<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>
SEPTEMBER 30, December 31,
2000 1999
(UNAUDITED) (Audited)
------------- ------------
<S> <C> <C>
A S S E T S
CURRENT
Cash and cash equivalents $ 348,702 $ 178,086
Short-term investments 49,169 65,893
Accounts receivable 86,224 60,571
Inventories 23,533 12,701
Assets held for disposal - 20,000
Deposits and prepaid expenses 4,955 3,172
--------- ---------
512,583 340,423
LONG-TERM INVESTMENTS 2,285 12
INVESTMENT IN IPL ACQUIRECO 2000 LTD. (Note 1) 141,500 -
CAPITAL ASSETS, net 48,834 45,300
OTHER ASSETS, net 205,543 249,402
--------- ---------
$ 910,745 $ 635,137
========= =========
L I A B I L I T I E S
CURRENT
Accounts payable $ 20,278 $ 22,685
Accrued liabilities 27,090 31,107
Income taxes payable 8,364 3,585
Customer prepayments 10,467 4,962
Future income taxes (Note 2) 1,262 -
Current portion of long-term debt 512 12,016
--------- ---------
67,973 74,355
FUTURE INCOME TAXES (Note 2) 2,719 -
LONG-TERM DEBT - 125,488
--------- ---------
70,692 199,843
--------- ---------
S H A R E H O L D E R S ' E Q U I T Y
Convertible Subordinated Preferred
Equivalent Debentures (Note 3) 308,334 -
Share capital 472,631 368,538
Warrants 8,244 8,244
Retained earnings 51,470 57,252
Cumulative translation adjustment (626) 1,260
--------- ---------
840,053 435,294
--------- ---------
$ 910,745 $ 635,137
========= =========
</TABLE>
26
<PAGE>
EXHIBIT 99.1
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 NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUE $ 88,693 $ 45,607 $ 198,282 $ 110,002
EXPENSES
Cost of goods sold 16,798 8,946 41,371 21,833
Research and development 24,903 7,699 54,992 19,482
Selling, general and administrative 17,226 7,678 37,864 20,282
--------- --------- --------- ---------
58,927 24,323 134,227 61,597
--------- --------- --------- ---------
OPERATING INCOME 29,766 21,284 64,055 48,405
EQUITY LOSS - (361) - (361)
INTEREST INCOME (EXPENSE), net 8,164 (2,722) 15,906 (8,171)
PREMIUM PAID ON EARLY EXTINGUISHMENT OF
U.S. DOLLAR SENIOR NOTES - - (20,039) -
--------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 37,930 18,201 59,922 39,873
PROVISION FOR (RECOVERY OF) INCOME TAXES
(Note 2) (4,562) 1,062 (8,768) 2,370
--------- --------- --------- ---------
NET INCOME 42,492 17,139 68,690 37,503
INTEREST EXPENSE ON CONVERTIBLE SUBORDINATED
PREFERRED EQUIVALENT DEBENTURES (9,127) - (19,021) -
--------- --------- --------- ---------
NET INCOME ATTRIBUTABLE TO COMMON
SHAREHOLDERS $ 33,365 $ 17,139 $ 49,669 $ 37,503
========= ========= ========= =========
BASIC EARNINGS PER SHARE $ 0.26 $ 0.18 $ 0.39 $ 0.38
========= ========= ========= =========
FULLY DILUTED EARNINGS PER SHARE $ 0.23 $ 0.15 $ 0.36 $ 0.34
========= ========= ========= =========
S E G M E N T E D I N F O R M A T I O N
REVENUE FROM EXTERNAL CUSTOMERS
Product sales $ 50,296 $ 28,730 $ 126,289 $ 66,271
Research and development 33,284 12,240 61,567 27,592
Royalty and licensing 5,113 4,637 10,426 16,139
--------- --------- --------- ---------
$ 88,693 $ 45,607 $ 198,282 $ 110,002
========= ========= ========= =========
SEGMENT OPERATING INCOME (LOSS)
Product sales $ 30,134 $ 14,421 $ 68,520 $ 30,255
Research and development 7,236 4,015 1,061 6,590
Royalty and licensing 4,887 4,651 10,148 15,928
Unallocated (12,491) (1,803) (15,674) (4,368)
--------- --------- --------- ---------
$ 29,766 $ 21,284 $ 64,055 $ 48,405
========= ========= ========= =========
</TABLE>
27
<PAGE>
EXHIBIT 99.1
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>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
2000 1999
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 68,690 $ 37,503
Depreciation and amortization 20,358 4,960
Future income tax recovery (Note 2) (14,946) -
Premium paid on early extinguishment
of U.S. Dollar Senior Notes 20,039 -
Equity loss - 361
--------- ---------
94,141 42,824
Change in non-cash operating items (35,037) 14,278
--------- ---------
59,104 57,102
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to capital assets, net (11,074) (5,281)
Investment in IPL Acquireco 2000 Ltd. (Note 1) (141,500) -
Maturity of short-term investments, net 16,725 -
Acquisition of long-term investments, net (2,273) -
Proceeds from assets held for disposal 20,000 -
Decrease in other assets 411 -
Investment in Fuisz Technologies Ltd. - (77,479)
Acquisition of product rights - (2,203)
Repayment of executive stock purchase plan loans - 719
--------- ---------
(117,711) (84,244)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of share capital 104,093 2,985
Repurchase of share capital - (30,593)
Issuance of Convertible Subordinated Preferred Equivalent
Debentures, net of financing costs (Note 3) 288,500 -
Interest paid on Convertible Subordinated Preferred Equivalent
Debentures (10,688) -
Repurchase of U.S. Dollar Senior Notes (141,017) -
Reduction in other long-term debt (11,432) (667)
--------- ---------
229,456 (28,275)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (233) 76
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 170,616 (55,341)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 178,086 78,279
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 348,702 $ 22,938
========= =========
</TABLE>
28
<PAGE>
EXHIBIT 99.1
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. INVESTMENT IN IPL ACQUIRECO 2000 LTD.
On September 29, 2000, Biovail Corporation (the "Company") sold all of its
interest in the special shares of Intelligent Polymers Limited ("IPL") to
IPL Acquireco 2000 Ltd. ("Acquireco"), in exchange for non-voting common
shares of Acquireco. In addition, the Company invested $141,500,000 in
Class A shares of Acquireco. On the same date, Acquireco, as holder of the
special shares of IPL, consummated the purchase of all the issued and
outstanding common shares of IPL and thereby IPL became a wholly-owned
subsidiary of Acquireco.
The Company, as holder of all of the non-voting common shares of Acquireco,
has the option, exercisable at its sole discretion, to purchase all of the
voting common shares of Acquireco, at any time prior to October 1, 2002. If
the option is exercised, the redemption price would be $1 per share plus
15% per annum prior to January 1, 2001, and $1 per share plus 35% per annum
on or after January 1, 2001. At September 30, 2000, Acquireco had 6,500,000
voting common shares issued and outstanding.
2. FUTURE INCOME TAXES
Effective January 1, 2000, 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 nine months ended September 30, 2000, application
of the new income tax rules increased net income by $16,389,000 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.
3. 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 $30.337(i) 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
$45.505(i) 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
29
<PAGE>
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.
(i) Adjusted to give effect to the 2 for 1 stock split on October 10, 2000.
30
