IVAX EXHIBIT 99 IVAX Corporation
4400 Biscayne Boulevard
Miami, Florida 33137
Telephone 305-575-6000
FOR IMMEDIATE RELEASE
IVAX ANNOUNCES 1996 SECOND QUARTER RESULTS
Miami, Florida -- August 2, 1996 -- IVAX Corporation (AMEX:IVX) today
announced a net loss for the 1996 second quarter of $16.0 million, or $.13 per
common share, compared to net income of $28.1 million, or $.24 per common share,
for the second quarter of 1995. IVAX' results for the three months ended June
30, 1996 are significantly below the $.04 to $.06 cents per share ($.06 to $.08
per share before extraordinary items) forecast by IVAX in a June 27, 1996 news
release, primarily due to higher than anticipated levels of customer inventory
credits and the establishment of additional reserves for customer inventory
returns. Included in IVAX' earnings for the second quarter and first half of
1996 is a one-time tax benefit of $.06 per share, and an extraordinary charge of
$.02 per share.
Net revenues for the 1996 second quarter were $273.9 million, compared
to $306.7 million for the 1995 second quarter. Gross profit for the second
quarter of 1996 was $82.8 million, compared to $129.8 million for the second
quarter of 1995. Loss before income taxes, minority interest and extraordinary
items in the 1996 second quarter was $31.7 million, compared to income before
income taxes, minority interest and extraordinary items of $37.8 million for the
1995 second quarter.
Primary net earnings per share for the first half of 1996 were $.16,
compared to $.44 for the first half of 1995. Fully diluted net earnings per
share for the first six months of 1996 were $.16, compared to $.43 for the first
six months of 1995. Net income for the first six months of 1996 was $19.9
million, compared to $51.5 million for the same period in 1995.
Net revenues for the first half of 1996 were $607.9 million, compared
to $587.8 million reported for the first half of 1995. Gross profit for the
first six months was $227.3 million, compared to $249.6 million for the same
period in 1995. Income before income taxes, minority interest and extraordinary
items was $12.5 million in the first half of 1996, compared to $70.3 million for
the same period in 1995.
IVAX' consolidated 1996 second quarter tax benefit reflects the
recognition of a deferred tax asset of $7.1 million by McGaw following an
adjustment resulting from an Internal Revenue Service examination.
IVAX' second quarter results include an extraordinary charge of $2.1
million (net of tax) relating to the redemption of McGaw's 10-3/8% Senior Notes,
which increased the second quarter net loss per share by $.02.
In its June news release, IVAX stated that significant customer
inventories of important U.S. generic drugs, price declines for certain generic
drugs, and related credits provided to customers would adversely affect its
second quarter financial results. Since its June forecast,
IVAX Corporation Press Release
August 2, 1996
Page 2 of 5
IVAX identified significantly higher than estimated inventory levels for certain
customers, largely relating to the introduction of an unusually large number of
U.S. generic drugs in 1995 and 1996. Accordingly, inventory credits and reserves
for returns were higher than originally estimated. In total, inventory credits,
return reserves, and other allowances relating to the U.S. generic drug business
were approximately $43.6 million higher than the average levels IVAX has
experienced in recent prior quarters.
During the 1996 second quarter, price declines in the U.S. generic drug
business reduced margins, and significant customer inventories resulted in lower
reorders from certain key accounts. Although IVAX operates in a highly
competitive environment and price declines were significant during the second
quarter, prices for IVAX' important generic products, in general, have not
materially declined since IVAX' June 27 forecast. Reorders are expected to
improve as customer inventories are depleted.
IVAX is a party to a revolving credit facility with a syndicate of
banks. As a result of IVAX' second quarter results, IVAX is presently out of
compliance with the facility's fixed charge ratio covenant, which constitutes a
technical default under the facility. Accordingly, the $281.8 million
outstanding under the facility as of June 30, 1996, ordinarily classified as
long term debt on IVAX' balance sheet, has been classified as short term debt.
IVAX is seeking a waiver of this default, and is hopeful that a waiver will be
granted shortly. IVAX believes that it has a strong balance sheet, with a debt
to total capital ratio of less than 32% and, if the waiver is granted and the
amounts outstanding under the facility are reclassified as long term debt, a
current ratio of 3.7.
Phillip Frost, M.D., IVAX' Chairman and Chief Executive Officer, said
"Clearly, we have experienced a very disappointing quarter. We believe, however,
that the challenges unique to this period in our history are now behind us. The
broader challenges of the generic drug industry as a whole, and its tremendous
opportunities, remain. We will meet these challenges with strategies honed and
improved as a result of this most difficult quarter. More significantly, we will
continue to exploit the industry's opportunities with a science team that has
led the industry in U.S. generic drug approvals, and with a distribution network
that is among the most extensive in the industry."
"In evaluating our strategies, we have taken a hard look at our U.S.
generic drug business. We have determined that, although we will not be blind to
opportunities outside our organization to improve shareholder value, we must
focus our resources on improving value from within. We have instituted actions
to enhance the profitability of our U.S. generics business. We will also be
expanding our management team and consolidating manufacturing facilities."
"In addition, we have begun to moderate those selling initiatives in
our U.S. generics business which can create high levels of inventory in the
distribution channels, and to develop a base of long term customer contracts and
arrangements. We believe this will permit us to
IVAX Corporation Press Release
August 2, 1996
Page 3 of 5
distribute sales more evenly over the quarter and, accordingly, reduce heavy
end-of-quarter selling."
Dr. Frost concluded "Our fundamental business and its underlying
strategies remain intact: the U.S. market for generic drugs doubled over the
last three years to more than $6 billion, and industry experts generally expect
it to double yet again over the next three to five years. Only a limited number
of companies are positioned to meaningfully participate in this rapidly growing
market and, among them, IVAX is certainly very well positioned."
IVAX Corporation, headquartered in Miami, Florida, is a holding company
with subsidiaries engaged primarily in the research, development, manufacture
and marketing of health care products, including generic and branded
pharmaceuticals, intravenous solutions and related products, and in vitro
diagnostics.
STATEMENTS MADE IN THIS PRESS RELEASE, INCLUDING THOSE RELATING TO
EXPECTATIONS OF INCREASED REORDERS, RECEIPT OF A CREDIT FACILITY WAIVER,
EARNINGS DISTRIBUTION, AND THE GENERIC DRUG INDUSTRY, ARE FORWARD LOOKING AND
ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE SECURITIES LITIGATION
REFORM ACT OF 1995. SUCH STATEMENTS INVOLVE RISKS AND UNCERTAINTIES WHICH MAY
CAUSE RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN THESE STATEMENTS.
AMONG OTHER THINGS, ADDITIONAL COMPETITION FROM EXISTING AND NEW COMPETITORS
WILL IMPACT REORDERS; THE CREDIT FACILITY WAIVER IS SUBJECT TO THE DISCRETION OF
THE BANK SYNDICATE; AND IVAX' ABILITY TO DISTRIBUTE EARNINGS MORE EVENLY OVER
FUTURE QUARTERS IS SUBJECT TO INDUSTRY PRACTICES AND PURCHASING DECISIONS BY
EXISTING AND POTENTIAL CUSTOMERS. IN ADDITION, THE U.S. GENERIC DRUG INDUSTRY IS
HIGHLY PRICE COMPETITIVE, WITH PRICING DETERMINED BY MANY FACTORS, INCLUDING THE
NUMBER AND TIMING OF PRODUCT INTRODUCTIONS. ALTHOUGH THE PRICE OF A GENERIC
PRODUCT GENERALLY DECLINES OVER TIME AS COMPETITORS INTRODUCE ADDITIONAL
VERSIONS OF THE PRODUCT, THE ACTUAL DEGREE AND TIMING OF PRICE COMPETITION IS
NOT PREDICTABLE. IN ADDITION TO THE FACTORS SET FORTH ELSEWHERE IN THIS RELEASE,
THE ECONOMIC, COMPETITIVE, GOVERNMENTAL, TECHNOLOGICAL AND OTHER FACTORS
IDENTIFIED IN IVAX' FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, COULD
AFFECT THE FORWARD LOOKING STATEMENTS CONTAINED IN THIS PRESS RELEASE.
* * * * *
CONTACTS:
Michael W. Fipps - or - Joseph C. Jones
Senior Vice President - Finance Vice President -
and Chief Financial Officer Investor Relations
305-575-6123 305-575-6042
IVAX Corporation press releases are available at no charge through PR Newswire's
Company News On-Call facsimile service and/or Web Site. For a menu of IVAX'
press releases or to retrieve a specific release, call 800-758-5804, extension
457725, or use the Internet via http://www.prnewswire.com.
IVAX Corporation Press Release
August 2, 1996
Page 4 of 5
RESULTS OF OPERATIONS THREE MONTHS SIX MONTHS
PERIOD ENDED JUNE 30, 1996 1995 1996 1995
----------- ----------- ----------- -----------
(In thousands, except per share data)
Net revenues $ 273,883 $ 306,684 $ 607,928 $ 587,764
Cost of sales 191,078 176,849 380,648 338,211
----------- ----------- ----------- -----------
Gross profit 82,805 129,835 227,280 249,553
Selling, general and administrative 86,893 69,288 166,356 137,310
Research and development 18,085 16,479 34,607 31,664
Amortization 2,797 2,559 5,360 4,942
Merger expenses - - 184 -
----------- ----------- ----------- -----------
Total operating expenses 107,775 88,326 206,507 173,916
----------- ----------- ----------- -----------
Income (loss) from operations (24,970) 41,509 20,773 75,637
Total other expense, net (6,709) (3,736) (8,239) (5,365)
----------- ----------- ----------- -----------
Income (loss) before income taxes,
minority interest and extraordinary items (31,679) 37,773 12,534 70,272
Provision (benefit) for income taxes (19,466) 8,793 (13,333) 16,653
----------- ----------- ----------- -----------
Income (loss) before minority interest and
extraordinary items (12,213) 28,980 25,867 53,619
Minority interest (1,718) (855) (3,902) (2,191)
----------- ----------- ----------- -----------
Income (loss) before extraordinary items (13,931) 28,125 21,965 51,428
Extraordinary items - Gains (losses) on
extinguishment of debt, net of tax (2,072) (20) (2,073) 34
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (16,003) $ 28,105 $ 19,892 $ 51,462
=========== =========== =========== ===========
EARNINGS (LOSS) PER SHARE:
PRIMARY:
Earnings (loss) before extraordinary items $ (0.11) $ 0.24 $ 0.18 $ 0.44
Extraordinary items (0.02) - (0.02) -
----------- ----------- ----------- -----------
Net earnings (loss) $ (0.13) $ 0.24 $ 0.16 $ 0.44
=========== =========== =========== ===========
FULLY DILUTED:
Earnings (loss) before extraordinary items $ (0.11) $ 0.24 $ 0.18 $ 0.43
Extraordinary items (0.02) - (0.02) -
----------- ----------- ----------- -----------
Net earnings (loss) $ (0.13) $ 0.24 $ 0.16 $ 0.43
=========== =========== =========== ===========
AVERAGE SHARES OUTSTANDING:
Primary 121,015 118,741 121,858 118,061
=========== =========== =========== ===========
Fully Diluted 121,015 119,030 121,882 118,586
=========== =========== =========== ===========
IVAX Corporation Press Release
August 2, 1996
Page 5 of 5
CONDENSED BALANCE SHEETS JUNE 30, DECEMBER 31,
(In thousands) 1996 1995
------------ ------------
ASSETS
Current assets $ 812,961 $ 676,818
Property, plant and equipment, net 406,335 385,419
Other assets 285,511 273,073
------------ ------------
Total assets $ 1,504,807 $ 1,335,310
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt $ 284,065 $ 3,521
Other current liabilities 218,754 202,392
Long-term debt 111,271 298,857
Other long-term liabilities 26,736 26,314
Minority interest 13,061 15,054
Shareholders' equity 850,920 789,172
------------ ------------
Total liabilities and shareholders' equity $ 1,504,807 $ 1,335,310
============ ============
BUSINESS SEGMENT FINANCIAL HIGHLIGHTS
PERIOD ENDED JUNE 30, THREE MONTHS SIX MONTHS
(In thousands) 1996 1995 1996 1995
----------- ----------- ----------- -----------
NET REVENUES:
Pharmaceuticals $ 147,997 $ 181,764 $ 360,127 $ 340,496
Intravenous products 84,840 87,592 168,043 170,839
Other operations 41,419 37,690 80,663 76,871
Intersegment eliminations (373) (362) (905) (442)
----------- ----------- ----------- -----------
Total $ 273,883 $ 306,684 $ 607,928 $ 587,764
=========== =========== =========== ===========
GROSS PROFIT:
Pharmaceuticals $ 33,605 $ 77,478 $ 132,989 $ 147,246
Intravenous products 29,569 36,498 56,397 68,989
Other operations 19,631 15,859 37,894 33,318
----------- ----------- ----------- -----------
Total $ 82,805 $ 129,835 $ 227,280 $ 249,553
=========== =========== =========== ===========
INCOME (LOSS) FROM OPERATIONS:
Pharmaceuticals $ (25,991) $ 34,226 $ 20,979 $ 60,851
Intravenous products 5,544 11,696 8,058 19,473
Other operations 1,331 524 2,608 2,299
Corporate expenses and other (5,854) (4,937) (10,872) (6,986)
----------- ----------- ----------- -----------
Total $ (24,970) $ 41,509 $ 20,773 $ 75,637
=========== =========== =========== ===========