EX-99.2 3 ex-992.txt EXHIBIT 99.2 Exhibit U BIOVAIL CORPORATION CONSOLIDATED BALANCE SHEETS IN ACCORDANCE WITH CANADIAN GAAP (All dollar amounts are expressed in thousands of U.S. dollars)
MARCH 31, December 31, 2000 1999 (UNAUDITED) (Audited) ----------- ------------ ASSETS CURRENT Cash and cash equivalents $475,670 $178,086 Short-term investments 19,547 65,893 Accounts receivable 75,577 60,571 Inventories 18,130 12,701 Assets held for disposal -- 20,000 Deposits and prepaid expenses 1,984 3,172 -------- -------- 590,908 340,423 LONG-TERM INVESTMENTS 2,297 12 CAPITAL ASSETS, NET 47,193 45,300 OTHER ASSETS, NET 214,467 249,402 -------- -------- $854,865 $635,137 ======== ======== LIABILITIES CURRENT Accounts payable $ 26,521 $ 22,685 Accrued liabilities 26,813 31,107 Income taxes payable 3,412 3,585 Customer prepayments 4,473 4,962 Future income taxes (Note 1) 3,814 -- Current portion of long-term debt 1,318 12,016 -------- -------- 66,351 74,355 FUTURE INCOME TAXES (NOTE 1) 12,660 -- LONG-TERM DEBT -- 125,488 -------- -------- 79,011 199,843 -------- -------- SHAREHOLDERS' EQUITY Convertible subordinated preferred equivalent debentures (Note 2) 300,343 -- Share capital 470,046 368,538 Warrants 8,244 8,244 Retained earnings (deficit) (3,601) 57,252 Cumulative translation adjustment 822 1,260 -------- -------- 775,854 435,294 -------- -------- $854,865 $635,137 ======== ========
BIOVAIL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (LOSS) IN ACCORDANCE WITH CANADIAN GAAP (All dollar amounts except per share data are expressed in thousands of U.S. dollars) (Unaudited)
THREE MONTHS ENDED MARCH 31, ------------------- 2000 1999 -------- -------- REVENUE $48,141 $28,231 EXPENSES Cost of goods sold 11,035 5,039 Research and development 13,957 5,324 Selling, general and administrative 9,459 6,245 ------- ------- 34,451 16,608 ------- ------- OPERATING INCOME 13,690 11,623 INTEREST INCOME (EXPENSE), NET 184 (2,792) PREMIUM PAID ON EARLY EXTINGUISHMENT OF U.S. DOLLAR SENIOR NOTES (20,039) -- ------- ------- INCOME (LOSS) BEFORE INCOME TAXES (6,165) 8,831 PROVISION FOR (RECOVERY OF) INCOME TAXES (NOTE 1) (1,556) 533 ------- ------- NET INCOME (LOSS) (4,609) 8,298 INTEREST EXPENSE ON CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES (793) -- ------- ------- NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS $(5,402) $ 8,298 ======= ======= BASIC EARNINGS (LOSS) PER SHARE $ (0.09) $ 0.17 ======= ======= FULLY DILUTED EARNINGS (LOSS) PER SHARE $ (0.09) $ 0.16 ======= ======= SEGMENTED INFORMATION REVENUE FROM EXTERNAL CUSTOMERS Product sales $33,631 $12,562 Research and development 11,782 6,717 Royalty and licensing 2,728 8,952 ------- ------- $48,141 $28,231 ======= ======= SEGMENT OPERATING INCOME (LOSS) Product sales $16,463 $ 3,147 Research and development (3,703) 942 Royalty and licensing 2,688 8,753 Unallocated (1,758) (1,219) ------- ------- $13,690 $11,623 ======= =======
BIOVAIL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS IN ACCORDANCE WITH CANADIAN GAAP (All dollar amounts are expressed in thousands of U.S. dollars) (Unaudited)
THREE MONTHS ENDED MARCH 31, ------------------- 2000 1999 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ (4,609) $ 8,298 Depreciation and amortization 7,350 1,489 Future income tax recovery (Note 1) (2,453) -- Premium paid on early extinguishment of U.S. Dollar Senior Notes 20,039 -- -------- ------- 20,327 9,787 Change in non-cash operating items: Decrease (increase) in accounts receivable (12,340) 1,466 Increase in inventories (5,550) (3,030) Decrease in deposits and prepaid expenses 1,188 103 Decrease in accounts payable and accrued liabilities (3,689) (383) Decrease in income taxes payable (177) (386) Increase (decrease) in customer prepayments (489) 9,440 -------- ------- (21,057) 7,210 -------- ------- (730) 16,997 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to capital assets, net (3,929) (1,611) Acquisition of product rights -- -- Maturity of short-term investments, net 46,346 -- Acquisition of long-term investments (2,285) -- Proceeds from assets held for disposal 17,000 -- Decrease in other assets 261 -- Advance of executive stock purchase plan loans -- (52) -------- ------- 57,393 (1,663) -------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of share capital 102,298 1,424 Repurchase of share capital -- (14,933) Issuance of convertible subordinated preferred equivalent debentures, net of financing costs (Note 2) 290,312 -- Repurchase of U.S. Dollar Senior Notes (141,017) -- Reduction in other long-term debt (10,651) (300) -------- ------- 240,942 (13,809) -------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (21) (548) -------- ------- INCREASE IN CASH AND CASH EQUIVALENTS 297,584 977 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 178,086 78,279 -------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD $475,670 $79,256 ======== =======
BIOVAIL CORPORATION CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH CANADIAN GAAP (All dollar amounts are expressed in thousands of U.S. dollars) (Unaudited) 1. FUTURE INCOME TAXES Effective January 1, 2000, Biovail Corporation (the "Company") changed its method of accounting for income taxes from the deferral method to the liability method of tax allocation as required by the Canadian Institute of Chartered Accountants. As permitted under the new rules, prior-year financial statements have not been restated. The cumulative effect of this change at January 1, 2000 was a decrease in opening retained earnings of $55,451,000, a decrease in goodwill of $36,524,000 and an increase in the future income tax liability of $18,927,000, reflecting the net liability which existed at that date for the difference between the accounting and tax value of the Company's assets and liabilities. For the three months ended March 31, 2000, application of the new income tax rules increased net income by $2,934,000 reflecting the reduction of the difference between the accounting and tax values, the reduction in goodwill amortization and the recognition of losses incurred by the Company's subsidiary Biovail Technologies Ltd. during the period. 2. CONVERTIBLE SUBORDINATED PREFERRED EQUIVALENT DEBENTURES On March 22, 2000, the Company issued $300 million of 6.75% Convertible Subordinated Preferred Equivalent Debentures, due March 31, 2025 (the "Convertible Preferred Securities"). The Convertible Preferred Securities are unsecured and subordinated to all Senior Indebtedness, as defined, of the Company. The Convertible Preferred Securities are convertible at any time into common shares at $60.675 per common share and may be redeemed at the option of the Company beginning on March 31, 2003 at a redemption price of 104.725% declining each year as prescribed in the indenture agreement to 100% by March 31, 2010. The Company has a special right to redeem the Convertible Preferred Securities prior to March 31, 2003 at 106.75% if the trading price of the Company's stock equals or exceeds $91.01 per share on the NYSE for a specified period, subject to certain conditions. Interest is payable quarterly in arrears commencing June 30, 2000. Subject to certain conditions, the Company has the right to defer payment of interest on the Convertible Preferred Securities for up to 20 consecutive quarterly periods. Interest and principal are payable in cash or, at the option of the Company, from the proceeds on the sale of equity securities of the Company delivered to the trustee of the Convertible Preferred Securities. For purposes of accounting under Canadian GAAP, the Convertible Preferred Securities are presented within shareholders' equity and are comprised of the holder conversion option and the interest and principal component. The value ascribed to the option component of $43,506,000 has been determined using the residual method after calculating the component attributable to the present value of the required interest and principal repayments at a rate approximating the interest rate that would have been applicable to non-convertible debt at the time the Convertible Preferred Securities were issued. The present value of the interest and principal repayments amounted to $256,837,000 and is also shown as a component of shareholders' equity reflecting the option the Company has to pay the liability from the sale of equity securities. The present value will be accreted to the face value of the payments over the 25 year term of the indenture as a charge to income attributable to common shareholders. [BIOVAIL LOGO] May 29, 2000 Dear Fellow Shareholder, Biovail Corporation changed its accounting reporting convention from Canadian Generally Accepted Accounting Principles to U.S. Generally Accepted Accounting Principles effective January 1, 2000. Enclosed you will find our Letter to Shareholders and quarterly financial statements prepared under U.S. GAAP. Additionally, Biovail Corporation will continue to provide and has enclosed its financial results under Canadian GAAP for your information. Thank you for your continued support and if you have any questions regarding the enclosures, please do not hesitate to contact Kenneth Howling at (416) 285-6000. Sincerely, /S/ Bruce Brydon Chief Executive Officer