive Plan, the 1984 Incentive Stock Option Plan and the 1984 Non-Qualified Stock Option Plan, the shares issuable to certain warrant holders, the shares issuable to certain convertible subordinated debenture holders, the Genentech, Inc. Tax Reduction Investment Plan and in the related prospectuses, as applicable, contained in such Registration Statements of our report dated April 10, 1995 relating to the unaudited condensed consolidated interim financial statements of Genentech, Inc. which are included in its Form 10-Q for the quarter ended March 31, 1995. Pursuant to Rule 436(c) of the Securities Act of 1933 our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the Securities Act of 1933. Very truly yours, ERNST & YOUNG LLP EX-27.1 2
5 This schedule contains summary financial information extracted from the consolidated balance sheets, consolidated statements of income and consolidated statements of cash flows included in the Company's Form 10-Q for the three month period ended March 31, 1995, and is qualified in its entirety by reference to such financial statements and the notes thereto. 3-MOS DEC-31-1995 MAR-31-1995 110113 832236 171689 5546 94300 1016203 714961 232844 1806846 205802 175140 2352 0 0 1399894 1806846 162067 238967 26750 26750 94959 2416 1871 51064 7660 43404 0 0 0 43404 .36 0
-----END PRIVACY-ENHANCED MESSAGE-----