-----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, PWzyhR7RbSxEQkhPhb+xZuij6RDQv9zr+OO1N/a1vnle0ry7FJIvbprX5qojBviX ptaE4SrxwgY4W7I6gyP44Q== 0001047469-03-024239.txt : 20030716 0001047469-03-024239.hdr.sgml : 20030716 20030716083707 ACCESSION NUMBER: 0001047469-03-024239 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030716 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030716 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GENZYME CORP CENTRAL INDEX KEY: 0000732485 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 061047163 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-14680 FILM NUMBER: 03788284 BUSINESS ADDRESS: STREET 1: ONE KENDALL SQ CITY: CAMBRIDGE STATE: MA ZIP: 02139 BUSINESS PHONE: 6172527500 MAIL ADDRESS: STREET 1: ONE KENDALL SQUARE CITY: CAMBRIDGE STATE: MA ZIP: 02139 8-K 1 a2114807z8-k.htm 8-K
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
July 16, 2003

GENZYME CORPORATION
(Exact name of registrant as specified in its charter)

Massachusetts
(State or other jurisdiction of incorporation or organization)
  0-14680
(Commission file number)
  06-1047163
(IRS employer identification number)

One Kendall Square, Cambridge, Massachusetts 02139
(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number, including area code:
(617) 252-7500



Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

    (c)
    Exhibits.

99.1   Press Release of Genzyme Corporation dated July 16, 2003.


Item 9. REGULATION FD DISCLOSURE

        The following information is furnished pursuant to Item 9 (Regulation FD Disclosure) and Item 12 (Results of Operations and Financial Condition).

        On July 16, 2003, Genzyme Corporation issued a press release relating to the anticipated results of operations for each of its Genzyme General, Genzyme Biosurgery and Genzyme Molecular Oncology Divisions for the three month period ended June 30, 2003.

        A copy of the press release is attached to this Form 8-K as Exhibit 99.1.

        To supplement our consolidated financial statements presented on a GAAP basis, we use non-GAAP additional measures of net income/loss and earnings per share for each of our divisions adjusted to exclude certain costs, expenses, gains and losses we believe appropriate to enhance an overall understanding of our past financial performance and also our prospects for the future. These adjustments to our GAAP results are made with the intent of providing both management and investors a more complete understanding of the underlying operational results and trends and our marketplace performance. For example, the non-GAAP results are an indication of our baseline performance before gains, losses or other charges that are considered by management to be outside of our core business segment operational results. In addition, these adjusted non-GAAP results are among the primary indicators management uses as a basis for our planning and forecasting of future periods. The presentation of this additional information is not meant to be considered in isolation or as a substitute for net earnings or diluted earnings per share prepared in accordance with generally accepted accounting principles in the United States.



SIGNATURE

        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 hereunto duly authorized.

    GENZYME CORPORATION

Dated: July 16, 2003

 

By:

 

/s/  
MICHAEL S. WYZGA      
Michael S. Wyzga
Senior Vice President, Finance; Chief Financial Officer; and Chief Accounting Officer


INDEX TO EXHIBITS

Exhibit No.

  Description

99.1   Press Release of Genzyme Corporation dated July 16, 2003.



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SIGNATURE
INDEX TO EXHIBITS
EX-99.1 3 a2114807zex-99_1.htm EX-99.1
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Exhibit 99.1

For Immediate Release
July 16, 2003
  Media Contact:
Bo Piela
617-252-7785
  Investor Contact:
Sally Curley
617-591-7140


Genzyme Corp. Reports Financial Results for Second Quarter of 2003



Genzyme General Reports 30 Percent Revenue Growth

        CAMBRIDGE, MA—Genzyme Corp. (Nasdaq: GENZ) today reported financial results for the second quarter of 2003 for each of its three former tracking-stock divisions and for the corporation. Genzyme eliminated its tracking-stock structure on July 1, 2003. Going forward, it will report only one set of financial results, reflecting the performance of the corporation.

Results for Genzyme General

        Genzyme General's revenues were $347.7 million for the second quarter, up 30 percent compared to revenues of $267.2 million for the second quarter of last year.

        Net income allocated to Genzyme General stock was $70.8 million, or $0.32 per diluted share, up 43 percent compared with net income of $49.6 million, or $0.23 per diluted share, for the same quarter a year ago. Amortization this quarter amounted to $9.9 million, or $0.03 per diluted share. Special items included a pre-tax charge of $3.6 million, or $0.01 per diluted share, for an impaired equity investment, and a net allocated tax benefit of $4.0 million, or $0.02 per diluted share, from a loss on the sale of Genzyme Biosurgery's cardiothoracic devices business to Teleflex Inc.

        Excluding amortization and special items, net income allocated to Genzyme General stock for the second quarter increased 39 percent to $75.3 million, or $0.34 per diluted share, compared to $54.1 million, or $0.25 per diluted share, for the second quarter of last year.

        The effective net tax rate allocated to Genzyme General stock in the second quarter was 23 percent. Excluding amortization and special items, the tax rate was 29 percent, reflecting lower tax benefits from Genzyme Biosurgery and Genzyme Molecular Oncology, and higher pre-tax income, which together increase the tax rate.

        Results for the quarter were driven principally by strong product sales. In addition, fluctuations in foreign exchange rates had a positive impact of approximately 3 percent on revenue. Fluctuations in foreign exchange also affect operating expenses and the cost of goods sold. The net effect of foreign exchange on operating profit was negligible for the quarter.

        Sales of Renagel® (sevelamer hydrochloride) phosphate binder for patients with end-stage renal disease on hemodialysis were $66.0 million, up 67 percent compared to second-quarter sales last year of $39.5 million. Included in this quarter's total is approximately $3.0 million in sales of bulk sevelamer to Chugai Pharmaceutical Co. Ltd. Chugai and its partner Kirin Brewery Co. Ltd. are commercializing Renagel in Japan, where the product was launched in June. Genzyme also will receive royalties on product sales.

        Genzyme expects that forthcoming National Kidney Foundation K/DOQI clinical practice guidelines on bone disease and metabolism will be published in a supplemental October issue of the American Journal of Kidney Diseases, available in September. The guidelines are expected to set more aggressive therapeutic goals for physicians and designate a broader set of patients for whom calcium-based phosphate binders are not appropriate. Renagel is a calcium-free, metal-free phosphate binder, and Genzyme anticipates that implementation of the guidelines over time will increase Renagel adoption.

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        Sales of Fabrazyme® (agalsidase beta) enzyme replacement therapy for Fabry disease were $15.4 million for the quarter, up 157 percent from sales of $6.0 million in the second quarter a year ago. On April 24, the Food and Drug Administration granted marketing approval for Fabrazyme in the United States, where the product also received Orphan Drug designation. The U.S. launch of Fabrazyme has gotten off to a strong start, with a substantial number of patients moving through the process to initiate therapy. In addition, Genzyme continues to make good progress in accruing new patients in markets outside the United States, which accounted for approximately $15 million in Fabrazyme sales for the quarter. In Japan, the marketing approval of Fabrazyme is expected during the second half of this year.

        Sales of Aldurazyme® (laronidase) enzyme replacement therapy for patients with MPS I, were $1.1 million. Genzyme is commercializing Aldurazyme under a joint venture with BioMarin Pharmaceutical Inc. and, therefore, Aldurazyme sales are not included as part of Genzyme General's total revenues. The companies received marketing approval for Aldurazyme in the United States on April 30 and in Europe on June 11 and launched the product late in the quarter in both markets. Launch activities have started successfully in both markets, driving early patient access to Aldurazyme.

        Sales of Cerezyme® (imiglucerase for injection) enzyme replacement therapy for patients with Type 1 Gaucher disease were $184.7 million, up 19 percent from sales of $154.7 million for the second quarter of last year. Genzyme now anticipates that Cerezyme revenues could approach $700 million this year, driven by continued new patient growth. In June, the European Committee for Proprietary Medicinal Products (CPMP) issued a positive opinion on expanding the indication for Cerezyme to include the non-neurological aspects of Type 3 Gaucher disease, the chronic neuronopathic form of the disease. The positive CPMP opinion is the final step before formal approval of the label expansion by the European Commission, which is expected within the next few months. The European Commission generally follows the advice of the CPMP, but is not required to do so.

        Sales of diagnostic products and services were $47.9 million, an increase of 11 percent compared to sales of $43.1 million in the second quarter last year.

        Revenues from other products—including Thyrogen® (thyrotropin alfa for injection), WelChol® (colesevelam hydrochloride) and pharmaceutical intermediates—were $33.6 million in the second quarter, up 41 percent compared to revenues of $23.9 million in the same period a year ago.

        During the quarter, Genzyme submitted a marketing application in Japan for Biogen's AVONEX® (Interferon beta-1a). Genzyme will commercialize the product in Japan and anticipates that the Ministry of Health, Labor and Welfare will act on the submission approximately one year from the filing date.

        Also during the quarter, Genzyme began patient enrollment in a pivotal clinical trial evaluating the use of its Myozyme™ recombinant human alpha-Glucosidase for Pompe disease and is forming a joint venture with Dyax Corp. to develop DX-88 for the treatment of hereditary angioedema.

Results for Genzyme Biosurgery

        Revenues for Genzyme Biosurgery in the second quarter were $68.8 million, up 9 percent from revenues of $62.9 million for the same period a year ago. Sales of Synvisc® (Hylan G-F 20) were $29.6 million, an increase of 15 percent compared to sales of $25.7 million in the second quarter a year ago. Sales of the Sepra™ family of products increased to $11.4 million, up 21 percent from $9.4 million in the second quarter last year.

        The net loss allocated to Biosurgery stock was $141.0 million, compared to a loss of $15.1 million in the second quarter last year. The net loss includes a charge of $102.8 million, reflecting an estimated impairment of goodwill for Genzyme's prior acquisition of Biomatrix Inc. It also includes a loss on the sale of the cardiothoracic devices business and other charges related to the disposition of this business

2



totaling $38.8 million. Amortization amounted to $7.8 million. Excluding special items and amortization, the net loss allocated to Biosurgery stock was $3.2 million.

Results for Genzyme Molecular Oncology

        Revenues for Genzyme Molecular Oncology were $2.5 million in the second quarter, compared to $2.3 million in the second quarter last year. Research and development expenses were $4.1 million, down from $5.3 million in the second quarter of 2002.

        The net loss allocated to Molecular Oncology stock was $4.4 million, compared to a net loss of $6.2 million in the same period last year.

        At a meeting of the American Association for Cancer Research last week in Washington, D.C., Genzyme scientists reported encouraging pre-clinical data in the areas of immunotherapy, antigen discovery and antiangiogenesis in a series of presentations on Genzyme's cancer research programs.

Genzyme Corporation Consolidated Results

        Total revenues for Genzyme Corp. in the second quarter were $418.9 million, up 26 percent compared to revenues of $332.2 million in the second quarter last year.

        The corporation recorded a net loss of $74.5 million for the quarter, compared with net income of $28.3 million for the second quarter a year ago, primarily reflecting the previously noted special items allocated to the Genzyme Biosurgery and Genzyme General divisions. Excluding amortization and special items, Genzyme Corp.'s pre-tax profit was $98.1 million, compared to $54.7 million in the second quarter of 2002.

        Genzyme Corp. anticipates GAAP earnings for the third quarter of approximately $0.27-$0.29 per share, and earnings of $0.32-$0.34 per diluted share before special items and amortization. In the third quarter, shares outstanding will increase to approximately 224 million and the tax rate will increase to approximately 30 percent. For the year, Genzyme is narrowing the range for its EPS guidance. GAAP earnings are expected to be in the range of $1.15-$1.20, compared to previous guidance of $1.10-$1.20 per share. Before special items and amortization, earnings are now expected to be $1.30-$1.35 per diluted share, compared to previous guidance of $1.25-$1.35 per share.

        Genzyme Corp. ended the second quarter with approximately $1.3 billion in cash and marketable securities.

About Genzyme Corporation

        Genzyme Corporation is a global biotechnology company dedicated to making a major positive impact on the lives of people with serious diseases and medical conditions. This commitment has driven innovation in treating both widespread diseases and rare genetic conditions, in providing leading diagnostic products and services, in bringing the benefits of biotechnology to the practice of surgery, and in developing novel approaches to cancer. Genzyme's 5,300 employees worldwide serve patients in more than 80 countries.

Safe harbor statement

        This press release contains forward-looking statements, including statements about: the anticipated receipt of royalties on sales of Renagel in Japan; the anticipated content and publication of k/DOQI guidelines, including the expected timing of publication and impact on market adoption of Renagel; anticipated financial results for the third quarter of 2003 and the full year, including Cerezyme revenues and earnings per share; the anticipated drivers for Cerezyme sales; the potential receipt of approval of a label expansion for Cerezyme from the European Commission and the anticipated timing

3



of approval; the anticipated receipt of marketing approval for Fabrazyme in Japan and the expected timing thereof; the potential receipt and timing of marketing approval for AVONEX in Japan and plans to commercialize AVONEX in Japan; and expectations concerning research and development programs. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected in these forward-looking statements. These risks and uncertainties include, among others: Genzyme's actual results of operations for 2003; the effectiveness of cost control initiatives; the ability to identify additional patients for Genzyme's products; the accuracy of Genzyme's expectations concerning Renagel wholesaler inventory levels, Renagel end-user growth, and the payer mix for Renagel; compliance levels with Renagel wholesaler inventory management arrangements; the actual timing, content and impact of the publication of K/DOQI guidelines; the ability to improve patient compliance and optimize dosing of Renagel; the ability to increase sales, market penetration and profit margins for Synvisc; the timing and content of submissions to and decisions made by regulatory authorities concerning Cerezyme, Fabrazyme, AVONEX and other products and facilities; the impact, if any, of war and terrorist activities on the operations and activities of Genzyme and third parties, including regulatory authorities; the ability to manufacture sufficient quantities of products for development and commercialization activities and to do so in a timely and cost efficient manner; the scope, validity and enforceability of patents and other proprietary rights held by third parties and the actual impact of such patents and other rights, if any, on our ability to commercialize products; the ability to obtain and maintain agreements with sublicensees, distributors and operators of fill/finish facilities; the continued operation and funding of our collaborations; the results of preclinical and clinical studies; the availability and extent of reimbursement from third-party payers for products and services; the outcome of pending litigation and other proceedings and the associated costs in terms of management time and out-of-pocket expenses; the accuracy of Genzyme's information concerning the markets for its products and services, including growth projections, and the competitive environment; foreign exchange rates for the remainder of the year; and all of the risks and uncertainties described in reports filed by Genzyme with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, including without limitation Exhibit 99.2 to Genzyme's 2002 Annual Report on Form 10-K, as amended. We caution investors not to place undue reliance on the forward-looking statements contained in this press release. These statements speak only as of the date of this press release, and we undertake no obligation to update or revise the statements.

        Genzyme®, Cerezyme®, Fabrazyme®, Renagel®, Thryogen® and Synvisc® are registered trademarks and Myozyme™ and Sepra™ are trademarks of Genzyme Corporation. Aldurazyme® is a registered trademark of BioMarin/Genzyme LLC. WelChol® is a registered trademark of Sankyo Pharma Inc. All rights reserved.

Conference call information

        There will be a conference call today at 11:00 a.m. ET to discuss Genzyme Corporation's second quarter financial results. If you would like to participate in the call, please dial 719-457-2642. A replay of this call will be available from 2:30 p.m. ET through midnight on July 23 by dialing 719-457-0820. Please refer to reservation number 474528. This call will also be webcast live at http://www.genzyme.com/corp/investors/events_home.asp

Upcoming Events

        Genzyme Corp. will report third-quarter 2003 financial results on October 15. If you would like to participate in the call, please dial 719-457-2642 at 11:00 a.m. ET. No passcode is necessary. Please refer to www.genzyme.com one week prior to the financial reporting date for any updates to this information. This call will also be webcast live at http://www.genzyme.com/corp/investors/events_home.asp

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GENZYME GENERAL (A Division of Genzyme Corporation)

Combined Statements of Operations

(Unaudited, amounts in thousands, except per share amounts)

 
  Six Months Ended
June 30,

  Three Months Ended
June 30,

 
 
  2003
  2002
  2003
  2002
 
Total revenues   $ 347,663   $ 267,168   $ 661,708   $ 509,315  
   
 
 
 
 
Operating costs and expenses:                          
  Cost of products and services sold     91,674     63,619     174,714     123,084  
  Selling, general and administrative     95,203     80,519     180,449     156,909  
  Research and development     58,834     56,477     115,163     120,313  
  Amortization of intangibles     9,873     9,723     19,609     19,441  
   
 
 
 
 
    Total operating costs and expenses     255,584     210,338     489,935     419,747  
   
 
 
 
 
Operating income     92,079     56,830     171,773     89,568  
   
 
 
 
 
Other income (expenses):                          
  Equity in net loss of unconsolidated affiliates     (4,804 )   (3,948 )   (8,998 )   (8,042 )
  Gain (loss) on investments in equity securities     (3,620 )   343     (3,620 )   509  
  Other     774     1,749     1,554     852  
  Investment income     12,058     12,079     23,339     25,031  
  Interest expense     (4,328 )   (4,678 )   (8,605 )   (9,219 )
   
 
 
 
 
    Total other income (expenses)     80     5,545     3,670     9,131  
   
 
 
 
 
Income before income taxes     92,159     62,375     175,443     98,699  
Provision for income taxes     (29,378 )   (17,964 )   (54,869 )   (29,979 )
   
 
 
 
 
Division net income     62,781     44,411     120,574     68,720  
Allocated tax benefits(1)     8,055     5,229     12,140     11,658  
   
 
 
 
 
Net income allocated to Genzyme General Stock   $ 70,836   $ 49,640   $ 132,714   $ 80,378  
   
 
 
 
 
Net income per share of Genzyme General Stock:                          
  Basic   $ 0.33   $ 0.23   $ 0.62   $ 0.38  
   
 
 
 
 
  Diluted(2)   $ 0.32   $ 0.23   $ 0.60   $ 0.36  
   
 
 
 
 
Weighted average shares outstanding:                          
  Basic     216,313     213,917     215,702     213,624  
   
 
 
 
 
  Diluted(2)     222,867     219,634     221,650     220,349  
   
 
 
 
 

(1)
Represents tax benefits allocated from Genzyme Biosurgery and Genzyme Molecular Oncology to Genzyme General.

(2)
Net income per share allocated to Genzyme General Stock on a diluted basis and weighted average shares-diluted for all periods presented includes the dilutive effect of options, stock purchase rights and warrants, but excludes the effect of the convertible subordinated debentures allocated to Genzyme General as the effect would be anti-dilutive in each period.

5



Condensed Combined Balance Sheets
(Unaudited, amounts in thousands)

 
  June 30,
2003

  December 31,
2002

Cash and all marketable securities   $ 1,263,949   $ 1,149,145
Other current assets     673,076     633,501
Property, plant and equipment, net     841,175     749,840
Intangibles, net     925,890     933,360
Other assets     122,556     89,955
   
 
  Total assets   $ 3,826,646   $ 3,555,801
   
 
Current liabilities   $ 284,563   $ 274,872
Noncurrent liabilities     676,602     695,045
Division equity     2,865,481     2,585,884
   
 
  Total liabilities and division equity   $ 3,826,646   $ 3,555,801
   
 

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GENZYME GENERAL

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Quarter Ended June 30, 2003
(Amounts in thousands, except per share data)

 
  NON-GAAP
Before
Gains (Charges)
& Amortization

  Tracking Stock
Tax Benefit for
Genzyme
Biosurgery
Disposition of
CT Business

  Impaired
Equity
Investments

  Amortization
  GAAP
As Reported

 
Pretax profit   $ 105,652   $   $ (3,620 ) $ (9,873 ) $ 92,159  
Provision for income taxes     (30,320 )   4,032     1,332     3,633     (21,323 )
   
 
 
 
 
 
Net income allocated to Genzyme General Stock   $ 75,332   $ 4,032   $ (2,288 ) $ (6,240 ) $ 70,836  
   
 
 
 
 
 
Net income per share of Genzyme General Stock:                                
  Basic   $ 0.35   $ 0.019   $ (0.011 ) $ (0.029 ) $ 0.33  
  Diluted   $ 0.34   $ 0.018   $ (0.010 ) $ (0.028 ) $ 0.32  
Weighted average shares outstanding:                                
  Basic     216,313     216,313     216,313     216,313     216,313  
  Diluted     222,867     222,867     222,867     222,867     222,867  

7



Genzyme General (A Division of Genzyme Corporation)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage and per share amounts)

 
  Q2-02
  Q3-02
  Q4-02
  Q1-03
  Q2-03
  Q2-03
vs.
Q2-02
% B/(W)

  FY 2001
  FY 2002
  YTD
6/30/2003

 
Product and service revenue:                                                      
  Cerezyme and Ceredase   $ 154,717   $ 157,471   $ 158,930   $ 167,187   $ 184,724   19 % $ 569,887   $ 619,184   $ 351,911  
  Renagel (including Sevelamer)     39,543     36,954     50,835     58,766     66,002   67 %   176,921     156,864     124,768  
  Diagnostic Products and Services     43,111     43,241     45,399     47,698     47,933   11 %   151,045     172,810     95,631  
  Other     27,805     34,335     42,033     39,843     48,215   73 %   74,934     125,154     88,058  
   
 
 
 
 
 
 
 
 
 
    Total product and service revenue     265,176     272,001     297,197     313,494     346,874   31 %   972,787     1,074,012     660,368  
R&D revenue     1,992     822     850     551     789   (60 %)   9,139     6,173     1,340  
   
 
 
 
 
 
 
 
 
 
Total revenues     267,168     272,823     298,047     314,045     347,663   30 %   981,926     1,080,185     661,708  
Total product and service gross profit     201,557     206,504     219,960     230,454     255,200   27 %   735,445     808,194     485,654  
SG&A expense     80,519     86,221     80,553     85,246     95,203   (18 %)   295,068     323,683     180,449  
R&D expense     56,477     54,407     55,323     56,329     58,834   (4 %)   187,502     230,043     115,163  
Amortization of intangibles     9,723     9,814     9,743     9,736     9,873   (2 %)   74,296     38,998     19,609  
IPR&D                             95,568          
Charge for impaired assets             13,986                   13,986      
Operating profit     56,830     56,884     61,205     79,694     92,079   62 %   92,150     207,657     171,773  
Other income (expenses):                                                      
  Equity in net loss of unconsolidated affiliates     (3,948 )   (2,387 )   (6,429 )   (4,194 )   (4,804 ) (22 %)   (34,365 )   (16,858 )   (8,998 )
  Gain (loss) on investments in equity securities     343     29     (15,035 )       (3,620 ) (1155 %)   (25,996 )   (14,497 )   (3,620 )
  Minority interest                             2,259          
  Other     1,749     (274 )   (730 )   780     774   (56 %)   (2,117 )   (152 )   1,554  
  Investment income     12,079     12,430     11,483     11,281     12,058   (0 %)   47,806     48,944     23,339  
  Interest expense     (4,678 )   (4,258 )   (4,370 )   (4,277 )   (4,328 ) 7 %   (23,192 )   (17,847 )   (8,605 )
   
 
 
 
 
 
 
 
 
 
Profit before income taxes     62,375     62,424     46,124     83,284     92,159   48 %   56,545     207,247     175,443  
Tax provision     (17,964 )   (17,906 )   (8,631 )   (25,491 )   (29,378 ) (64 %)   (52,666 )   (56,516 )   (54,869 )
   
 
 
 
 
 
 
 
 
 
Division net income     44,411     44,518     37,493     57,793     62,781   41 %   3,879     150,731     120,574  
Cumulative effect of change in accounting for derivative financial instruments, net of tax (1)                             4,167          
Division net income before allocated tax benefits     44,411     44,518     37,493     57,793     62,781   41 %   8,046     150,731     120,574  
Allocated tax benefits     5,229     8,898     7,239     4,085     8,055   54 %   36,497     27,795     12,140  
   
 
 
 
 
 
 
 
 
 
Net income allocated to Genzyme General Stock   $ 49,640   $ 53,416   $ 44,732   $ 61,878   $ 70,836   43 % $ 44,543   $ 178,526   $ 132,714  
   
 
 
 
 
 
 
 
 
 
Net income per share of Genzyme General Stock-diluted (2)   $ 0.23   $ 0.25   $ 0.20   $ 0.28   $ 0.32   39 % $ 0.21(3 ) $ 0.81   $ 0.60  
   
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding-diluted (4)     219,634     217,541     219,313     220,432     222,867   1 %   211,176     219,388     221,650  

Notes:

(1)
On January 1, 2002, we adopted SFAS No. 133, "Accounting for Derviative Financial Instruments and Hedging Activities," as amended by SFAS No. 137 and SFAS No. 138. In accordance with the transition provisions of SFAS No. 133, Genzyme General recorded a cumulative adjustment of $4.1 million, net of tax, in its combined statements of operations for the year ended December 31, 2001 to recognize the fair value of warrants to purchase shares of GTC Biotherapeutics, Inc. (formerly Genzyme Transgenics Corporation) common stock held on January 1, 2001.
(2)
For all periods except 2001, includes the dilutive effect of options, stock purchase rights and warrants allocated to Genzyme General but excludes the dilutive effect of the convertible subordinated debentures allocated to Genzyme General because the effect in each period would be anti-dilutive.
(3)
In 2001, includes the dilutive effect of options, warrants and the convertible subordinated debentures and notes allocated to Genzyme General.
(4)
All weighted average shares data reflect the 2 for 1 split of Genzyme General Stock on June 1, 2001.

8


Genzyme General (A Division of Genzyme Corporation)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage amounts)

 
  Q2-02

  Q3-02
  Q4-02
  Q1-03
  Q2-03
  FY 2001
  FY 2002
  YTD 6/30/2003
 
Total revenues   $ 267,168   $ 272,823   $ 298,047   $ 314,045   $ 347,663   $ 981,926   $ 1,080,185   $ 661,708  
As a % of total product and service revenue:                                                  
  Cerezyme and Ceredase     58 %   58 %   54 %   53 %   53 %   59 %   58 %   53 %
  Renagel     15 %   13 %   17 %   19 %   19 %   18 %   14 %   19 %
  Diagnostic Products and Services     16 %   16 %   15 %   15 %   14 %   15 %   16 %   15 %
  Other     11 %   13 %   14 %   13 %   14 %   8 %   12 %   13 %
Total product and service gross margin     76 %   76 %   74 %   74 %   74 %   76 %   75 %   74 %
SG&A expense as % of total revenue     30 %   32 %   27 %   27 %   27 %   30 %   30 %   27 %
R&D expense as % of total revenue     21 %   20 %   19 %   18 %   17 %   19 %   21 %   17 %
Operating profit as % of total revenue     21 %   21 %   21 %   25 %   26 %   9 %   19 %   26 %
Tax provision (benefit) as % of profit before tax     20 %   14 %   3 %   26 %   23 %   29 %   14 %   24 %

 

 

Q2-02


 

Q3-2


 

Q4-02


 

Q1-03


 

Q2-03


 

FY 2001


 

FY 2002


 

YTD
6/30/03


 
Other selected financial data:                                                  
  Cash and all marketable securities   $ 1,080,332   $ 1,121,022   $ 1,149,145   $ 1,205,571   $ 1,263,949   $ 1,041,500   $ 1,149,145   $ 1,263,949  
  Working capital     638,283     680,873     825,573     849,029     791,470     473,870     825,573     791,470  
  Property, plant & equipment, net     663,220     704,579     749,840     779,199     841,175     581,401     749,840     841,175  
  Goodwill and other intangible assets     963,248     954,051     933,360     923,640     925,890     981,468     933,360     925,890  
  Total assets     3,348,856     3,418,299     3,555,801     3,654,909     3,826,646     3,225,254     3,555,801     3,826,646  
  Long-term debt, convertible debentures and long-term capital leases     600,044     600,040     600,038     600,026     600,092     600,085     600,038     600,092  
  Division equity     2,431,852     2,491,892     2,585,884     2,680,030     2,865,481     2,280,352     2,585,884     2,865,481  

9


GENZYME BIOSURGERY (A Division of Genzyme Corporation)

Combined Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)

 
  Three Months Ended
June 30,

  Six Months Ended
June 30,

 
 
  2003
  2002
  2003
  2002
 
Total revenues   $ 68,758   $ 62,863   $ 134,384   $ 116,234  
   
 
 
 
 
Operating costs and expenses:                          
  Cost of products and services sold     27,886     29,342     56,658     56,930  
  Selling, general and administrative     33,915     28,239     61,159     52,738  
  Research and development     14,947     12,984     28,886     24,856  
  Amortization of intangibles     7,768     7,863     15,537     15,742  
  Charge for impaired goodwill (1)     102,792         102,792      
  Charge for impaired asset (2)     2,898         2,898      
  Loss on sale of product line (3)     29,367         29,367      
   
 
 
 
 
    Total operating costs and expenses     219,573     78,428     297,297     150,266  
   
 
 
 
 
Operating loss     (150,815 )   (15,565 )   (162,913 )   (34,032 )
   
 
 
 
 
Other income (expenses):                          
  Other     (5 )   78     (35 )   111  
  Investment income     253     326     472     623  
  Interest expense     (1,987 )   (2,361 )   (4,180 )   (4,606 )
   
 
 
 
 
    Total other income (expenses)     (1,739 )   (1,957 )   (3,743 )   (3,872 )
   
 
 
 
 
Division net loss before cumulative effect of change in accounting for goodwill     (152,554 )   (17,522 )   (166,656 )   (37,904 )
Cumulative effect of change in accounting for goodwill (4)                 (98,270 )
   
 
 
 
 
Division net loss (4)     (152,554 )   (17,522 )   (166,656 )   (136,174 )
Allocated tax benefit     11,597     2,442     14,005     4,890  
   
 
 
 
 
Net loss allocated to Biosurgery Stock (4)   $ (140,957 ) $ (15,080 ) $ (152,651 ) $ (131,284 )
   
 
 
 
 
Net loss per share of Biosurgery Stock-basic and diluted:                          
  Net loss per share before cumulative effect of change in accounting for goodwill   $ (3.46 ) $ (0.38 ) $ (3.76 ) $ (0.83 )
  Per share cumulative effect of change in accounting for goodwill (4)                 (2.48 )
   
 
 
 
 
  Net loss per share of Biosurgery Stock-basic and diluted (4)   $ (3.46 ) $ (0.38 ) $ (3.76 ) $ (3.31 )
   
 
 
 
 
Weighted average shares outstanding     40,681     39,637     40,630     39,600  
   
 
 
 
 
(1)
Represents an estimated write off of the goodwill allocated to Genzyme Biosurgery's orthopaedics reporting unit in June 2003 in accordance with Statement of Financial Accounting Standards, or SFAS, No. 142, "Goodwill and Other Intangible Assets." This charge may be adjusted pending final valuation of the impairment assessment.

(2)
Represents the impairment charge recorded in June 2003 to write down the carrying value of Genzyme Biosurgery's cardiothoracic devices manufacturing facility in Fall River, Massachusetts to fair value.

(3)
Represents a loss on the sale of substantially all of the assets of Genzyme Biosurgery's cardiothoracic devices business to Teleflex Inc. in June 2003.

(4)
Effective January 1, 2002, in connection with the provisions of SFAS No. 142, Genzyme Biosurgery ceased amortizing goodwill. In connection with the adoption of SFAS No, 142, we tested the goodwill of Genzyme Biosurgery's cardiothoracic reporting unit for impairment and, as a result, reduced goodwill by recording a cumulative effect impairment charge of $98.3 million in our consolidated statements of operations and the combined statements of operations of Genzyme Biosurgery in March 2002.


Condensed Combined Balance Sheets
(Unaudited, amounts in thousands)

 
  June 30,
2003

  December 31,
2002

Cash and all marketable securities   $ 26,949   $ 32,747
Other current assets     78,630     80,022
Property, plant and equipment, net     41,423     52,582
Intangibles, net     241,732     393,193
Other assets     3,277     2,248
   
 
  Total assets   $ 392,011   $ 560,792
   
 
Current liabilities   $ 360,631   $ 360,636
Noncurrent liabilities     11,519     13,933
Division equity     19,861     186,223
   
 
  Total liabilities and division equity   $ 392,011   $ 560,792
   
 

10



GENZYME BIOSURGERY

RECONCILIATION OF GAAP TO NON-GAAP EARNINGS

Quarter Ended June 30, 2003

(Amounts in thousands, except per share data)

 
   
  Disposition of CT Business
   
   
   
 
 
  NON-GAAP
Before
Gains (Charges)
& Amortization

   
   
   
 
 
  Loss on Sale
  Transaction
Costs

  Impairment of
Long-Lived Assets

  Impairment of
Orthopaedics
Goodwill

  Amortization
  GAAP
As Reported

 
Income Statement Classification:                                            
Cost of products and services sold   $ (27,397 )       $ (489 )                   $ (27,886 )
Selling, general, and administrative   $ (27,989 )       $ (5,926 )                   $ (33,915 )
Research and development   $ (14,804 )       $ (143 )                   $ (14,947 )
Amortization   $                           $ (7,768 ) $ (7,768 )
Charge for impaired goodwill   $                     $ (102,792 )       $ (102,792 )
Charge for impaired asset   $               $ (2,898 )             $ (2,898 )
Loss on sale of product line   $   $ (29,367 )                         $ (29,367 )
   
 
 
 
 
 
 
 
Summary:                                            
Pretax loss   $ (3,171 ) $ (29,367 ) $ (6,558 ) $ (2,898 ) $ (102,792 ) $ (7,768 ) $ (152,554 )
Allocated tax benefit         9,188                 2,409     11,597  
   
 
 
 
 
 
 
 
Net loss allocated to Biosurgery Stock   $ (3,171 ) $ (20,179 ) $ (6,558 ) $ (2,898 ) $ (102,792 ) $ (5,359 ) $ (140,957 )
   
 
 
 
 
 
 
 
Net loss per share of Biosurgery Stock—Basic and Diluted   $ (0.08 ) $ (0.496 ) $ (0.161 ) $ (0.071 ) $ (2.527 ) $ (0.132 ) $ (3.46 )
Weighted average shares outstanding—Basic and Diluted     40,681     40,681     40,681     40,681     40,681     40,681     40,681  

11


Genzyme Biosurgery (A Division of Genzyme Corporation)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage and per share amounts)

 
  Q2-02
  Q3-02
  Q4-02
  Q1-03
  Q2-03
  Q2-03
vs.
Q2-02
% B/(W)

  FY 2001
  FY 2002
  YTD
6/30/2003

 
Revenues:                                                      
  Orthopaedics   $ 30,495   $ 31,700   $ 23,803   $ 32,851   $ 35,280   16 % $ 101,790   $ 110,173   $ 68,131  
  Biosurgical Specialties     12,635     14,160     12,027     13,763     13,850   10 %   56,263     49,843     27,613  
  Cardiac Science             4     32     139             4     171  
  Cardiac Devices     19,733     19,201     22,954     18,980     19,489   (1 %)   77,089     80,063     38,469  
   
 
 
 
 
 
 
 
 
 
    Total revenues     62,863     65,061     58,788     65,626     68,758   9 %   235,142     240,083     134,384  
Gross profit     33,521     36,917     33,590     36,854     40,872   22 %   109,159     129,811     77,726  
SG&A expense     28,239     27,547     26,665     27,244     33,915   (20 %)   122,020     106,950     61,159  
R&D expense     12,984     13,264     14,216     13,939     14,947   (15 %)   47,159     52,336     28,886  
Amortization of intangibles     7,863     7,769     7,769     7,769     7,768   1 %   46,828     31,280     15,537  
Purchase of in-process research and development (1)         1,879                     1,879            
Charge for impaired goodwill(2)                     102,792                 102,792  
Charge for impaired assets(3)         8,958             2,898             8,958     2,898  
Loss on sale of product line(4)                     29,367                 29,367  
   
 
 
 
 
 
 
 
 
 
Operating loss     (15,565 )   (22,500 )   (15,060 )   (12,098 )   (150,815 ) (869 %)   (106,848 )   (71,592 )   (162,913 )
Other income (expenses):                                                      
  Equity in net loss of unconsolidated affiliate                             (1,316 )        
  Gain (loss) on sale of product line(5)                             (24,999 )        
  Other     78     40     41     (30 )   (5 ) (106 %)   124     192     (35 )
  Investment income     326     320     360     219     253   (22 %)   1,753     1,303     472  
  Interest expense     (2,361 )   (2,324 )   (2,295 )   (2,193 )   (1,987 ) 16 %   (13,884 )   (9,225 )   (4,180 )
   
 
 
 
 
 
 
 
 
 
Division net loss before cumulative effect of change in accounting for goodwill     (17,522 )   (24,464 )   (16,954 )   (14,102 )   (152,554 ) (771 %)   (145,170 )   (79,322 )   (166,656 )
Cumulative effect of change in accounting for goodwill(6)                             (98,270 )          
   
 
 
 
 
 
 
 
 
 
Division net loss     (17,522 )   (24,464 )   (16,954 )   (14,102 )   (152,554 ) (771 %)   (145,170 )   (177,592 )   (166,656 )
Allocated tax benefit     2,442     2,408     2,408     2,408     11,597   375 %   18,189     9,706     14,005  
   
 
 
 
 
 
 
 
 
 
Net loss allocated to Biosurgery Stock   $ (15,080 ) $ (22,056 ) $ (14,546 ) $ (11,694 ) $ (140,957 ) (835 %) $ (126,981 ) $ (167,886 ) $ (152,651 )
   
 
 
 
 
 
 
 
 
 
Net loss per share of Biosurgery Stock-basic and diluted:                                                      
  Net loss per share before cumulative effect of change in accounting for goodwill   $ (0.38 ) $ (0.55 ) $ (0.36 ) $ (0.29 ) $ (3.46 ) (811 %) $ (3.34 ) $ (1.74 ) $ (3.76 )
  Per share cumulative effect of change in accounting for goodwill(6)                             (2.46 )          
   
 
 
 
 
 
 
 
 
 
Net loss per share of Biosurgery Stock—basic and diluted   $ (0.38 ) $ (0.55 ) $ (0.36 ) $ (0.29 ) $ (3.46 ) (811 %) $ (3.34 ) $ (4.20 ) $ (3.76 )
   
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding     39,637     40,179     40,479     40,578     40,681   3 %   37,982     39,965     40,630  

Notes:

(1)
In Q3-02, includes a charge for the purchase of in-process research and development of $(1,879)K related to our investment in Myosix SA.
(2)
In Q2-03, represents an estimated write off of the goodwill allocated to Genzyme Biosurgery's orthopaedics reporting unit in June 2003 in accordance with SFAS No. 142, "Goodwill and Other Intangible Assets." This charge may be adjusted pending final valuation of the impairment assessment.
(3)
Includes impairment charges of: $(8,958)K in Q3-02 to write down a bulk HA manufacturing facility in the United Kingdom and $(2,898)K in Q2-03 to write down the cardiothoracic devices manufacturing facility in Fall River, Massachusetts to fair value.
(4)
In Q2-03, represents a loss on the sale of substantially all of the assets of Genzyme Biosurgery's cardiothoracic devices business to Teleflex Inc. in June 2003.
(5)
In 2001, includes a loss of $(24,999)K related to the sale of Genzyme Biosurgery's Snowden-Pencer line of surgical instruments.
(6)
Effective January 1, 2002, in connection with the provisions of SFAS No. 142, Genzyme Biosurgery ceased amortizing goodwill. In connection with the adoption of SFAS No. 142, we tested the goodwill of Genzyme Biosurgery's cardiothoracic reporting unit for impairment and, as a result, reduced goodwill by recording a cumulative effect impairment charge of $98.3 million in our consolidated statements of operations and the combined statements of operations of Genzyme Biosurgery in March 2002.

12


Genzyme Biosurgery (A Division of Genzyme Corporation)

Analyst Schedule

(Unaudited, amounts in thousands, except percentage amounts)

 
  Q2-02
  Q3-02
  Q4-02
  Q1-03
  Q2-03
  FY 2001
  FY 2002
  YTD 6/30/2003
 
Total revenues   $ 62,863   $ 65,061   $ 58,788   $ 65,626   $ 68,758   $ 235,142   $ 240,083   $ 134,384  
Revenue by reporting segment as a % of total revenue:                                                  
  Orthopaedics     49 %   48 %   41 %   50 %   51 %   43 %   46 %   51 %
  Biosurgical Specialties     20 %   22 %   20 %   21 %   20 %   24 %   21 %   20 %
  Cardiac Science     0 %   0 %   0 %   0 %   0 %   0 %   0 %   0 %
  Cardiac Devices     31 %   30 %   39 %   29 %   29 %   33 %   33 %   29 %
Total gross margin     53 %   57 %   57 %   56 %   59 %   46 %   54 %   58 %
SG&A expense as % of total revenue     45 %   42 %   45 %   42 %   49 %   52 %   45 %   46 %
R&D expense as % of total revenue     21 %   20 %   24 %   21 %   22 %   20 %   22 %   21 %
Operating loss as % of total revenue     (25 %)   (35 %)   (26 %)   (18 %)   (219 %)   (45 %)   (30 %)   (121 %)

 

 

Q2-02


 

Q3-02


 

Q4-02


 

Q1-03


 

Q2-03


 

FY 2001


 

FY 2002


 

YTD Q2-03


 
Other selected financial data:                                                  
  Cash and all marketable securities   $ 27,168   $ 23,979   $ 32,747   $ 21,996   $ 26,949   $ 38,623   $ 32,747   $ 26,949  
  Working capital     31,307     16,889     (247,867 )   (256,802 )   (255,052 )   64,121     (247,867 )   (255,052 )
  Property, plant & equipment, net     52,343     52,758     52,582     51,825     41,423     53,794     52,582     41,423  
  Goodwill and other intangible assets     410,827     403,055     393,193     385,409     241,732     525,178     393,193     241,732  
  Total assets     574,206     562,770     560,792     541,563     392,011     704,671     560,792     392,011  
  Division equity     224,857     203,314     186,223     171,997     19,861     394,454     186,223     19,861  

13


GENZYME MOLECULAR ONCOLOGY (A Division of Genzyme Corporation)

Combined Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)

 
  Three Months Ended
June 30,

  Six Months Ended
June 30,

 
 
  2003
  2002
  2003
  2002
 
Total revenues   $ 2,482   $ 2,346   $ 4,670   $ 4,768  
   
 
 
 
 
Operating costs and expenses:                          
  Cost of revenues     1,173     1,335     2,345     2,589  
  Selling, general and administrative     1,689     2,124     3,423     4,193  
  Research and development     4,126     5,323     8,317     10,621  
   
 
 
 
 
  Total operating costs and expenses     6,988     8,782     14,085     17,403  
   
 
 
 
 
Operating loss     (4,506 )   (6,436 )   (9,415 )   (12,635 )
   
 
 
 
 
Other income (expenses):                          
  Interest income     117     219     231     407  
  Interest expense     (20 )   (20 )   (40 )   (40 )
   
 
 
 
 
  Total other income (expenses)     97     199     191     367  
   
 
 
 
 
Division net loss and net loss allocated to                          
Molecular Oncology Stock   $ (4,409 ) $ (6,237 ) $ (9,224 ) $ (12,268 )
   
 
 
 
 
Net loss per share of Molecular Oncology Stock—basic and diluted   $ (0.26 ) $ (0.37 ) $ (0.54 ) $ (0.73 )
   
 
 
 
 
Weighted average shares outstanding     16,978     16,801     16,958     16,782  
   
 
 
 
 


Condensed Combined Balance Sheets
(Unaudited, amounts in thousands)

 
  June 30,
2003

  December 31,
2002

Cash and all marketable securities   $ 825   $ 13,112
Other current assets     774     843
Equipment, net     11     26
   
 
Total assets   $ 1,610   $ 13,981
   
 
Current liabilities   $ 7,266   $ 10,427
Division equity (deficit)     (5,656 )   3,554
   
 
Total liabilities and division equity (deficit)   $ 1,610   $ 13,981
   
 

14


GENZYME CORPORATION

Consolidated Statements of Operations
(Unaudited, amounts in thousands, except per share amounts)

 
  Three Months Ended
June 30,

  Six Months Ended
June 30,

 
 
  2003
  2002
  2003
  2002
 
Total revenues   $ 418,903   $ 332,192   $ 800,762   $ 630,132  
   
 
 
 
 
Operating costs and expenses:                          
  Cost of products and services sold     119,560     92,961     231,372     180,133  
  Selling, general and administrative     130,807     110,882     245,031     213,840  
  Research and development     79,080     75,934     154,711     158,075  
  Amortization of intangibles     17,641     17,586     35,146     35,183  
  Charge for impaired goodwill(1)     102,792         102,792      
  Charge for impaired asset(2)     2,898         2,898      
  Loss on sale of product line(3)     29,367         29,367      
   
 
 
 
 
    Total operating costs and expenses     482,145     297,363     801,317     587,231  
   
 
 
 
 
Operating income (loss)     (63,242 )   34,829     (555 )   42,901  
   
 
 
 
 
Other income (expenses):                          
  Equity in net loss of unconsolidated affiliates     (4,804 )   (3,948 )   (8,998 )   (8,042 )
  Gain (loss) on investments in equity securities     (3,620 )   343     (3,620 )   509  
  Other     769     1,827     1,519     963  
  Investment income     12,428     12,624     24,042     26,061  
  Interest expense     (6,335 )   (7,059 )   (12,825 )   (13,865 )
   
 
 
 
 
    Total other income (expenses)     (1,562 )   3,787     118     5,626  
   
 
 
 
 
Income (loss) before income taxes     (64,804 )   38,616     (437 )   48,527  
Provision for income taxes     (9,726 )   (10,293 )   (28,724 )   (13,431 )
   
 
 
 
 
Net income (loss) before cumulative effect of change in accounting for goodwill     (74,530 )   28,323     (29,161 )   35,096  
Cumulative effect of change in accounting for goodwill(4)                 (98,270 )
   
 
 
 
 
Net income (loss)(4)   $ (74,530 ) $ 28,323   $ (29,161 ) $ (63,174 )
   
 
 
 
 
Net income (loss) per share:                          
Allocated to Genzyme General Stock:                          
  Genzyme General division net income   $ 62,781   $ 44,411   $ 120,574   $ 68,720  
  Tax benefit allocated from Genzyme Biosurgery     6,398     2,994     8,720     7,293  
  Tax benefit allocated from Genzyme Molecular Oncology     1,657     2,235     3,420     4,365  
   
 
 
 
 
  Net income allocated to Genzyme General Stock   $ 70,836   $ 49,640   $ 132,714   $ 80,378  
   
 
 
 
 
  Net income per share of Genzyme General Stock:                          
    Basic   $ 0.33   $ 0.23   $ 0.62   $ 0.38  
   
 
 
 
 
    Diluted(5)   $ 0.32   $ 0.23   $ 0.60   $ 0.36  
   
 
 
 
 
  Weighted average shares outstanding:                          
    Basic     216,313     213,917     215,702     213,624  
   
 
 
 
 
    Diluted(5)     222,867     219,634     221,650     220,349  
   
 
 
 
 
Allocated to Biosurgery Stock:                          
  Division net loss before cumulative effect of change in accounting for goodwill   $ (152,554 ) $ (17,522 ) $ (166,656 ) $ (37,904 )
  Cumulative effect of change in accounting for goodwill (4)                     (98,270 )
   
 
 
 
 
  Genzyme Biosurgery division net loss     (152,554 )   (17,522 )   (166,656 )   (136,174 )
  Allocated tax benefit     11,597     2,442     14,005     4,890  
   
 
 
 
 
  Net loss allocated to Biosurgery Stock(4)   $ (140,957 ) $ (15,080 ) $ (152,651 ) $ (131,284 )
   
 
 
 
 
Net loss per share of Biosurgery Stock—basic and diluted:                          
  Net loss per share before cumulative effect of change in accounting for goodwill   $ (3.46 ) $ (0.38 ) $ (3.76 ) $ (0.83 )
  Per share cumulative effect of change in accounting for goodwill (4)                 (2.48 )
   
 
 
 
 
  Net loss per share of Biosurgery Stock — basic and diluted(4)   $ (3.46 ) $ (0.38 ) $ (3.76 ) $ (3.31 )
   
 
 
 
 
  Weighted average shares outstanding     40,681     39,637     40,630     39,600  
   
 
 
 
 
Net income (loss) per share (continued):                          
Allocated to Molecular Oncology Stock:                          
Net loss   $ (4,409 ) $ (6,237 ) $ (9,224 ) $ (12,268 )
   
 
 
 
 
Net loss per share of Molecular Oncology Stock-basic and diluted   $ (0.26 ) $ (0.37 ) $ (0.54 ) $ (0.73 )
   
 
 
 
 
Weighted average shares outstanding     16,978     16,801     16,958     16,782  
   
 
 
 
 

(1)
Represents an estimated write off of the goodwill allocated to our orthopaedics reporting unit in June 2003 in accordance with Statement of Financial Accounting Standards, or SFAS, No. 142, "Goodwill and Other Intangible Assets." This charge may be adjusted pending final valuation of the impairment assessment.
(2)
Represents the impairment charge recorded in June 2003 to write down the carrying value of our cardiothoracic devices manufacturing facility in Fall River, Massachusetts to fair value.
(3)
Represents a loss on the sale of substantially all of the assets of our cardiothoracic devices business to Teleflex Inc. in June 2003.
(4)
Effective January 1, 2002, in connection with the provisions of SFAS No. 142, we ceased amortizing goodwill. In connection with the adoption of SFAS No. 142, we tested the goodwill of our cardiothoracic reporting unit for impairment and, as a result, reduced goodwill by recording a cumulative effect impairment charge of $98.3 million in our consolidated statements of operations and the combined statements of operations of Genzyme Biosurgery in March 2002.
(5)
Net income per share allocated to Genzyme General Stock on a diluted basis and weighted average shares-diluted for all periods presented includes the dilutive effect of options, stock purchase rights and warrants, but excludes the effect of the convertible subordinated debentures allocated to Genzyme General as the effect would be anti-dilutive in each period.

15



Condensed Combined Balance Sheets
(Unaudited, amounts in thousands)

 
  June 30,
2003

  December 31,
2002

Cash and all marketable securities   $ 1,291,723   $ 1,195,004
Other current assets     719,678     676,231
Property, plant and equipment, net     882,609     802,448
Intangibles, net     1,167,622     1,326,553
Other assets     117,390     82,813
   
 
Total assets   $ 4,179,022   $ 4,083,049
   
 
Current liabilities   $ 618,427   $ 607,800
Noncurrent liabilities     752,329     777,402
Stockholders' equity     2,808,266     2,697,847
   
 
Total liabilities and stockholders' equity   $ 4,179,022   $ 4,083,049

16




QuickLinks

Genzyme Corp. Reports Financial Results for Second Quarter of 2003
Genzyme General Reports 30 Percent Revenue Growth
GENZYME GENERAL (A Division of Genzyme Corporation) Combined Statements of Operations (Unaudited, amounts in thousands, except per share amounts)
Condensed Combined Balance Sheets (Unaudited, amounts in thousands)
RECONCILIATION OF GAAP TO NON-GAAP EARNINGS
Genzyme General (A Division of Genzyme Corporation) Analyst Schedule (Unaudited, amounts in thousands, except percentage and per share amounts)
Analyst Schedule
Combined Statements of Operations
Condensed Combined Balance Sheets
GENZYME BIOSURGERY RECONCILIATION OF GAAP TO NON-GAAP EARNINGS Quarter Ended June 30, 2003 (Amounts in thousands, except per share data)
Analyst Schedule
Analyst Schedule
Combined Statements of Operations
Condensed Combined Balance Sheets
Consolidated Statements of Operations
Condensed Combined Balance Sheets (Unaudited, amounts in thousands)
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