FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
Commission File Number 1-09623
IVAX CORPORATION
FLORIDA 16-1003559
- ------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
121,516,423 SHARES OF COMMON STOCK, $.10 PAR VALUE, OUTSTANDING AS
OF OCTOBER 31, 1997.
<PAGE>
IVAX CORPORATION
INDEX
PART I - FINANCIAL INFORMATION PAGE NO.
--------
Item 1 - Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1997 and December 31, 1996 2
Condensed Consolidated Statements of Operations
for the three months and nine months ended
September 30, 1997 and 1996 3
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996 4
Notes to Condensed Consolidated Financial Statements 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 19
Item 4 - Submission of Matters to a Vote of Security Holders 19
Item 6 - Exhibits and Reports on Form 8-K 19
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
IVAX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 117,141 $ 80,806
Accounts receivable, net 125,042 198,009
Inventories 156,250 204,194
Other current assets 107,280 101,117
Net assets of discontinued operations 45,788 398,329
------------- ------------
Total current assets 551,501 982,455
Property, plant and equipment, net 199,275 223,312
Cost in excess of net assets of acquired companies, net 16,695 25,998
Patents, trademarks, licenses and other intangibles, net 24,100 28,728
Other 50,199 73,155
------------- ------------
Total assets $ 841,770 $ 1,333,648
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable $ 4,403 $ 5,027
Current portion of long-term debt 1,578 5,595
Accounts payable 48,130 58,075
Accrued income taxes payable 6,031 13,437
Accrued expenses and other current liabilities 118,509 86,065
------------- ------------
Total current liabilities 178,651 168,199
Long-term debt, net of current portion 104,467 442,819
Other long-term liabilities 15,934 12,934
Minority interest 15,523 14,568
Shareholders' equity:
Common stock, $.10 par value, authorized 250,000 shares,
issued and outstanding 121,512 shares (121,476 in 1996) 12,151 12,148
Capital in excess of par value 515,216 515,070
Retained earnings 15,373 160,960
Cumulative translation adjustment and other (15,545) 6,950
------------- ------------
Total shareholders' equity 527,195 695,128
------------- ------------
Total liabilities and shareholders' equity $ 841,770 $ 1,333,648
============= ============
</TABLE>
THE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE BALANCE SHEETS.
2
<PAGE>
<TABLE>
<CAPTION>
IVAX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS NINE MONTHS
PERIOD ENDED SEPTEMBER 30, 1997 1996 1997 1996
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
(In thousands, except per share data)
NET REVENUES $ 126,357 $ 101,641 $ 467,064 $ 469,078
COST OF SALES 113,596 117,672 343,582 347,434
----------- ----------- ----------- ------------
Gross Profit 12,761 (16,031) 123,482 121,644
----------- ----------- ----------- ------------
OPERATING EXPENSES:
Selling 31,156 31,846 94,090 87,469
General and administrative 29,380 36,517 85,682 80,976
Research and development 12,939 14,133 38,852 38,611
Amortization of intangible assets 948 1,383 2,899 3,580
Restructuring costs and asset write-downs 4,359 69,873 24,859 69,873
Merger expenses - - 2,343 184
----------- ----------- ----------- ------------
Total operating expenses 78,782 153,752 248,725 280,693
----------- ----------- ----------- ------------
Loss from operations (66,021) (169,783) (125,243) (159,049)
OTHER INCOME (EXPENSE):
Interest income 1,573 199 3,447 618
Interest expense (1,336) (4,628) (12,256) (10,362)
Other income (expense), net 44,295 (275) 50,881 3,527
----------- ----------- ----------- ------------
44,532 (4,704) 42,072 (6,217)
----------- ----------- ----------- ------------
Loss from continuing operations before
income taxes and minority interest (21,489) (174,487) (83,171) (165,266)
PROVISION (BENEFIT) FOR INCOME TAXES 56,560 (37,504) 55,913 (43,368)
----------- ----------- ----------- ------------
Loss from continuing operations
before minority interest (78,049) (136,983) (139,084) (121,898)
MINORITY INTEREST (705) (745) (3,586) (4,647)
----------- ----------- ----------- ------------
Loss from continuing operations (78,754) (137,728) (142,670) (126,545)
Loss from discontinued operations (11,380) (40,941) (780) (30,159)
----------- ----------- ----------- ------------
Loss before extraordinary items (90,134) (178,669) (143,450) (156,704)
Extraordinary items - losses on
extinguishment of debt, net of taxes - - (2,137) (2,073)
----------- ----------- ----------- ------------
NET LOSS $ (90,134) $ (178,669) $ (145,587) $ (158,777)
=========== =========== =========== ============
LOSS PER COMMON SHARE:
Continuing operations $ (.65) $ (1.13) $ (1.17) $ (1.05)
Discontinued operations (.09) (.34) (.01) (.24)
Extraordinary items - - (.02) (.02)
----------- ----------- ----------- ------------
Net loss $ (.74) $ (1.47) $ (1.20) $ (1.31)
=========== =========== =========== ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING: 121,491 121,467 121,489 120,774
=========== =========== =========== ============
</TABLE>
THE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
IVAX CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 1997 1996
------------- -------------
<S> <C> <C>
(In thousands)
Cash flows from operating activities:
Net loss $ (145,587) $ (158,777)
Adjustments to reconcile net loss to net cash provided by
(used for) operating activities:
Non cash charges relating to restructuring costs and asset write-downs 24,859 69,873
Depreciation and amortization 25,677 22,179
Provision (benefit) for deferred taxes 48,823 (33,431)
Provision for allowances for doubtful accounts 4,917 21,703
Gain on the sale of product rights (43,224) -
Gains on sale of long-term assets (243) (587)
Losses on extinguishment of debt 2,137 1,640
Minority interest 3,586 4,647
Loss from discontinued operations 780 30,159
Changes in assets and liabilities:
Decrease in accounts receivable 60,045 71,742
Decrease (increase) in inventories 40,204 (53,925)
Decrease (increase) in other current assets 42,426 (28,420)
Increase in other assets (831) (8,281)
(Decrease) increase in accounts payable, accrued expenses
and other current liabilities (15,735) 895
Increase (decrease) in other long-term liabilities 1,094 (2,302)
Other, net (818) (428)
Net cash provided by discontinued operations 16,513 2,735
------------- -------------
Net cash provided by (used for) operating activities 64,623 (60,578)
------------- -------------
Cash flows from investing activities:
Proceeds from divestitures 361,105 -
Capital expenditures, net of proceeds from sales (22,162) (37,952)
Acquisitions of patents, trademarks, licenses
and other intangibles, net of sales proceeds (1,572) (1,156)
Acquisitions of businesses and other, net of cash acquired (10,500) (12,006)
Net cash used for discontinued operations (13,846) (25,030)
------------- -------------
Net cash provided by (used for) investing activities 313,025 (76,144)
------------- -------------
Cash flows from financing activities:
Borrowings on long-term debt and loans payable 47,203 568,198
Payments on long-term debt and loans payable (387,874) (368,702)
Issuance of common stock 149 31,779
Cash dividends paid - (6,057)
Net cash used for discontinued operations (92) (87,408)
------------- -------------
Net cash (used for) provided by financing activities (340,614) 137,810
------------- -------------
Effect of exchange rate changes on cash (699) (720)
------------- -------------
Net increase in cash and cash equivalents 36,335 368
Cash and cash equivalents at the beginning of the year 80,806 14,720
------------- -------------
Cash and cash equivalents at the end of the period $ 117,141 $ 15,088
============= =============
Supplemental disclosures:
Interest paid $ 14,148 $ 18,186
============= =============
Income tax (refunds) payments $ (46,935) $ 12,123
============= =============
</TABLE>
THE ACCOMPANYING NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ARE AN
INTEGRAL PART OF THESE STATEMENTS.
4
<PAGE>
IVAX CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share data)
(1) GENERAL:
In management's opinion, the accompanying unaudited condensed
consolidated financial statements of IVAX Corporation and subsidiaries ("IVAX")
contain all adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position of IVAX as of September 30,
1997, and the results of its operations for the three and nine months ended
September 30, 1997 and 1996. The results of operations and cash flows for the
nine months ended September 30, 1997 are not necessarily indicative of the
results of operations or cash flows which may be reported for the remainder of
1997.
The accompanying unaudited interim condensed consolidated financial
statements have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission for reporting on Form 10-Q. Pursuant to such
rules and regulations, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The condensed consolidated
financial statements should be read in conjunction with the Consolidated
Financial Statements and the Notes to Consolidated Financial Statements included
in IVAX's Annual Report on Form 10-K for the year ended December 31, 1996.
The accounting policies followed for interim financial reporting are
the same as those disclosed in Note 2 of the Notes to Consolidated Financial
Statements included in IVAX's Annual Report on Form 10-K for the year ended
December 31, 1996.
Certain amounts presented in the condensed consolidated financial
statements for prior periods have been reclassified to conform to the current
period's presentation and as required with respect to discontinued operations.
(2) EARNINGS (LOSS) PER SHARE:
Earnings (loss) per share is computed by dividing net earnings (loss)
by the weighted-average number of common and dilutive common equivalent shares
outstanding for each period. Common stock equivalents include the dilutive
effect of all outstanding stock options and warrants using the treasury stock
method.
Statement of Financial Accounting Standards ("SFAS") No. 128, EARNINGS
PER SHARE, requires the disclosure of "basic" and "diluted" earnings per share
for periods ending after December 15, 1997. The computation under SFAS No. 128
differs from the computation of primary and fully diluted earnings per share
under Accounting Principles Board ("APB") Opinion No. 15 primarily in the manner
in which potential common stock (that is, securities such as options, warrants,
convertible securities, or contingent stock agreements) is treated. Basic
earnings per share is computed by dividing net income (loss) by the
weighted-average number of common shares outstanding for the period. In the
computation of diluted earnings per share, the weighted-average number of common
shares outstanding is adjusted for the effect of all dilutive potential common
stock.
5
<PAGE>
Basic and diluted earnings per share computed in accordance with SFAS
No. 128 for the three and nine months ended September 30, 1997 and 1996 do not
differ from the primary earnings per share reported in the accompanying
condensed consolidated statements of operations. Both diluted earnings per share
computed in accordance with SFAS No. 128 and fully diluted earnings per share
computed under APB Opinion No. 15 are not dilutive for the periods presented.
(3) RESTRUCTURING COSTS AND ASSET WRITE-DOWNS:
RESTRUCTURING COSTS
During the third quarter of 1997, IVAX continued its ongoing efforts to
reduce costs and enhance operating efficiency by initiating further
restructuring programs at its corporate headquarters and domestic generic
pharmaceutical operations. The third quarter restructuring programs include an
approximate 30% work force reduction at IVAX's corporate headquarters and
further reductions of sales and marketing personnel at IVAX's domestic generic
pharmaceutical operations. IVAX recorded a pre-tax restructuring charge of
$4,359 in the third quarter of 1997, comprised primarily of $1,300 for severance
and other employee termination benefits associated with the work force
reductions and $2,200 for certain costs associated primarily with manufacturing
facilities held for sale in connection with 1996 restructuring programs. As of
September 30, 1997, no costs had been charged against reserves established in
the third quarter of 1997.
ASSET WRITE-DOWNS
During the second quarter of 1997, management reevaluated the carrying
value of certain long-lived assets. The reevaluation was performed, primarily,
in conjunction with initiatives to further consolidate facilities of IVAX's
domestic generic pharmaceutical operations in an effort to improve its
efficiency. As a result of these initiatives, a $20,500 asset write-down was
recognized which primarily represents an initial estimate of the minimum level
of charges associated with expected losses on facility disposals. These asset
write-downs were recorded in accordance with SFAS No. 121, ACCOUNTING FOR THE
IMPAIRMENT OF LONG LIVED ASSETS AND FOR LONG LIVED ASSETS TO BE DISPOSED OF, and
are shown as asset write-downs in the accompanying condensed consolidated
statements of operations. Management determined the amount of the write-downs
based on various valuation techniques, including discounted cash flow analysis,
independent appraisals and third party offers.
Management anticipates that it will continue to consolidate facilities
and restructure its operations, including its domestic generic pharmaceutical
operations, in an ongoing effort to improve efficiency and operations.
Accordingly, additional restructuring costs and asset write-downs may be
recorded in future periods as consolidation and restructuring initiatives
develop further.
(4) INCOME TAXES:
The provision (benefit) for income taxes is based on the consolidated
United States entities' and individual foreign companies' estimated tax rates
for the applicable year. IVAX utilizes the asset and liability method, and
deferred taxes are determined based on the estimated future tax effects of
differences between the financial accounting and tax bases of assets and
liabilities using the applicable tax laws. Deferred income tax provisions and
benefits are based on the changes in the deferred tax asset or tax liability
from period to period.
6
<PAGE>
The provision (benefit) for income taxes from continuing operations
consists of the following:
<TABLE>
THREE MONTHS NINE MONTHS
PERIOD ENDED SEPTEMBER 30, 1997 1996 1997 1996
------------- -------------- ------------- ----------
<S> <C> <C> <C> <C>
Current:
United States $ (174) $ (25,897) $ - $ (25,252)
Foreign, including Puerto Rico
and U.S. Virgin Islands 1,929 1,108 7,090 15,315
Deferred 54,805 (12,715) 48,823 (33,431)
------------- -------------- ------------- ----------
Provision (benefit) for income taxes $ 56,560 $ (37,504) $ 55,913 $ (43,368)
============= ============== ============= ==========
</TABLE>
In the second and third quarters of 1997, IVAX established $87,435 in
valuation allowances, not including $16,137 in valuation allowances related to
discontinued operations, primarily against its domestic deferred tax assets
generated from losses incurred by its domestic operations. As a result, the
domestic deferred tax asset is fully reserved as of September 30, 1997.
Management expects that it will also recognize additional valuation allowances
related to any future deferred tax assets generated from its domestic operations
until such time as sustainable domestic taxable income is achieved.
As of September 30, 1997, a foreign net deferred tax asset aggregating
$16,111 is included in other current assets, other assets and other long-term
liabilities in the accompanying condensed consolidated balance sheet.
Realization of the foreign net deferred tax asset is dependent upon generating
sufficient future foreign taxable income. Although realization is not assured,
management believes it is more likely than not that the foreign net deferred tax
asset will be realized.
(5) MERGERS:
On March 20, 1997, IVAX announced that Bergen Brunswig Corporation
("Bergen") unilaterally terminated the proposed merger between IVAX and Bergen.
On March 21, 1997, Bergen filed a lawsuit against IVAX in federal court
alleging, among other things, various breaches of the merger agreement, and IVAX
filed a counterclaim for breach of the merger agreement by Bergen. On August 15,
1997, IVAX and Bergen announced that they agreed to settle the pending
litigation and stipulated to the dismissal of the lawsuit with prejudice. The
settlement did not have a material effect on the accompanying consolidated
results of operations. Included in the accompanying condensed consolidated
statement of operations for the nine months ended September 30, 1997 are $2,343
of merger expenses related to the terminated merger.
(6) DIVESTITURES:
Effective May 30, 1997, IVAX sold McGaw, Inc. ("McGaw"), its
intravenous division, to B. Braun of America, Inc. ("B. Braun"), a subsidiary of
B. Braun Melsungen AG, for $320,000 in cash (subject to certain post-closing
adjustments), additional payments of up to $80,000 contingent upon the combined
operating results of McGaw and B. Braun's principal United States operating
subsidiary, and certain royalties based on sales of the Duplex(TM) drug delivery
system. The Duplex(TM) system, presently in development, is a multi-compartment
intravenous drug delivery system devised for drugs that have limited stability
after mixing.
During the third quarter of 1997, IVAX completed the sale of a
significant portion of the assets of its specialty chemicals division in three
separate transactions in which IVAX received an aggregate of
7
<PAGE>
$41,105 in cash, subject to certain post closing adjustments. With the exception
of its specialty lubricants business, IVAX has divested all of its specialty
chemicals division.
The gain on sale and results of operations of both the intravenous
division and specialty chemicals division were classified as part of
discontinued operations for all periods presented (See Note 7, Discontinued
Operations).
(7) DISCONTINUED OPERATIONS:
During the second quarter of 1997, IVAX's board of directors determined
to divest its intravenous, personal care products and specialty chemicals
divisions. As a result, IVAX classified these businesses as discontinued
operations, and, accordingly, has included their results of operations in loss
from discontinued operations in the accompanying condensed consolidated
statements of operations. Results of these operations were as follows:
<TABLE>
THREE MONTHS NINE MONTHS
PERIOD ENDED SEPTEMBER 30, 1997 1996 1997 1996
------------- -------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
INTRAVENOUS (THROUGH MAY 30, 1997)
Net revenues (1) $ - $ 81,553 $ 140,634 $ 249,597
Income from operations before taxes (2) $ - $ 3,011 $ 3,770 $ 4,982
Income tax benefit - (252) (427) (8,805)
------------- -------------- ------------- -----------
Income from operations $ - $ 3,263 $ 4,197 $ 13,787
------------- -------------- ------------- -----------
PERSONAL CARE PRODUCTS
Net revenues (1) $ 15,299 $ 22,915 $ 54,128 $ 61,974
Income (loss) from operations before
taxes (2) $ (18,465) $ 2,653 $ (18,254) $ 6,745
Income tax provision 3,097 1,202 3,283 3,054
------------- -------------- ------------- -----------
Income (loss) from operations $ (21,562) $ 1,451 $ (21,537) $ 3,691
------------- -------------- ------------- -----------
SPECIALTY CHEMICALS
Net revenues (1) $ 5,300 $ 17,138 $ 40,350 $ 51,408
Loss from operations before
taxes (2) $ (2,389) $ (49,654) $ (1,749) $ (52,404)
Income tax provision (benefit) 1,834 (3,999) 2,235 (4,767)
------------- -------------- ------------- -----------
Loss from operations $ (4,223) $ (45,655) $ (3,984) $ (47,637)
------------- -------------- ------------- -----------
Sub-total loss from operations $ (25,785) $ (40,941) $ (21,324) $ (30,159)
------------- -------------- ------------- -----------
DIVESTITURES (SEE NOTE 6)
Pre-tax gain on divestitures $ 15,800 $ - $ 47,015 $ -
Income tax provision 1,395 - 26,471 -
------------- -------------- ------------- -----------
Net gain on divestitures $ 14,405 $ - $ 20,544 $ -
------------- -------------- ------------- -----------
Total loss from discontinued operations $ (11,380) $ (40,941) $ (780) $ (30,159)
============= ============== ============= ===========
</TABLE>
(1) Net revenues include intersegment sales of $102 and $528 for the three
months ended September 30, 1997 and 1996, respectively, and $1,596 and $1,409
for the nine months ended September 30, 1997 and 1996, respectively.
(2) Includes an allocation of interest expense based on the ratio of net assets
of each of the discontinued businesses to IVAX's consolidated total capital. The
above operating results include interest expense
8
<PAGE>
allocations of $475 and $1,817 for the three months ended September 30, 1997 and
1996, respectively, and $5,547 and $4,242 for the nine months ended September
30, 1997 and 1996, respectively.
The net assets of IVAX's remaining discontinued operations (excluding
intercompany assets) at September 30, 1997, as presented in the Condensed
Consolidated Balance Sheet, are as follows:
<TABLE>
PERSONAL CARE SPECIALTY
PRODUCTS CHEMICALS
DIVISION DIVISION TOTAL
------------- ------------- --------------
<S> <C> <C> <C>
Current assets $ 24,253 $ 6,320 $ 30,573
Property, plant and equipment, net 5,519 1,059 6,578
Other assets 21,200 3,749 24,949
------------- ------------- --------------
Total assets 50,972 11,128 62,100
------------- ------------- --------------
Current liabilities 10,107 5,099 15,206
Other liabilities 420 686 1,106
------------- ------------- --------------
Total liabilities 10,527 5,785 16,312
------------- ------------- --------------
Net assets of discontinued operations $ 40,445 $ 5,343 $ 45,788
============= ============= ==============
</TABLE>
(8) SALE OF PRODUCT RIGHTS:
On September 18, 1997, IVAX sold the rights to its proprietary drug
Elmiron(R) and three additional urology products in the United States and Canada
to ALZA Corporation ("ALZA"). IVAX retained the rights to these products in the
rest of the world. IVAX will receive $75 million in up-front payments and may
receive additional fees based on the achievement of specified sales levels of
Elmiron(R) during the next five years. IVAX will manufacture and package all of
these products for ALZA and will receive payments from ALZA based on sales of
the products.
The $75 million payment due from ALZA is included in other current
assets as of September 30, 1997. Included in other income is a $43,224 pre- and
after-tax gain on the transaction. The gain is net of $15,000 in reserves
provided for a related research and development cost sharing arrangement, the
write-off of $11,774 in certain assets of the domestic proprietary
pharmaceutical operations, $3,000 in payments due to a third party associated
with an existing licensing agreement, and $2,002 in severance and other employee
termination benefits associated with work force reductions in the domestic
proprietary pharmaceutical operations.
(9) DEBT:
During the second quarter of 1997, IVAX utilized a portion of the
proceeds from the sale of its intravenous division (See Note 6, Divestitures) to
pay the $270,147 outstanding balance of its revolving credit facility which was
scheduled to mature November 14, 1999. The facility was terminated in
conjunction with this payment, resulting in IVAX recording an extraordinary loss
of $2,137 primarily related to the write-off of deferred financing costs.
(10) CONTINGENCIES:
With regard to the shareholder class action lawsuit filed against IVAX
in September 1994, the parties executed a definitive settlement agreement in
April 1997 which was approved by the court in August 1997. On September 11,
1997, the court's final judgment and order of dismissal with prejudice
9
<PAGE>
became final and conclusive. IVAX's portion of the settlement obligation, which
is not significant, was appropriately accrued at December 31, 1996.
(11) COMPREHENSIVE INCOME:
SFAS No. 130, REPORTING COMPREHENSIVE INCOME, is effective for fiscal
years beginning after December 15, 1997. SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a full set
of financial statements. The objective of SFAS No. 130 is to report a measure of
all changes in equity of an enterprise that result from transactions and other
economic events in a period other than transactions with owners. Comprehensive
income is the total of net income and all other non-owner changes in equity.
Management believes that the adoption of SFAS No. 130 will not have a material
impact on IVAX's consolidated financial statements, and IVAX has elected to
disclose comprehensive income in the consolidated statement of shareholders'
equity.
(12) SUBSEQUENT EVENT:
On November 13, 1997, IVAX announced a further restructuring program at
its domestic generic pharmaceutical operations aimed at improving efficiency
and reducing costs. The program consists of a work force reduction of
approximately 250 employees throughout the organization, or 20% of the domestic
generic pharmaceutical work force. IVAX will recognize an approximate $2,000
pre-tax restructuring charge in the fourth quarter of 1997 for severance and
other employee benefits associated with the work force reduction. As discussed
in Note 3, Restructuring Costs and Asset Write-Downs, management anticipates
that it will continue to consolidate facilities and restructure its operations,
including its domestic generic pharmaceutical operations, in an ongoing effort
to improve efficiency and reduce costs. Accordingly, additional restructuring
costs and asset write-downs may be recorded in the fourth quarter of 1997 or
thereafter.
10
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Consolidated Financial Statements, the related Notes to Consolidated
Financial Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations included in IVAX's Annual Report on Form
10-K for the year ended December 31, 1996 and the Condensed Consolidated
Financial Statements and the related Notes to Condensed Consolidated Financial
Statements included in Item 1 of this Quarterly Report on Form 10-Q. Except for
historical information contained herein, the matters discussed below are forward
looking statements made pursuant to the safe harbor provisions of the Securities
Litigation Reform Act of 1995. Such statements involve risks and uncertainties,
including but not limited to economic, competitive, governmental and
technological factors affecting IVAX's operations, markets, products and prices,
and other factors discussed elsewhere in this report and the documents filed by
IVAX with the Securities and Exchange Commission ("SEC").
Results for the three and nine months ending September 30, 1996 have
been restated to reflect the classification of certain businesses as
discontinued operations. See "Results of Operations-Discontinued Operations" for
a further discussion. Additionally, the diagnostics division's results of
operations, previously reported as part of the "Other operations" segment, are
not disclosed as a separate segment because they are not significant.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1996
IVAX reported a loss from continuing operations of $142.7 million for
the nine months ended September 30, 1997, compared to a loss from continuing
operations of $126.5 million for the nine months ended September 30, 1996. The
net loss for the nine months ended September 30, 1997 was $145.6 million,
compared to a net loss of $158.8 million for the same period of the prior year.
Results for both periods included a $2.1 million net extraordinary loss relating
to the extinguishment of debt.
Loss per common share from continuing operations was $1.17 for the nine
months ended September 30, 1997, compared to a loss of $1.05 for the nine months
ended September 30, 1996. Net loss per common share was $1.20 for the nine
months ended September 30, 1997, compared to a net loss of $1.31 for the same
period of the prior year. The net extraordinary losses recorded in both periods
relating to the early extinguishment of debt resulted in a $.02 loss per common
share.
Net revenues for the first nine months of 1997 totaled $467.1 million,
a decrease of $2.0 million, or less than 1%, compared to the same period of the
prior year. An increase of $36.6 million in net revenues of IVAX's international
operations was more than offset by a decrease of $38.6 million in net revenues
of IVAX's domestic operations.
Domestic net revenues totaled $186.5 million for the first nine months
of 1997, compared to $225.1 million for the same period of 1996. The $38.6
million, or 17%, decrease in domestic net revenues was primarily attributable to
lower sales volumes and prices of certain generic pharmaceutical products. This
decline was partially offset by lower sales returns and allowances and net
revenues generated by certain new generic and proprietary pharmaceutical
products manufactured by IVAX and introduced into the market over the past
twelve months.
11
<PAGE>
The decline in sales returns and allowances during the nine months
ended September 30, 1997 compared to the same period of the prior year is
primarily due to unusually high provisions for these items for the first nine
months of 1996 as compared to the same period of 1997. The factors contributing
to the unusually high provisions in 1996 are discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included in IVAX's Annual Report on Form 10-K for the year ended December 31,
1996. The decline in sales returns and allowances was, however, limited by
increased provisions during the third quarter of 1997 primarily related to an
unusually high volume of sales for certain products at low contractual prices
and adjustments to reserves for customer inventory credits, rebates and expected
returns.
During the first nine months of 1997 and 1996, IVAX's domestic generic
pharmaceutical operations provided reserves which reduced gross sales by $157.2
million and $231.9 million, respectively (which includes reserves for expected
inventory credits and returns of $48.4 million and $125.7 million,
respectively). At September 30, 1997 and December 31, 1996, these reserves
totaled $77.0 million and $98.2 million, respectively (which includes reserves
for expected inventory credits and returns of $42.4 million and $65.9 million,
respectively).
IVAX's international operations generated net revenues of $280.6
million in the first nine months of 1997, compared to $244.0 million for the
same period of the prior year. The $36.6 million, or 15%, increase in
international net revenues was primarily due to increased volume for both
generic and branded pharmaceutical products and, to a lesser extent, the
favorable impact of foreign currency fluctuations.
Gross profit for the first nine months of 1997 increased $1.9 million,
or 2%, from the same period of the prior year. Gross profit was $123.5 million
(26.4% of net revenues) for the first nine months of 1997, compared to $121.6
million (25.9% of net revenues) for the first nine months of 1996. The increase
in gross profit percentage is primarily due to lower sales returns and
allowances at IVAX's domestic generic pharmaceutical operations which were
partially offset by price declines and unfavorable product mix for both the
domestic generic pharmaceutical and international operations and, to a lesser
extent, increased inventory obsolescence reserves at IVAX's domestic generic
pharmaceutical operations.
Selling expenses totaled $94.1 million (20.1% of net revenues) for the
first nine months of 1997, compared to $87.5 million (18.6% of net revenues) for
the first nine months of 1996. The increase was primarily attributable to
additional sales force and promotional costs related to Elmiron(R), IVAX's
innovative drug used to treat interstitial cystitis, approved for marketing in
the United States during September 1996, and additional sales force and
promotional costs related to IVAX's international operations. These increases
were partially offset by a decrease in selling expenses of the domestic generic
pharmaceutical operations as a result of fewer product promotions and reductions
in sales and marketing personnel.
General and administrative expenses totaled $85.7 million (18.3% of
net revenues) for the first nine months of 1997, compared to $81.0 million
(17.3% of net revenues) for the first nine months of 1996, an increase of $4.7
million. The increase is primarily attributable to higher occupancy costs and
professional fees at IVAX's international operations. To a lesser extent,
corporate general and administrative expenses increased from the same period in
1996 primarily due to increases in health insurance, personnel and legal costs.
These increases were partially offset by lower bad debt provisions at IVAX's
domestic generic pharmaceutical operations which were unusually high in the
comparable period of the prior year as a result of the 1996 bankruptcy of a
wholesaler customer.
12
<PAGE>
Research and development expenses for the first nine months of 1997
remained relatively flat compared to the first nine months of 1996, at a total
of $38.9 million (8.3% of net revenues). The future level of research and
development expenditures will depend on, among other things, the outcome of
clinical testing of products under development, delays or changes in government
required testing and approval procedures, technological and competitive
developments, and strategic marketing decisions.
During the nine months ended September 30, 1997 and 1996, IVAX recorded
restructuring costs and asset write-downs of $24.9 million and $69.9 million,
respectively. During the third quarter of 1996, IVAX approved and initiated a
restructuring program aimed at reducing costs and enhancing operating
efficiency at its domestic generic pharmaceutical operations. The
restructuring program primarily involved facility consolidations, work force
reductions and other cost saving measures. IVAX recorded a pre-tax restructuring
charge of $14.0 million ($8.4 million after-tax) in the 1996 third quarter,
comprised of $8.7 million for the estimated loss on sale of closed manufacturing
plants, $3.0 million for other plant closures and related costs, and $2.3
million for severance and other employee termination benefits associated with
the work force reductions.
In addition, during the third quarter of 1996, management reevaluated
the carrying value of certain long-lived assets and goodwill related to those
assets held and used in IVAX's domestic generic pharmaceutical operations. This
reevaluation was necessitated by management's determination that the expected
future results of operations and cash flows from that business would be
substantially lower than previously expected by management. As a result, IVAX
recorded a charge of $55.9 million (pre-and after-tax) to reduce the carrying
value of goodwill related to these operations. The write-down reduced
amortization expense by approximately $1.6 million annually.
During the second quarter of 1997, management again reevaluated the
carrying value of certain long-lived assets, primarily in conjunction with
initiatives to further consolidate facilities of IVAX's domestic generic
pharmaceutical operations in a continuing effort to improve its efficiency. As a
result of these initiatives, a $20.5 million (pre- and after-tax) asset
write-down was recognized which primarily represents an initial estimate of the
minimum level of charges associated with expected losses on facility disposals.
In addition, during the third quarter of 1997, IVAX continued its
ongoing effort to reduce costs and enhance operating efficiency by initiating
further restructuring programs at its corporate headquarters and domestic
generic pharmaceutical operations. The third quarter restructuring programs
include an approximate 30% work force reduction at IVAX's corporate headquarters
and further reductions of sales and marketing personnel at IVAX's domestic
generic pharmaceutical operations. IVAX recorded a pre-tax restructuring charge
of $4.4 million (pre- and after-tax) in the third quarter of 1997, comprised
primarily of $1.3 million for severance and other employee termination benefits
associated with the work force reductions and $2.2 million for certain costs
associated primarily with manufacturing facilities held for sale in connection
with the 1996 restructuring programs.
On November 13, 1997, IVAX announced a further restructuring program at
its domestic generic pharmaceutical operations aimed at improving efficiency
and reducing costs. The program consists of a work force reduction of
approximately 250 employees throughout the organization, or 20% of the domestic
generic pharmaceutical work force. IVAX will recognize an approximate $2 million
pre-tax restructuring charge in the fourth quarter of 1997 for severance and
other employee benefits associated with the work force reduction. The work force
reduction is expected to generate approximately $8 million in annual cost
savings. Management anticipates that it will continue to consolidate facilities
and restructure its operations, including its domestic generic pharmaceutical
operations, in an ongoing effort to
13
<PAGE>
improve efficiency and reduce costs. Accordingly, additional restructuring
costs and asset write-downs may be recorded in the fourth quarter of 1997 or
thereafter.
Interest income increased $2.8 million in the first nine months of
1997, as compared to the first nine months of the prior year, primarily due to
higher levels of cash on hand resulting from the proceeds received from the
divestiture of certain businesses classified as discontinued operations. See
Note 6, Divestitures, to the Notes to Condensed Consolidated Financial
Statements for further discussion.
Interest expense increased $1.9 million in the first nine months of
1997, as compared to the first nine months of the prior year, primarily due to
higher average debt levels associated with borrowings to fund capital
expenditures and operations. Interest expense is expected to decline in the near
term as compared to recent prior periods due to the repayment of IVAX's
revolving credit facility. See Note 9, Debt, to the Notes to Condensed
Consolidated Financial Statements for further discussion.
Other income (expense), net increased $47.4 million in the first nine
months of 1997, as compared to the first nine months of the prior year,
primarily due to the $43.2 million pre-tax gain on the sale of the rights to
Elmiron(R) and three other urology products in the 1997 third quarter. See Note
8, Sale of Product Rights, to the Notes to Condensed Consolidated Financial
Statements for further discussion.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1996
IVAX reported a loss from continuing operations of $78.8 million for
the three months ended September 30, 1997, compared to a loss of $137.7 million
for the same period in 1996. The net loss for the three months ended September
30, 1997 was $90.1 million, compared to a net loss of $178.7 million for the
same period in 1996.
Loss per common share from continuing operations was $.65 for the
three months ended September 30, 1997, compared to a loss of $1.13 for the three
months ended September 30, 1996. Net loss per common share was $.74 for the
three months ended September 30, 1997, compared to a net loss of $1.47 for the
same period in the prior year.
Net revenues for the three months ended September 30, 1997, totaled
$126.4 million, an increase of $24.7 million, or 24%, compared to the same
period of the prior year. Net revenues from IVAX's domestic and international
operations increased by $17.8 million and $6.9 million, respectively.
Domestic net revenues totaled $37.7 million for the three months ended
September 30, 1997, compared to $19.9 million for the same period of the prior
year. The $17.8 million increase was primarily attributable to lower sales
returns and allowances. As noted in "Results of Operations - Nine months ended
September 30, 1997 compared to the nine months ended September 30, 1996," the
level of sales returns and allowances in the third quarter of 1997 was lower
than the comparable prior year period as a result of significant factors
impacting IVAX's operations in 1996.
IVAX's international operations generated net revenues of $88.7 million
for the three months ended September 30, 1997, compared to $81.8 million for the
same period of the prior year. The $6.9 million increase in international net
revenues was primarily due to increases in volume and, to a lesser extent,
higher licensing fee revenues from IVAX's United Kingdom operations.
14
<PAGE>
Gross profit for the three months ended September 30, 1997, increased
$28.8 million, or 180%, compared to the same period in 1996. Gross profit was
$12.8 million (10.1% of net revenues) for the 1997 period, compared to a
negative margin of $16.0 million (15.8% of net revenues) for the 1996 period.
The improvement in gross profit percentage was primarily the result of an
increase in net revenues principally driven by a decrease in sales returns and
allowances at IVAX's domestic generic pharmaceutical operations, partially
offset by unfavorable product mix and, to a lesser extent, increased inventory
obsolescence reserves at IVAX's domestic generic pharmaceutical operations.
Selling expenses totaled $31.2 million (24.7% of net revenues) for the
three months ended September 30, 1997, a decrease of $.6 million, from $31.8
million (31.3% of net revenues) for the same period of 1996. The decrease was
primarily attributable to reductions in the sales force and promotional expenses
at IVAX's domestic generic pharmaceutical operations partially offset by higher
promotional costs at IVAX's international operations.
General and administrative expenses totaled $29.4 million (23.3% of net
revenues) for the three months ended September 30, 1997, compared to $36.5
million (35.9% of net revenues) for the same period of 1996, a decrease of $7.1
million. The decrease is primarily attributable to lower bad debt provisions at
IVAX's domestic generic pharmaceutical operations which were unusually high in
the comparable period of the prior year as a result of the 1996 bankruptcy of a
wholesaler customer.
Research and development expenses for the three months ended September
30, 1997, decreased 8.4% compared to the same period of the prior year to a
total of $12.9 million. The decrease is primarily due to the timing of costs
incurred.
Refer to the "Results of Operations - Nine months ended September 30,
1997 compared to the nine months ended September 30, 1996" for a discussion of
the restructuring costs and asset write-downs of $4.4 million and $69.9 million
recognized during the three months ended September 30, 1997 and 1996,
respectively.
Interest income increased $1.4 million over the comparable period of
the prior year primarily due to higher levels of cash on hand primarily
resulting from the proceeds received from the divestiture of certain businesses
classified as discontinued operations.
Interest expense decreased $3.3 million over the comparable period of
the prior year primarily due to lower debt levels following the repayment of
IVAX's revolving credit facility.
Other income (expense), net increased $44.6 million over the
comparable period of the prior year primarily due to the $43.2 million pre-tax
gain on the sale of the rights to Elmiron(R) and three other urology products.
DISCONTINUED OPERATIONS
During the second quarter of 1997, IVAX's board of directors
determined to divest its intravenous, personal care products and specialty
chemicals divisions. As a result, IVAX classified these businesses as
discontinued operations. The nine months ended September 30, 1997 and 1996
included a loss from discontinued operations of $.8 million and $30.2 million,
respectively. The three months ended September 30, 1997 and 1996 included a loss
from discontinued operations of $11.4 million and $40.9 million, respectively.
15
<PAGE>
The third quarter of 1996 includes charges of $9.8 million ($6.2
million after-tax) and $38.7 million (pre- and after-tax) to reduce the carrying
value of certain fixed assets and goodwill, respectively, related to certain
product lines of the specialty chemical operations. The second quarter of 1997
includes a net gain on the divestiture of the intravenous division of $5.0
million. The third quarter of 1997 includes a net gain on the sale of a
significant portion of the specialty chemicals operations of $15.5 million which
was more than offset by additional provisions for inventory excess and
obsolescence reserves and accounts receivable return reserves of the personal
care products division.
CURRENCY FLUCTUATIONS
For the three and nine months ended September 30, 1997, approximately
74% and 65%, respectively, of IVAX's net revenues were attributable to
operations which principally generated revenues in currencies other than the
United States dollar, compared to approximately 83% and 54% for the three and
nine months ended September 30, 1996, respectively. Fluctuations in the value of
foreign currencies relative to the United States dollar impact the reported
results of operations for IVAX. If the United States dollar weakens relative to
the foreign currency, the earnings generated in the foreign currency will, in
effect, increase when converted into United States dollars and vice versa. As a
result of exchange rate differences, net revenues decreased by approximately
$1.4 million and increased by approximately $2.7 million for the three and nine
months ended September 30, 1997, respectively, as compared to the same periods
of the prior year.
INCOME TAXES
IVAX recognized a $55.9 million tax provision for the nine months ended
September 30, 1997. The amount includes $87.4 million in valuation allowances,
not including $16.1 million in valuation allowances related to discontinued
operations, established in 1997 primarily against its domestic deferred tax
assets generated from losses incurred by its domestic operations. As a result,
the domestic deferred tax asset is fully reserved as of September 30, 1997.
Management expects that it will also recognize additional valuation allowances
related to any future deferred tax assets generated from its domestic operations
until such time as sustainable domestic taxable income is achieved.
As of September 30, 1997, IVAX had a foreign net deferred tax asset
aggregating $16.1 million. Realization of the foreign net deferred tax asset is
dependent upon generating sufficient future foreign taxable income. Although
realization is not assured, management believes it is more likely than not that
the foreign net deferred tax asset will be realized. Management's estimates of
future taxable income are subject to revision due to, among other things,
regulatory and competitive factors affecting the pharmaceutical industry. Such
factors are further discussed in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in IVAX's Annual Report
on Form 10-K for the year ended December 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, IVAX's working capital, excluding net assets of
discontinued operations, was $327.1 million, compared to $415.9 million at
December 31, 1996. Cash and cash equivalents totaled $80.8 million at December
31, 1996, as compared to $117.1 million at September 30, 1997 and $15.1 million
at September 30, 1996.
16
<PAGE>
Net cash of $64.6 million was provided by operating activities during
the first nine months of 1997, compared to $60.6 million in cash used for
operating activities during the first nine months of 1996. The increase in cash
provided by operating activities, as compared to the first nine months of 1996,
was primarily the result of better inventory management at IVAX's domestic
generic pharmaceutical operations. Additionally, in the 1997 second quarter IVAX
received a $52.5 million refund of federal income taxes paid in prior years.
Net cash of $313.0 million was provided by investing activities during
the first nine months of 1997, as compared to $76.1 million in cash used for
investing activities during the same period of the prior year. The increase was
primarily attributable to the cash proceeds received for the sale of IVAX's
intravenous division in June 1997 and a significant portion of the specialty
chemicals division during the third quarter of 1997. Capital expenditures during
the first nine months of 1997 decreased $15.8 million compared to the first nine
months of 1996 due to spending constraints imposed by the revolving credit
facility during the first quarter of 1997 and further constraints imposed by
management thereafter. During the first quarter of 1997, IVAX purchased a
pharmaceutical manufacturing facility in Kirkland, Canada for $10.5 million.
During the first nine months of 1996, IVAX purchased additional shares of
Galena, a.s. for an aggregate of $12.4 million, increasing its ownership to 74%.
Net cash of $340.6 million was used for financing activities during the
first nine months of 1997, compared to $137.8 million provided by financing
activities in the same period of the prior year, primarily reflecting the pay
off of the revolving credit facility in June 1997.
Management has initiated an enterprise-wide program to prepare IVAX's
computer systems and applications for the year 2000. IVAX expects to incur
internal staff costs as well as consulting and other expenses related to
infrastructure and facilities enhancements necessary to prepare its systems for
the year 2000. Testing and conversion of systems applications is estimated to
cost approximately $9.0 million over the next three years. A significant portion
of these costs are not likely to be incremental costs, but instead will
represent the upgrade of existing information technology resources and new
systems replacements which are currently underway.
During the second quarter of 1997, IVAX's board of directors determined
to divest its intravenous, personal care products and specialty chemicals
divisions. Effective May 30, 1997, IVAX sold McGaw, its intravenous division, to
B. Braun of America, Inc. ("B. Braun"), a subsidiary of B. Braun Melsungen AG,
for $320.0 million in cash (subject to certain post-closing adjustments),
additional payments of up to $80.0 million contingent upon the combined
operating results of McGaw and B. Braun's principal United States operating
subsidiary, and certain royalties based on sales of the Duplex(TM) drug delivery
system. The Duplex(TM) system, presently in development, is a multi-compartment
intravenous drug delivery system devised for drugs that have limited stability
after mixing. On June 24, 1997, IVAX utilized a portion of the McGaw sale
proceeds in the amount of $270.1 million to pay off the outstanding balance of
its revolving credit facility which was scheduled to mature November 14, 1999.
The facility was terminated in conjunction with the payment and IVAX recognized
a net extraordinary loss of $2.1 million on the early extinguishment of debt.
During July and August 1997, IVAX completed the sale of a significant
portion of the assets of its specialty chemicals division in three separate
transactions in which IVAX received an aggregate of $41.1 million in cash,
subject to certain post closing adjustments. With the exception of its specialty
lubricants business, IVAX has divested all of its specialty chemicals division.
17
<PAGE>
IVAX's principal sources of short term liquidity are existing cash and
internally generated funds which IVAX believes will be sufficient to meet its
operating needs and anticipated capital expenditures over the short term. For
the long term, IVAX intends to utilize capital from the disposition of certain
non-strategic assets, including those currently classified as discontinued
operations, but may need to seek alternative sources of financing to fund its
operations. IVAX has terminated its revolving credit facility and no assurance
can be given that alternative financing will be available, if at all, in a
timely manner, on favorable terms. If IVAX is unable to obtain satisfactory
alternative financing, IVAX may be required to delay or reduce its proposed
expenditures, including expenditures for research and development, or sell
assets in order to meet its future obligations.
18
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
With respect to the case styled HARVEY M. JASPER RETIREMENT TRUST, ET
AL. V. IVAX CORPORATION AND PHILLIP FROST ET AL., previously reported in IVAX's
Annual Report on Form 10-K for the year ended December 31, 1996, on September
11, 1997, the Final Judgment and Order Of Dismissal With Prejudice, which was
previously reported in IVAX's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1997, became final and conclusive.
With respect to the case styled BERGEN BRUNSWIG CORPORATION V. IVAX
CORPORATION, previously reported in IVAX's Annual Report on Form 10-K for the
year ended December 31, 1996, on August 15, 1997, IVAX and Bergen announced that
they agreed to settle the pending litigation. Pursuant to that agreement, the
parties submitted to the Court a Stipulation and Order of Dismissal stipulating
to the dismissal of the action with prejudice, which was entered by the Court on
August 18, 1997.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At IVAX's annual meeting of shareholders held on September 18, 1997,
IVAX's shareholders elected six directors. The number of votes cast for and
withheld for each nominee for directors were as follows:
DIRECTOR FOR WITHHELD
-------- --- --------
Mark Andrews 93,328,979 9,477,633
Ernst Biekert, Ph.D. 99,612,179 3,194,433
Jack Fishman, Ph.D. 95,744,769 7,061,843
Phillip Frost, M.D. 93,287,817 9,518,795
Jane Hsiao, Ph.D. 99,650,165 3,156,447
Isaac Kaye 99,638,440 3,168,172
There were no broker non-votes with respect to the foregoing matter.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
3.2 Amended and Restated By-Laws
11 Computation of Earnings (Loss) Per Share
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the three
months ended September 30, 1997.
19
<PAGE>
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.
IVAX CORPORATION
Date: November 14, 1997 By: /S/ THOMAS E. BEIER
-------------------
Thomas E. Beier
Senior Vice President-Finance
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
3.2 Amended and Restated By-Laws
11 Computation of Earnings (Loss) Per Share
27 Financial Data Schedule
IVAX CORPORATION
BYLAWS
ARTICLE I
MEETINGS OF SHAREHOLDERS
SECTION 1. ANNUAL MEETING. The annual meeting of shareholders for the
election of directors and for the transaction of such other business as may
properly come before the meeting shall be held on the date, time and place
designated by the Board of Directors.
SECTION 2. SPECIAL MEETING.
(a) Special meetings of the shareholders shall be held when directed by
the Chairman of the Board or the Board of Directors or when requested in writing
by shareholders holding at least 50% of the corporation's stock having the right
and entitled to vote at such meeting. The call for the meeting shall be issued
by the secretary, unless the Chairman of the Board, the Board of Directors or
the shareholders requesting the calling of the meeting designate another person
to do so. Only business within the purposes described in the notice required in
Section 4 of this Article I may be conducted at a special shareholders' meeting.
(b) Any shareholder of record seeking to have the shareholders request
a special meeting may, by written notice to the secretary, request the Board of
Directors to fix a record date pursuant to Section 7 of this Article I. The
Board of Directors shall promptly, but in all events within 10 business days
after the date upon which such a request is received, adopt resolutions fixing
the record date. In the event of the delivery, in the manner provided by Section
7 of this Article I, to the corporation of such a request or requests and/or any
related revocation or revocations, the corporation shall engage nationally
recognized independent inspectors of elections for the purpose of promptly
performing a ministerial review of the validity of the requests and revocations.
Every written request for a special meeting shall set forth the purpose or
purposes for which the special meeting is requested, the name and address, as
they appear in the corporation's books, of each shareholder making the request,
the class and number of shares of the corporation which are owned of record by
each such shareholder, and shall bear the date of signature of each such
shareholder. No such request shall be effective to request such a meeting
unless, within 60 days of any record date established in accordance with Section
7 of this Article I, a written request signed by a sufficient number of record
holders as of such date to request a special meeting in accordance with Section
2(a) of this Article I and, if applicable, the Articles of Incorporation are
delivered to the corporation in the manner prescribed in this Article I. For the
purposes of permitting a prompt ministerial review by
<PAGE>
the independent inspectors, no request by shareholders for a special meeting
shall be effective until such date as the independent inspectors certify to the
corporation that the requests delivered to the corporation in accordance with
this Article I represent at least the minimum number of shares that would be
necessary to request such meeting. Within 10 business days after the independent
inspectors deliver such a certified report to the corporation, the Board of
Directors shall adopt a resolution calling a special meeting of the shareholders
and fixing a record date for such meeting in accordance with Section 7 of this
Article I. In setting a meeting date, the Board of Directors may consider such
factors as it deems relevant within the good faith exercise of its business
judgment including, without limitation, the nature of the action proposed to be
taken, the facts and circumstances surrounding the request, and any plan of the
Board of Directors to call a special or annual meeting of shareholders for the
conduct of related business. Nothing contained in this section shall in any way
be construed to suggest or imply that the Board of Directors or any shareholder
shall not be entitled to contest the validity of any request or revocation
thereof, or to take any other action including, without limitation, the
commencement, prosecution or defense of any litigation with respect thereto.
SECTION 3. PLACE. Meetings of the shareholders shall be held at the
principal office of the corporation or as determined by the Chairman of the
Board, unless otherwise designated by resolution from time to time by the Board
of Directors.
SECTION 4. NOTICE. A written notice of each meeting of shareholders,
signed by the secretary, president or the person authorized to call the meeting,
shall be mailed to each shareholder having the right and entitled to vote at the
meeting at the address as it appears on the records of the corporation, not less
than 10 nor more than 60 days before the date set for the meeting. The notice
shall state the time and place the meeting is to be held. A notice of a special
meeting shall also state the purposes of the meeting. A notice of meeting shall
be sufficient for that meeting and any adjournment of it. If a shareholder
transfers any shares after the notice is sent, it shall not be necessary to
notify the transferee. All shareholders may waive notice of a meeting before, at
or after the meeting.
SECTION 5. SHAREHOLDER QUORUM. Except as otherwise required by law, or
by the Articles of Incorporation, a majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of
shareholders. Any number of shareholders, even if less than a quorum, may
adjourn the meeting from time to time and place to place without further notice
until a quorum is obtained. When a specified item of business is required to be
voted on separately by a particular class or series of stock, the presence of a
majority of the shares of such class or series shall constitute a quorum for the
transaction of such item of business by that class or series, except as
otherwise required by law, by the Articles of Incorporation or by the terms of
the particular class or series of shares. If less than a quorum of shares
entitled to vote on a matter, as above defined, shall be present at the time and
place for which a meeting shall be called, the Chairman of the Board, or
secretary or the holders of a majority of the shares represented may adjourn any
such meeting from time to time without notice other
2
<PAGE>
than by announcement at such meeting, until the number of shares requisite to
constitute a quorum shall be present. At any adjourned meeting at which a
quorum, as above defined, shall be present, in person or by proxy, any business
may be transacted which might have been transacted at the meeting as originally
called. Once a share is represented for any purpose at a meeting, it is deemed
present for quorum purposes for the remainder of the meeting and for any
adjournment of that meeting unless a new record date is or must be set for that
adjourned meeting.
SECTION 6. SHAREHOLDER VOTING. If a quorum is present, action on a
matter is approved and shall be the act of the shareholders if the votes cast
favoring the action exceed the votes cast against the action, except as
otherwise provided in Section 6 of Article II or the Articles of Incorporation
or as required by law. Except as otherwise provided in the Articles of
Incorporation or as required by law, each outstanding share shall be entitled to
one vote on each matter submitted to a vote at a meeting of shareholders. The
books of record of shareholders shall be produced at a shareholders' meeting
upon the request of any shareholder.
SECTION 7. FIXING RECORD DATES. For the purpose of determining
shareholders entitled (a) to notice of or to vote at any meeting of shareholders
or any adjournment thereof, (b) to request a special meeting of shareholders
pursuant to Section 2 of this Article I, (c) to receive payment of any dividend,
or (d) to make a determination of shareholders for any other proper purpose, the
Board of Directors shall have the power to fix a date, not more than 60 days (or
such longer period as may be permitted by current or future law) prior to the
date on which the particular action requiring a determination of shareholders is
to be taken, as the record date for any such determination of shareholders. A
record date for the determination of shareholders entitled to notice of or to
vote at any meeting of shareholders or any adjournment thereof shall not be a
date less than 10 days prior to such meeting. In setting a record date, whether
in response to a request from a shareholder or otherwise, the Board of Directors
may consider such factors as it deems relevant within the good faith exercise of
its business judgment including, without limitation, the nature of the action
proposed to be taken, the facts and circumstances surrounding the request, and
any plan of the Board of Directors to call a special or annual meeting of
shareholders for the conduct of related business. In any case where a record
date is set under any provision of this Article I, only shareholders of record
on the record date shall be entitled to participate in the action for which the
determination of shareholders of record is made, and, if the record date is set
for the determination of shareholders entitled to notice of or to vote at a
meeting of shareholders, only such shareholders of record shall be entitled to
such notice or vote, notwithstanding any transfer of any shares on the books of
the corporation after such record date.
SECTION 8. PROXIES. A shareholder entitled to vote at any meeting of
shareholders or any adjournment thereof may vote in person or by proxy executed
in writing and signed by the shareholder or his attorney-in-fact. The
appointment of a proxy will be effective when received by the corporation's
secretary or other officer or agent
3
<PAGE>
authorized to tabulate votes. If a proxy designates two or more persons to act
as proxies, a majority of these persons present at the meeting, or if only one
is present, that one, has all of the powers conferred by the instrument upon all
the persons designated unless the instrument otherwise provides. No proxy shall
be valid more than 11 months after the date of its execution unless a longer
term is expressly stated in the proxy.
SECTION 9. NOTIFICATION OF NOMINATION OF DIRECTORS. Nominations for
election to the Board of Directors of the corporation at a meeting of
shareholders may be made by the Board of Directors or by any shareholder of the
corporation entitled to vote for the election of directors at such meeting who
complies with the notice procedures set forth in this Section 9. Such
nominations, other than those made by or on behalf of the Board of Directors,
may be made only if notice in writing is personally delivered to, or mailed by
first class United States mail, postage prepaid, and received by, the secretary
not less than 60 days nor more than 90 days prior to such meeting; PROVIDED,
HOWEVER, that if less than 70 days' notice or prior public disclosure of the
date of the meeting is given to shareholders, such nomination shall have been
mailed by first class United States mail, postage prepaid, and received by, or
personally delivered to, the secretary not later than the close of business on
the tenth day following the day on which notice of the date of the meeting was
mailed or such public disclosure was made, whichever occurs first. Such notice
shall set forth (a) as to each proposed nominee (i) the name, age, business
address and, if known, residence address of each such nominee, (ii) the
principal occupation or employment of each such nominee, (iii) the number of
shares, if any, of stock of the corporation that are beneficially owned by each
such nominee and (iv) any other information concerning the nominee that must be
disclosed in proxy solicitations pursuant to the proxy rules of the Securities
and Exchange Commission if such person had been nominated, or was intended to be
nominated, by the Board of Directors (including such person's written consent to
be named as a nominee and to serve as a director if elected); and (b) as to the
shareholder giving the notice (i) the name and address, as it appears on the
corporation's books, of such shareholder, (ii) a representation that such
shareholder is a holder of record of shares of stock of the corporation entitled
to vote at the meeting and the class and number of shares of the corporation
which are beneficially owned by such shareholder, (iii) a representation that
such shareholder intends to appear in person or by proxy at the meeting to
nominate the person or persons specified in the notice and (iv) a description of
all arrangements or understandings between such shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by such shareholder. The
corporation also may require any proposed nominee to furnish such other
information as may reasonably be required by the corporation to determine the
eligibility of such proposed nominee to serve as a director of the corporation.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he should so determine, he shall so declare to the
meeting, and that the defective nomination shall be disregarded.
4
<PAGE>
SECTION 10. NOTICE OF BUSINESS AT ANNUAL MEETINGS. At an annual meeting
of the shareholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board of Directors, (b)
otherwise properly brought before the meeting by or at the direction of the
Board of Directors or (c) otherwise properly brought before the meeting by a
shareholder. For business to be properly brought before an annual meeting by a
shareholder, if such business relates to the election of directors of the
corporation, the shareholder must comply with Section 9 of this Article I. If
such business relates to any other matter, the shareholder must have given
timely notice thereof in writing to the secretary. To be timely, a shareholder's
notice must be personally delivered to, or mailed by first class United States
mail, postage prepaid, and received by, the secretary not less than 60 days not
more than 90 days prior to such meeting; PROVIDED, HOWEVER, that if less than 70
days' notice or prior public disclosure of the date of the meeting is given to
shareholders, such notice, to be timely, must have been mailed by first class
United States mail, postage prepaid, and received by, or personally delivered
to, the secretary not later than the close of business on the tenth day
following the day on which notice of the date of the meeting was mailed or such
public disclosure was made, whichever occurs first. A shareholder's notice to
the secretary shall set forth as to each matter the shareholder proposes to
bring before the annual meeting (i) a brief description of the business desired
to be brought before the annual meeting and the reasons for conducting such
business at the annual meeting, (ii) the name and address, as they appear on the
corporation's books, of the shareholder proposing such business, (iii) a
representation that the shareholder is a holder of record of shares of stock of
the corporation entitled to vote at the meeting and the class and number of
shares of the corporation which are beneficially owned by the shareholder and
(iv) any material interest of the shareholder in such business. Notwithstanding
anything in these Bylaws to the contrary, no business shall be conducted at any
annual meeting except in accordance with the procedures set forth in this
Section 10 and except that any shareholder proposal which complies with Rule
14a-8 of the proxy rules (or any successor provision) promulgated under the
Securities Exchange Act of 1934, as amended, and is to be included in the
corporation's proxy statement for an annual meeting of shareholders shall be
deemed to comply with the requirements of this Section 10.
The chairman of the meeting may, if the facts warrant, determine and
declare to the meeting that business was not properly brought before the meeting
in accordance with the provisions of this Section 10, and if he should so
determine, he shall so declare to the meeting and the business not properly
brought before the meeting shall be disregarded.
5
<PAGE>
ARTICLE II
DIRECTORS
SECTION 1. FUNCTION. All corporate powers shall be exercised by or
under the authority of, and the business and affairs of the corporation shall be
managed under the direction of, the Board of Directors. Directors must be
natural persons who are at least 18 years of age but need not be residents of
Florida or shareholders of the corporation.
SECTION 2. COMPENSATION. The directors, as such, shall be entitled to
receive such reasonable compensation for their services as may be fixed from
time to time by resolution of the Board of Directors. In addition, the directors
may be reimbursed for expenses of attending meetings of the Board of Directors
and committees thereof and meetings of the shareholders. Nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of the executive committee or of any standing or special committee of the Board
of Directors may by resolution of the Board of Directors be allowed such
compensation for their services as the Board of Directors may deem reasonable,
and additional compensation may be allowed to directors for special services
rendered.
SECTION 3. PRESUMPTION OF ASSENT. A director who is present at a
meeting of the Board of Directors or a committee of the Board of Directors at
which action on any corporate matter is taken shall be presumed to have assented
to the action taken unless he objects at the beginning of the meeting (or
promptly upon arriving) to the holding of the meeting or transacting the
specified business at the meeting, or if the director votes against the action
taken or abstains from voting because of an asserted conflict of interest or
otherwise.
SECTION 4. NUMBER OF DIRECTORS. The Board of Directors of the
corporation shall consist of a number of persons not less than two, the exact
number to be determined from time to time by resolution adopted by the
affirmative vote of a majority of all directors of the corporation then holding
office at any special or regular meeting. Any resolution increasing or
decreasing the number of directors shall have the effect of creating or
eliminating a vacancy or vacancies, as the case may be, provided that no
resolution shall reduce the number of directors below the number then holding
office.
SECTION 5. TERM OF OFFICE. Each director shall hold office until the
annual meeting next succeeding his election and until his successor is elected
and qualified, or until his earlier resignation, removal from office or death.
SECTION 6. ELECTION OF DIRECTORS. Directors shall be elected at the
annual meeting of shareholders, but when the annual meeting is not held or
directors are not elected thereat, they may be elected at a special meeting
called and held for that purpose. Directors shall be elected by a plurality of
the votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present.
6
<PAGE>
SECTION 7. VACANCIES. Any vacancy occurring in the Board of Directors,
including a vacancy created by an increase in the number of directors, may be
filled by the shareholders or by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board of Directors. A
director elected to fill a vacancy shall hold office only until the next
election of directors by the shareholders. If there are no remaining directors,
the vacancy shall be filled by the shareholders.
SECTION 8. REMOVAL OF DIRECTORS. At a meeting of shareholders, any
director or the entire Board of Directors may be removed, with or without cause,
provided the notice of the meeting states that one of the purposes of the
meeting is the removal of the director or directors. A director may be removed
only if the number of votes cast for removal exceeds the number of votes cast
against removal.
SECTION 9. QUORUM AND TRANSACTION OF BUSINESS. A majority of the number
of directors fixed pursuant to these Bylaws shall constitute a quorum for the
transaction of business. The act of a majority of the directors present at a
meeting at which a quorum is present shall be the act of the Board of Directors.
SECTION 10. PLACE OF MEETING. Regular and special meetings of the Board
of Directors shall be held at the principal office of the corporation or as
determined by the Chairman of the Board, unless otherwise designated by
resolution from time to time by the Board of Directors.
SECTION 11. TIME, NOTICE AND CALL OF MEETINGS. Regular meetings of the
Board of Directors shall be held without notice at the time and on the date
designated by resolution of the Board of Directors. Meetings of the Board of
Directors may be called by the Chairman of the Board, the chief executive
officer or any two directors. Upon determining the need for a special meeting,
the Chairman of the Board shall direct the secretary of the corporation to
provide written notice of the time, date and place of such special meeting of
the Board of Directors to each director by personal delivery, mail or courier
delivery or by facsimile at least two but not more than 15 days before the
meeting. Notice of a meeting of the Board of Directors need not be given to a
director who signs a waiver of notice either before, at or after the meeting.
Attendance of a director at a meeting constitutes a waiver of notice of that
meeting and waiver of all objections to the place of the meeting, the time of
the meeting, and the manner in which it has been called or convened, except when
a director states at the beginning of the meeting or promptly upon arrival at
the meeting, objection to the transaction of business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the Board of Directors must be
specified in the notice or waiver of notice of the meeting. Notice of an
adjourned meeting shall be given to the directors who were not present at the
time of the adjournment and, unless the time and place of the adjourned meeting
are announced at the time of the adjournment, to the other directors. Members of
the Board of Directors (and any committee of the Board) may
7
<PAGE>
participate in a meeting of the Board of Directors (or committee) by means of a
conference telephone or similar communications equipment pursuant to which all
persons participating in the meeting can hear each other at the same time.
Participation by these means constitutes presence in person at a meeting.
SECTION 12. ACTION WITHOUT A MEETING. Any action required to be taken
at a meeting of the Board of Directors (or a committee), and any action which
may be taken at a meeting of the Board of Directors (or a committee) may be
taken without a meeting if a consent in writing, setting forth the action to be
taken and signed by all of the directors (or members of the committee), is filed
in the minutes of the proceedings of the Board of Directors. The action taken
shall be deemed effective when the last director signs the consent, unless the
consent specifies otherwise.
ARTICLE III
COMMITTEES
SECTION 1. EXECUTIVE COMMITTEE. The Board of Directors may from time to
time, by resolution passed by a majority of the whole Board of Directors, create
an executive committee of three or more directors, the members of which shall be
elected by the Board of Directors to serve at the pleasure of the Board of
Directors. If the Board of Directors does not designate a chairman of the
executive committee, the executive committee shall elect a chairman from its own
members. Except as otherwise required by law, these bylaws, or in the resolution
creating an executive committee, such committee shall, during the intervals
between the meetings of the Board of Directors, possess and may exercise all of
the powers of the Board of Directors in the management of the business and
affairs of the corporation, other than that of filling vacancies among the
directors or in any committee of the directors. The executive committee shall
keep full records and accounts of its proceedings and transactions. All action
by the executive committee shall be reported to the Board of Directors at its
meeting next succeeding such action and shall be subject to control, revision
and alteration by the Board of Directors, provided that no rights of third
persons shall be prejudicially affected thereby. Vacancies in the executive
committee shall be filled by the Board of Directors, and the Board of Directors
may appoint one or more directors as alternate members of the executive
committee who may take the place of any absent member or members at any meeting.
SECTION 2. MEETINGS OF EXECUTIVE COMMITTEE. Subject to the provisions
of these Bylaws, the executive committee shall fix its own rules of procedure
and shall meet as provided by such rules or by resolutions of the Board of
Directors, and it shall also meet at the call of the Chairman of the Board, the
chairman of the executive committee or any two members of the committee. Unless
otherwise provided by such rules or by such resolutions, the provisions of
Section 11 of Article II relating to the notice required to be given for
meetings of the Board of Directors shall also apply to meetings of the executive
8
<PAGE>
committee. A majority of the executive committee shall be necessary to
constitute a quorum.
SECTION 3. OTHER COMMITTEES. The Board of Directors may by resolution
provide for such other standing or special committees as it deems desirable, and
discontinue the same at its pleasure. Each such committee shall have such powers
and perform such duties, not inconsistent with law, as may be delegated to it by
the Board of Directors. The provisions of Section 1 and Section 2 of this
Article III shall govern the appointment and action of such committee so far as
consistent, unless otherwise provided by the Board of Directors. Vacancies in
such committees shall be filled by the Board of Directors or as the Board of
Directors may provide.
ARTICLE IV
OFFICERS
SECTION 1. GENERAL PROVISIONS. The Board of Directors shall appoint a
Chairman of the Board of Directors, a chief executive officer, a president, and
a secretary. A person may hold more than one such office. The Board of Directors
may from time to time create such offices and appoint such other officers,
subordinate officers and assistant officers as it may determine. The Chairman of
the Board, shall be, but the other officers need not be, chosen from among the
members of the Board of Directors. Each officer shall hold office at the
pleasure of the Board of Directors, and perform such duties as the Board of
Directors may prescribe. The Board of Directors may, from time to time,
authorize any officer to appoint and remove subordinate and assistant officers,
to prescribe their authority and duties, and to fix their compensation.
SECTION 2. TERM OF OFFICE. The officers of the corporation shall hold
office at the pleasure of the Board of Directors, and, unless sooner removed by
the Board of Directors, until the annual meeting of the Board of Directors
following the date of their appointment and until their successors are chosen
and qualified. The Board of Directors may remove any officer at any time, with
or without cause. A vacancy in any office established by these Bylaws or created
by the Board of Directors shall be filled by the Board of Directors.
SECTION 3. CHAIRMAN OF THE BOARD. The Chairman of the Board shall
preside at all meetings of the Board of Directors and meetings of shareholders.
SECTION 4. CHIEF EXECUTIVE OFFICER. The chief executive officer shall
exercise supervision over the management of the business of the corporation and
its several officers, subject, however, to the oversight of the Board of
Directors. In the absence of the Chairman of the Board, he shall preside at
meetings of the shareholders.
9
<PAGE>
SECTION 5. PRESIDENT. The president shall exercise supervision over the
management of the business of the corporation and its several officers, subject,
however, to the oversight of the Board of Directors and the chief executive
officer. In the absence of the Chairman of the Board and chief executive
officer, he shall preside at meetings of the shareholders.
SECTION 6. SECRETARY. The secretary shall keep minutes of all the
proceedings of the shareholders and the Board of Directors and shall make proper
records of the same, which shall be attested by him; shall have authority to
execute and deliver certificates as to any of such proceedings and any other
records of the corporation; shall give notice of meetings of shareholders and
directors; shall produce on request at each meeting of shareholders a certified
list of shareholders arranged in alphabetical order; shall keep such books and
records as may be required by law or by the Board of Directors; and, in general,
shall perform all duties incident to the office of secretary and such other
duties as may from time to time be assigned to him by the Board of Directors or
the president.
SECTION 7. DUTIES OF OFFICERS MAY BE DELEGATED. In the absence of any
officer of the corporation, or for any other reason the Board of Directors may
deem sufficient, the Board of Directors may delegate, for such period of time as
the Board of Directors deem appropriate, the powers or duties, or any of them,
of any officer to any other officer or to any director.
SECTION 8. REMOVAL OF CERTAIN OFFICERS. Neither the Chairman, the chief
executive officer nor the president may be removed from office unless such
removal shall have first been approved by a majority of the whole Board of
Directors.
ARTICLE V
SHARE CERTIFICATE AND SEAL
SECTION 1. FORM AND EXECUTION. Certificates for shares, certifying the
number of fully-paid shares owned, shall be issued to each shareholder in such
form as shall be approved by the Board of Directors. Such certificates shall be
signed by the Chairman of the Board, the chief executive officer or the
president and by the secretary; provided, however, that if such certificates are
countersigned by a transfer agent and/or registrar the signatures of any of said
officers and the seal of the corporation upon such certificates may be
facsimiles, engraved, stamped or printed. If any officer or officers who shall
have signed, or whose facsimile signature shall have been used, printed or
stamped on any certificate or certificates for shares, shall cease to be such
officer or officers, because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the corporation, such
certificate or certificates, if authenticated by the endorsement thereon of the
signature of a transfer agent or registrar, shall nevertheless be conclusively
deemed to have been adopted by the corporation by the use and delivery thereof
and shall be as effective in all respects as though signed by a duly elected,
qualified
10
<PAGE>
and authorized officer or officers, and as though the person or persons who
signed such certificate or certificates, or whose facsimile signature or
signatures shall have been used thereon, had not ceased to be an officer or
officers of the corporation. The failure of the corporation to note upon a
certificate a restriction on the transfer of shares imposed or which may be
imposed by law, contract or otherwise, shall not be deemed to imply that such
shares are free of any such restriction or create in favor of the person to whom
such certificate is issued, or any successor, assign, devise or heir of such
recipient, any cause of action of any nature against the corporation.
SECTION 2. REGISTRATION OF TRANSFER. Any certificate for shares of the
corporation shall be transferable (subject to any applicable restrictions
imposed or which may be imposed by law, contract or otherwise) in person or by
attorney upon the surrender thereof to the corporation or any transfer agent
therefor (for the class of shares represented by the certificate surrendered)
properly endorsed for transfer and accompanied by such assurances as the
corporation or such transfer agent may require as to the genuineness and
effectiveness of each necessary endorsement.
SECTION 3. LOST, STOLEN OR DESTROYED CERTIFICATES. The corporation
shall, upon the authorization of the Chairman of the Board, the chief executive
officer, the president, the secretary or such other person as is authorized by
resolution of the Board of Directors, issue a new stock certificate in the place
of any certificate previously issued if the holder of record of the certificate
(a) makes proof in affidavit form that it has been lost, destroyed or wrongfully
taken; (b) requests the issue of a new certificate before the corporation has
notice that the certificate has been acquired by a purchaser for value in good
faith and without notice of any adverse claim; (c) gives bond in such form as
the corporation may direct to indemnify the corporation and any transfer agent
and registrar against any claim that may be made on account of the alleged loss,
destruction, or theft of a certificate; and (d) satisfies any other reasonable
requirements imposed by the corporation.
SECTION 4. SEAL. The corporate seal shall be circular in form and
include the name of the corporation.
ARTICLE VI
DISTRIBUTIONS
The Board of Directors may, from time to time, declare distributions to
its shareholders in cash, property, or its own shares, unless the distribution
would cause (i) the corporation to be unable to pay its debts as they become due
in the usual course of business, or (ii) the corporation's assets to be less
than its liabilities plus the amount necessary, if the corporation were
dissolved at the time of the distribution, to satisfy the preferential rights of
shareholders whose rights are superior to those receiving the
11
<PAGE>
distribution. The shareholders and the corporation may enter into an agreement
requiring the distribution of corporate profits, subject to the provisions of
applicable law.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 1. FISCAL YEAR. The fiscal year of the corporation shall be the
calendar year.
SECTION 2. RESIGNATION. Any director or officer of the corporation may
resign his office at any time upon presenting his written resignation to the
Board of Directors, the Chairman of the Board, the chief executive officer, the
president or the secretary, and, unless some time be fixed in such resignation
as the date upon which it is to become effective, the same shall become
effective immediately upon presentation. The acceptance of a resignation shall
not be required to make it effective, unless otherwise so stated in such
resignation, and in that event it shall become effective at the pleasure of the
Board of Directors.
SECTION 3. VOTING UPON STOCKS OF OTHER CORPORATIONS. Unless otherwise
ordered by the Board of Directors, the Chairman of the Board, the chief
executive officer, or the president shall, in the order above stated, have full
power and authority on behalf of the corporation to attend, act and vote at any
meeting or meetings of shareholders of any corporation in which the corporation
may hold stock or other securities, and at any such meeting shall possess and
may exercise on behalf of the corporation any and all of the rights and powers
incident to the ownership of such stock or other securities. The person having
the power and authority as set forth above may in his discretion delegate the
same to another person that he designates to act on behalf of the corporation at
any given meeting. The Board of Directors, by resolution, may from time to time
confer like powers upon any other person or persons.
ARTICLE VIII
CORPORATE RECORDS, SHAREHOLDERS'
INSPECTION RIGHTS; FINANCIAL INFORMATION
SECTION 1. CORPORATE RECORDS.
(a) The corporation shall keep as permanent records minutes of all
meetings of its shareholders and the Board of Directors, a record of all actions
taken by the shareholders or Board of Directors without a meeting, and a record
of all actions taken by a committee of the Board of Directors.
12
<PAGE>
(b) The corporation shall maintain a record of its shareholders in a
form that permits preparation of a list of the names and addresses of all
shareholders in alphabetical order by class of shares showing the number and
series of shares held by each.
(c) The corporation shall keep a copy of: (i) its articles or restated
articles of incorporation and all amendments to them currently in effect; (ii)
these Bylaws or restated Bylaws and all amendments currently in effect; (iii)
resolutions adopted by the Board of Directors creating one or more classes or
series of shares and fixing their relative rights, preferences, and limitations,
if shares issued pursuant to those resolutions are outstanding; (iv) the minutes
of all shareholders' meetings and records of all actions taken by shareholders
without a meeting for the past three years; (v) written communications to all
shareholders generally or all shareholders of a class of series within the past
three years, including the financial statements furnished for the last three
years; (vi) a list of names and business street addresses of its current
directors and officers; and (vii) its most recent annual report delivered to the
Department of State.
(d) The corporation shall maintain its records in written form or in
another form capable of conversion into written form within a reasonable time.
SECTION 2. SHAREHOLDERS' INSPECTION RIGHTS. A shareholder is entitled
to inspect and copy, during regular business hours at the corporation's
principal office, any of the corporate records described in Section 1(c) of this
Article if the shareholder gives the corporation written notice of the demand at
least 5 business days before the date on which he wishes to inspect and copy the
records.
A shareholder is entitled to inspect and copy, during regular business
hours at a reasonable location specified by the corporation, any of the
following records of the corporation if the shareholder gives the corporation
written notice of this demand at least 5 business days before the date on which
he wishes to inspect and copy provided (a) the demand is made in good faith and
for a proper purpose; (b) the shareholder describes with reasonable
particularity the purpose and the records he desires to inspect; and (c) the
records are directly connected with the purpose: (i) excerpts from minutes of
any meeting of the Board of Directors, records of any action of a committee of
the Board of Directors while acting in place of the Board of Directors on behalf
of the corporation; (ii) accounting records; (iii) the record of shareholders;
and (iv) any other books and records of the corporation.
This Section 2 does not affect the right of a shareholder to inspect
and copy the shareholders' list described in Section 6 of Article I or, if the
shareholder is in litigation with the corporation, to the same extent as any
other litigant or the power of a court to compel the production of corporate
records for examination.
The corporation may deny any demand for inspection if the demand was
made for an improper purpose, or if the demanding shareholder has within the two
years preceding
13
<PAGE>
his demand, sold or offered for sale any list of shareholders of the corporation
or of any other corporation, has aided or abetted any person in procuring any
list of shareholders for that purpose, or has improperly used any information
secured through any prior examination of the records of the corporation or any
other corporation.
SECTION 3. FINANCIAL STATEMENTS FOR SHAREHOLDERS. Unless modified by
resolution of the shareholders within 120 days after the close of each fiscal
year, the corporation shall furnish its shareholders with annual financial
statements which may be consolidated or combined statements of the corporation
and one or more of its subsidiaries, as appropriate, that include a balance
sheet as of the end of the fiscal year, an income statement for that year, and a
statement of cash flows for that year. If financial statements are prepared for
the corporation on the basis of generally accepted accounting principles, the
annual financial statements must also be prepared on that basis.
If the annual financial statements are reported upon by a public
accountant, his report must accompany them. If not, the statements must be
accompanied by a statement of the chief financial officer or the person
responsible for the corporation's accounting records stating his reasonable
belief whether the statements were prepared on the basis of generally accepted
accounting principles and, if not, describing the basis of preparation and
describing any respects in which the statements were not prepared on a basis of
accounting consistent with the statements prepared for the preceding year.
The corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the corporation
to prepare its financial statements. Thereafter, on written request from a
shareholder who was not mailed the statements, the corporation shall mail him
the latest annual financial statements.
SECTION 4. OTHER REPORTS TO SHAREHOLDERS. If the corporation
indemnifies or advances expenses to any director, officer, employee or agent
otherwise than by court order or action by the shareholders or by an insurance
carrier pursuant to insurance maintained by the corporation, the corporation
shall report the indemnification or advance in writing to the shareholders with
or before the notice of the next annual shareholders' meeting, or prior to the
meeting if the indemnification or advance occurs after the giving of the notice
but prior to the time the annual meeting is held. This report shall include a
statement specifying the persons paid, the amounts paid, and the nature and
status at the time of such payment of the litigation or threatened litigation.
If the corporation issues or authorizes the issuance of shares for
promises to render services in the future, the corporation shall report in
writing to the shareholders the number of shares authorized or issued, and the
consideration received by the corporation, with or before the notice of the next
shareholders' meeting.
14
<PAGE>
ARTICLE IX
INDEMNIFICATION
SECTION 1. RIGHT TO INDEMNIFICATION. Each person (including here and
hereinafter, the heirs, executors, administrators, or estate of such person) (i)
who is or was a director or officer of the corporation, (ii) who is or was an
agent or employee of the corporation other than an officer and as to whom the
corporation has agreed to grant such indemnity, or (iii) who is or was serving
at the request of the corporation as its representative in the position of
director, officer, agent or employee of another corporation, partnership, joint
venture, trust or other enterprise and as to whom the corporation has agreed to
grant such indemnity shall be indemnified by the corporation as of right to the
fullest extent permitted or authorized by current or future legislation or by
current or future judicial or administrative decision (but, in the case of any
such future legislation or decision, only to the extent that it permits the
corporation to provide broader indemnification rights than permitted prior to
such legislation or decision), against any liability or expense, awarded or
assessed against him, or incurred by him, in his capacity as such director,
officer, agent, employee or representative, or arising out of his status as such
director, officer, agent, employee, or representative, including (in the case of
derivative actions) expenses and amounts paid by him in settlement of any
proceeding asserted or brought against him in his aforesaid capacity or arising
out of his status as such.
SECTION 2. ADVANCEMENT OF EXPENSES. Expenses incurred by a person
referred to in Section 1 of this Article IX in defending a proceeding shall be
paid by the corporation in advance of the final disposition of such proceeding,
(i) upon receipt, in the case of a director or officer, of an undertaking by or
on behalf of the director or officer to repay all amounts so advanced if he is
ultimately found not to be entitled to be indemnified by the corporation
pursuant to this Article IX, and (ii) upon satisfaction of such other conditions
as are required by current or future legislation (but, with respect to future
legislation, only to the extent that it provides conditions less burdensome to
the director, officer, employee, agent or representative, and to the
corporation, than those provided previously). Such expenses incurred by other
employees, agents and representatives may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate. The Board of
Directors may, in the manner set forth above, and upon approval of such
director, officer, employee, agent or representative of the corporation,
authorize the corporation's counsel to represent such person, in any proceeding,
whether or not the corporation is a party to such proceeding.
SECTION 3. PROCEDURE FOR INDEMNIFICATION AND OBTAINING ADVANCEMENT OF
EXPENSES. Any indemnification of liabilities and expenses or advancement of
expenses under this Article IX shall be made promptly, and in any event within
60 days, upon the written request of the director, officer, employee, agent or
representative seeking indemnification or an advancement. If the corporation
denies such request in whole or in
15
<PAGE>
part or if no disposition thereof is made within 60 days of its receipt of such
request or if the corporation otherwise fails to provide indemnification or
advancement provided for in this Article IX, and despite any contrary
determination by the corporation (including its Board of Directors or a
committee thereof, its independent legal counsel or its shareholders) in the
specific case, a director, officer, employee, agent or representative may apply
for indemnification or advancement, or both, in an appropriate proceeding
brought in a court of competent jurisdiction and shall be entitled to such
indemnification or advancement, or both, as the court shall by order direct.
Such person's reasonable expenses in obtaining court-ordered indemnification or
advancement shall be reimbursed by the corporation. No such contrary
determination by the corporation (including the Board of Directors or a
committee thereof, its independent legal counsel or its shareholders) shall be a
defense to such proceeding or create a presumption that the claimant has not met
the applicable standard of conduct, if any, for indemnification or an
advancement.
SECTION 4. OTHER RIGHTS, CONTINUATION OF RIGHT TO INDEMNIFICATION AND
ADVANCEMENTS. The indemnification and advancements provided by this Article IX
shall not be deemed exclusive of any other or further rights to which a person
seeking indemnification or advancements may be entitled under any law (common or
statutory), agreement, vote of shareholders or disinterested directors or
otherwise, either as to action taken or omitted to be taken in his official
capacity or as to action taken or omitted to be taken in another capacity while
holding office or while employed by or acting as agent for the corporation. All
rights to indemnification and to advancements of expenses under this Article IX
shall be deemed to be a contract between the corporation and each director,
officer, employee, agent or representative of the corporation described in
Section 1 of this Article IX who serves or has served in any such capacity at
any time while this Article IX is in effect.
Any repeal or modification of this Article IX, or any repeal or
modification of relevant provisions of the Florida Business Corporation Act or
any other applicable law, shall not in any way diminish any right to
indemnification or to advancement of expenses of such director, officer,
employee, agent or representative, or the obligations of the corporation,
arising hereunder prior to such repeal or modification.
SECTION 5. INSURANCE. The corporation may purchase and maintain
insurance, at its expense, to protect itself and any person who is or was or has
agreed to become a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
or on his behalf in any such capacity, or arising out of his status as such,
whether or not the corporation would have the legal power to directly indemnify
him against such liability.
16
<PAGE>
SECTION 6. SAVINGS CLAUSE. If this Article IX or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the corporation shall nevertheless indemnify each director and officer, and each
employee, agent and representative of the corporation described in Section 1 of
this Article IX, as to liabilities and expenses, and amounts paid in settlement
with respect to any proceeding, including any action by or in the right of the
corporation, to the full extent permitted by any applicable portion of this
Article IX that shall not have been invalidated and to the full extent permitted
by applicable law.
SECTION 7. TERMS . For purposes of this Article IX, the term "other
enterprises" includes employee benefit plans; the term "expenses" includes
counsel fees, including those for appeal; the term "liability" includes
obligations to pay a judgment, settlement, penalty, fine (including an excise
tax assessed with respect to any employee benefit plan), and expenses actually
and reasonably incurred with respect to a proceeding; the term "proceeding"
includes any threatened, pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or investigative and
whether formal or informal; the term "agent" includes a volunteer; and the term
"serving at the request of the corporation" includes any service as a director,
officer, employee or agent of the corporation that imposes duties on such
persons, including duties relating to an employee benefit plan and its
participants or beneficiaries.
ARTICLE X
AMENDMENT
These Bylaws may be altered, amended or repealed, and new Bylaws
adopted, by the Board of Directors or shareholders.
17
EXHIBIT 11
<TABLE>
<CAPTION>
IVAX CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS (LOSS) PER SHARE
(In thousands, except per share data)
THREE MONTHS NINE MONTHS
PERIOD ENDED SEPTEMBER 30, 1997 1996 1997 1996
------------ ------------ ------------ ---------
<S> <C> <C> <C> <C>
PRIMARY LOSS PER COMMON SHARE:
Loss before extraordinary items $ (90,134) $ (178,669) $ (143,450) $(156,704)
Extraordinary items, net of tax - - (2,137) (2,073)
------------ ------------ ------------ ---------
Net loss for primary computation $ (90,134) $ (178,669) $ (145,587) $(158,777)
============ ============ ============ =========
Average number of common and dilutive
common equivalent shares-primary 121,491 121,467 121,489 120,774
============ ============ ============ =========
Loss before extraordinary items $ (.74) $ (1.47) $ (1.18) $ (1.29)
============ ============ ============ =========
Net loss $ (.74) $ (1.47) $ (1.20) $ (1.31)
============ =========== ============ =========
FULLY DILUTED LOSS PER COMMON SHARE:
Loss before extraordinary items $ (90,134) $ (178,669) $ (143,450) $(156,704)
Extraordinary items, net of tax - - (2,137) (2,073)
------------ ------------ ------------ ---------
Net loss for primary computation $ (90,134) $ (178,669) $ (145,587) $(158,777)
============ ============ ============ =========
Average number of common and dilutive
common equivalent shares-primary 121,491 121,467 121,489 120,774
============ ============ ============ =========
Loss before extraordinary items $ (.74) $ (1.47) $ (1.18) $ (1.29)
============ ============ ============ =========
Net loss $ (.74) $ (1.47) $ (1.20) $ (1.31)
============ ============ ============ =========
AVERAGE NUMBER OF COMMON SHARES AND
DILUTIVE COMMON SHARES EQUIVALENTS
Primary shares:
Average number of common shares outstanding 121,491 121,467 121,489 120,774
Incremental shares for options and warrants - - - -
------------ ------------ ------------ ---------
121,491 121,467 121,489 120,774
============ ============ ============ =========
Fully diluted shares:
Average number of common shares outstanding 121,491 121,467 121,489 120,774
Incremental shares for options and warrants - - - -
------------ ------------ ------------ ---------
121,491 121,467 121,489 120,774
============ ============ ============ =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM IVAX
CORPORATION'S FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 117,141
<SECURITIES> 0
<RECEIVABLES> 125,042 <F1>
<ALLOWANCES> 0
<INVENTORY> 156,250
<CURRENT-ASSETS> 551,501
<PP&E> 199,275 <F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 841,770
<CURRENT-LIABILITIES> 178,651
<BONDS> 104,467
0
0
<COMMON> 12,151
<OTHER-SE> 515,044
<TOTAL-LIABILITY-AND-EQUITY> 841,770
<SALES> 467,064
<TOTAL-REVENUES> 467,064
<CGS> 343,582
<TOTAL-COSTS> 343,582
<OTHER-EXPENSES> 248,725
<LOSS-PROVISION> 4,917
<INTEREST-EXPENSE> 12,256
<INCOME-PRETAX> (83,171)
<INCOME-TAX> 55,913
<INCOME-CONTINUING> (142,670)
<DISCONTINUED> (780)
<EXTRAORDINARY> (2,137)
<CHANGES> 0
<NET-INCOME> (145,587)
<EPS-PRIMARY> (1.20)
<EPS-DILUTED> 0 <F3>
<FN>
<F1> AMOUNT SHOWN IS NET OF ALLOWANCES.
<F2> AMOUNT SHOWN IS NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION.
<F3> AMOUNT IS ANTI-DILUTIVE.
</FN>
</TABLE>
