IVAX CORP - 10-Q Quarterly Report

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, 2002

Commission File Number 1-09623

IVAX CORPORATION


Florida		16-1003559

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)


4400 Biscayne Boulevard, Miami, Florida		33137

(Address of principal executive offices)		(Zip Code)

(305) 575-6000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

194,604,074 shares of Common Stock, $.10 par value, outstanding as of October 25, 2002

TABLE OF CONTENTS


	PART I — FINANCIAL INFORMATION
	Item 1 — Financial Statements
IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
IVAX CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
IVAX CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3 — Quantitative and Qualitative Disclosures About Market Risk
	Item 4 — Controls and Procedures
	PART II — OTHER INFORMATION
	Item 1 — Legal Proceedings
	Item 6 — Exhibits and Reports on Form 8-K
Certification of CEO
Certification of CFO

IVAX CORPORATION

INDEX


			PAGE NO.

PART I — FINANCIAL INFORMATION

	Item 1. Financial Statements

		Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001		2

		Consolidated Statements of Operations for the three and nine months ended September 30, 2002 and 2001		3

		Consolidated Statement of Shareholders’ Equity for the nine months ended September 30, 2002		5

		Consolidated Statements of Cash Flows for the nine months ended September 30, 2002 and 2001		6

		Notes to Consolidated Financial Statements		8

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			18

	Item 3. Quantitative and Qualitative Disclosures About Market Risk			30

	Item 4. Controls and Procedures			31


PART II — OTHER INFORMATION

	Item 1. Legal Proceedings			32

	Item 6. Exhibits and Reports on Form 8-K			32

PART I — FINANCIAL INFORMATION

Item 1 — Financial Statements

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(In thousands)


					September 30,			December 31,
					2002			2001

					(Unaudited)
				ASSETS
Current assets:
	Cash and cash equivalents				$	140,225		$	178,264
	Marketable securities					25,701			154,842
	Accounts receivable, net of allowances for doubtful accounts of $22,604 in 2002 and $21,670 in 2001					208,233			247,670
	Inventories					291,918			253,471
	Other current assets					154,415			164,692

		Total current assets				820,492			998,939
Property, plant and equipment, net						387,081			356,304
Goodwill, net						396,612			502,077
Intangible assets, net						288,650			187,479
Other assets						52,521			60,650

		Total assets			$	1,945,356		$	2,105,449

			LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
	Accounts payable				$	88,906		$	97,465
	Current portion of long-term debt					28,472			52,199
	Loans payable					14,646			13,249
	Accrued income taxes payable					24,806			41,861
	Accrued expenses and other current liabilities					209,086			196,587

		Total current liabilities				365,916			401,361
Long-term debt, net of current portion						893,660			913,486
Other long-term liabilities						53,266			57,536
Minority interest						14,986			14,712
Shareholders’ equity:
	Common stock, $.10 par value, authorized 437,500 shares, issued and outstanding 194,604 shares in 2002 and 196,523 shares in 2001					19,460			19,652
	Capital in excess of par value					314,479			328,095
	Put options					—			34,650
	Retained earnings					532,454			446,469
	Accumulated other comprehensive loss					(248,865	)		(110,512	)

		Total shareholders’ equity				617,528			718,354

		Total liabilities and shareholders’ equity			$	1,945,356		$	2,105,449

The accompanying Notes to Consolidated Financial Statements are an integral part of these balance sheets.

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Three Months						Nine Months
Period Ended September 30,
(In thousands, except per share data)		2002			2001			2002			2001

Net revenues		$	319,394		$	321,990		$	872,021		$	883,704
Cost of sales			176,592			150,128			476,682			417,191

	Gross profit		142,802			171,862			395,339			466,513

Operating expenses:
	Selling		40,593			41,036			126,516			98,641
	General and administrative		30,952			32,042			85,511			84,669
	Research and development		18,220			26,307			55,603			65,210
	Amortization of intangible assets		3,855			5,404			10,787			13,226
	Restructuring costs		879			1,317			3,161			1,097

	Total operating expenses		94,499			106,106			281,578			262,843

	Income from operations		48,303			65,756			113,761			203,670
Other income (expense):
	Interest income		1,934			5,892			7,359			19,633
	Interest expense		(13,032	)		(13,913	)		(37,752	)		(28,731	)
	Other income, net		7,651			17,618			32,025			28,549
	Gain on partial sale of IVAX Diagnostics, Inc.		—			—			—			10,278

	Total other income (expense), net		(3,447	)		9,597			1,632			29,729

	Income from continuing operations before income taxes and minority interest		44,856			75,353			115,393			233,339
Provision for income taxes			14,503			14,120			34,081			44,086

	Income from continuing operations before minority interest		30,353			61,233			81,312			189,313
Minority interest			450			228			512			143

	Income from continuing operations		30,803			61,461			81,824			189,456
Cumulative effect of a change in accounting principle			—			—			4,161			—

Net income		$	30,803		$	61,461		$	85,985		$	189,456

(Continued)

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Continuation)


		Three Months				Nine Months
Period Ended September 30,
(In thousands, except per share data)		2002		2001		2002		2001

BASIC EARNINGS PER COMMON SHARE:
	Continuing operations	$	0.16	$	0.31	$	0.42	$	0.95
	Cumulative effect of a change in accounting principle		—		—		0.02		—

	Net income	$	0.16	$	0.31	$	0.44	$	0.95

DILUTED EARNINGS PER COMMON SHARE:
	Continuing operations	$	0.16	$	0.30	$	0.42	$	0.91
	Cumulative effect of a change in accounting principle		—		—		0.02		—

	Net income	$	0.16	$	0.30	$	0.44	$	0.91

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
	Basic		194,604		200,089		195,292		199,743

	Diluted		196,452		214,497		197,501		224,144

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)
(In thousands)


				Common Stock														Accumulated
										Capital in								Other
				Number of						Excess of			Put			Retained		Comprehensive
				Shares			Amount			Par Value			Options			Earnings		Income (Loss)			Total

BALANCE, January 1, 2002					196,523		$	19,652		$	328,095		$	34,650		$	446,469	$	(110,512	)	$	718,354
	Comprehensive loss:
		Net income															85,985					85,985
		Translation adjustment																	(137,607	)		(137,607	)
		Unrealized net loss on available-for-sale equity securities and derivatives, net of tax																	(746	)		(746	)

			Comprehensive loss																			(52,368	)
	Exercise of stock options				627			63			4,937											5,000
	Tax benefit of option exercises										1,319											1,319
	Employee stock purchases				58			6			729											735
	Repurchase and retirement of common stock				(3,575	)		(358	)		(42,477	)		(12,725	)							(55,560	)
	Shares issued to settle put options				971			97			21,828			(21,925	)							—
	Value of stock options issued to non-employees										48											48

BALANCE, September 30, 2002					194,604		$	19,460		$	314,479		$	—		$	532,454	$	(248,865	)	$	617,528

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Nine Months Ended September 30,				2002			2001
(In thousands)
Cash flows from operating activities:
	Net income			$	85,985		$	189,456
	Adjustments to reconcile net income to net cash flows from operating activities:
		Restructuring costs			988			1,097
		Depreciation and amortization			43,212			36,192
		Deferred tax provision (benefit)			2,575			(13,279	)
		Tax effect of stock option exercises			1,319			10,647
		Value of stock options issued to non-employees			48			173
		Provision for doubtful accounts			3,007			2,852
		Provision for inventory obsolescence			6,458			7,973
		Interest accretion on notes payable			1,171			—
		Minority interest in earnings			(512	)		(143	)
		Equity in earnings of unconsolidated affiliates			(644	)		(882	)
		Loss on sale of marketable securities			341			—
		Gain on sale of product rights			(9,053	)		(8,312	)
		Losses (gains) on sale of assets, net			537			(12,673	)
		Gains on extinguishment of debt			(13,614	)		(11,302	)
		Cumulative effect of a change in accounting principle			(4,161	)		—
		Changes in operating assets and liabilities:
			Accounts receivable		27,541			(65,448	)
			Inventories		(45,592	)		(26,875	)
			Other current assets		(330	)		(11,300	)
			Other assets		5,706			2,007
			Accounts payable, accrued expenses, and other current liabilities		(7,276	)		14,770
			Other long-term liabilities		(6,222	)		(1,626	)

			Net cash flows from operating activities		91,484			113,327

Cash flows from investing activities:
	Proceeds from sale of product rights				9,053			8,312
	Capital expenditures				(64,096	)		(44,255	)
	Proceeds from sale of assets				615			41,300
	Acquisitions of intangible assets				(38,393	)		(11,162	)
	Acquisitions of businesses, net of cash acquired				1,302			(467,511	)
	Investment in affiliates				(964	)		(14,266	)
	Purchases of marketable securities				(101,065	)		(57,457	)
	Proceeds from sales of marketable securities				229,684			—

		Net cash flows from investing activities			36,136			(545,039	)

Cash flows from financing activities:
	Borrowings on long-term debt and loans payable				12,883			724,235
	Payments on long-term debt and loans payable				(118,323	)		(78,197	)
	Exercise of stock options and employee stock purchases				5,735			14,151
	Repurchase of common stock				(55,560	)		(117,030	)

		Net cash flows from financing activities			(155,265	)		543,159

Effect of exchange rate changes on cash and cash equivalents					(10,393	)		(5,033	)

Net (decrease) increase in cash and cash equivalents					(38,039	)		106,414
Cash and cash equivalents at the beginning of the year					178,264			174,794

Cash and cash equivalents at the end of the period				$	140,225		$	281,208

(Continued)

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continuation)


Nine Months Ended September 30,			2002		2001
(In thousands)
Supplemental disclosures:
	Interest paid		$	23,637	$	12,047

	Income tax payments		$	45,493	$	46,033

Supplemental schedule of non-cash investing and financing activities:
		Information with respect to acquisitions which were accounted for under the purchase method of accounting is summarized as follows:
Fair value of assets acquired					$	228,114
Liabilities assumed						(165,097	)

Net assets acquired						63,017

Purchase price:
	Cash, net of cash acquired					461,153
	Acquisition costs					6,358
	Fair market value of stock and options issued					77,057

	Total					544,568

Goodwill					$	481,551

The accompanying Notes to Consolidated Financial Statements are an integral part of these statements.

IVAX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)
(In thousands, except per share data)

(1) GENERAL:

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. However, in the opinion of management, all adjustments (consisting of only normal recurring adjustments) considered necessary to present fairly the results of operations, financial position and cash flows have been made. The results of operations and cash flows for the three and nine months ended September 30, 2002, are not necessarily indicative of the results of operations and cash flows which may be reported for the remainder of 2002. The interim consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes to consolidated financial statements included in IVAX’ Annual Report on Form 10-K for the year ended December 31, 2001. For purposes of these financial statements, North America includes the United States and Canada. Mexico is included within Latin America. Certain prior period amounts presented in the consolidated financial statements have been reclassified to conform to the current period’s presentation.

(2) EARNINGS PER SHARE:

A reconciliation of the denominator of the basic and diluted earnings per share computation is as follows:


Period Ended September 30,		Three Months				Nine Months

		2002		2001		2002		2001

Numerator:
Income from continuing operations, basic		$	30,803	$	61,461	$	81,824	$	189,456
Interest reduction on conversion of convertible debt			—		2,183		—		15,070

Income from continuing operations, diluted		$	30,803	$	63,644	$	81,824	$	204,526

Denominator:
Basic weighted average number of shares outstanding			194,604		200,089		195,292		199,743
Effect of dilutive securities – stock options and warrants			1,848		14,408		2,209		24,401

Diluted weighted average number of shares outstanding			196,452		214,497		197,501		224,144

Not included in the calculation of diluted earnings per share because their impact is antidilutive:
	Stock options outstanding		14,163		413		13,245		326
	Convertible debt		23,409		18,017		23,993		—
	Put options		—		1,850		—		450

(3) REVENUES:

Net revenues are comprised of gross revenues less provisions for expected customer returns, inventory credits, discounts, promotional allowances, volume rebates, chargebacks, reimbursements relating to Medicaid and Medicare and other allowances. The reserve balances related to these provisions are included in “Accounts receivable, net of allowances for doubtful accounts” and “Accrued expenses and other current liabilities” in the accompanying

consolidated balance sheets in the amounts of $131,124 and $98,447, respectively, at September 30, 2002, and $115,752 and $88,955, respectively, at December 31, 2001.

(4) INVENTORIES:

Inventories consist of the following:


		September 30,		December 31,
		2002		2001

Raw materials		$	107,342	$	110,443
Work-in-process			47,356		34,820
Finished goods			137,220		108,208

	Total inventories	$	291,918	$	253,471

(5) INTANGIBLE ASSETS:

Intangible assets with definite lives are amortized and carried at cost less accumulated amortization. Intangible assets with indefinite lives are carried at cost and are not amortized. Intangible assets consist of the following:


		September 30, 2002				December 31, 2001

		Gross				Gross
		Carrying		Accumulated		Carrying		Accumulated
		Amount		Amortization		Amount		Amortization

Amortized intangible assets:
	Patents and related licenses	$	75,556	$	45,035	$	73,031	$	40,766
	Trademarks		123,477		6,051		112,958		2,114
	Licenses and other intangibles		124,871		7,236		22,768		4,352

	Total	$	323,904	$	58,322	$	208,757	$	47,232

Unamortized intangible assets:
	Trademarks & product registrations	$	23,068			$	25,954

Intangible assets amortization expense is estimated to be $6,332 for the remainder of fiscal 2002, $25,329 in fiscal 2003, $25,328 in fiscal 2004, $25,319 in fiscal 2005, and $24,873 in fiscal 2006.

On March 1, 2002, IVAX acquired from Syntex Pharmaceuticals International Ltd. the non-U.S. rights to pharmaceutical products containing flunisolide hemihydrate, sold under the trademarks Syntaris, Nasalide, Rhinalar, Locasyn and Lokilan, for 10,156 Swiss francs ($5,986 at the February 28, 2002, currency exchange rate).

On April 2, 2002, IVAX entered into an agreement to acquire the technical files and French marketing authorizations to substantially all of the products comprising the generic pharmaceutical business of Merck & Co., Inc.’s subsidiary in France. The total consideration due is 5,641 Euros ($4,917 at the March 31, 2002, currency exchange rate) one-half of which was paid upon signing and the remainder in four months. On July 19, 2002, the agreement was amended reducing the second payment to 2,565 Euros ($2,531 as of the August 2, 2002, payment date).

On April 22, 2002, IVAX acquired an exclusive U.S. license to the patent rights to market QVAR™ (beclomethasone dipropionate HFA), an aerosol inhaler prescribed to treat asthma. In addition, IVAX has an option to obtain ownership of the U.S. QVAR trademark, as well as related patents and the

New Drug Application in five years. 3M Drug Delivery Systems will manufacture the QVAR product for IVAX under a long-term contract. The purchase price was allocated to the fair values of the assets acquired pursuant to an independent appraisal resulting in a value of $27,140 for the license agreement, which is being amortized over its 5 year life, and $67,116 for the option, which is not being amortized. If the option is exercised, the value of the option will be allocated to the underlying assets acquired by the exercise and appropriate lives determined. The total consideration due under the contract, including options and extensions, is $105,000, $21,000 of which was paid on the effective date, $22,000 is due on the first anniversary, $31,000 is due on the second anniversary, $26,000 is due on the third anniversary and $5,000 is due on the fifth anniversary upon exercise of the option. IVAX also acquired a non-exclusive worldwide license to certain 3M patents covering HFA formulations of various asthma drugs.

On July 1, 2002, in connection with the termination of a license granted by IVAX to specified products in IVAX’ proprietary dry powder inhaler device (“MDPI”), IVAX entered into an agreement to acquire the technical files, trademark and related rights invented or produced by the licensee in connection with the commercialization of products under the license. The total consideration due is 5,000 Pounds Sterling ($7,665 at the July 1, 2002, currency exchange rate). An additional payment of between 250 to 1,100 Pounds Sterling will also be paid to the licensee upon the receipt of marketing approval and launch of a specified product using the acquired rights and data.

(6) DEBT:

During January 2002, IVAX repaid $48,000 of U.S. denominated loans held by an Argentine subsidiary resulting in a pretax foreign exchange loss of $2,824.

See Note 10, Recently Issued Accounting Standards, for a discussion of the classification of gains on extinguishment of debt. During the first quarter of 2002, IVAX repurchased $35,000 of 4.5% Convertible Senior Subordinated Notes due 2008 for $28,797, plus accrued interest of $484, and wrote off debt issuance costs of $828, resulting in a gain on extinguishment of debt of $5,375. During the second quarter of 2002, IVAX repurchased $20,000 of 4.5% Convertible Senior Subordinated Notes due 2008 for $15,363, plus accrued interest of $111, and wrote off debt issuance costs of $442, resulting in a gain on extinguishment of debt of $4,195. During the third quarter of 2002, IVAX repurchased $22,000 of 4.5% Convertible Senior Subordinated Notes due 2008 for $17,486, plus accrued interest of $337, and wrote off debt issuance costs of $470, resulting in a gain on extinguishment of debt of $4,044.

As described in Note 5, payments for the acquisition of QVAR are due through the third anniversary of the effective date. The payments carried no stated interest rate and were discounted at a 3.7% rate resulting in $74,394 of additional long-term debt as of September 30, 2002, including accretion of interest, of which $22,000 is current. In addition, payments for the technical files, trademark and related rights to the MDPI are due through June 30, 2005. The payments carried no stated interest rate and were discounted at a 4.1% rate resulting in $7,404 of additional long-term debt as of September 30, 2002, including accretion of interest, of which $2,196 is current.

(7) INCOME TAXES:

The provision for income taxes from continuing operations consists of the following:


Period Ended September 30,		Three Months				Nine Months

		2002		2001		2002		2001

Current:
	Domestic	$	8,249	$	5,166	$	15,492	$	45,872
	Foreign		5,040		8,732		16,014		15,675
Deferred			1,214		222		2,575		(17,461	)

Total		$	14,503	$	14,120	$	34,081	$	44,086

The effective tax rate during the first nine months of 2002 is less than the statutory rate due primarily to low tax rates applicable to IVAX’ Puerto Rican and Irish manufacturing operations and the Swiss and Chilean operations. Payment of the current tax provision for the year ended December 31, 2002, for domestic and foreign operations will be reduced by $945 and $374, respectively, representing the incremental impact of compensation expense deductions associated with non-qualified stock option exercises during the current year. These amounts were credited to “Capital in excess of par value.” As of September 30, 2002, a domestic net deferred tax asset of $102,391 and an aggregate foreign net deferred tax asset of $4,320 are included in “Other current assets” and “Other assets” in the accompanying consolidated balance sheet. Realization of the net deferred tax assets is dependent upon generating sufficient future domestic and foreign taxable income. Although realization is not assured, management believes it is more likely than not that the net deferred tax assets will be realized.

(8) SHAREHOLDERS’ EQUITY:

On March 5, 2002, IVAX elected the net share settlement method and issued 160 shares of IVAX’ common stock to settle one put option for 200 shares, bearing a strike price of $31.00, that expired on March 1, 2002. On April 4, 2002, IVAX elected the physical settlement method for one put option, and paid $4,750 to purchase 250 shares of IVAX’ common stock at a strike price of $19.00. On April 30, 2002, IVAX elected the physical settlement method for one put option, and paid $7,975 to purchase 250 shares of IVAX’ common stock at a strike price of $31.90. On May 15, 2002, IVAX elected the net share settlement method and issued 444 shares of IVAX’ common stock to settle one put option for 250 shares, bearing a strike price of $32.28, that expired on May 14, 2002. On May 22, 2002, IVAX elected the net share settlement method and issued 367 shares of IVAX’ common stock to settle one put option for 250 shares, bearing a strike price of $32.15, that expired on May 21, 2002.

On March 15, 2002, IVAX’ Board of Directors expanded the authorization of our repurchase program by an additional 10,000 shares of common stock or a like-valued amount of IVAX’ convertible debentures.

(9) BUSINESS SEGMENT INFORMATION:


Revenues by Region
Period Ended September 30,		Three Months						Nine Months

		2002			2001			2002			2001

North America
	External sales	$	131,369		$	139,804		$	345,876		$	440,793
	Intersegment sales		153			758			705			1,221
	Other revenues		6,801			1,152			21,661			1,420

	Net revenues — North America		138,323			141,714			368,242			443,434

Europe
	External sales		98,188			75,646			264,377			221,844
	Intersegment sales		6,646			13,923			36,551			35,123
	Other revenues		18,163			14,562			35,354			43,451

	Net revenues — Europe		122,997			104,131			336,282			300,418

Latin America
	External sales		52,859			78,375			169,362			143,545
	Other revenues		274			1,021			1,104			1,556

	Net revenues — Latin America		53,133			79,396			170,466			145,101

Corporate & Other
	External sales		12,085			9,615			32,292			27,346
	Intersegment sales		(6,799	)		(14,681	)		(37,256	)		(36,344	)
	Other revenues		(345	)		1,815			1,995			3,749

	Net revenues — Corporate & Other		4,941			(3,251	)		(2,969	)		(5,249	)

Consolidated net revenues		$	319,394		$	321,990		$	872,021		$	883,704


Profits by Region
Period Ended September 30,		Three Months					Nine Months

		2002			2001		2002			2001

Income from continuing operations before minority interest:
	North America	$	24,134		$	25,742	$	54,126		$	123,371
	Europe		6,329			16,420		21,217			6,114
	Latin America		8,334			11,307		25,800			14,395
	Corporate & Other		(8,444	)		7,764		(19,831	)		45,433

Income from continuing operations before minority interest			30,353			61,233		81,312			189,313

Net Income:
	Minority interest		450			228		512			143
	Cumulative effect of a change in accounting principle		—			—		4,161			—

Net income		$	30,803		$	61,461	$	85,985		$	189,456


		September 30,

		2002		2001

Long-Lived Assets:
	North America	$	306,699	$	77,663
	Europe		280,060		224,454
	Latin America		412,695		593,197
	Corporate & Other		109,390		109,050

Total		$	1,108,844	$	1,004,364

(10) RECENTLY ISSUED ACCOUNTING STANDARDS:

Statement of Financial Accounting Standards (“SFAS”) No. 143, Accounting for Asset Retirement Obligations, addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets. It is effective for fiscal years beginning after June 15, 2002. Management believes the impact of adoption of this statement will not be significant.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred rather than when a commitment to an exit plan is made. It is effective for exit or disposal activities that are initiated after December 31, 2002. Management believes the impact of adoption of this statement will not be significant.

Effective January 1, 2002, IVAX adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, EITF Issue No. 00-25, Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products,and EITF Issue No. 01-09, Accounting for Consideration Given to a Customer or a Reseller of Vendor’s Products. The impact of adoption was not significant.

In accordance with SFAS No. 141, Business Combinations, on January 1, 2002, $4,161 of negative goodwill recorded in the balance sheet as of December 31, 2001, was reversed through a cumulative effect of a change in accounting principle. In addition, a workforce in place intangible asset in the amount of $722 was reclassified to goodwill.

Effective January 1, 2002, IVAX adopted SFAS No. 142, Goodwill and Other Intangible Assets. Intangible assets that have indefinite lives and goodwill are no longer amortized. This will increase net income by approximately $2,000 per quarter, or $8,000 per year. The life of one product intangible asset with a net book value of $6,519 as of January 1, 2002, was extended based on a review of the expected remaining estimated useful life. Intangible assets with indefinite lives were tested for impairment resulting in the write-down of one intangible asset by $177. The initial test for impairment of goodwill as of January 1, 2002, was completed during the second quarter and no impairments were indicated. An independent valuation firm was used to perform the test.

Goodwill and Other Intangible Assets — Adoption of SFAS No. 142:


Period Ended September 30,		Three Months				Nine Months

		2002		2001		2002		2001

Reported net income		$	30,803	$	61,461	$	85,985	$	189,456
Addback: Interest savings on conversion of convertible debt					2,183				15,070

Reported net income, diluted					63,644				204,526
Addback: Goodwill amortization					1,477				3,838
Addback: Workforce in place amortization					54				163
Adjust: Product intangible amortization					903				2,709

Adjusted net income		$	30,803	$	66,078	$	85,985	$	211,236

Basic earnings per common share:
	Reported net income	$	0.16	$	0.31	$	0.44	$	0.95
	Goodwill amortization				0.01				0.02
	Product intangible amortization				—				0.01

	Adjusted net income	$	0.16	$	0.32	$	0.44	$	0.98

Diluted earnings per common share:
	Reported net income, diluted	$	0.16	$	0.30	$	0.44	$	0.91
	Goodwill amortization				0.01				0.02
	Product intangible amortization				—				0.01

	Adjusted net income, diluted	$	0.16	$	0.31	$	0.44	$	0.94

The following table displays the changes in the carrying amounts of goodwill by operating segment for the nine months ended September 30, 2002:


		Balance		Foreign			Balance
		December 31,		Exchange and			September 30,
		2001		Other			2002

North America		$	3,972	$	—		$	3,972
Europe			24,200		7,168			31,368
Latin America			427,157		(113,373	)		313,784
Corporate & Other			46,748		740			47,488

	Consolidated goodwill	$	502,077	$	(105,465	)	$	396,612

During the second quarter of 2002, IVAX elected to early adopt SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The impact of adoption was the reclassification into income from continuing operations of extraordinary losses from the early retirement of subordinated notes of $8,725 in 2000, an extraordinary gain of $7,120, net of taxes of $4,182, during the third quarter of 2001, an extraordinary gain of $3,413, net of taxes of $1,962, during the first quarter of 2002 and an extraordinary gain of $2,664, net of taxes of $1,531, during the second quarter of 2002.

(11) ACQUISITIONS:

On February 9, 2001, IVAX indirectly acquired IVAX Pharmaceuticals Mexico, S.A. de C.V. (“IVAX Mexico,” formerly known as Laboratorios Fustery, S.A. de C.V.), a Mexican pharmaceutical company, by purchasing the outstanding securities of IVAX Mexico’s parent, Maancirkel Holding B.V.,

a corporation organized under the laws of The Netherlands, from Morcob CVA, an entity organized under the laws of Belgium, pursuant to a stock purchase agreement entered into among the parties on October 11, 2000. The operating results of IVAX Mexico are included in the consolidated financial statements subsequent to the February 9, 2001, acquisition date. During the second quarter of 2002, IVAX received a refund of $6,417 on the purchase price of IVAX Mexico, which reduced goodwill.

On February 26, 2001, IVAX acquired the assets of a research organization located in the United States. The operating results of this company are included in the consolidated financial statements subsequent to its acquisition date.

On March 13, 2001, IVAX acquired Netpharma Scandinavia AB (“Netpharma”), a Swedish pharmaceutical company. The operating results of Netpharma are included in the consolidated financial statements subsequent to its acquisition date.

On April 3, 2001, IVAX acquired the remaining 70% of Indiana Protein Technologies, Inc. (“Indiana Protein”) that it did not already own. Indiana Protein was previously accounted for as an investment under the equity method of accounting. The operating results of Indiana Protein are included in the consolidated financial statements subsequent to its acquisition date.

During the third quarter of 2001, IVAX acquired 99.9% of the outstanding shares and American Depositary Shares (“ADS”) of Laboratorio Chile S.A. (“Lab Chile”), a Chilean pharmaceutical company, in two tender offers for cash. The operating results of Lab Chile are included in the consolidated financial statements subsequent to its acquisition date.

Proforma information for the above acquisitions as if the purchases occurred on January 1, 2001, is presented below.


	Three Months		Nine Months
Period Ended September 30,	2001		2001

Revenues	$	320,423	$	998,425
Net income		57,141		201,301
Diluted weighted average shares		206,085		224,678
Diluted earnings per share	$	0.28	$	0.96

These proforma results of operations are not necessarily indicative of results that might have been achieved if the acquisitions had actually occurred on January 1, 2001.

On August 30, 2002, IVAX acquired Glaxo Wellcome S.A. (subsequently renamed IVAX Manufacturing Argentina S.A.), an Argentine manufacturing pharmaceutical company, consisting primarily of a manufacturing facility, for $6,000 in cash. The operating results of this company are included in the consolidated financial statements subsequent to its acquisition date.

(12) PARTIAL SALE OF IVAX DIAGNOSTICS, INC.:

On March 14, 2001, IVAX’ wholly-owned subsidiary, IVAX Diagnostics, Inc., was merged with b2bstores.com, a non-operating company with approximately $22,285 of cash, resulting in IVAX owning approximately 70% of the newly merged public company. IVAX received 20,000 shares of b2bstores.com common stock in exchange for all of the outstanding shares of IVAX Diagnostics, Inc. and b2bstores.com’s name was changed to IVAX Diagnostics, Inc. For accounting purposes, this transaction

was treated as a partial sale of IVAX Diagnostics, Inc. in exchange for cash of b2bstores.com. IVAX elected income statement recognition as its accounting policy for sales of subsidiary stock and recorded a gain of $10,278. Deferred taxes were not recorded related to the gain as it represents an outside basis difference and IVAX expects it can recover its investment in IVAX Diagnostics, Inc. tax-free. Also recorded was $1,041 of nondeductible compensation expense from outstanding options under the IVAX Diagnostics, Inc. 1999 Stock Option Plan converting to a fair value plan as a result of the merger. IVAX Diagnostics, Inc. is engaged in the development, manufacture and marketing of diagnostic test kits, reagents and instruments.

(13) LEGAL PROCEEDINGS:

On January 11, 2002, two of the class action lawsuits containing allegations similar to those in the Louisiana Wholesale Drug Co. v. Abbott Laboratories, Geneva Pharmaceuticals, Inc. and Zenith Goldline Pharmaceuticals, Inc. case, previously reported in IVAX’ Annual Report on Form 10-K for the year ended December 31, 2001, were settled.

In April 2002, we received notice of an investigation by United Kingdom National Health Service officials concerning prices charged by generic drug companies, including IVAX UK Limited, for penicillin-based antibiotics and warfarin sold in the United Kingdom from 1996 to 2000. This is an investigation by the Serious Fraud Office of the United Kingdom involving all pharmaceutical companies that sold these products in the United Kingdom during this period. According to statements by investigating agencies, this is a complex investigation expected to continue for some time and there is no indication from the agencies when or if charges will be made against any of these companies. The company is cooperating fully with this investigation and believes its sales of these products have been in compliance with all applicable laws and regulations.

On June 13, 2002, the Louisiana Wholesale Drug Co. v. Abbott Laboratories and Valley Drug Co. v. Abbott Laboratories et al. cases, previously reported in IVAX’ Annual Report on Form 10-K for the year ended December 31, 2001, were also settled.

On July 12, 2002, an action purporting to be a class action styled John Rice v. Abbott Laboratories, Inc., et al. was filed against IVAX Pharmaceuticals, Inc. and others in the Superior Court of the State of California, alleging violations of California’s Business & Professional Code §17200 et seq. with respect to the way pharmaceutical companies report their average wholesale price (“AWP”). Plaintiffs allege that each defendant reported an AWP to Medicare and Medicaid which materially misrepresented the actual prices paid to defendants by physicians and pharmacies for prescription drugs. The complaint seeks unspecified damages, including punitive damages, and injunctive relief. Two other class actions, Thompson v. Abbott Laboratories, Inc., et al. and Turner v. Abbott Laboratories, Inc., et al., containing similar allegations against IVAX Pharmaceuticals, Inc. and others were filed in California courts in August and September 2002, respectively, as well. IVAX believes that it has substantial defenses to these claims and will defend itself vigorously. However, as with any litigation, there can be no assurance that IVAX will prevail.

On September 13, 2002, a lawsuit containing allegations similar to those in the Louisiana Wholesale Drug Co. v. Abbott Laboratories, Geneva Pharmaceuticals, Inc. and Zenith Goldline, Inc. filed by the Attorneys General of Florida, Kansas and Colorado, previously reported in IVAX’ Annual Report on Form 10-K for the year ended December 31, 2001, was also settled.

(14) SUBSEQUENT EVENTS:

From October 1, 2002, through October 25, 2002, IVAX repurchased $11,000 of 4.5% Convertible Senior Subordinated Notes due 2008 for $8,652, plus accrued interest of $212, and wrote off debt issuance costs of $235, resulting in a gain on extinguishment of debt of $2,113.

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 our Annual Report on Form 10-K for the year ended December 31, 2001, and the unaudited interim consolidated financial statements and the related notes to unaudited interim consolidated financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations

Nine months ended September 30, 2002 compared to the nine months ended September 30, 2001

Net income for the nine months ended September 30, 2002, was $86.0 million, or $.44 per diluted share, compared to $189.5 million, or $.91 per diluted share, for the same period of the prior year. Income from continuing operations for the nine months ended September 30, 2002, was $81.8 million, or $.42 per diluted share, compared to $189.5 million, or $.91 per diluted share, for the same period of the prior year. As of January 1, 2002, we recorded a cumulative change in accounting principle credit in the amount of $4.2 million, or $.02 per diluted share, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business Combinations.

Net Revenues and Gross Profit

Net revenues for the nine months ended September 30, 2002, totaled $872.0 million, a decrease of $11.7 million, or 1%, from the $883.7 million reported in the same period of the prior year. This decrease was comprised of decreases in net revenues of $75.2 million from North American subsidiaries partially offset by increases of $35.8 million from European subsidiaries, $25.4 million from Latin American subsidiaries and $2.3 million from other operations.

North American subsidiaries generated net revenues of $368.2 million for the nine months ended September 30, 2002, compared to $443.4 million for the same period of the prior year. The 17% decrease in net revenues was primarily attributable to decreased volume and lower prices of our paclitaxel product and higher sales returns and allowances, partially offset by increased volume and prices of certain brand equivalent pharmaceutical products, increased sales of proprietary respiratory products and increased product development fees. North American subsidiaries recorded provisions for sales returns and allowances that reduced gross sales by $420.9 million during the nine months ended September 30, 2002, and $275.0 million for the same period of the prior year. The increase of $145.9 million, or 53%, was primarily due to reduced net prices on certain brand equivalent pharmaceutical products and increased sales volume.

European subsidiaries generated net revenues of $336.2 million for the nine months ended September 30, 2002, compared to $300.4 million for the same period of the prior year. The 12% increase in net revenues was primarily due to higher sales volumes and favorable effects of currency exchange rates and $5.8 million of other revenues from a previously deferred up-front payment received under a license agreement that was terminated during the third quarter of 2002, partially offset by reduced product development fees and lower prices for certain brand equivalent products. European subsidiaries recorded provisions for sales returns and allowances that reduced gross sales by $35.7 million during the nine months ended September 30, 2002, and $24.8 million for the same period of the prior year. The increase of $10.9 million, or 44%, was primarily due to pricing pressures on brand equivalent products and an increase in financial discounts.

Latin American subsidiaries generated net revenues of $170.5 million for the nine months ended September 30, 2002, compared to $145.1 million for the same period of the prior year. The 17% increase was primarily due to the revenue generated by Laboratorio Chile S.A. (“Lab Chile”), which was acquired July 5, 2001, partially offset by unfavorable effects of currency exchange rates. Latin American subsidiaries recorded provisions for sales returns and allowances that reduced gross sales by $25.4 million during the nine months ended September 30, 2002, and $14.9 million for the same period of the prior year. The increase of $10.5 million, or 70%, was primarily due to the inclusion of the operations of Lab Chile for the full nine-month period in 2002 as compared to only a partial period in 2001.

Gross profit was $395.3 million (45% of net revenues) for the nine months ended September 30, 2002, compared to $466.5 million (53% of net revenues) for the same period of the prior year. The decrease in gross profit percentage was primarily attributable to reduced volume and pricing of our paclitaxel product. We are continuing to experience increased competition for paclitaxel as well as our brand equivalent albuterol products and the resulting pricing and volume pressures have negatively impacted and may continue to negatively impact our revenues and gross profits. Our results for the first nine months of 2002 were also adversely impacted by significant currency devaluations in Argentina and Venezuela, reductions in government purchases of our products in Mexico and continued pricing pressures in the United States and the United Kingdom. Revenues from the sale of our paclitaxel product did not contribute significantly to our revenues and gross profits during the first nine months of 2002 and, because of the continuing price erosion and competition, are not likely to contribute significantly in the near future to our North American results.

As part of our ongoing business strategy, we enter into collaborative alliances, which allow us to exploit our drug discovery and development capabilities or provide us with valuable intellectual property and technologies. Many of these alliances involve licenses to other companies relating to technologies or compounds under development and, in some cases, finished products. These licenses permit us to reduce our development costs and often involve the receipt of an up-front payment and fees upon completion of certain development milestones and also provide for royalties based on sales of the products. We have received significant payments in the past from these arrangements, including, but not limited to, payments under the Product Collaboration and Development Services Agreement with Bristol-Myers Squibb (“BMS”), which will expire in November 2002. In October 2002, we entered into a new agreement with BMS that supersedes, effective November 2002, the prior product collaboration agreement. The new agreement, which in part relates to some of the subject matter of the earlier agreement, also encompasses additional arrangements between the parties and has a term of ten months, although the parties may enter into additional collaboration agreements if certain option rights contained therein are exercised. Notwithstanding the expiration of the prior product collaboration agreement with BMS, we expect that milestone, developmental, royalty and other payments under existing and new collaboration and license agreements with other parties, including expected payments under the new agreement with BMS and the recently announced development agreement with Serono S.A. for our cladribine product for the treatment of multiple sclerosis, as well as other agreements which we expect to enter into, will continue to be a significant portion of our net revenues and profits. Our future net revenues and profits will depend and will fluctuate from period to period, in part, based upon our ability to replace or renew license fees, royalties and development service fees as the related agreements expire or are terminated. Our future net revenues and profits will also depend upon:

• our ability to obtain and maintain FDA approval of our manufacturing facilities;

• our ability to maintain a pipeline of products in development;

• our ability to achieve the milestones specified in our license and development agreements;

• our ability to develop and rapidly introduce new products;

• the timing of regulatory approval of such products;

• our ability to manufacture such products efficiently; and

• the number and timing of regulatory approvals of competing products.

Operating Expenses

Selling expenses increased $27.9 million, or 28%, to $126.5 million (15% of net revenues) for the nine months ended September 30, 2002, compared to $98.6 million (11% of net revenues) for the same period of the prior year. The increase was due to higher expenses associated with the operations of Lab Chile and IVAX Pharmaceuticals Mexico, S.A. de C.V. (“IVAX Mexico,” formerly known as Laboratorios Fustery, S.A. de C.V.) and increased sales and promotional expenses at IVAX Laboratories, our U.S. proprietary respiratory subsidiary, and our European subsidiaries, partially offset by reduced sales and promotional expenses at Elvetium Argentina and favorable effects of foreign currency rates.

General and administrative expenses increased $.9 million, or 1%, to $85.5 million (10% of net revenues) for the nine months ended September 30, 2002, compared to $84.6 million (10% of net revenues) for the same period of the prior year. The increase is primarily attributable to additional general and administrative expenses from the operations of Lab Chile and IVAX Mexico and increased expenses at IVAX Laboratories and our European subsidiaries, partially offset by reduced expenses at Elvetium Argentina, favorable effects of foreign currency rates and lower professional fees at Corporate. In June 2002, we received $2.2 million in partial settlement of a vitamin price-fixing class action lawsuit. In addition, we paid $2.1 million to settle the Louisiana Wholesale Drug Co. v. Abbott Laboratories and Valley Drug Co. v. Abbott Laboratories et al. cases, previously reported in our Annual Report on Form 10-K for the year ended December 31, 2001.

Research and development expenses for the nine months ended September 30, 2002, decreased $9.6 million, or 15%, to a total of $55.6 million (6% of net revenues), compared to $65.2 million (7% of net revenues) for the same period of the prior year. Our 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, strategic marketing decisions, collaborative alliances and liquidity.

During the first nine months of 2002, we incurred $3.2 million of restructuring costs, which were substantially paid out during the second quarter, at two subsidiaries, consisting primarily of employee termination benefits.

Other Income (Expense)

Interest income decreased $12.3 million and interest expense increased $9.0 million for the nine months ended September 30, 2002, as compared to the same period of the prior year primarily due to the cash purchases of Lab Chile on July 5, 2001, and Nasarel and Nasalide on October 16, 2001, and the issuance of $725 million of 4.5% Convertible Senior Subordinated Notes in 2001.

Other income, net increased $3.5 million for the nine months ended September 30, 2002, compared to the same period of the prior year. During January 2002, we repaid $48 million of U.S. denominated loans held by an Argentine subsidiary resulting in a pretax foreign exchange loss of approximately $2.8 million, which was partially offset by foreign currency gains at other subsidiaries. During the second quarter, we reclassified $5.3 million of first quarter extraordinary gains on the repurchase of subordinated notes into other income in accordance with the early adoption of SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. Also during the second quarter of 2002, we realized a gain of $4.2 million on the repurchase of subordinated notes, earned a $4.3 million milestone as additional consideration for the sale of Elmiron to ALZA Corporation during 1997, which is to be received in the first quarter of 2003, and recorded a gain of $6.3 million on the sale of certain intangible assets in the Czech Republic, which proceeds under the contract were received in the third quarter of 2002. During the third quarter of 2002,

we realized $4.0 million of gains on the repurchase of subordinated notes and $3.3 million of foreign currency gains at various subsidiaries. These gains were partially offset by net foreign currency losses at various subsidiaries during the previous quarters.

On March 14, 2001, we sold a partial interest in IVAX Diagnostics, Inc. through a merger with b2bstores.com, Inc. resulting in a gain of $10.3 million.

Three months ended September 30, 2002 compared to the three months ended September 30, 2001

Net income for the three months ended September 30, 2002, was $30.8 million, or $.16 per diluted share, compared to $61.5 million, or $.30 per diluted share, for the same period of the prior year.

Net Revenues and Gross Profit

Net revenues for the three months ended September 30, 2002, totaled $319.4 million, a decrease of $2.6 million, or 1%, from the $322.0 million reported in the same period of the prior year. This decrease was comprised of reductions in net revenues of $3.4 million from North American subsidiaries and $26.3 million from Latin American subsidiaries, partially offset by increases in net revenues of $18.9 million from European subsidiaries and $8.2 million from other operations.

North American subsidiaries generated net revenues of $138.3 million for the three months ended September 30, 2002, compared to $141.7 million for the same period of the prior year. The 2% decrease was primarily attributable to decreased volume and lower prices of our paclitaxel product and higher sales returns and allowances, partially offset by increased volume and prices of certain brand equivalent pharmaceutical products, increased sales of proprietary respiratory products and increased product development fees. North American subsidiaries recorded provisions for sales returns and allowances that reduced gross sales by $142.5 million during the three months ended September 30, 2002, and $135.8 million for the same period of the prior year. The increase of $6.7 million, or 5%, was primarily due to reduced net prices on certain brand equivalent pharmaceutical products and increased sales volume.

European subsidiaries generated net revenues of $123.0 million for the three months ended September 30, 2002, compared to $104.1 million for the same period of the prior year. The 18% increase was primarily due to higher sales volumes and favorable effects of currency exchange rates and $5.8 million of other revenues from a previously deferred up-front payment received under a license agreement that was terminated during the third quarter of 2002, partially offset by reduced product development fees and lower prices for certain brand equivalent products. European subsidiaries recorded provisions for sales returns and allowances that reduced gross sales by $12.8 million during the three months ended September 30, 2002, and $8.4 million for the same period of the prior year.

Latin American subsidiaries generated net revenues of $53.1 million for the three months ended September 30, 2002, compared to $79.4 million for the same period of the prior year. The 33% decrease was primarily due to reduced sales volume in Mexico and unfavorable effects of currency exchange rates. Latin American subsidiaries recorded provisions for sales returns and allowances that reduced gross sales by $7.8 million during the three months ended September 30, 2002, and $11.6 million for the same period of the prior year. The $3.8 million, or 33%, decrease was primarily due to the favorable effects of currency exchange in Argentina.

Gross profit was $142.8 million (45% of net revenues) for the three months ended September 30, 2002, compared to $171.9 million (53% of net revenues) for the same period of the prior year. The decrease in gross profit percentage was primarily attributable to reduced volume and pricing of our paclitaxel product.

We are continuing to experience increased competition for paclitaxel as well as our brand equivalent albuterol products and the resulting pricing and volume pressures have negatively impacted and may continue to negatively impact our revenues and gross profits. Our results this quarter were also adversely impacted by significant currency devaluations in Argentina and Venezuela and by reductions in government purchases of our products in Mexico.

Operating Expenses

Selling expenses decreased $.4 million, or 1%, to $40.6 million (13% of net revenues) for the three months ended September 30, 2002, compared to $41.0 million (13% of net revenues) for the same period of the prior year. The decrease was primarily due to reduced sales and promotional expenses at Elvetium Argentina and favorable effects of foreign currency rates, partially offset by higher expenses associated with the operations of Lab Chile and IVAX Mexico and increased sales and promotional expenses at IVAX Laboratories and our European subsidiaries.

General and administrative expenses decreased $1 million, or 3%, to $31.0 million (10% of net revenues) for the three months ended September 30, 2002, compared to $32.0 million (10% of net revenues) for the same period of the prior year. The decrease is primarily attributable to reduced general and administrative expenses at Elvetium Argentina, favorable effects of foreign currency rates and lower professional fees at Corporate, partially offset by increased expenses at North American pharmaceutical subsidiaries and the operations of Lab Chile.

Research and development expenses for the three months ended September 30, 2002, decreased $8.1 million, or 31%, to $18.2 million (6% of net revenues), compared to the same period of the prior year. Our 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, strategic marketing decisions, collaborative alliances and liquidity.

During the third quarter of 2002, we incurred $.9 million of restructuring costs consisting primarily of employee termination benefits.

Other Income (Expense)

Interest income decreased $4.0 million and interest expense decreased $.9 million for the three months ended September 30, 2002, compared to the same period of the prior year primarily due to the cash purchases of Nasarel and Nasalide on October 16, 2001, and the repurchases of subordinated notes during 2002.

Other income, net decreased $10.0 million for the three months ended September 30, 2002, compared to the same period of the prior year. During the third quarter of 2002, we realized $4.0 million of gains on the repurchase of subordinated notes and $3.3 million of foreign currency gains at various subsidiaries. See discussion below of adoption of SFAS No. 145 regarding reclassification of prior year extraordinary gains.

Recently Issued Accounting Standards

Statement of Financial Accounting Standards (“SFAS”) No. 143, Accounting for Asset Retirement Obligations, addresses financial accounting and reporting for obligations associated with the

retirement of tangible long-lived assets. It is effective for fiscal years beginning after June 15, 2002. Management believes the impact of adoption of this statement will not be significant.

Effective January 1, 2002, we adopted SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, EITF Issue No. 00-25, Vendor Income Statement Characterization of Consideration Paid to a Reseller of the Vendor’s Products, and EITF Issue No. 01-09, Accounting for Consideration Given to a Customer or a Reseller of Vendor’s Products. The impact of adoption was not significant.

In accordance with SFAS No. 141, Business Combinations, on January 1, 2002, $4.2 million of negative goodwill recorded in the balance sheet as of December 31, 2001, was reversed through a cumulative effect of a change in accounting principle. In addition, a workforce in place intangible asset in the amount of $.7 million was reclassified to goodwill.

Effective January 1, 2002, we adopted SFAS No. 142, Goodwill and Other Intangible Assets. Intangible assets that have indefinite lives and goodwill are no longer amortized. This will increase net income by approximately $2 million per quarter, or $8 million per year. The life of one product intangible asset with a net book value of $6.5 million as of January 1, 2002, was extended based on a review of the expected remaining estimated useful life. Intangible assets with indefinite lives were tested for impairment resulting in the write-down of one intangible asset by $.2 million. The initial test for impairment of goodwill as of January 1, 2002, was completed during the second quarter and no impairments were indicated. An independent valuation firm was used to perform the test.

Goodwill and Other Intangible Assets — Adoption of SFAS No. 142 (in thousands, except per share amounts):


Period Ended September 30,		Three Months				Nine Months

		2002		2001		2002		2001

Reported net income		$	30,803	$	61,461	$	85,985	$	189,456
Addback: Interest savings on conversion of convertible debt					2,183				15,070

Reported net income, diluted					63,644				204,526
Addback: Goodwill amortization					1,477				3,838
Addback: Workforce in place amortization					54				163
Adjust: Product intangible amortization					903				2,709

Adjusted net income		$	30,803	$	66,078	$	85,985	$	211,236

Basic earnings per common share:
	Reported net income	$	0.16	$	0.31	$	0.44	$	0.95
	Goodwill amortization				0.01				0.02
	Product intangible amortization				—				0.01

	Adjusted net income	$	0.16	$	0.32	$	0.44	$	0.98

Diluted earnings per common share:
	Reported net income, diluted	$	0.16	$	0.30	$	0.44	$	0.91
	Goodwill amortization				0.01				0.02
	Product intangible amortization				—				0.01

	Adjusted net income, diluted	$	0.16	$	0.31	$	0.44	$	0.94

The following table displays the changes in the carrying amounts of goodwill by operating segment for the nine months ended September 30, 2002 (in thousands):


		Balance		Foreign			Balance
		December 31,		Exchange and			September 30,
		2001		Other			2002

North America		$	3,972	$	—		$	3,972
Europe			24,200		7,168			31,368
Latin America			427,157		(113,373	)		313,784
Corporate & Other			46,748		740			47,488

	Consolidated goodwill	$	502,077	$	(105,465	)	$	396,612

During the second quarter of 2002, IVAX elected to early adopt SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. The impact of adoption was the reclassification into income from continuing operations of extraordinary losses from the early retirement of subordinated notes of $8.7 million in 2000, an extraordinary gain of $7.1 million, net of taxes of $4.2 million, during the third quarter of 2001, an extraordinary gain of $3.4 million, net of taxes of $2.0 million, during the first quarter of 2002 and an extraordinary gain of $2.7 million, net of taxes of $1.5 million, during the second quarter of 2002.

Liquidity and Capital Resources

At September 30, 2002, working capital was $454.6 million compared to $597.6 million at December 31, 2001. Cash and cash equivalents were $140.2 million at September 30, 2002, compared to

$178.3 million at December 31, 2001. Short-term marketable securities were $25.7 million at September 30, 2002 compared to $154.8 million at December 31, 2001.

Net cash of $91.5 million was provided by operating activities during the first nine months of 2002 compared to $113.3 million during the same period of the prior year. The decrease in cash provided by operating activities was primarily the result of reduced operating earnings and increases in inventories and payments of accounts payable, partially offset by increased collections of accounts receivable.

Net cash of $36.1 million was provided by investing activities during the first nine months of 2002 compared to $545.0 million used for investing activities during the same period of the prior year. During the first nine months of 2002, our capital expenditures increased by approximately $19.8 million as compared to the same period of the prior year. During the first nine months of 2001, we also received $41.3 million in proceeds from the sale of assets. During the first nine months of 2002 we spent $38.4 million to acquire intangible assets, compared to $11.1 million to acquire intangible assets during the same period of the prior year, and $481.8 million was used to acquire businesses and increase our ownership interest in affiliates during the same period of the prior year. During the first nine months of 2002, we received $128.6 million net proceeds from the sale of marketable securities compared to using $57.5 million to acquire marketable securities during the same period of the prior year.

On March 1, 2002, we acquired from Syntex Pharmaceuticals International Ltd. the non-U.S. rights to pharmaceutical products containing flunisolide hemihydrate, sold under the tradenames Syntaris, Nasalide, Rhinalar, Locasyn and Lokilan, for 10.2 million Swiss francs ($6.0 million at the February 28, 2002, currency exchange rate). During April 2002, we entered into an agreement to acquire the technical files and French marketing authorizations to substantially all of the products comprising the generic pharmaceutical business of Merck & Co., Inc.’s subsidiary in France for total consideration of approximately $5 million payable half on signing and half in four months. On July 19, 2002, the agreement was amended reducing the second payment to 2.6 million Euros ($2.5 million as of the August 2, 2002, payment date). We also acquired an exclusive U.S. license to the patent rights to market QVAR™ (beclomethasone dipropionate HFA), an aerosol inhaler prescribed to treat asthma. In addition, we have an option to obtain ownership of the U.S. QVAR trademark, as well as related patents and the New Drug Application in five years. 3M Drug Delivery Systems will manufacture the QVAR product for us under a long-term contract. The total consideration due under the contract, including options and extensions, is $105 million, $21 million of which was paid on the effective date, $22 million is due on the first anniversary, $31 million is due on the second anniversary, $26 million is due on the third anniversary and $5 million is due on the fifth anniversary upon exercise of the option. The payments carry no stated interest rate and were discounted at a 3.7% rate. On July 1, 2002, in connection with the termination of a license granted by IVAX to specified products in IVAX’ proprietary dry powder inhaler device (“MDPI”), IVAX entered into an agreement to acquire the technical files, trademark and related rights invented or produced by the licensee in connection with the commercialization of products under the license. The total consideration due is 5 million Pounds Sterling ($7.7 million at the July 1, 2002, currency exchange rate). An additional payment up to 1.1 million Pounds Sterling will also be paid to the licensee upon the receipt of marketing approval and launch of a specified product using the acquired rights and data. On August 30, 2002, we acquired Glaxo Wellcome S.A. (subsequently renamed IVAX Manufacturing Argentina S.A.), an Argentine manufacturing pharmaceutical company, consisting primarily of a manufacturing facility, for $6.0 million in cash.

Net cash of $155.3 million was used by financing activities during the first nine months of 2002 compared to $543.2 million provided by financing activities during the same period of the prior year primarily reflecting the $725 million Convertible Senior Subordinated Notes sold in May of 2001. During the first nine months of 2002, we repaid $56.9 million of bank debt, made $12.9 million of new

borrowings, and repurchased $77.0 million of our convertible debentures for $61.6 million, but reduced our repurchases of common stock by $61.4 million compared to the same period of the prior year. On March 15, 2002, our Board of Directors expanded the authorization of our repurchase program by an additional 10 million shares of our common stock or a like-valued amount of our convertible debentures.

We plan to spend substantial amounts of capital in 2002 to continue the research and development of pharmaceutical products. Although research and development expenditures are expected to be between $75 million and $80 million during 2002, actual expenditures will depend on, among other things, the outcome of clinical testing or products under development, delays or changes in government required testing and approval procedures, technological and competitive developments, strategic marketing decisions, collaborative alliances and liquidity. In addition, we plan to spend between $80 million and $90 million in 2002 to improve and expand our pharmaceutical and other related facilities.

Our principal sources of short-term liquidity are existing cash and internally generated funds, which we believe will be sufficient to meet our operating needs and anticipated capital expenditures over the short term. For the long term, we intend to principally utilize internally generated funds, which are anticipated to be derived primarily from the sale of existing pharmaceutical products and pharmaceutical products currently under development. There can be no assurance that we will successfully complete products under development, that we will be able to obtain regulatory approval for any such products, or that any approved product will be produced in commercial quantities, at reasonable costs, and be successfully marketed. We may consider issuing debt or equity securities in the future to fund potential acquisitions and growth.

Income Taxes

We recognized a $34.1 million tax provision for the nine months ended September 30, 2002, of which $18.0 million related to foreign operations. The effective tax rate during the first nine months of 2002 is less than the statutory rate due primarily to low tax rates applicable to our Puerto Rico and Waterford, Ireland manufacturing operations and our Swiss and Chile operations.

As of September 30, 2002, domestic net deferred tax assets totaled $102.4 million and aggregate foreign net deferred tax assets totaled $4.3 million. Realization of the net deferred tax assets is dependent upon generating sufficient future domestic and foreign taxable income. Although realization is not assured, we believe it is more likely than not that the net deferred tax assets will be realized. Our estimates of future taxable income are subject to revision due to, among other things, regulatory and competitive factors affecting the pharmaceutical industries in the markets in which we operate. Such factors are further discussed in management’s discussion and analysis of financial condition and results of operations included in our Annual Report on Form 10-K for the year ended December 31, 2001.

Critical Accounting Policies

Revenue Recognition, Sales Returns and Allowances – Revenues and the related cost of sales are recognized at the time title to our products passes to our customers. Our pharmaceutical revenues are affected by the level of provisions for estimated returns, inventory credits, discounts, promotional allowances, volume rebates, chargebacks, reimbursements relating to Medicaid and Medicare and other allowances. The custom in the U.S. pharmaceutical industry is generally to grant customers the right to return purchased goods. In the brand equivalent pharmaceutical industry, this custom has resulted in a practice of suppliers issuing inventory credits (also known as shelf-stock adjustments) to customers based on the customers’ existing inventory following decreases in the market price of the related brand equivalent pharmaceutical product. We have contractual agreements with many of our customers which require that we grant these customers inventory credit following a

price decrease. In other cases, the determination to grant a credit is at our discretion. These credits allow customers with established inventories to compete with those buying product at the current market price, and allow us to maintain shelf space, market share and customer loyalty.

Provisions for estimated returns, inventory credits and chargebacks, as well as other sales allowances, are established by us concurrently with the recognition of revenue. The provisions are established in accordance with generally accepted accounting principles based upon consideration of a variety of factors, including actual return and inventory credit experience for products during the past several years by product type, the number and timing of regulatory approvals for the product by our competitors (both historical and projected), the market for the product, expected sell-through levels by our wholesaler customers to customers with contractual pricing arrangements with us, estimated customer inventory levels by product and projected economic conditions. Actual product returns and inventory credits incurred are, however, dependent upon future events, including remaining shelf-life and price competition and the level of customer inventories at the time of any price decreases. We continually monitor the factors that influence the pricing of our products and customer inventory levels and make adjustments to these provisions when we believe that actual product returns, inventory credits and other allowances may differ from established reserves.

Legal Costs – Legal charges are recorded for the costs anticipated to be incurred in connection with litigation and claims against us when we can reasonably estimate these costs. We intend to vigorously defend each of the lawsuits described in Note 13, Commitments and Contingencies, in the notes to consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2001, and in Part II Item 1 of this Form 10-Q but their respective outcomes cannot be predicted. Any of such lawsuits or investigations, if determined adversely to us, could have a material adverse effect on our financial position and results of operations. Our ultimate liability with respect to any of these proceedings is not presently determinable.

We are involved in various other legal proceedings arising in the ordinary course of business, some of which involve substantial amounts. In order to obtain brand equivalent approvals prior to the expiration of patents on branded products, and to benefit from the exclusivity allowed to Abbreviated New Drug Application applicants that successfully challenge these patents, we frequently become involved in patent infringement litigation brought by branded pharmaceutical companies. Although these lawsuits involve products that are not yet marketed and therefore pose little or no risk of liability for damages, the legal fees and costs incurred in defending such litigation can be substantial. While it is not feasible to predict or determine the outcome or the total cost of these proceedings, in our opinion, based on a review with legal counsel, any losses resulting from such legal proceedings will not have a material adverse impact on our financial position or results of operations.

Disclosure Regarding Forward-Looking Statements

We caution the reader that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statement which may have been deemed to have been made in this report or which are otherwise made by us or on our behalf. For this purpose any statements contained in this report that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “estimate,” “continue” or “pursue,” or the negative other variations thereof or comparable terminology are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, among other things:

• difficulties in product development and uncertainties related to the timing or outcome of product development;

• the availability on commercially reasonable terms of raw materials, particularly raw materials for our paclitaxel product, and other third-party sourced products;

• our ability to replace or renew license fees, royalties and development service fees as the related agreements expire or are terminated;

• our ability to reduce our backlog and manufacture, obtain and maintain a sufficient supply of products to meet market demand, retain our customers and meet contractual deadlines and terms;

• our dependence on sole or limited source suppliers and the risk associated with a production interruption or shipment delays at such suppliers;

• difficulties in manufacturing products;

• efficacy or safety concerns with respect to marketed products, whether or not scientifically justified, leading to recalls, withdrawals or declining sales;

• that our proposed spending on facilities improvement and expansion may not be as projected;

• our ability to obtain and maintain FDA approval of our manufacturing facilities, the failure of which could result in production stoppage or delays;

• our ability to obtain approval from the FDA to market new pharmaceutical products;

• the acceptance of new products by the medical community as effective as alternative forms of treatment for indicated conditions;

• the outcome of any pending or future litigation or investigation (including patent, trademark and copyright litigation and the United Kingdom National Health Service investigation), and the cost, expenses and possible diversion of management’s time and attention arising from such litigation or investigation;

• the impact of new regulations or court decisions regarding the protection of patents and the exclusivity period for the marketing of branded drugs;

• the impact of the adoption of certain accounting standards;

• our success in acquiring or licensing proprietary technologies that are necessary for our product development activities;

• the impact of political and economic instability in the countries in which we operate, particularly Argentina and other Latin American countries;

• our successful compliance with extensive, costly, complex and evolving governmental regulations and restrictions;

• our ability to successfully compete in both the branded and brand equivalent pharmaceutical sectors; and

• other risks and uncertainties detailed herein and from time to time in our Securities and Exchange Commission filings.

The information in this Form 10-Q is as of September 30, 2002 or, where clearly indicated, as of the date of this filing. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. We also may make additional disclosures in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that we may file from time to time with the Securities and Exchange Commission. Please also note that we provide a cautionary discussion of risks and uncertainties under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2001. These are factors that we think could cause our actual results to differ materially from expected results. Other factors besides those listed here could also adversely affect us.

Item 3 — Quantitative and Qualitative Disclosures About Market Risk

Market risk represents the risk of loss that may impact our consolidated financial position, results of operations or cash flows. We, in the normal course of doing business, are exposed to the risks associated with foreign currency exchange rates and changes in interest rates.

Foreign Currency Exchange Rate Risk – We have subsidiaries in more than 20 countries worldwide. During the nine months ended September 30, 2002, sales outside the United States accounted for approximately 59% of worldwide sales. Virtually all of these sales were denominated in currencies of the local country. As such, our reported profits and cash flows are exposed to changing exchange rates. 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. Although we do not speculate in the foreign exchange market, we do from time to time manage exposures that arise in the normal course of business related to fluctuations in foreign currency exchange rates by entering into offsetting positions through the use of foreign exchange forward contracts. As a result of exchange rate differences, net revenues decreased by $21.4 million for the nine months ended September 30, 2002, as compared to the same period of the prior year. The effects of inflation on consolidated net revenues and operating income were not significant. Certain firmly committed transactions are hedged with foreign exchange forward contracts. As exchange rates change, gains and losses on the exposed transactions are partially offset by gains and losses related to the hedging contracts. Both the exposed transactions and the hedging contracts are translated at current spot rates, with gains and losses included in earnings. Our derivative activities, which primarily consist of foreign exchange forward contracts, are initiated primarily to hedge forecasted cash flows that are exposed to foreign currency risk.

The foreign exchange forward contracts generally require us to exchange local currencies for foreign currencies based on pre-established exchange rates at the contracts’ maturity dates. If the counterparties to the exchange contracts do not fulfill their obligations to deliver the contracted currencies, we could be at risk for currency related fluctuations. We enter into these contracts with counterparties that we believe to be creditworthy and do not enter into any leveraged derivative transactions. As of September 30, 2002, we had $23 million in foreign exchange forward contracts outstanding. During January 2002, we repaid $48 million of United States dollar denominated bank loans of the Argentine operations assumed in the acquisition of Lab Chile resulting in a pretax loss of $2.8 million.

Interest Rate Risk – Our only material debt obligations relate to the 4.5% and 5.5% Convertible Notes, which bear fixed rates of interest, and the amounts we owe for the purchase of QVAR, which carry no stated interest rate. We believe that our exposure to market risk relating to interest rate risk is not material.

Item 4 — Controls and Procedures

IVAX evaluated the design and operation of its disclosure controls and procedures to determine whether they are effective in ensuring that the disclosure of required information is timely made in accordance with the Exchange Act and the rules and forms of the Securities and Exchange Commission. This evaluation was made under the supervision and with the participation of management, including IVAX’ principal executive officer and principal financial officer within the 90-day period prior to the filing of this Quarterly Report on Form 10-Q. The principal executive officer and principal financial officer have concluded, based on their review, that IVAX’ disclosure controls and procedures, as defined at Exchange Act Rules 13a-14(c) and 15d-14(c), are effective to ensure that information required to be disclosed by IVAX in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. No significant changes were made to IVAX’ internal controls or other factors that could significantly affect these controls subsequent to the date of their evaluation.

PART II — OTHER INFORMATION

Item 1 — Legal Proceedings

Item 3, Legal Proceedings, of Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001, as amended by Item 1, Legal Proceedings, of Part II of the Company’s Quarterly Report on Form 10-Q for each of the quarters ended March 31, 2002 and June 30, 2002, are incorporated by reference herein.

On July 12, 2002, an action purporting to be a class action styled John Rice v. Abbott Laboratories, Inc., et al. was filed against IVAX Pharmaceuticals, Inc. and others in the Superior Court of the State of California, alleging violations of California’s Business & Professional Code §17200 et seq. with respect to the way pharmaceutical companies report their average wholesale price (“AWP”). Plaintiffs allege that each defendant reported an AWP to Medicare and Medicaid which materially misrepresented the actual prices paid to defendants by physicians and pharmacies for prescription drugs. The complaint seeks unspecified damages, including punitive damages, and injunctive relief. Two other class actions, Thompson v. Abbott Laboratories, Inc., et al. and Turner v. Abbott Laboratories, Inc., et al., containing similar allegations against IVAX Pharmaceuticals, Inc. and others were filed in California courts in August and September 2002, respectively, as well. IVAX believes that it has substantial defenses to these claims and will defend itself vigorously. However, as with any litigation, there can be no assurance that IVAX will prevail.

Item 6 — Exhibits and Reports on Form 8-K

(a) Exhibits


99.1	Certificate of the Chairman and Chief Executive Officer of IVAX Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

99.2	Certificate of the Chief Financial Officer of IVAX Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

(b) Reports on Form 8-K

On August 14, 2002, we filed a report under Item 9 – Regulation FD Disclosure on Form 8-K reporting that our Chairman and Chief Executive Officer and our Chief Financial Officer each filed with the Securities and Exchange Commission (the “SEC”) a statement under oath regarding facts and circumstances relating to certain of the Company’s filings under the Securities Exchange Act of 1934, as amended, as required by the SEC’s order Requiring the Filing of Sworn Statements Pursuant to Section 21(a)(1) of the Securities Exchange Act (File No. 4-460, June 27, 2002).

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 13, 2002		By: /s/ Thomas E. Beier

		Thomas E. Beier Senior Vice President-Finance Chief Financial Officer

I, Phillip Frost, M.D., certify that:

1. I have reviewed this quarterly report on Form 10-Q of IVAX Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.


		/s/ Phillip Frost, M.D.

November 13, 2002		Phillip Frost, M.D. Chairman and Chief Executive Officer

I, Thomas E. Beier, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IVAX Corporation;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and


		/s/ Thomas E. Beier

November 13, 2002		Thomas E. Beier Senior Vice President – Finance and Chief Financial Officer

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	•		our ability to obtain and maintain FDA approval of our manufacturing facilities;

	•		our ability to maintain a pipeline of products in development;

	•		our ability to achieve the milestones specified in our license and development agreements;

	•		our ability to develop and rapidly introduce new products;

	•		the timing of regulatory approval of such products;

	•		our ability to manufacture such products efficiently; and

	•		the number and timing of regulatory approvals of competing products.

	•		difficulties in product development and uncertainties related to the timing or outcome of product development;

	•		the availability on commercially reasonable terms of raw materials, particularly raw materials for our paclitaxel product, and other third-party sourced products;

	•		our ability to replace or renew license fees, royalties and development service fees as the related agreements expire or are terminated;

	•		our ability to reduce our backlog and manufacture, obtain and maintain a sufficient supply of products to meet market demand, retain our customers and meet contractual deadlines and terms;

	•		our dependence on sole or limited source suppliers and the risk associated with a production interruption or shipment delays at such suppliers;

	•		difficulties in manufacturing products;

	•		efficacy or safety concerns with respect to marketed products, whether or not scientifically justified, leading to recalls, withdrawals or declining sales;

	•		that our proposed spending on facilities improvement and expansion may not be as projected;

	•		our ability to obtain and maintain FDA approval of our manufacturing facilities, the failure of which could result in production stoppage or delays;

	•		our ability to obtain approval from the FDA to market new pharmaceutical products;

	•		the acceptance of new products by the medical community as effective as alternative forms of treatment for indicated conditions;

	•		the outcome of any pending or future litigation or investigation (including patent, trademark and copyright litigation and the United Kingdom National Health Service investigation), and the cost, expenses and possible diversion of management’s time and attention arising from such litigation or investigation;

	•		the impact of new regulations or court decisions regarding the protection of patents and the exclusivity period for the marketing of branded drugs;

	•		the impact of the adoption of certain accounting standards;

	•		our success in acquiring or licensing proprietary technologies that are necessary for our product development activities;

	•		the impact of political and economic instability in the countries in which we operate, particularly Argentina and other Latin American countries;

	•		our successful compliance with extensive, costly, complex and evolving governmental regulations and restrictions;

	•		our ability to successfully compete in both the branded and brand equivalent pharmaceutical sectors; and

	•		other risks and uncertainties detailed herein and from time to time in our Securities and Exchange Commission filings.