SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
Commission File Number 1-09623
IVAX CORPORATION
| Florida | 16-1003559 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| 4400 Biscayne Boulevard, Miami, Florida | 33137 | |
| (Address of principal executive offices) | (Zip Code) | |
(305) 575-6000
(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 by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934). 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.
200,117,486 shares of Common Stock, $.10 par value, outstanding as of July 27, 2004.
IVAX CORPORATION
| PAGE NO. | ||||
| PART I - FINANCIAL INFORMATION | ||||
| Item 1 - |
Financial Statements | |||
| Consolidated Balance Sheets as of June 30, 2004 and December 31, 2003 | 2 | |||
| Consolidated Statements of Operations for the three and six months ended June 30, 2004 and 2003 | 3 | |||
| Consolidated Statement of Shareholders’ Equity for the six months ended June 30, 2004 | 4 | |||
| Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003 | 5 | |||
| Notes to Consolidated Financial Statements | 6 | |||
| Item 2 - |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 18 | ||
| Item 3 - |
Quantitative and Qualitative Disclosures About Market Risk | 32 | ||
| Item 4 - |
Controls and Procedures | 33 | ||
| PART II - OTHER INFORMATION | ||||
| Item 1 - |
Legal Proceedings | 34 | ||
| Item 6 - |
Exhibits and Reports on Form 8-K | 35 | ||
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
IVAX CORPORATION AND SUBSIDIARIES
(In thousands, except per share data)
| June 30, 2004 |
December 31, 2003 |
|||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 191,043 | $ | 146,870 | ||||
| Marketable securities |
4,334 | 10,470 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $18,701 in 2004 and $17,675 in 2003 |
400,777 | 264,317 | ||||||
| Inventories |
460,863 | 413,872 | ||||||
| Other current assets |
157,240 | 160,187 | ||||||
| Total current assets |
1,214,257 | 995,716 | ||||||
| Property, plant and equipment, net |
526,948 | 502,942 | ||||||
| Goodwill, net |
485,298 | 489,665 | ||||||
| Intangible assets, net |
304,667 | 314,361 | ||||||
| Other assets |
112,482 | 70,250 | ||||||
| Total assets |
$ | 2,643,652 | $ | 2,372,934 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 146,092 | $ | 139,990 | ||||
| Current portion of long-term debt |
52,329 | 58,607 | ||||||
| Loans payable |
18,730 | 17,804 | ||||||
| Accrued income taxes payable |
26,797 | 27,990 | ||||||
| Accrued expenses and other current liabilities |
256,002 | 242,158 | ||||||
| Total current liabilities |
499,950 | 486,549 | ||||||
| Long-term debt, net of current portion |
982,051 | 855,335 | ||||||
| Other long-term liabilities |
52,928 | 56,208 | ||||||
| Minority interest |
12,588 | 12,531 | ||||||
| Shareholders’ equity: |
||||||||
| Common stock, $0.10 par value, authorized 437,500 shares, issued and outstanding 200,061 shares in 2004 and 196,708 shares in 2003 |
20,006 | 19,671 | ||||||
| Capital in excess of par value |
413,473 | 341,231 | ||||||
| Retained earnings |
780,915 | 690,476 | ||||||
| Accumulated other comprehensive loss |
(118,259 | ) | (89,067 | ) | ||||
| Total shareholders’ equity |
1,096,135 | 962,311 | ||||||
| Total liabilities and shareholders’ equity |
$ | 2,643,652 | $ | 2,372,934 | ||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
2
IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months |
Six Months |
|||||||||||||||
| Period Ended June 30, (In thousands, except per share data) |
2004 |
2003 |
2004 |
2003 |
||||||||||||
| Net revenues |
$ | 463,962 | $ | 342,985 | $ | 889,153 | $ | 660,678 | ||||||||
| Cost of sales (excludes amortization, which is presented below) |
239,408 | 192,033 | 465,193 | 363,583 | ||||||||||||
| Gross profit |
224,554 | 150,952 | 423,960 | 297,095 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling |
66,496 | 52,458 | 127,867 | 98,053 | ||||||||||||
| General and administrative |
43,599 | 31,279 | 80,105 | 56,347 | ||||||||||||
| Research and development |
38,662 | 25,065 | 71,012 | 45,486 | ||||||||||||
| Amortization of intangible assets |
5,432 | 5,315 | 10,937 | 9,806 | ||||||||||||
| Restructuring costs (reversal) |
(36 | ) | 317 | 597 | 780 | |||||||||||
| Total operating expenses |
154,153 | 114,434 | 290,518 | 210,472 | ||||||||||||
| Operating income |
70,401 | 36,518 | 133,442 | 86,623 | ||||||||||||
| Other income (expense): |
||||||||||||||||
| Interest income |
1,193 | 686 | 2,285 | 1,919 | ||||||||||||
| Interest expense |
(19,385 | ) | (11,003 | ) | (31,130 | ) | (21,952 | ) | ||||||||
| Other income, net |
6,013 | 230 | 6,351 | 5,854 | ||||||||||||
| Total other expense |
(12,179 | ) | (10,087 | ) | (22,494 | ) | (14,179 | ) | ||||||||
| Income before income taxes and minority interest |
58,222 | 26,431 | 110,948 | 72,444 | ||||||||||||
| Provision for income taxes |
10,071 | 7,378 | 20,452 | 24,484 | ||||||||||||
| Income before minority interest |
48,151 | 19,053 | 90,496 | 47,960 | ||||||||||||
| Minority interest |
(53 | ) | 33 | (57 | ) | 111 | ||||||||||
| Income from continuing operations |
48,098 | 19,086 | 90,439 | 48,071 | ||||||||||||
| Income from discontinued operations, net of tax of $12,763 |
— | 22,204 | — | 22,204 | ||||||||||||
| Net income |
$ | 48,098 | $ | 41,290 | $ | 90,439 | $ | 70,275 | ||||||||
| Basic earnings per common share: |
||||||||||||||||
| Continuing operations |
$ | 0.24 | $ | 0.10 | $ | 0.46 | $ | 0.25 | ||||||||
| Discontinued operations |
— | 0.11 | — | 0.11 | ||||||||||||
| Net income |
$ | 0.24 | $ | 0.21 | $ | 0.46 | $ | 0.36 | ||||||||
| Diluted earnings per common share: |
||||||||||||||||
| Continuing operations |
$ | 0.24 | $ | 0.10 | $ | 0.45 | $ | 0.25 | ||||||||
| Discontinued operations |
— | 0.11 | — | 0.11 | ||||||||||||
| Net income |
$ | 0.24 | $ | 0.21 | $ | 0.45 | $ | 0.36 | ||||||||
| Weighted average number of common shares outstanding: |
||||||||||||||||
| Basic |
198,268 | 195,163 | 197,671 | 195,066 | ||||||||||||
| Diluted |
203,037 | 198,503 | 202,580 | 197,578 | ||||||||||||
The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.
3
IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands)
| Common Stock |
Capital in Excess of |
Retained Earnings |
Accumulated Comprehensive |
Total |
|||||||||||||||
| Number of Shares |
Amount |
||||||||||||||||||
| BALANCE, January 1, 2004 |
196,708 | $ | 19,671 | $ | 341,231 | $ | 690,476 | $ | (89,067 | ) | $ | 962,311 | |||||||
| Comprehensive income: |
|||||||||||||||||||
| Net income |
— | — | — | 90,439 | — | 90,439 | |||||||||||||
| Translation adjustment |
— | — | — | — | (27,421 | ) | (27,421 | ) | |||||||||||
| Unrealized net loss on available-for-sale equity securities and derivatives, net of tax |
— | — | — | — | (1,771 | ) | (1,771 | ) | |||||||||||
| Comprehensive income |
61,247 | ||||||||||||||||||
| Exercise of stock options |
911 | 91 | 10,427 | — | |||||||||||||||