<PAGE>
EXHIBIT 99.1
BIOVAIL CORPORATION
CONSOLIDATED BALANCE SHEETS
IN ACCORDANCE WITH CANADIAN GAAP
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
2000 1999
------------ -------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents................................. $447,453 $178,086
Short-term investments.................................... 61,675 65,893
Accounts receivable....................................... 81,986 60,571
Inventories............................................... 23,891 12,701
Assets held for disposal.................................. -- 20,000
Deposits and prepaid expenses............................. 3,075 3,172
-------- --------
618,080 340,423
LONG-TERM INVESTMENTS....................................... 2,297 12
CAPITAL ASSETS, net......................................... 46,407 45,300
OTHER ASSETS, net........................................... 210,322 249,402
-------- --------
$877,106 $635,137
======== ========
LIABILITIES
CURRENT
Accounts payable.......................................... $ 22,813 $ 22,685
Accrued liabilities....................................... 24,543 31,107
Income taxes payable...................................... 4,945 3,585
Customer prepayments...................................... 9,922 4,962
Future income taxes (Note 1).............................. 1,262 --
Current portion of long-term debt......................... 1,298 12,016
-------- --------
64,783 74,355
FUTURE INCOME TAXES (Note 1)................................ 11,034 --
LONG-TERM DEBT.............................................. -- 125,488
-------- --------
75,817 199,843
-------- --------
SHAREHOLDERS' EQUITY
Convertible Subordinated Preferred Equivalent Debentures
(Note 2)................................................ 304,269 --
Share capital............................................. 470,939 368,538
Warrants.................................................. 8,244 8,244
Retained earnings......................................... 18,105 57,252
Cumulative translation adjustment......................... (268) 1,260
-------- --------
801,289 435,294
-------- --------
$877,106 $635,137
======== ========
</TABLE>
19
<PAGE>
BIOVAIL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
IN ACCORDANCE WITH CANADIAN GAAP
(ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED IN THOUSANDS OF U.S.
DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -------------------
2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUE..................................................... $61,448 $36,164 $109,589 $64,395
EXPENSES
Cost of goods sold........................................ 13,538 7,848 24,573 12,887
Research and development.................................. 16,132 6,459 30,089 11,783
Selling, general and administrative....................... 11,179 6,359 20,638 12,604
------- ------- -------- -------
40,849 20,666 75,300 37,274
------- ------- -------- -------
OPERATING INCOME............................................ 20,599 15,498 34,289 27,121
INTEREST INCOME (EXPENSE), net.............................. 7,558 (2,657) 7,742 (5,449)
PREMIUM PAID ON EARLY EXTINGUISHMENT OF U.S. DOLLAR SENIOR
NOTES..................................................... -- -- (20,039) --
------- ------- -------- -------
INCOME BEFORE INCOME TAXES.................................. 28,157 12,841 21,992 21,672
PROVISION FOR (RECOVERY OF) INCOME TAXES (Note 1)........... (2,650) 775 (4,206) 1,308
------- ------- -------- -------
NET INCOME.................................................. 30,807 12,066 26,198 20,364
INTEREST EXPENSE ON CONVERTIBLE SUBORDINATED PREFERRED
EQUIVALENT DEBENTURES..................................... (9,101) -- (9,894) --
------- ------- -------- -------
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS.............. $21,706 $12,066 $ 16,304 $20,364
======= ======= ======== =======
BASIC EARNINGS PER SHARE.................................... $ 0.34 $ 0.25 $ 0.26 $ 0.42
======= ======= ======== =======
FULLY DILUTED EARNINGS PER SHARE............................ $ 0.31 $ 0.22 $ 0.25 $ 0.38
======= ======= ======== =======
SEGMENTED INFORMATION
REVENUE FROM EXTERNAL CUSTOMERS
Product sales............................................. $42,362 $24,979 $ 75,993 $37,541
Research and development.................................. 16,501 8,635 28,283 15,352
Royalty and licensing..................................... 2,585 2,550 5,313 11,502
------- ------- -------- -------
$61,448 $36,164 $109,589 $64,395
======= ======= ======== =======
SEGMENT OPERATING INCOME (LOSS)
Product sales............................................. $21,923 $12,687 $ 38,386 $15,834
Research and development.................................. (2,472) 1,633 (6,175) 2,575
Royalty and licensing..................................... 2,573 2,524 5,261 11,277
Unallocated............................................... (1,425) (1,346) (3,183) (2,565)
------- ------- -------- -------
$20,599 $15,498 $ 34,289 $27,121
======= ======= ======== =======
</TABLE>
20
<PAGE>
BIOVAIL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN ACCORDANCE WITH CANADIAN GAAP
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
--------------------
2000 1999
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income................................................ $ 26,198 $ 20,364
Depreciation and amortization............................. 13,639 3,154
Future income tax recovery (Note 1)....................... (6,630) --
Premium paid on early extinguishment of U.S. Dollar Senior
Notes................................................... 20,039 --
--------- --------
53,246 23,518
Change in non-cash operating items:
Decrease (increase) in accounts receivable.............. (22,041) 6,497
Increase in inventories................................. (11,517) (4,471)
Decrease in deposits and prepaid expenses............... 97 93
Decrease in accounts payable and accrued liabilities.... (7,961) (3,259)
Increase in income taxes payable........................ 1,320 301
Increase in customer prepayments........................ 4,960 11,610
--------- --------
(35,142) 10,771
--------- --------
18,104 34,289
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to capital assets, net.......................... (5,791) (2,785)
Maturity of short-term investments, net................... 4,218 --
Acquisition of long-term investments...................... (2,285) --
Proceeds from assets held for disposal.................... 20,000 --
Decrease in other assets.................................. 261 --
Acquisition of product rights............................. -- (1,811)
Repayment of executive stock purchase plan loans.......... -- 31
--------- --------
16,403 (4,565)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of share capital................................. 102,822 2,088
Repurchase of share capital............................... -- (23,550)
Issuance of Convertible Subordinated Preferred Equivalent
Debentures, net of financing costs (Note 2)............. 289,410 --
Interest paid on Convertible Subordinated Preferred
Equivalent Debentures................................... (5,625) --
Repurchase of U.S. Dollar Senior Notes.................... (141,017) --
Reduction in other long-term debt......................... (10,657) (300)
--------- --------
234,933 (21,762)
--------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS............................................... (73) 117
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS....................... 269,367 8,079
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 178,086 78,279
--------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 447,453 $ 86,358
========= ========
</TABLE>
21
<PAGE>
BIOVAIL CORPORATION
CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
IN ACCORDANCE WITH CANADIAN GAAP
(ALL DOLLAR AMOUNTS ARE EXPRESSED IN U.S. DOLLARS)
(UNAUDITED)
1. FUTURE INCOME TAXES
Effective January 1, 2000, Biovail Corporation (the "Company") changed its
method of accounting for income taxes from the deferral method to the
liability method of tax allocation as required by the Canadian Institute of
Chartered Accountants. As permitted under the new rules, prior-year
financial statements have not been restated. The cumulative effect of this
change at January 1, 2000 was a decrease in opening retained earnings of
$55,451,000, a decrease in goodwill of $36,524,000 and an increase in the
future income tax liability of $18,927,000, reflecting the net liability
which existed at that date for the difference between the accounting and tax
value of the Company's assets and liabilities. For the six months ended
June 30, 2000, application of the new income tax rules increased net income
by $7,593,000 reflecting the reduction of the difference between the
accounting and tax values, the reduction in goodwill amortization and the
recognition of losses incurred by the Company's subsidiary Biovail
Technologies Ltd. during the period.
2. CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES
On March 22, 2000, the Company issued $300 million of 6.75% Convertible
Subordinated Preferred Equivalent Debentures, due March 31, 2025 (the
"Convertible Preferred Securities"). The Convertible Preferred Securities
are unsecured and subordinated to all Senior Indebtedness, as defined, of
the Company. The Convertible Preferred Securities are convertible at any
time into common shares at $60.675 per common share and may be redeemed at
the option of the Company beginning on March 31, 2003 at a redemption price
of 104.725% declining each year as prescribed in the indenture agreement to
100% by March 31, 2010. The Company has a special right to redeem the
Convertible Preferred Securities prior to March 31, 2003 at 106.75% if the
trading price of the Company's stock equals or exceeds $91.01 per share on
the NYSE for a specified period, subject to certain conditions. Interest is
payable quarterly in arrears commencing June 30, 2000. Subject to certain
conditions, the Company has the right to defer payment of interest on the
Convertible Preferred Securities for up to 20 consecutive quarterly periods.
Interest and principal are payable in cash or, at the option of the Company,
from the proceeds on the sale of equity securities of the Company delivered
to the trustee of the Convertible Preferred Securities.
For purposes of accounting under Canadian GAAP, the Convertible Preferred
Securities are presented within shareholders' equity and are comprised of
the holder conversion option and the interest and principal component. The
value ascribed to the option component of $43,506,000 has been determined
using the residual method after calculating the component attributable to
the present value of the required interest and principal repayments at a
rate approximating the interest rate that would have been applicable to
non-convertible debt at the time the Convertible Preferred Securities were
issued. The present value of the interest and principal repayments amounted
to $260,763,000 and is also shown as a component of shareholders' equity
reflecting the option the Company has to pay the liability from the sale of
equity securities. The present value will be accreted to the face value of
the payments over the 25 year term of the indenture as a charge to income
attributable to common shareholders.
22
<PAGE>
[LOGO]
August 29, 2000
Dear Fellow Shareholder,
Biovail Corporation changed its accounting reporting convention from Canadian
Generally Accepted Accounting Principles to U.S. Generally Accepted Accounting
Principles effective January 1, 2000.
Enclosed you will find our Letter to Shareholders and quarterly financial
statements prepared under U.S. GAAP. Additionally, Biovail Corporation will
continue to provide and has enclosed its financial results under Canadian GAAP
for your information.
Thank you for your continued support. If you have any questions regarding the
enclosures, please do not hesitate to contact the undersigned at (416) 285-6000.
Sincerely,
Kenneth G. Howling
Vice President Finance
KGH/ls
