-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HgR9b5N+zNTT/hv0gBkD48eBfQ+1Ckq+PUXbPmd54dCOb8exCA4ZPHLtgfoRXyGx w7CmCtl2IZVrU5jEd90GbA== 0000950124-98-007068.txt : 19991027 0000950124-98-007068.hdr.sgml : 19991027 ACCESSION NUMBER: 0000950124-98-007068 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981130 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIOVAIL CORPORATION INTERNATIONAL CENTRAL INDEX KEY: 0000885590 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: SEC FILE NUMBER: 001-14956 FILM NUMBER: 98761028 BUSINESS ADDRESS: STREET 1: 2488 DUNWIN DR STREET 2: MISSISSIAUGA CITY: ONTARIO STATE: A6 BUSINESS PHONE: 4162856000 MAIL ADDRESS: STREET 1: 2488 DUNWIN DR STREET 2: MISSISSAUGA CITY: ONTARIO STATE: A6 6-K 1 FORM 6-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 6-K REPORT OF FOREIGN ISSUER PURSUANT TO RULE 13A - 16 AND 15D - 16 OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED SEPTEMBER 30, 1998 COMMISSION FILE NUMBER 001-11145 BIOVAIL CORPORATION INTERNATIONAL (TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH) 2488 DUNWIN DRIVE, MISSISSAUGA, ONTARIO L5L 1J9, CANADA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (416) 285-6000 INDICATE BY CHECK MARK WHETHER THE REGISTRANT FILES OR WILL FILE ANNUAL REPORTS UNDER COVER OF FORM 20-F OR FORM 40-F FORM 20-F X FORM 40-F __ INDICATE BY CHECK MARK WHETHER FOR REGISTRANT BY FURNISHING THE INFORMATION CONTAINED IN THIS FORM IS ALSO THEREBY FURNISHING THE INFORMATION TO THE COMMISSION PURSUANT TO RULE 12G 3-2 (B) UNDER THE SECURITIES EXCHANGE ACT OF 1934. YES ___ NO _X_ 1 2 BIOVAIL CORPORATION INTERNATIONAL QUARTERLY REPORT INDEX PART 1. FINANCIAL INFORMATION CONSOLIDATED BALANCE SHEETS, SEPTEMBER 30, 1998 AND DECEMBER 31, 1997.................................................. 3 CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS AND THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997........................................ 4 CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997.............. 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.............................. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.......................................... 10 PART II. OTHER INFORMATION.............................................. 14
(ALL DOLLAR AMOUNTS IN THIS DOCUMENT ARE EXPRESSED IN U.S. DOLLARS UNLESS OTHERWISE STATED.) 2 3 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED BALANCE SHEETS (All dollar amounts are expressed in thousands of U.S. dollars)
SEPTEMBER 30, DECEMBER 31, 1998 1997 ------------------------ ------------------------- (UNAUDITED) ASSETS Current Cash and short-term deposits $ 11,892 $ 8,275 Accounts receivable 36,481 33,114 Inventories 17,955 16,609 Executive loans (Note 3) 2,868 2,933 Deposits and prepaids 2,575 2,053 ------------------------ ------------------------- 71,771 62,984 Long-term investments (Note 4) 10,000 - Fixed assets, net 23,429 24,172 Other assets, net (Note 5) 24,376 6,583 ------------------------ ------------------------- $ 129,576 $ 93,739 ======================== ========================= LIABILITIES Current Bank indebtedness (Note 6) $ 10,051 $ - Accounts payable 6,859 4,579 Accrued liabilities 4,851 6,002 Income taxes payable 1,899 1,013 Customer prepayments 4,836 1,840 Current portion of long-term debt 1,124 1,887 ------------------------ ------------------------- 29,620 15,321 Long-term debt (Note 7) 14,148 2,960 ------------------------ ------------------------- 43,768 18,281 ------------------------ ------------------------- SHAREHOLDERS' EQUITY Share capital (Note 8) 20,683 18,465 Warrants 8,244 8,244 Retained earnings 58,267 49,709 Cumulative translation adjustment (1,386) (960) ------------------------ ------------------------- 85,808 75,458 ------------------------ ------------------------- $ 129,576 $ 93,739 ======================== =========================
The accompanying notes are an integral part of the consolidated financial statements 3 4 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED STATEMENTS OF INCOME (All dollar amounts except per share data are expressed in thousands of U.S. dollars)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ---------------- --------------- ------------- ------------------ REVENUE (UNAUDITED) (UNAUDITED) Research and development $ 8,974 $ 4,887 $ 20,927 $ 7,046 Manufacturing 16,540 38,904 10,367 45,303 Royalty and licensing 10,124 3,476 5,978 9,905 ---------------- --------------- ------------- ------------------ 28,990 56,074 21,232 76,135 ---------------- --------------- ------------- ------------------ EXPENSES Research and development 11,452 4,047 4,893 12,179 Cost of manufactured goods sold 11,128 6,946 2,947 18,956 Selling, general and administrative 10,075 4,067 3,350 12,521 ---------------- --------------- ------------- ------------------ 15,060 32,655 11,190 43,656 ---------------- --------------- ------------- ------------------ OPERATING INCOME 13,930 10,042 32,479 23,419 INTEREST INCOME (EXPENSE), net (97) (142) (254) (208) -------------- ----------------- ---------------- --------------- INCOME BEFORE INCOME TAXES 13,833 9,900 32,225 23,211 PROVISION FOR INCOME TAXES 629 491 1,629 1,174 ================ =============== ============= ================== NET INCOME $ 13,204 $ 9,409 $ 30,596 $ 22,037 ================ =============== ============= ================== EARNINGS PER SHARE (Note 10 ) $ 0.49 $ 0.37 $ 1.14 $ 0.87 ================ =============== ============= ================== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 26,899,290 25,447,000 26,899,290 25,447,000 ================ ============== ============== ==================
The accompanying notes are an integral part of the consolidated financial statements 4 5 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED STATEMENTS OF CASH FLOWS (All dollar amounts are expressed in thousands of U.S. dollars)
NINE MONTHS ENDED SEPTEMBER 30 1998 1997 ------------------ ------------------ NET INFLOW (OUTFLOW) OF CASH RELATED (UNAUDITED) TO THE FOLLOWING ACTIVITIES OPERATING Net income for the period $ 30,595 $ 22,037 Depreciation and amortization 3,534 2,188 ------------------ ------------------ 34,129 24,225 Change in non-cash operating items (Note 2) (804) (30,952) ------------------ ------------------ 33,325 (6,727) ------------------ ------------------ INVESTING Acquisition of royalty interest (Note 5) (15,000) - Long-term investments (Note 4) (10,000) - Additions to fixed assets, net (2,505) (2,005) Executive loans (Note 3) 66 (389) Increase in other assets (4,165) (250) ------------------ ------------------ (31,604) (2,644) ------------------ ------------------ FINANCING Increase in long-term debt (Note 7) 19,141 387 Reduction in long-term debt (Note 7) (8,455) (1,919) Issuance of share capital 3,776 708 Stock repurchase program (Note 8) (22,598) - ------------------- ------------------ (8,136) (824) ------------------- ------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH (19) (39) ------------------ ------------------ INCREASE (DECREASE) IN CASH (6,434) (10,234) CASH, BEGINNING OF PERIOD 8,275 4,526 ------------------ ------------------ CASH, END OF PERIOD $ 1,841 $ (5,708) ================== ================== REPRESENTED BY Cash and short-term deposits $ 11,892 $ 4,409 Bank indebtedness (Note 6) (10,051) (10,117) ------------------ ------------------ $ 1,841 $ (5,708) ================== ==================
The accompanying notes are an integral part of the consolidated financial statements 5 6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S DOLLARS) (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES Biovail Corporation International (the "Company"), was amalgamated effective March 29, 1994, under the laws of the province of Ontario. The Company's accounting and reporting policies conform to generally accepted accounting principles in Canada. There were no material differences between generally accepted accounting principles in Canada and generally accepted accounting principles in the United States in the reporting periods except for those described in Note 8. 1997 Figures Certain of the 1997 figures have been reclassified to conform to the 1998 presentation. For a full description of the other accounting policies of the Company, reference is made to the Annual Report on Form 20-F for the year ended December 31, 1997. In the opinion of management, all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the period presented have been made and all such adjustments are of a normal recurring nature. 2. CHANGE IN NON-CASH OPERATING WORKING CAPITAL
Nine Months ended September 30, (In Thousands) -------------------------------------------------- 1998 1997 --------------------- ------------------- Accounts receivable $ (3,658) $ (23,159) Inventories (1,462) (7,727) Deposits and prepaid expenses (521) (1,035) Accounts payable and accrued liabilities 1,033 6,071 Income taxes payable 809 (247) Customer prepayments 2,995 (4,855) ==================== ================== $ (804) $ (30,952) ==================== ==================
3. EXECUTIVE LOANS Executive loans as at September 30, 1998 consist of Executive Stock Purchase Plan ("ESPP") loans of $2,868,000 made to finance the acquisition of shares of the Company on the open market by executive officers. The loans are secured by the shares of the Company 6 7 owned by the executive officers, bear interest at 1/4% over the bank prime rate, and are due on December 1, 1998. 4. LONG-TERM INVESTMENTS In March, 1998, the Company made a $7,500,000 investment in a marketable securities fund for a term of two years. The fair value of the investment at September 30, 1998, was $9,276,000. In July, 1998, in connection with the acquisition from Celgene Corporation ("Celgene") of Canadian marketing and distribution rights in respect to immediate release and pulse release formulations of products containing d-methylphenidate hydrochloride, the Company made a $2,500,000 investment in common shares of Celgene, the supplier of the product. The fair value of the investment at September 30, 1998 was $1,959,000. The above investments are carried at cost, less any provision which may be required to recognize a permanent decline in value. 5. OTHER ASSETS In March, 1998, the Company completed the acquisition of the royalty interest of Galephar Puerto Rico, Inc., Limited ("Galephar") in certain of the Company's products. The Company paid $15,000,000 to Galephar in full satisfaction of the Company's royalty obligation on the sales of Tiazac(R) and the Company's generic controlled release version of Cardizem CD in the United States and Canada. In September 1998 the Company acquired from Centocor, Inc. the exclusive distribution rights in Canada for Retavase for $4,000,000. 6. BANK INDEBTEDNESS At September 30, 1998 the Company had available lines of credit of $55,000,000 with a Canadian chartered bank. At that date, $8,000,000 under a term line and $10,051,000 of short-term indebtedness was outstanding. 7. LONG-TERM DEBT In March, 1998, the Company utilized a $15,000,000 revolving term bank loan to acquire the royalty interest of Galephar (See Note 5). In September, 1998 $4,000,000 under the revolving loan was used for the purchase of the distribution rights for Retavase (See Note 5). The loan is secured by a general security agreement bearing interest at the bank's London Interbank Offer Rate ("LIBOR"), plus 1 1/2%. The Company may make repayments on the loan at any time and in June, 1998, repaid $7,000,000 of the revolving term bank loan. 7 8 8. SHARE CAPITAL On August 17, 1998, the Company announced the implementation of a Stock Repurchase Program under which the Company may repurchase up to 5% of its issued and outstanding stock. As of September 30, 1998, 716,500 shares had been repurchased under this plan at a cost of $22,598,000. The excess cost of $21,039,000 of the common shares acquired over the stated capital thereof has been charged to retained earnings. 9. LITIGATION From time to time, the Company becomes involved in various legal proceedings which it considers to be in the ordinary course of business. The vast majority of these proceedings involve intellectual property issues that often result in patent infringement suits brought by patent holders upon the Company's filing of its ANDA applications. The timing of these actions is mandated by statute and may result in a delay of FDA's approval for such filed ANDAs until the final resolution of such actions or the expiry of 30 months, whichever occurs earlier. The Company is currently litigating a number of such actions and the Company is vigorously defending these suits by denying infringement of the patents and has or will be asserting counterclaims seeking damages for violation of the anti-trust laws of the U.S. and for tortious interference with the Company's prospective business advantage. While the Company is not currently able to determine the potential liability, if any, related to such matters, the Company believes none of the matters, individually or in aggregate, will have a material adverse effect on its financial position, results of operations or cash flows. 10. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in Canada ("Cdn. GAAP") which differ in certain respects from those applicable in the United States ("U.S. GAAP"). The material differences as they apply to the Company's financial statements are as follows: 8 9 a) Reconciliation of net income under Cdn. and U.S. GAAP
NINE MONTHS ENDED SEPTEMBER 30 (IN THOUSANDS EXCEPT PER SHARE DATA) 1998 1997 ---- ---- Net income under Cdn. GAAP........................... $ 30,596 $ 22,037 U.S GAAP adjustments: Collection of warrant subscription Receivable...................................... (958) (693) ---------------- ------------------ $ 29,638 $ 21,344 ================ ================= Earnings per share under U.S. GAAP Basic $ 1.10 $ 0.84 Diluted $ 1.09 $ 0.79 Weighted average number of common shares Outstanding under U.S. GAAP Basic........................................... 26,889 25,447 Diluted......................................... 27,239 26,903
b) The components of shareholders' equity under U.S. GAAP are as follows:
SEPTEMBER 30, DECEMBER 31, 1998 1997 ---- ---- Share Capital........................................ $ 20,683 $ 18,465 Warrants............................................. 8,244 8,244 Warrants subscription receivable, net................ (6,536) (7,494) Retained earnings.................................... 64,803 57,203 Cumulative translation adjustment.................... (1,386) (960) Unrealized holding gain- long term investments (Note 4).............................. 1,235 0 ----------------- ------------------ $ 87,043 $ 75,458 ================= ==================
9 10 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (ALL DOLLAR AMOUNTS ARE EXPRESSED IN U.S. DOLLARS) OVERVIEW Biovail Corporation International ("Biovail" or the "Company") derives its revenues from (i) developing and licensing oral controlled release products using its proprietary drug delivery technologies; (ii) manufacturing such products for sale to licensees and wholesalers; and (iii) providing pharmaceutical contract research services to third parties. RESULTS OF OPERATIONS Revenues for the first nine months of 1998 were $76,135,000 compared with $56,074,000 in 1997. This increase was primarily due to increased research and development and manufacturing revenues. Net income increased 39% to $30,596,000, or $01.14 per share, in the first nine months of 1998 compared with net income of $22,037,000 or $0.87 per share in 1997. Research and development revenue from third-party customers was $20,927,000 in the first nine months of 1998, compared to $7,046,000 in 1997. The increase in research and development revenue was due to product development activities undertaken on behalf of Teva Pharmaceuticals ("Teva") and Intelligent Polymers Limited ("IPL"). Research and development expenses for the first nine months of 1998 were $12,179,000 as compared to $11,452,000 in 1997. The increased spending over 1997 reflects the Company's higher level of research and development activity for third party customers. Manufacturing revenues for the first nine months of 1998 were $45,303,000 compared to $38,904,000 in 1997. In 1998 revenues were generated primarily on sales of Tiazac(R) to Forest Laboratories ("Forest") for the U.S. market, Canadian market sales of Tiazac(R) by the Company's subsidiary, Crystaal Corporation ("Crystaal"), and the shipment of product to Teva in the first quarter. The cost of manufactured goods increased to 42% of revenue in the first nine months of 1998 as compared to 29% in 1997. This cost increase is primarily from the one time contractual price reduction to Forest of approximately 25% which occurred in the second quarter of 1997. Royalty and licensing revenue, net of related expenses, totaled $9,905,000 in the first nine months of 1998, compared to $10,124,000 in 1997. The 1998 period was favourably impacted by royalties on higher trade sales of Tiazac in the U.S. market and the elimination of a royalty obligation of Biovail to Galephar on sales of Tiazac(R) in the U.S. and Canada. Royalty and licensing revenues in 1998 were adversely impacted by the amortization expense related to the elimination of the royalty obligation, and by a reduction in royalties on sales of Oruvail in the U.S. due to the introduction of a competing generic product. Selling, general and administrative expenses increased to $12,521,000 in the first nine months of 1998, compared to $10,075,000 in 1997. The increase primarily stems from increased sales and marketing expenses related to the launch of Tiazac(R) in Canada, the registration costs associated with Tiazac(R) in European markets, and the hiring of key management personnel. 10 11 Operating income of $32,479,000 was achieved in the first nine months of 1998 compared to operating income of $23,419,000 in 1997. Canadian operations (including Crystaal, manufacturing and contract research facilities, research and development and corporate administrative functions), incurred operating losses of $9,725,000 in the first nine months of 1998 compared to $1,355,000 in 1997. The lower level of Canadian losses for the first nine months of 1997 was due primarily to the significant revenues generated from Canadian launch shipments of Tiazac(R) in May, 1997. Operating income of $3,097,000 and $3,203,000 in each of the 1998 and 1997 periods respectively was earned by the Company's subsidiary in Switzerland through royalties earned on Biovail products excluding Tiazac(R). Operations in Barbados and Puerto Rico contributed operating income of $39,107,000 in the first nine months of 1998 compared to $21,571,000 in 1997. The increase in operating income in Barbados and Puerto Rico was due primarily to third party product development and manufacturing sales activities. Net interest expense was $254,000 in the first nine months of 1998 compared to $208,000 in 1997. Income taxes in the first nine months of 1998 were $1,629,000 compared to $1,174,000 in 1997. The tax provisions are reflective of the geographic sources of income at appropriate rates. LIQUIDITY AND CAPITAL RESOURCES As at September 30, 1998, the Company's working capital was $42,151,000 compared to $47,663,000 at December 31, 1997. The Company had positive cash flow from operations of $33,325,000 for the nine months ended September 30, 1998 compared to a cash flow deficiency of $6,727,000 in 1997. Net income before depreciation and amortization charges was $34,129,000 for the nine month period in 1998 compared with $24,225,000 in 1997. Approximately $804,000 was required in 1998 to fund increases in accounts receivable and inventories in excess of accounts payable and customer prepayments. For the comparable 1997 period, non-cash working capital requirements were $30,952,000. This was due to an increase in accounts receivable related to the launch of Tiazac(R) in Canada, amounts owing from IPL related to research and development activities and a technology transfer fee, and an increase in inventories related to raw materials for Tiazac(R) and generic product forecast requirements. Investing activities in the first nine months included the acquisition of the royalty interest from Galephar for $15,000,000, and long-term investments of $10,000,000. In the 1998 period, the Company acquired from Centocor, Inc., at a cost of $4,000,000, the exclusive distribution rights in Canada for Retavase. Additions to fixed assets in 1998 were $2,505,000. In the comparable 1997 period investing activities totalled $2,644,000 of which the majority related to fixed assets. Net cash used for financing activities was $8,136,000 in the first nine months of 1998 compared to $824,000 in 1997. The 1998 cash requirement reflects the open-market purchases of 716,500 11 12 common shares of the Company for an aggregate cost of $22,598,000, offset by a net increase in long-term debt of $10,686,000 and $3,776,000 received from the issuance of common shares on the exercise of stock options. In the comparable period in 1997, cash utilization was as a result of net long-term debt repayments of $1,532,000 offset by proceeds of $708,000 received from the issuance of common shares on the exercise of stock options. Exchange rate changes on foreign cash balances resulted in a decrease in cash of $19,000 in the first nine months of 1998 compared to a reduction of cash of $39,000 in 1997. As a result of the foregoing, the Company's cash position net of bank indebtedness as at September 30, 1998 was $1,841,000 compared to a cash deficit of $5,708,000 at September 30, 1997. The Company's total long-term debt (including current portions thereof) was $15,272,000 as at September 30, 1998 compared to $4,847,000 at December 31, 1997. The Company has available lines of credit aggregating $55,000,000. As of September 30, 1998, $8,000,000, related to the acquisition of the Galephar royalty obligation buy back and $10,051,000 of short-term indebtedness, was outstanding under these lines of credit. The Company believes it has adequate capital and sources of short-term financing to support its ongoing operational requirements. Furthermore, the Company believes it will be able to obtain long-term capital, if necessary, to support its growth objectives. There can be no assurance, however, that these financial resources will be available on acceptable terms and will be sufficient to sustain the Company's longer term growth objectives. The Company and its subsidiaries generate revenue and expenses primarily in U.S. and Canadian dollars. In the first nine months of 1998, revenue was generated in the following proportions: 90% in U.S. dollars, 9% in Canadian dollars and 1% in other currencies. In addition, expenses were incurred in the following proportions:71% in U.S. dollars, and 29% in Canadian dollars. The Company does not believe that its exposure to foreign currency exchange risk is significant because of the relatively minor, and diminishing, proportion of Canadian dollar to U.S. dollar denominated transactions. The Company has not historically utilized foreign currency hedging instructions. Inflation has not had a material impact on the Company's operations. YEAR 2000 COMPLIANCE. The Company is currently in the process of identifying potential Year 2000 readiness issues associated with its systems and its suppliers' products, services, systems and operations, and expects to complete this process by mid-1999. As part of its Year 2000 compliance program, the Company has purchased and is in the process of implementing enterprise-wide business application software that has been represented to the Company by the vendor to be Year 2000 compliant. These systems are expected to be fully functional by early 1999. The Company is also assembling a Year 2000 project team to deal with the remaining issues, such as building environmental systems, phone, fax and desktop computers. The Company's goal is to perform testing for these systems including simulating system dates prior to, during and after the century change. This effort is scheduled to be complete by mid-1999. The Company expects that the cash cost of achieving Year 2000 compliance will be approximately $500,000. 12 13 Biovail's customers and suppliers may not have management information systems that are Year 2000 compliant or may not have completed required system modifications by the Year 2000. Failure to be Year 2000 compliant could have a material adverse effect on the Company's results of operations, business, prospects and financial condition. The Company is currently in the process of developing a contingency plan, which it expects to complete by mid-1999, to address the prospect of customers and/or suppliers not being Year 2000 compliant. 13 14 BIOVAIL CORPORATION INTERNATIONAL PART II - OTHER INFORMATION 1. OPERATIONAL INFORMATION The press releases issued by the Company in the 1998 third quarter are attached as the following exhibits: a) On July 21, 1998, the Company announced that it had received FDA approval for generic Trental b) On July 28, 1998 the Company reported record 1998 Second Quarter Financial Results. c) On August 17, 1998, the Company announced Stock- Repurchase Program. d) On September 15, 1998, the Company announced that it will market Retavase(TM) in Canada. e) On October 29, 1998, Biovail reported record 1998 Third Quarter Financial Results. 2. LEGAL PROCEEDINGS For detailed information concerning legal proceedings, reference is made to Note 8 in the financial statement contained as part hereof and to the Annual Report on Form 20-F for the year ended December 31, 1997. 3. THIRD QUARTER REPORT TO SHAREHOLDERS The Third Quarter Report to Shareholders is attached as Exhibit F. 14 15 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. Biovail Corporation International November 30, 1998 By /s/ Kenneth G. Howling Kenneth G. Howling Vice President, Finance and Chief Financial Officer 15 16 EXHIBITS FOR THE THIRD QUARTER 6-K FOR 1998 16 EX-99.A 2 EXHIBIT 99.A 1 EXHIBIT "A" CONTACT: Eugene Melnyk Chairman of the Board Kenneth Howling Chief Financial Officer (416) 285-6000 FOR IMMEDIATE RELEASE: * BIOVAIL RECEIVES FDA APPROVAL FOR GENERIC TRENTAL * TORONTO, Canada, July 21, 1998 - Biovail Corporation International (NYSE, TSE: BVF) today announced that it has received marketing approval for its generic version of Trental (pentoxifylline) from the Food and Drug Administration (FDA). Trental is sold in the United States by Hoechst Marion Roussel and is prescribed for the treatment of peripheral vascular disease. Sales of pentoxifylline were in excess of $190 million for 1997 in the United States. Biovail's pentoxifylline will be marketed in the U.S. by Teva Pharmaceuticals USA, Inc., one of the premier marketers of generic products in the United States. Eugene Melnyk, Chairman of the Board, stated that, "We are excited by the approval of our generic version of Trental by the FDA. Biovail has an additional five ANDA applications, including generic versions of Cardizem CD, Cardizem SR, Verelan, Procardia XL and Adalat CC, awaiting FDA approval. These products currently generate approximately $1.9 billion in brand sales in the United States." Biovail Corporation International is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration and manufacture of drug products utilizing advanced drug delivery technologies. "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this release contain information that is not historical, these statements are essentially forward looking and are subject to risks and uncertainties, including the difficulty of predicting FDA and TPD approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. EX-99.B 3 EXHIBIT 99.B 1 EXHIBIT "B" CONTACT: Eugene Melnyk Chairman of the Board Ken Howling Chief Financial Officer (416) 285-6000 FOR IMMEDIATE RELEASE: * BIOVAIL REPORTS RECORD 1998 SECOND QUARTER FINANCIAL RESULTS * TORONTO, Canada, July 28, 1998 - Biovail Corporation International (NYSE,TSE:BVF) today reported second quarter and six month financial results for the period ended June 30, 1998. Revenues for the second quarter of 1998 were $25.3 million, compared to $18.5 in the second quarter of 1997. Record second quarter net income of $9.5 million, or $0.36 per share, was achieved representing a 34% increase over last year's net income of $7.1 million, or $0.28 per share. Revenues for the six months ended June 30, 1998 were $47.1 million compared to $34.8 million in 1997. Net income of $17.4 million, or $0.65 per share, increased by 38% over last year's net income of $12.6 million, or $0.50 per share. The increase in second quarter and first half 1998 net income is primarily due to continued market penetration of Tiazac(R) in the U.S. market and the elimination of royalty obligations to Galephar Puerto Rico Inc., Limited ("Galephar") on sales of Tiazac(R) in the U.S. and Canada and milestone fees earned from Teva Pharmaceuticals related to ANDA product filings with the FDA. Eugene Melnyk, Chairman of the Board, commented, "We are pleased with the success of our base business and the continued success of Tiazac(R) in North America. In Europe, Tiazac(R) has recently been approved for angina, which accounts for approximately 70% of prescriptions written for once daily diltiazem. The recent approval by the Food and Drug Administration of Biovail's generic version of Trental continues to demonstrate our scientific and regulatory capabilities. With a solid core business, comprehensive marketing strategy and a promising pipeline of products, Biovail is committed to building upon the successes we have achieved to date." - more - 2 Biovail Corporation International is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration and manufacture of drug products utilizing advanced drug delivery technologies. "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this release contain information that is not historical, these statements are essentially forward looking and are subject to risks and uncertainties, including the difficulty of predicting FDA and TPD approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. - Tables Follow - 3 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED BALANCE SHEETS (ALL DOLLAR AMOUNTS ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS)
JUNE 30, DECEMBER 31, 1998 1997 --------------- --------------- (UNAUDITED) ASSETS Current Cash and short-term deposits $ 20,882 $ 8,275 Accounts receivable 28,983 33,114 Inventories 18,423 16,609 Executive loans 2,818 2,933 Deposits and prepaids 2,302 2,053 --------------- --------------- 73,408 62,984 Long-term investments 7,500 - Fixed Assets, net 24,423 24,172 Other Assets, net 20,899 6,583 --------------- --------------- $ 126,230 $ 93,739 =============== =============== LIABILITIES Current Accounts payable 5,392 4,579 Accrued liabilities 4,267 6,002 Income taxes payable 1,470 1,013 Customer prepayments 7,080 1,840 Current portion of long-term debt 1,739 1,887 --------------- --------------- 19,948 15,321 Long-Term Debt 9,857 2,960 --------------- --------------- 29,805 18,281 --------------- --------------- SHAREHOLDERS' EQUITY Share capital 21,869 18,465 Warrants 8,244 8,244 Retained earnings 67,099 49,709 Cumulative translation adjustment (787) (960) --------------- --------------- 96,425 75,458 --------------- --------------- $ 126,230 $ 93,739 =============== ===============
4
BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED STATEMENTS OF INCOME (ALL DOLLAR AMOUNTS EXCEPT PER SHARE DATA ARE EXPRESSED IN THOUSANDS OF U.S. DOLLARS) THREE MONTHS ENDED JUNE 30 SIX MONTHS ENDED JUNE 30 1998 1997 1998 1997 ----------------- ----------------- ----------------- ----------------- (UNAUDITED) (UNAUDITED) REVENUE Research and development $ 4,109 $ 1,419 $ 11,953 $ 2,159 Manufacturing 17,296 15,247 28,763 28,537 Royalty and licensing 3,850 1,784 6,428 4,146 ---------------- ---------------- ---------------- ---------------- 25,255 18,450 47,144 34,842 ---------------- ---------------- ---------------- ---------------- EXPENSES Research and development 4,103 3,010 8,132 6,559 Cost of manufactured goods sold 6,867 3,858 12,009 8,181 Selling, general and administrative 4,143 4,078 8,454 6,725 ---------------- ---------------- ---------------- ---------------- 15,113 10,946 28,595 21,465 ---------------- ---------------- ---------------- ---------------- OPERATING INCOME 10,142 7,504 18,549 13,377 INTEREST INCOME (EXPENSE), net (89) (51) (157) (66) --------------- ---------------- ---------------- ---------------- INCOME BEFORE INCOME TAXES 10,053 7,453 18,392 13,311 PROVISION FOR INCOME TAXES 510 375 1,001 683 ---------------- ---------------- ---------------- ---------------- NET INCOME $ 9,543 $ 7,078 $ 17,391 $ 12,628 ================ ================ ================ ================ EARNINGS PER SHARE $ 0.36 $ 0.28 $ 0.65 $ 0.50 ================ ================ ================ ================ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 26,849,900 25,435,000 26,849,900 25,435,000 ================ ================ ================ ================
EX-99.C 4 EXHIBIT 99.C 1 EXHIBIT "C" CONTACT: Eugene Melnyk Chairman of the Board Kenneth Howling Chief Financial Officer (416) 285-6000 FOR IMMEDIATE RELEASE: * BIOVAIL ANNOUNCES STOCK-REPURCHASE PROGRAM* TORONTO, Canada, August 17, 1998 - Biovail Corporation International (NYSE,TSE:BVF) today announced that its Board of Directors has authorized the Company to implement a Stock-Repurchase Program pursuant to which the Company will repurchase up to 5% of its issued and outstanding common stock, depending upon market conditions and other factors. The common stock will be purchased through open market transactions on the New York Stock Exchange in accordance with applicable rules and regulations. Biovail has approximately 26.9 million common shares outstanding. The Company's Officers and Directors will be restricted from selling common stock of the Company during the Period. Biovail Corporation International is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration and manufacture of drug products utilizing advanced drug delivery technologies. "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this release contain information that is not historical, these statements are essentially forward looking and are subject to risks and uncertainties, including the difficulty of predicting FDA and TPD approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. EX-99.D 5 EXHIBIT 99.D 1 EXHIBIT "D" CONTACT: Rolf Reininghaus President Crystaal Corporation Kenneth Howling Chief Financial Officer (416) 285-6000 FOR IMMEDIATE RELEASE: * BIOVAIL TO MARKET CENTOCOR'S RETAVASE(TM) IN CANADA* - PRODUCT APPROVED FOR MARKETING - TO BE LAUNCHED IN FOURTH QUARTER - TORONTO, Canada, September 15, 1998 - Biovail Corporation International (NYSE, TSE: BVF) today announced that it has entered into an agreement with Centocor, Inc. (NASDAQ:CNTO) for the exclusive distributorship of Retavase(TM) (reteplase) in Canada. Retavase, a fibrinolytic agent, has been approved for marketing by the regulatory authorities in Canada and will soon be available to hospitals nationwide. The new "clot busting" product is expected to help treat the 200,000 Canadian patients suffering from heart attacks each year. Retavase, a biotechnology product, was developed by Boehringer Mannheim GmbH prior to its recent merger with Roche Holding AG. Centocor, headquartered in Malvern, PA, acquired the USA and Canadian rights to Retavase from Roche Holding AG earlier this year. Crystaal Corporation, a wholly owned subsidiary of Biovail, intends to begin marketing Retavase in the fourth quarter of 1998. The up-front payments made upon execution of the agreement amount to U.S. $4 million. Biovail will purchase Retavase from Centocor at a pre-agreed supply price and will pay Centocor a royalty on sales. Rolf Reininghaus, President of Crystaal, commented that "Retavase will enable Crystaal to establish a strong foothold in the acute care market segment and will help further the company's ongoing efforts to solidify and expand its relationship with leading cardiovascular specialists and hospitals in Canada." 2 According to Health Canada - Laboratory Center for Disease Control, Cardiovascular disease is now the leading cause of death in Canada, accounting for 37% of all deaths. Ischemic Heart Disease (IHD) is responsible for the greatest percentage of deaths with 21%, of which half are attributable to acute myocardial infarction (AMI). Cardiovascular disease was the most expensive disease category according to 1995 statistics, representing $7.3 billion or 17% of the total direct costs of all illnesses. Fibrinolytic agents are used to treat patients who suffer from heart attacks. Widespread research has shown that one of the most effective treatments for a heart attack caused by a blood clot is to quickly administer a fibrinolytic agent to restore blood flow to the affected artery. Retavase is the only fibrinolytic that can be administered through a simple two-shot injection rather than by way of a continuous intravenous infusion. Crystaal Corporation, a wholly owned subsidiary of Biovail Corporation International, is engaged in the registration, marketing, sale and distribution of branded pharmaceutical products developed by Biovail or acquired from third parties worldwide. Crystaal is currently marketing Tiazac(R), Biovail's once-daily controlled release diltiazem formulation and has secured the exclusive marketing rights to Brexidol(TM), a once-daily analgesic product, Corlopam(TM), an antihypertensive agent for in-hospital use and d-methylphenidate, a chiral preparation for the treatment of Attention Deficit Hyperactivity Disorder. Biovail Corporation International is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration and manufacture of drug products utilizing advanced drug delivery technologies. "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this release contain information that is not historical, these statements are essentially forward looking and are subject to risks and uncertainties, including the difficulty of predicting FDA and TPD approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the company's filings with the Securities and Exchange Commission. EX-99.E 6 EXHIBIT 99.E 1 EXHIBIT "E" CONTACT: Eugene Melnyk Chairman of the Board Ken Howling Chief Financial Officer (416) 285-6000 FOR IMMEDIATE RELEASE * BIOVAIL REPORTS RECORD FINANCIAL RESULTS * -ANNOUNCES ANDA GENERIC FILING FOR DILACOR XR - Toronto, Canada, October 29, 1998 --- Biovail Corporation International (NYSE,TSE:BVF) today reported record third quarter and nine month financial results for the period ended September 30, 1998. The Company also reported it had filed in the third quarter an Abbreviated New Drug Application (ANDA) for a generic version of Dilacor XR, a once daily formulation of diltiazem which has U.S. sales in excess of $148 million. Biovail's revenues for the third quarter of 1998 were $29.0 million representing an increase of 37% over 1997 third quarter revenues of $21.2 million. Net income for the third quarter of 1998 increased 40% to $13.2 million, or $0.49 per share, compared to net income of $9.4 million, or $0.37 per share, in the third quarter of 1997. Revenues for the nine months ended September 30, 1998 of $76.1 million were 36% higher than the revenues of $56.1 million for the comparable 1997 period. Net income for the nine months ended September 30, 1998 increased by 39%, to $30.6 million, or $1.14 per share, compared to $22.0 million, or $0.87 per share for the nine months ended September 30, 1997. - more - 2 "We are extremely pleased with the Company's strong performance" commented Eugene Melnyk, Chairman of the Board. "We have just completed a very successful quarter in which our base business achieved significant growth and our scientific objectives were meet with the ANDA filing for a generic version of Dilacor XR. Dilacor XR is our third ANDA filing this year and is our seventh ANDA filing in less than thirty months." "In Canada, TiazacO received marketing approval for the angina indication; we filed controlled-release generic applications for Cardizem SR, Trental, and Verelan; and we successfully acquired exclusive Canadian marketing rights for Retavase(TM) from Centocor, Inc. Biovail continues to perform as expected in meeting the Company's stated objectives," concluded Mr. Melnyk. Biovail Corporation International is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration and manufacture of drug products utilizing advanced drug delivery technologies. "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995. To the extent any statements made in this release contain information that is not historical, these statements are essentially forward looking and are subject to risks and uncertainties, including the difficulty of predicting FDA and TPD approvals, acceptance and demand for new pharmaceutical products, the impact of competitive products and pricing, new product development and launch, reliance on key strategic alliances, availability of raw materials, the regulatory environment, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission. - Tables Follow - 3 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED BALANCE SHEETS (All dollar amounts are expressed in thousands of U.S. dollars)
SEPTEMBER 30, DECEMBER 31, 1998 1997 ----------------- --------------- (UNAUDITED) ASSETS Current Cash and short-term deposits $ 11,892 $ 8,275 Short-term investment 2,500 - Accounts receivable 36,481 33,114 Inventories 17,955 16,609 Executive loans (Note 3) 2,868 2,933 Deposits and prepaids 2,575 2,053 -------------- --------------- 74,271 62,984 Long-term investments (Note 4) 7,500 - Fixed Assets, net 23,429 24,172 Other Assets, net (Note 5) 24,376 6,583 -------------- --------------- $129,576 $93,739 ============== =============== LIABILITIES Current Bank Indebtedness (Note 6) $ 10,051 $ - Accounts payable 6,859 4,579 Accrued liabilities 4,851 6,002 Income taxes payable 1,899 1,013 Customer prepayments 4,836 1,840 Current portion of long-term debt 1,124 1,887 -------------- --------------- 29,620 15,321 Long-Term Debt (Note 7) 14,148 2,960 -------------- --------------- 43,768 18,281 -------------- --------------- SHAREHOLDERS' EQUITY Share capital (Note 8) 20,683 18,465 Warrants 8,244 8,244 Retained earnings 58,267 49,709 Cumulative translation adjustment (1,386) (960) -------------- --------------- 85,808 75,458 -------------- --------------- $129,576 $93,739 ============== ===============
The accompanying notes are an integral part of the consolidated financial statements 4 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED STATEMENTS OF INCOME (All dollar amounts except per share data are expressed in thousands of U.S. dollars)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ---------------- --------------- ---------------- ---------------- REVENUE (Unaudited) (Unaudited) Research and development $ 8,974 $ 4,887 $ 20,927 $ 7,046 Manufacturing 16,540 10,367 45,303 38,904 Royalty and licensing 3,476 5,978 9,905 10,124 ---------------- --------------- ---------------- ---------------- 28,990 21,232 76,135 56,074 ---------------- --------------- ---------------- ---------------- EXPENSES Research and development 4,047 4,893 12,179 11,452 Cost of manufactured goods sold 6,946 2,947 18,956 11,128 Selling, general and administrative 4,067 3,350 12,521 10,075 ---------------- --------------- ---------------- ---------------- 15,060 11,190 43,656 32,655 ---------------- --------------- ---------------- ---------------- OPERATING INCOME 13,930 10,042 32,479 23,419 INTEREST EXPENSE, net (97) (142) (254) (208) INCOME BEFORE INCOME TAXES 13,833 9,900 32,225 23,211 PROVISION FOR INCOME TAXES 629 491 1,629 1,174 ---------------- --------------- ---------------- ---------------- NET INCOME $ 13,204 $ 9,409 $ 30,596 $ 22,037 ================ =============== ================ ================ EARNINGS PER SHARE $ 0.49 $ 0.37 $ 1.14 $ 0.87 ================ =============== ================ ================ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 26,899,290 25,447,000 26,899,290 25,447,000 ================ =============== ================ ================
EX-99.F 7 EXHIBIT 99.F 1 EXHIBIT "F" 3rd Quarter Report 1998 DEAR FELLOW SHAREHOLDERS I am pleased to report that the third quarter of 1998 has been very successful for Biovail. Once again, Biovail achieved record quarterly financial results. During the quarter, we achieved significant growth in our base business operations and continued to meet important scientific objectives, in terms of regulatory approvals, new ANDA filings and exciting in-licensing agreements. PRODUCT APPROVAL In July, the Company received marketing approval from the U.S. Food and Drug Administration ("FDA") for its controlled-release generic version of Trental (pentoxifylline). Trental is currently marketed in the U.S. for the treatment of peripheral vascular disease. Annual U.S. sales of Trental are approximately $190 million in 1997. Marketing of Biovail's pentoxifylline product will be undertaken by Teva Pharmaceuticals USA, Inc., one of the premier marketers of generic pharmaceuticals in the U.S. This is part of the exciting multi-product development and marketing agreement with Teva concluded at the end of 1997. U.S. ANDA FILLINGS In September, Biovail filed an Abbreviated New Drug Application ("ANDA") with the U.S. FDA for a generic controlled-release version of Dilacor XR, a successful once-daily diltiazem formulation. Annual U.S. sales of Dilacor XR are in excess of $148 million. This marked Biovail's third ANDA filing of 1998. Earlier in the year, the Company filed ANDAs for generic controlled-release versions of Adalat CC and Procardia XL. In total, Biovail presently has six controlled-release generic products filed and awaiting FDA approval. Combined branded annual U.S. sales of these six products exceed $2 billion. TIAZAC(R) PERFORMANCE U.S. market share of Tiazac(R), Biovail's once-daily diltiazem medication, continued to grow, capturing greater than 14% share of all U.S. branded once-daily diltiazem sales. Factors contributing to Tiazac(R)'s continued U.S. market penetration growth include sales force expansion by our licensee and the approval of the angina indication by the FDA at the beginning of 1998. A 420 mg dose of Tiazac(R) received FDA approval during the quarter as well. Tiazac(R) will have the only 420 mg dosage strength for once-daily diltiazem available in the U.S. and we expect this to contribute to Tiazac(R)'s continued market success. Additionally, approval of Tiazac(R) to treat chronic stable angina was received for Canada during the quarter. This will allow Crystaal, Biovail's Canadian marketing operation to further compete in the Canadian market. CANADIAN EXPANSION The third quarter was especially exciting for the Company's operations in Canada. Along with the marketing approval of Tiazac(R) for the treatment of angina, Biovail entered into an agreement with Centocor, Inc. for the exclusive Canadian distributorship of Retavase (reteplase). Retavase, a 2 fibrinolytic agent originally developed by Boehringer Mannheim GmbH is used as a "clot buster" to restore blood flow in heart attack victims. Approximately 200,000 Canadians suffer heart attacks each year. Retavase is the only fibrinolytic agent that can be administered through a simple two-shot injection, as opposed to continuous IV infusion. Retavase has already received approval for marketing in Canada. It will be marketed by Crystaal Corporation, a wholly-owned subsidiary of Biovail, starting in the fourth quarter of 1998. The addition of Retavase to its portfolio will enable Crystaal to establish a presence in the acute care segment and enhance its position in the Canadian cardiovascular product marketplace. Finally, during the quarter Biovail filed applications for regulatory approval with the Therapeutic Products Programme (TPP) for controlled-release generic versions of Cardizem SR, Trental and Verelan. CONTINUED RECORD RESULTS Once again Biovail reported record financial results, both for the third quarter and the nine month period ended September 30, 1998. The Company's revenues for the third quarter were $29.0 million, a 37% increase over 1997 third quarter revenues of $21.2 million. Net income for the third quarter of 1998 increased 40% to $13.2 million, or $0.49 per share, compared to net income of $9.4 million, or $0.37 per share, in the third quarter of 1997. Revenues for the nine months ended September 30, 1998 were $76.1 million, 36% higher than the comparable period in 1997. Net income increased by 39% to $30.6 million, or $1.14 per share, compared to $22.0 million, or $0.87 per share for the first nine months of 1997. Once again, I would like to express my gratitude to all Company employees for their continued dedication, and to all shareholders for their support. Sincerely, Eugene Melnyk Chairman of the Board 3 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED BALANCE SHEETS (All dollar amounts are expressed in thousands of U.S. dollars)
September 30, December 31, 1998 1997 ------------------ ------------------ (Unaudited) ASSETS Current Cash and short-term deposits $ 11,892 $ 8,275 Accounts receivable 36,481 33,114 Inventories 17,955 16,609 Executive loans 2,868 2,933 Deposits and prepaids 2,575 2,053 ------------------ ------------------ 71,771 62,984 Long-term investments 10,000 - Fixed Assets, net 23,429 24,172 Other Assets, net 24,376 6,583 ------------------ ------------------ $ 129,576 $ 93,739 ================== =================== LIABILITIES Current Bank indebtedness $ 10,051 $ - Accounts payable 6,859 4,579 Accrued liabilities 4,851 6,002 Income taxes payable 1,899 1,013 Customer prepayments 4,836 1,840 Current portion of long-term debt 1,124 1,887 ------------------ ------------------ 29,620 15,321 Long-Term Debt 14,148 2,960 43,768 18,281 SHAREHOLDERS' EQUITY Share capital 20,683 18,465 Warrants 8,244 8,244 Retained earnings 58,267 49,709 Cumulative translation adjustment (1,386) (960) ------------------ ------------------ 85,808 75,458 ------------------ ------------------ $ 129,576 $ 93,739 ================== ===================
4 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED STATEMENTS OF INCOME (All dollar amounts except per share data are expressed in thousands of U.S. dollars)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1998 1997 1998 1997 ---------------- --------------- ---------------- ---------------- REVENUE (Unaudited) Research and development $ 8,974 $ 4,887 $ 20,927 $ 7,046 Manufacturing 16,540 10,367 45,303 38,904 Royalty and licensing 3,476 5,978 9,905 10,124 ---------------- --------------- ---------------- ---------------- 28,990 21,232 76,135 56,074 ---------------- --------------- ---------------- ---------------- EXPENSES Research and development 4,047 4,893 12,179 11,452 Cost of manufactured goods sold 6,946 2,947 18,956 11,128 Selling, general and administrative 4,067 3,350 12,521 10,075 ---------------- --------------- ---------------- ---------------- 15,060 11,190 43,656 32,655 ---------------- --------------- ---------------- ---------------- OPERATING INCOME 13,930 10,042 32,479 23,419 INTEREST (EXPENSE), net (97) (142) (254) (208) INCOME BEFORE INCOME TAXES 13,833 9,900 32,225 23,211 PROVISION FOR INCOME TAXES 629 491 1,629 1,174 ---------------- --------------- ---------------- ---------------- NET INCOME $ 13,204 $ 9,409 $ 30,596 $ 22,037 ================ =============== ================ ================ EARNINGS PER SHARE $ 0.49 $ 0.37 $ 1.14 $ 0.87 ================ =============== ================ ================ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 26,899,000 25,447,000 26,899,000 25,447,000 ================ =============== ================ ================
5 BIOVAIL CORPORATION INTERNATIONAL CONSOLIDATED STATEMENTS OF CASH FLOWS (All dollar amounts are expressed in thousands of U.S. dollars) (Unaudited)
NINE MONTHS ENDED SEPTEMBER 1998 1998 1997 ------------------ ------------------ NET INFLOW (OUTFLOW) OF CASH RELATED TO THE FOLLOWING ACTIVITIES OPERATING Net income for the period $ 30,595 $ 22,037 Depreciation and amortization 3,534 2,188 ------------------ ------------------ 34,129 24,225 Change in non-cash operating items (804) (30,952) ------------------ ------------------ 33,325 (6,727) ------------------ ------------------ INVESTING Acquisition of royalty interest (15,000) - Long-term investments (10,000) - Additions to fixed assets, net (2,505) (2,005) Executive loans 66 (389) Increase in other assets (4,165) (250) ------------------- ------------------ (31,604) (2,644) ------------------- ------------------ FINANCING Increase in long-term debt 19,141 387 Reduction in long-term debt (8,455) (1,919) Issuance of share capital 3,776 708 Stock repurchase program (22,598) - ------------------- ------------------ (8,136) (824) ------------------- ------------------ EFFECT OF EXCHANGE RATE CHANGES ON CASH (19) (39) ------------------- ------------------ INCREASE (DECREASE) IN CASH (6,434) (10,234) CASH, BEGINNING OF PERIOD 8,275 4,526 ------------------ ------------------ CASH, END OF PERIOD $ 1,841 $ (5,708) ================== ================== REPRESENTED BY Cash and short-term deposits $ 11,892 $ 4,409 Bank indebtedness (10,051) (10,117) ------------------- ------------------ $ 1,841 $ (5,708) ================== ==================
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