##### 









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004                                                 
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to                                             

Commission file number 000-31475


ANDRX CORPORATION


(Exact Name of Registrant as Specified in Its Charter)


|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|Delaware                                                           |  | 65-1013859                          
|(State or Other Jurisdiction of Incorporation or
    Organization) |  | (I.R.S. Employer Identification No.)
|                                                                  
|4955 Orange Drive
    Davie, Florida                               |  | 33314                               
|(Address of Principal Executive Offices)                           |  | (Zip Code)                          

(954) 584-0300


(Registrants telephone number, including area code)




None




Andrx Corporation  Andrx Group common stock,
$0.001 par value




Rights to Purchase Series A Junior Participating
Preferred Stock




þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE












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tm tm tm tm tm




FORWARD-LOOKING STATEMENTS






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PART I




|        |         
|------- | --------
|Item 1. | Business

Overview






| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | develops, manufactures and commercializes generic versions of
    controlled-release, niche and immediate-release pharmaceutical
    products, including oral contraceptives; and                                               
|
| |  | distributes pharmaceuticals, primarily generics, which have been
    commercialized by others, as well as our own, primarily to
    independent pharmacies, pharmacy chains, pharmacy buying groups
    and physicians offices.





Business Strategy






| |                         
| | ------------------------
| | Research and Development





1



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##### 





| |                                                                   
| | ------------------------------------------------------------------
| | Strategic Alliances, Collaborative Agreements and
    Dispositions



Generic Pharmaceuticals






Regulation 
Pharmaceuticals  ANDA Process  Generic
Pharmaceuticals Patent Infringement Litigation


Regulation  Pharmaceuticals  ANDA
Process  Generic Pharmaceuticals


2



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|                                                     |  |                             |  |             |      | 
|---------------------------------------------------- |  | --------------------------- |  | ----------- | ---- | 
|Andrx Generic Product*                               |  | Comparable Brand Name       |  | Launch Date |     
|                                                     |  |                             |  |             |     
|Controlled-Release:                                  |  |                             |  |             |      | 
|Diltiazem HCl ER (Diltia XT)                         |  | Dilacor XR                  |  |             | 1997 | 
|Ketoprofen ER(1)                                     |  | Oruvail                     |  |             | 1999 | 
|Diltiazem HCl ER (Cartia XT)                         |  | Cardizem CD                 |  |             | 1999 | 
|Famotidine(2)                                        |  | Pepcid                      |  |             | 2001 | 
|Potassium Chloride                                   |  | K-Dur                       |  |             | 2002 | 
|Naproxen Sodium ER                                   |  | Naprelan                    |  |             | 2002 | 
|Loratadine/ Pseudoephedrine Sulfate(3)               |  | Claritin-D 24               |  |             | 2003 | 
|Diltiazem HCl ER (Taztia XT)                         |  | Tiazac                      |  |             | 2003 | 
|Glipizide Extended-Release(4)                        |  | Glucotrol XL                |  |             | 2003 | 
|Metformin Hydrochloride Extended-Release  500mg     |  | Glucophage XR               |  |             | 2004 | 
|Phenylephrine Extended-Release/ Guaifenesin(5)       |  | Entex LA                    |  |             | 2004 | 
|                                                    
|Immediate-Release:                                   |  |                             |  |             |      | 
|Metformin Hydrochloride(6)                           |  | Glucophage                  |  |             | 2002 | 
|Fluoxetine(2)                                        |  | Prozac                      |  |             | 2002 | 
|Lovastatin Tablets USP(2)                            |  | Mevacor                     |  |             | 2003 | 
|Acetaminophen and Codeine Phosphate                  |  | Tylenol and Codeine Tablets |  |             | 2003 | 
|Mirtazapine                                          |  | Remeron                     |  |             | 2003 | 
|Benazepril Hydrochloride                             |  | Lotensin                    |  |             | 2004 | 
|Benazepril Hydrochloride and Hydrochlorothiazide     |  | Lotensin HCT                |  |             | 2004 | 
|Hydrocodone Bitartrate and Acetaminophen             |  | Vicodin HP                  |  |             | 2004 | 
|Hydrocodone Bitartrate and Ibuprofen                 |  | Vicoprofen                  |  |             | 2004 | 
|Paroxetine Hydrochloride(7)                          |  | Paxil                       |  |             | 2004 | 
|Cilostazol(7)                                        |  | Pletal                      |  |             | 2004 | 
|                                                    
|Other:                                               |  |                             |  |             |      | 
|Albuterol Inhalation Aerosol(8)                      |  | Ventolin                    |  |             | 2001 | 
|Loratadine Orally Disintegrating(3)                  |  | Claritin RediTabs           |  |             | 2004 | 
|Norgestimate and Ethinyl Estradiol (Previfem)(9)     |  | Ortho-Cyclen 28             |  |             | 2004 | 
|Norgestimate and Ethinyl Estradiol (Tri-Previfem)(9) |  | Ortho Tri-Cyclen            |  |             | 2004 | 






| |   |                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Manufactured and marketed by Andrx, unless otherwise indicated.
    Andrx trade names are reflected in the parenthetical to the
    right of the chemical name.



|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|(1) | Manufactured by Andrx in connection with our ANCIRC joint
    venture.                   
|   
|(2) | Manufactured by Carlsbad Technology, Inc. in connection with our
    CARAN joint venture.
|   
|(3) | Marketed by Perrigo Company as an over-the counter
    (OTC) product.                    
|   
|(4) | Manufactured by Pfizer Inc.                                                              
|   
|(5) | Manufactured by PharmaFab, Inc.                                                          
|   
|(6) | Manufactured by both Andrx and Mova Pharmaceutical Corporation.                          
|   
|(7) | Manufactured by Genpharm Inc. or its affiliate, Alphapharm Pty.
    Ltd.                 
|   
|(8) | Manufactured by Armstrong Pharmaceuticals, Inc.                                          
|   
|(9) | Marketed by Teva USA.                                                                    



3



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Risk
Factors










| |                         
| | ------------------------
| | Generic Product Pipeline





| |                                                 
| | ------------------------------------------------
| | Collaborative Agreements and Strategic Alliances



4



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2004




| |   |                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our March 2004 agreement to market in the United States all four
    strengths of Genpharm Inc.s generic version of Paxil.                                                                                                                                                                                               
|
| |  | Our June 2004 agreement with Martec Pharmaceutical, Inc. whereby
    Martec will supply its generic version of Procardia XL 90mg
    tablets to us and we will market the product in the United
    States. Under the terms of the arrangement, the parties share
    the net profits, as defined, from product sales.    
|
| |  | Our September 2004 agreement with Ranbaxy Pharmaceuticals Inc.
    in which we transferred to Ranbaxy the remaining portion of our
    180-day period of market exclusivity for a generic version of
    Monopril-HCT in exchange for a share of Ranbaxys profits
    from the sale of this product for a period of time.
|
| |  | Our October 2004 agreement to market in the United States the
    50mg and 100mg strengths of Genpharms generic version of
    Pletal.                                                                                                                                                                                   

2003




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our January 2003 agreement with Perrigo Company providing for
    our manufacture and supply to Perrigo of our generic versions of
    Claritin-D 24, Claritin RediTabs and Claritin-D 12, as
    store brand OTC products. This agreement followed the FDAs
    determination that the Claritin line of products should be sold
    as OTC products, and not as prescription pharmaceuticals.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | Our July 2003 agreement with Impax Laboratories, Inc. and Teva
    Pharmaceuticals Curacao, N.V. pertaining to the respective ANDAs
    for generic versions of Wellbutrin SR and Zyban. In March 2004
    and May 2004, we relinquished our rights to the 180-day period
    of market exclusivity for generic Wellbutrin SR 150mg and
    generic Zyban, respectively, allowing Impax and other companies
    to gain FDA approval to market their products. Teva launched
    Impaxs generic Wellbutrin SR product in the first quarter
    of 2004 and Impaxs generic Zyban product in the second
    quarter of 2004, and we were entitled to a share of the profits,
    as defined, derived from Tevas sale of such products for a
    180-day period. Our share of profits from sales of generic
    Wellbutrin SR 150mg ended in September 2004 and our share of
    profits from sales of generic Zyban expired in November 2004.
|
| |  | Our September 2003 agreement resolving patent infringement
    litigation with Pfizer Inc. and Alza Corporation concerning our
    ANDAs for the 2.5mg, 5mg and 10mg strengths of Glucotrol XL.
    Pursuant to this agreement, the lawsuits were dismissed and we
    received the right to either market the Glucotrol XL product
    (including any strength thereof) supplied by Pfizer as an
    authorized generic and/or to manufacture and market our ANDA
    product(s) in exchange for a royalty pursuant to a sublicense
    for relevant Alza patents. Though we launched all three
    strengths of Glucotrol XL, supplied by Pfizer, in December 2003,
    we continue to work toward gaining FDA approval to launch our
    own versions of this product.                                                                                                                                                                     
|
| |  | Our October 2003 agreement where we sold our Massachusetts
    aerosol manufacturing operation to Amphastar Pharmaceuticals,
    Inc., a California-based generic and specialty pharmaceutical
    company and agreed, under certain circumstances, to continue to
    purchase certain minimum quantities of albuterol MDI for at
    least one year, which we renewed for another two years in
    November 2004.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Our December 2003 agreement with Teva Pharmaceuticals providing
    for our formulation, submission to the FDA and manufacture of
    certain oral contraceptive products to be marketed in both the
    United States and Canada by Teva as part of its larger product
    line of oral contraceptives.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | Our December 2003 agreement to co-develop and manufacture a
    combination brand product consisting of Takeda Chemical
    Industries, Ltd.s Actos (pioglitazone) and our
    extended-release metformin, each of which products is
    administered once-a-day for the treatment of Type 2
    diabetes.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

5



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2002




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Our October 2002 agreement in which Genpharm and we relinquished
    our shared marketing exclusivity rights to the generic versions
    of the 10mg and 20mg strengths of Prilosec, and accelerated the
    ability of KUDCo to receive FDA approval of the sale of its
    product. Though the amount was higher in the past, this
    agreement gives us 6.25% of KUDCos net profits, as
    defined, from the sale of KUDCos product, which will
    continue until approximately February 2006.



| |                      
| | ---------------------
| | Customer Arrangements

Critical Accounting Policies and Estimates 
Revenue Recognition




| |               
| | --------------
| | Joint Ventures





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | CARAN, which is a 50/50 joint venture with Carlsbad
    Technologies, Inc. Through this joint venture, Carlsbad
    developed and manufactures generic versions of Pepcid, Prozac
    and Mevacor, which we are currently selling under the Andrx
    Pharmaceuticals, Inc. label; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| |  | ANCIRC, which is a 50/50 joint venture with Watson
    Pharmaceuticals, Inc. for the development, manufacture and sale
    of certain generic products. We are currently selling one ANCIRC
    product, a generic version of Oruvail, for which we share
    profits equally with Watson. In November 2000, we became solely
    responsible for all of the additional costs to develop,
    manufacture and sell the six remaining ANCIRC products, and
    Watson became entitled, under certain conditions, to a royalty
    on the net sales we derive from the commercialization of those
    products, including our generic versions of Glucotrol XL.
    Other than Glucotrol XL, we have discontinued our
    development efforts with respect to the ANCIRC products.

Pharmaceutical Distribution Operations






6



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Brand Pharmaceuticals










7



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Note 9 to
Consolidated Financial Statements


Our Proprietary Controlled-Release Drug Delivery
Technologies








| |   |                                                        
| | - | -------------------------------------------------------
| |  | Pelletized Pulsatile Delivery System                   
|
| |  | Single Composition Osmotic Tablet System               
|
| |  | Solubility Modulating Hydrogel System                  
|
| |  | Delayed Pulsatile Hydrogel System                      
|
| |  | Stabilized Pellet Delivery System                      
|
| |  | Stabilized Tablet Delivery System                      
|
| |  | Granulated Modulating Hydrogel System                  
|
| |  | Pelletized Tablet System                               
|
| |  | Porous Tablet System                                   
|
| |  | Modified Antihistamine/ Decongestant Combination System
|
| |  | Pulsatile Hydrogel System                              
|
| |  | Directly Compressible Hydrogel System                  
|
| |  | Modulating Matrix System                               
|
| |  | Pulsatile Enteric Coating System                       
|
| |  | Pelletized Delivery System                             

Patents and Other Intellectual Property Rights




8



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Raw Materials




Manufacturing and Quality










9



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Risk Factors


Risk Factors


Information Systems






| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | Automation of certain labor-intensive administrative processes
    and activities;                             
|
| |  | Optimized manufacturing and distribution business processes;                                                   
|
| |  | Enhanced collaboration with electronic trading partners
    (customers and suppliers);                         
|
| |  | Improved materials management usage and movement;                                                              
|
| |  | Enhanced performance management capabilities through improved
    accuracy and availability of information; and
|
| |  | Enhanced regulatory compliance.                                                                                





10



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Regulation  Pharmaceuticals




| |                                       
| | --------------------------------------
| | ANDA Process  Generic Pharmaceuticals









11



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12



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| |                                    
| | -----------------------------------
| | NDA Process  Brand Pharmaceuticals









13



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Patent Infringement Litigation


Ongoing Patent Litigation










14



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Ongoing Patent Infringement Litigation






| |                           
| | --------------------------
| | Naproxen Sodium (Naprelan)





| |                                 
| | --------------------------------
| | Metoprolol Succinate (Toprol-XL)





| |                 
| | ----------------
| | Sodium Valproate



15



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| |                                 
| | --------------------------------
| | Paroxetine Hydrochloride (Paxil)





| |                      
| | ---------------------
| | Omeprazole (Prilosec)







| |                                               
| | ----------------------------------------------
| | Bupropion Hydrochloride (Wellbutrin SR/ Zyban)





| |                                                                      
| | ---------------------------------------------------------------------
| | Fosinopril Sodium and Fosinopril HCTZ (Monopril and
    Monopril HCT)



16



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Seasonality




Personnel




|                                  |  |              |     |  |         |  |     |       |  |  |           |  |  |       |     |  |  |  |       | 
|--------------------------------- |  | ------------ | --- |  | ------- |  | --- | ----- |  |  | --------- |  |  | ----- | --- |  |  |  | ----- | 
|                                  |  | Distribution |     |  | Generic |  |     | Brand |  |  | Corporate |  |  | Total |    
|                                  |  |              |     |  |         |  |     |       |  |  |           |  |  |       |    
|Sales & Marketing                 |  |              | 242 |  |         |  | 6   |       |  |  | 356       |  |  |       |    |  |  |  | 604   | 
|Research and Development          |  |              |    |  |         |  | 151 |       |  |  | 9         |  |  |       |    |  |  |  | 160   | 
|Manufacturing*                    |  |              |    |  |         |  | 349 |       |  |  |          |  |  |       |    |  |  |  | 349   | 
|Quality and Regulatory Affairs*   |  |              |    |  |         |  | 252 |       |  |  | 3         |  |  |       |    |  |  |  | 255   | 
|Administration                    |  |              | 168 |  |         |  | 69  |       |  |  | 15        |  |  |       | 145 |  |  |  | 397   | 
|Warehouse/ Shipping/ Maintenance* |  |              | 206 |  |         |  | 129 |       |  |  |          |  |  |       |    |  |  |  | 335   | 
|                                  |  |              |     |  |         |  |     |       |  |  |           |  |  |       |    
|                                  |  |              | 616 |  |         |  | 956 |       |  |  | 383       |  |  |       | 145 |  |  |  | 2,100 | 
|                                  |  |              |     |  |         |  |     |       |  |  |           |  |  |       |    






|  |                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------
|* | Though certain of these personnel perform work on both generic
    and brand products, all such personnel are included in the
    generic segment.

17



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RISK FACTORS


You should carefully consider the following factors and other
information contained and incorporated by reference in this
Form 10-K. Any of these risks could adversely affect our
results of operations, financial condition and cash flows. Any
of these events could also cause the market price of our common
stock to decline.


Risks Relating to Andrx




| |                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | As we are dependent on a small number of products, a loss
    of revenues from certain products prior to the introduction of
    significant new products could adversely affect our results of
    operations, financial condition and cash flows.





| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | The pharmaceutical industry is highly competitive, and is
    affected by new technologies, financing and numerous other
    factors.









18



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| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | If we are unable to successfully develop and commercialize
    new products, our operating results will suffer.





| |   |                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | remaining at all times in compliance with regulatory standards
    and the specifications set forth in our ANDAs;                                                                          
|
| |  | scaling-up production to commercial levels in a timely manner;                                                                                                                             
|
| |  | securing, on a timely basis and on commercially reasonable
    terms, all of the raw materials required for the manufacture of
    our products;                                           
|
| |  | receiving requisite regulatory approvals to commercialize our
    products in a timely manner;                                                                                             
|
| |  | avoiding the commercialization delays which may result under the
    regulatory process; and                                                                                               
|
| |  | successfully defending legal actions (including Citizens
    Petitions) brought by our direct competitors or others who seek
    to prevent or delay the commercialization of our products.





| |                                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Litigation claiming that our products infringe the
    proprietary rights of third parties, and other litigation, may
    delay or prevent us from manufacturing and commercializing our
    products or result in substantial damages.







19



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Litigation. Litigation, Patent Infringement
Litigation




| |                                                                   
| | ------------------------------------------------------------------
| | Our business could suffer as a result of manufacturing
    issues.







20



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| |                                                                                                                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to obtain sufficient supplies of raw
    materials from key suppliers that in some cases may be the only
    source of those supplies, our ability to manufacture and market
    our products may be impaired.









| |                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | There are inherent uncertainties involved in the
    estimates, judgments and assumptions used in the preparation of
    our financial statements, and any changes in those estimates,
    judgments and assumptions could have a material adverse effect
    on our financial position and results of operations.



21



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| |                                                                                      
| | -------------------------------------------------------------------------------------
| | If we are unable to adequately protect our technology, our
    business could suffer.



22



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| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | We may need to rely on licenses to proprietary
    technologies, which may be difficult or expensive to
    obtain.





| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | We may have to pay additional tax as a result of audits by
    the Internal Revenue Service.





| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | Our operations could be disrupted if our information
    systems fail or if we are unsuccessful in implementing necessary
    upgrades.





| |                                                                      
| | ---------------------------------------------------------------------
| | The loss of our key personnel could cause our business to
    suffer.



23



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| |                                                                                                                    
| | -------------------------------------------------------------------------------------------------------------------
| | We will continue to incur losses in the brand business
    until we conclude our disposition of this business unit.







| |                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------
| | Our sales of generic products may suffer if the use of
    such products is limited through legislative, regulatory and
    other efforts.





| |   |                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------
| |  | pursuing new patents that could extend patent protection for
    their brand products and delay the launch of generic competition;               
|
| |  | selling the brand product as an authorized generic, either by
    the brand company directly, through an affiliate or by a
    marketing partner;
|
| |  | pursuing pediatric exclusivity for their brand products;                                                                                         
|
| |  | using the Citizens Petition process to request amendments to FDA
    standards;                                                                  
|
| |  | seeking changes to U.S. Pharmacopeia, an organization that
    publishes industry recognized compendia of drug standards;                        
|
| |  | attaching patent extension amendments to unrelated federal
    legislation; and                                                                  
|
| |  | engaging in state-by-state initiatives to enact legislation that
    restricts the substitution of certain generic products.                     





| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | Sales of our generic and brand products may be adversely
    affected by the consolidation or loss of our customers.



24



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| |                                                                                                                                  
| | ---------------------------------------------------------------------------------------------------------------------------------
| | Our distribution business concentrates on generic products
    and is therefore subject to the risks of the generic
    industry.





| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our business could suffer if we experience difficulties in
    integrating any technologies, products and businesses we
    acquire, or if we incur significant charges to earnings with
    respect to such acquisitions.







| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | Our business could suffer from rising insurance costs, the
    unavailability of insurance or other events.







25



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| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | We have entered into a consent decree with the SEC, and
    future SEC investigations could result in the imposition of
    severe penalties.



Risks Relating to the Pharmaceutical Industry Generally and
to Andrx Specifically




| |                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our failure to comply with FDA, Drug Enforcement
    Administration (DEA), licensure and other regulatory
    requirements could adversely affect our business.







26



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##### 







| |                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------
| | There is no assurance that our products will receive FDA
    approval or enjoy the benefits of the 180-day exclusivity
    period.











| |                                                                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We are subject to Therapeutic Equivalent Substitution,
    Medicaid Reimbursement and Price Reporting, and we and other
    drug manufacturers may be the target of governmental
    investigations and related pricing litigation.



27



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| |                                          
| | -----------------------------------------
| | We are subject to Post-Marketing Actions.





| |                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------
| | Federal regulation of arrangements between manufacturers
    of brand and generic products could adversely affect our
    business.





| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | The changing United States healthcare environment may
    impact our revenue and income.



28



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Risks Associated With Investment in Our Common Stock




| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our stock price has experienced volatility, which may
    affect our stockholders ability to sell their stock at an
    advantageous price and could impact the market value.





| |   |                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | new product introductions;                                                                                                                                                                        
|
| |  | the purchasing practices of our customers;                                                                                                                                                        
|
| |  | regulatory issues, including receipt of new drug approvals from
    the FDA, compliance with FDA or other agency regulations or the
    lack or failure of either of the foregoing;               
|
| |  | the ability to manufacture our products and product candidates;                                                                                                                                   
|
| |  | changes in the degree of competition for our products;                                                                                                                                            
|
| |  | the announcement of technological innovations or new commercial
    products by our competitors or us;                                                                                            
|
| |  | changes in governmental regulation affecting our business
    environment;                                                                                                                        
|
| |  | any future issuances of our common stock or other securities;                                                                                                                                     
|
| |  | the issuance of new patents or other proprietary rights;                                                                                                                                          
|
| |  | the announcement of earnings;                                                                                                                                                                     
|
| |  | the publication of earnings estimates or other research reports
    and speculation in the press or investment community;                                                                         
|
| |  | the loss of key personnel;                                                                                                                                                                        
|
| |  | the inability to acquire sufficient supplies of finished
    products or raw materials;                                                                                                           
|
| |  | litigation and/or threats of litigation;                                                                                                                                                          
|
| |  | failure or delay in meeting milestones in collaborative
    arrangements expected to result in revenues;                                                                                          
|
| |  | unanticipated expenses from joint ventures not under our control;                                                                                                                                 
|
| |  | publicity regarding actual or potential clinical results with
    respect to products we have under development or with respect to
    any consent decree to which we are, or may become, subject;
|
| |  | any outbreak or escalation of hostilities;                                                                                                                                                        
|
| |  | political developments or proposed legislation in the
    pharmaceutical or healthcare industry;                                                                                                  
|
| |  | general market and economic conditions; and                                                                                                                                                       
|
| |  | divestiture or acquisition of businesses or products.                                                                                                                                             



29



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##### 





| |                                                                  
| | -----------------------------------------------------------------
| | Investors should not look to dividends as a source of
    income.





| |                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------
| | We may issue additional securities, which would lead to
    dilution of our issued and outstanding common stock.





| |                                                                           
| | --------------------------------------------------------------------------
| | Our stockholder rights plan may deter a third party from
    acquiring us.





| |                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Delaware law and our charter documents contain provisions
    that could discourage or prevent a potential takeover of our
    company that might otherwise result in our stockholders
    receiving a premium over the market price of their
    shares.



30



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##### 



EXECUTIVE OFFICERS




|                      |  |     |    |  |          |                                                                                 |               |  |      | 
|--------------------- |  | --- | -- |  | -------- | ------------------------------------------------------------------------------- | ------------- |  | ---- | 
|                      |  |     |    |  |          | Executive                                                                       |              
|Name                  |  | Age |    |  | Position |                                                                                 | Officer Since | 
|                      |  |     |    |  |          |                                                                                 |               | 
|Thomas P. Rice        |  |     | 54 |  |          | Andrx Corporation  Chief Executive Officer and a
    Director                  |               |  | 2004 | 
|Angelo C. Malahias    |  |     | 43 |  |          | Andrx Corporation  President                                                   |               |  | 1996 | 
|Scott Lodin           |  |     | 49 |  |          | Andrx Corporation  Executive Vice President, General
    Counsel and Secretary |               |  | 1994 | 
|John M. Hanson        |  |     | 52 |  |          | Andrx Corporation  Senior Vice President and Chief
    Financial Officer       |               |  | 2004 | 
|Thomas R. Giordano    |  |     | 54 |  |          | Andrx Corporation  Senior Vice President and Chief
    Information Officer     |               |  | 2004 | 
|Ian J. Watkins        |  |     | 42 |  |          | Andrx Corporation  Senior Vice President of Human
    Resources                |               |  | 2003 | 
|Lawrence J. Rosenthal |  |     | 59 |  |          | Andrx Pharmaceuticals, Inc.  President                                         |               |  | 2002 | 
|Daniel H. Movens      |  |     | 46 |  |          | Anda, Inc.  President                                                          |               |  | 2002 | 

Thomas P. Rice


Angelo C. Malahias


Scott Lodin


John M. Hanson


Thomas R. Giordano


31



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##### 



Ian J. Watkins


Lawrence J. Rosenthal


Daniel H. Movens






32



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##### 





|        |           
|------- | ----------
|Item 2. | Properties



|                                                               |  |        |        |  |             |                                                |         |               
|-------------------------------------------------------------- |  | ------ | ------ |  | ----------- | ---------------------------------------------- | ------- | --------------
|                                                               |  | Owned  |        |  |             |                                                |        
|                                                               |  | or     |        |  |             |                                                |        
|Location                                                       |  | Leased |        |  | Primary Use |                                                | Segment
|                                                               |  |        |        |  |             |                                                |        
|Davie, Florida  4955 Orange Drive                             |  |        | Owned  |  |             | Manufacturing, R&D, Warehouse, Administration  |         | Generic       
|Davie, Florida  4001 SW 47th Avenue                           |  |        | Leased |  |             | Manufacturing, Administration                  |         | Generic       
|Davie, Florida  4011 SW 47th Avenue                           |  |        | Leased |  |             | Manufacturing, Warehouse, Administration       |         | Generic       
|Sunrise, Florida  Marina West Warehouse                       |  |        | Leased |  |             | Warehouse, Administration                      |         | Generic       
|Weston, Florida  2945 W Corporate Lakes Blvd
    (Building E) |  |        | Leased |  |             | Manufacturing, R&D, Warehouse, Administration  |         | Generic       
|Morrisville, North Carolina                                    |  |        | Owned  |  |             | Manufacturing  (Presently Unoccupied)         |         | Generic       
|Davie, Florida  4360 Oaks Road                                |  |        | Leased |  |             | Warehouse                                      |         | Generic       
|Davie, Florida  4380 Oaks Road                                |  |        | Leased |  |             | Warehouse                                      |         | Generic       
|Ft. Lauderdale, FL  4491 S. State Rd.
    7 Suite 200         |  |        | Leased |  |             | Administration                                 |         | Generic       
|Weston, Florida  2915 Weston Road                             |  |        | Leased |  |             | Warehouse, Sales and Marketing, Administration |         | Distribution  
|Groveport, Ohio                                                |  |        | Leased |  |             | Warehouse, Administration                      |         | Distribution  
|Grand Island, New York                                         |  |        | Owned  |  |             | Administration, Sales and Marketing            |         | Distribution  
|Hackensack, New Jersey                                         |  |        | Leased |  |             | Administration                                 |         | Brand, Generic
|Weston, Florida  3040 Universal                               |  |        | Leased |  |             | Sales and Marketing, Administration            |         | Brand         
|Plantation, Florida                                            |  |        | Leased |  |             | Administration, Sales and Marketing            |         | Generic       





|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Item 1 Patent
Infringement Litigation


Ongoing Other Litigation




| |                        
| | -----------------------
| | Drug Pricing Litigation



33



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##### 







| |                                 
| | --------------------------------
| | Cardizem CD Antitrust Litigation











| |                                        
| | ---------------------------------------
| | Wellbutrin SR Related Securities Claims



34



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##### 







| |               
| | --------------
| | PPA Litigation





| |                           
| | --------------------------
| | Lemelson Patent Litigation



Other Pending Matters




Litigation Resolved in 2004




| |                                 
| | --------------------------------
| | Tiazac Related Securities Claims



35



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##### 







| |                     
| | --------------------
| | Trademark Litigation





| |                    
| | -------------------
| | Famotidine (Pepcid)





| |                           
| | --------------------------
| | Burnett Employment Dispute





| |                                       
| | --------------------------------------
| | Alpharma Breach of Contract Litigation





|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



36



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##### 



PART II




|        |                                                                          
|------- | -------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity and Related
    Stockholder Matters

(A)     Market Information






|               |  |                    |       |  |     |   |       | 
|-------------- |  | ------------------ | ----- |  | --- | - | ----- | 
|               |  | Andrx Common       |      
|               |  | Stock Market Price |      
|               |  |                    |      
|               |  | High               |       |  | Low |  
|               |  |                    |       |  |     |  
|2004           |  |                    |       |  |     |   |       | 
|First Quarter  |  | $                  | 30.87 |  |     | $ | 23.55 | 
|Second Quarter |  |                    | 29.35 |  |     |   | 22.24 | 
|Third Quarter  |  |                    | 28.10 |  |     |   | 16.95 | 
|Fourth Quarter |  |                    | 23.63 |  |     |   | 14.09 | 
|2003           |  |                    |       |  |     |   |       | 
|First Quarter  |  | $                  | 16.83 |  |     | $ | 7.68  | 
|Second Quarter |  |                    | 24.20 |  |     |   | 11.10 | 
|Third Quarter  |  |                    | 25.90 |  |     |   | 16.32 | 
|Fourth Quarter |  |                    | 24.05 |  |     |   | 17.00 | 



(B)     Holders




(C)     Dividends




37



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##### 



(D)     Securities Authorized for
Issuance under Equity Compensation Plans




|                                                            |                                                   |                   |           |           |                   |                      |                     |                      |     |  |           |           | 
|----------------------------------------------------------- | ------------------------------------------------- | ----------------- | --------- | --------- | ----------------- | -------------------- | ------------------- | -------------------- | --- |  | --------- | --------- | 
|                                                            |                                                   |                   |           |           |                   | Number of Securities |                    
|                                                            |                                                   | Number of         |           |           |                   |                      | Remaining Available |                     
|                                                            |                                                   | Securities to be  |           |           |                   |                      | for Future Issuance |                     
|                                                            |                                                   | Issued Upon       |           |           | Weighted-average  |                      |                     | Under Equity         |    
|                                                            |                                                   | Exercise of       |           |           | Exercise Price of |                      |                     | Compensation Plans   |    
|                                                            |                                                   | Outstanding       |           |           | Outstanding       |                      |                     | (Excluding           |    
|                                                            |                                                   | Options, Warrants |           |           | Options, Warrants |                      |                     | Securities Reflected |    
|                                                            |                                                   | and Rights        |           |           | and Rights        |                      |                     | in Column (a))       |    
|Plan Category                                               |                                                   | (a)               |           |           | (b)               |                      |                     | (c)                  |    
|                                                            |                                                   |                   |           |           |                   |                      |                     |                      |    
|Equity compensation plans approved by security holders:     |                                                   |                   |           |           |                   |                      |                     |                      |     |  |           |          
|                                                            | 1993 Stock Option Plan and 2000 Stock Option Plan |                   |           | 7,256,200 | (2)               |                      | $                   | 32.94                | (3) |  |           | 5,716,500 | 
|                                                            | Employee Stock Purchase Plan                      |                   |           |          |                   |                      |                     | N/A                  |     |  |           | 388,500   | 
|Equity compensations plans not approved by security holders |                                                   |                   |          |           |                   |                      | N/A                 |                      |     |  | N/A       |          
|                                                            |                                                   |                   |           |           |                   |                      |                     |                      |    
|Total                                                       |                                                   |                   | 7,256,200 | (2)       |                   | $                    | 32.94               | (3)                  |     |  | 6,105,000 |          






|    |                                                                                                                                                                                                                                                                                            
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | On March 2, 2005, our board of directors accelerated the
    vesting of all of our out-of-the-money unvested stock options
    awarded under our option plans which have an exercise price
    greater than $21.57, which was the closing price of Andrx common
    stock on March 2, 2005.
|   
|(2) | Includes an aggregate of 460,500 RSUs. Excludes approximately
    2,900 options to purchase Andrx common stock with exercise
    prices ranging from $314 to $18,500 per share, as a result
    of the May 2002 conversion of Cybear common stock into Andrx
    common stock.             
|   
|(3) | Weighted average exercise price of outstanding options excludes
    RSUs and the 2,900 Andrx common stock options converted in
    the May 2002 Cybear conversion with exercise prices ranging from
    $314 to $18,500.                                                                   





|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data





|        |                                                                                        
|------- | ---------------------------------------------------------------------------------------
|Item 7. | Managements Discussion & Analysis of
    Financial Condition and Results of Operations

OVERVIEW




| |             
| | ------------
| | Our Business





| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | develops, manufactures and commercializes generic versions of
    controlled-release, niche and immediate-release pharmaceutical
    products, including oral contraceptives; and                                               
|
| |  | distributes pharmaceuticals, primarily generics, which have been
    commercialized by others, as well as our own, primarily to
    independent pharmacies, pharmacy chains, pharmacy buying groups
    and physicians offices.



38



---



##### 











tm






39



---



##### 









| |                        
| | -----------------------
| | Key Performance Factors











| |                  
| | -----------------
| | Cash Requirements



40



---



##### 















|                                                                            |  |                       |        |           |        |   |        |       |  |     |        |  |           |         |        |  |  |   |        | 
|--------------------------------------------------------------------------- |  | --------------------- | ------ | --------- | ------ | - | ------ | ----- |  | --- | ------ |  | --------- | ------- | ------ |  |  | - | ------ | 
|                                                                            |  | Payment due by Period |       
|                                                                            |  |                       |       
|                                                                            |  |                       |        | Less Than |        |   | 1-3    |       |  | 3-5 |        |  | More Than |        
|Contractual Obligations                                                     |  | Total                 |        |           | 1 Year |   |        | Years |  |     | Years  |  |           | 5 Years |       
|                                                                            |  |                       |        |           |        |   |        |       |  |     |        |  |           |         |       
|                                                                            |  | ($ in thousands)      |       
|Capital lease obligations                                                   |  | $                     | 1,589  |           |        | $ | 863    |       |  | $   | 726    |  |           | $       |       |  |  | $ |       | 
|Operating lease obligations                                                 |  |                       | 64,323 |           |        |   | 11,833 |       |  |     | 20,964 |  |           |         | 14,274 |  |  |   | 17,252 | 
|Purchase obligations                                                        |  |                       | 22,433 |           |        |   | 13,691 |       |  |     | 8,742  |  |           |         |       |  |  |   |       | 
|Other long-term liabilities reflected on the Consolidated
    Balance Sheet |  |                       | 10,974 |           |        |   |       |       |  |     | 10,210 |  |           |         | 210    |  |  |   | 554    | 
|                                                                            |  |                       |        |           |        |   |        |       |  |     |        |  |           |         |       
|Total                                                                       |  | $                     | 99,319 |           |        | $ | 26,387 |       |  | $   | 40,642 |  |           | $       | 14,484 |  |  | $ | 17,806 | 
|                                                                            |  |                       |        |           |        |   |        |       |  |     |        |  |           |         |       





| |                           
| | --------------------------
| | Forward Looking Statements



41



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##### 









| |                                                                               
| | ------------------------------------------------------------------------------
| | The Equity Reorganization and 2002 Conversion of Cybear
    Group Common Stock





CRITICAL ACCOUNTING POLICIES AND ESTIMATES






| |   |                                                                       
| | - | ----------------------------------------------------------------------
| |  | revenue recognition, including sales returns and allowances,          
|
| |  | allowance for doubtful accounts receivable,                           
|
| |  | inventories and cost of goods sold,                                   
|
| |  | useful life or impairment of goodwill and other long-lived
    assets,

42



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##### 





| |   |                                             
| | - | --------------------------------------------
| |  | litigation settlements and related accruals,
|
| |  | income taxes, and                           
|
| |  | self-insurance programs.                    







| |                                                                       
| | ----------------------------------------------------------------------
| | Revenue Recognition, including Sales Returns and
    Allowances (SRAs)













43



---



##### 







Returns




Chargebacks




44



---



##### 





Shelf Stock Adjustments












45



---



##### 





| |                                           
| | ------------------------------------------
| | Allowance for Doubtful Accounts Receivable







|                                                                             |  |                          |        |   |      |   |         |      |  |   |        |  
|---------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                             |  | Years Ended December 31, |       
|                                                                             |  |                          |       
|                                                                             |  | 2004                     |        |   | 2003 |   |         | 2002 | 
|                                                                             |  |                          |        |   |      |   |         |      | 
|                                                                             |  | ($ in thousands)         |       
|Beginning of year                                                            |  | $                        | 7,734  |   |      | $ | 15,495  |      |  | $ | 7,663  |  
|Provision for (recoveries of) allowance for doubtful accounts
    receivable |  |                          | (273   | ) |      |   | 4,340   |      |  |   | 13,178 |  
|Write-offs, net                                                              |  |                          | (2,758 | ) |      |   | (12,101 | )    |  |   | (5,346 | )
|                                                                             |  |                          |        |   |      |   |         |      | 
|End of year                                                                  |  | $                        | 4,703  |   |      | $ | 7,734   |      |  | $ | 15,495 |  
|                                                                             |  |                          |        |   |      |   |         |      | 





| |                                   
| | ----------------------------------
| | Inventories and Cost of Goods Sold



46



---



##### 







| |                       
| | ----------------------
| | Pre-Launch Inventories







47



---



##### 





|                |  |                  |        |  |      |   |        | 
|--------------- |  | ---------------- | ------ |  | ---- | - | ------ | 
|                |  | December 31,     |       
|                |  |                  |       
|                |  | 2004             |        |  | 2003 |  
|                |  |                  |        |  |      |  
|                |  | ($ in thousands) |       
|Raw materials   |  | $                | 7,603  |  |      | $ | 9,232  | 
|Work in process |  |                  | 2,623  |  |      |   | 2,828  | 
|Finished goods  |  |                  | 1,519  |  |      |   | 397    | 
|                |  |                  |        |  |      |  
|                |  | $                | 11,745 |  |      | $ | 12,457 | 
|                |  |                  |        |  |      |  





| |                              
| | -----------------------------
| | Charges to Cost of Goods Sold



|                                                                  |                                                 |                          |        |        |      |   |        |       |  |   |         |        | 
|----------------------------------------------------------------- | ----------------------------------------------- | ------------------------ | ------ | ------ | ---- | - | ------ | ----- |  | - | ------- | ------ | 
|                                                                  |                                                 | Years Ended December 31, |       
|                                                                  |                                                 |                          |       
|                                                                  |                                                 | 2004                     |        |        | 2003 |   |        | 2002  | 
|                                                                  |                                                 |                          |        |        |      |   |        |       | 
|                                                                  |                                                 | ($ in thousands)         |       
|Production related write-offs                                     |                                                 | $                        | 18,712 |        |      | $ | 11,509 |       |  | $ | 12,246  |       
|Write-offs of pre-launch inventories                              |                                                 |                          | 11,319 |        |      |   | 6,903  |       |  |   | 66,779  |       
|Impairment charges:                                               |                                                 |                          |        |        |      |   |        |       |  |   |         |       
|                                                                  | North Carolina facility                         |                          |        | 14,535 |      |   |        |      |  |   |         |       | 
|                                                                  | Entex product rights                            |                          |        | 3,500  |      |   |        |      |  |   |         |       | 
|                                                                  | Massachusetts facility, inventory and severance |                          |        |       |      |   |        | 7,851 |  |   |         | 11,750 | 
|                                                                  | Florida machinery and equipment                 |                          |        |       |      |   |        | 3,946 |  |   |         |       | 
|Under-utilization and inefficiencies of manufacturing operations: |                                                 |                          |        |        |      |   |        |       |  |   |         |       
|                                                                  | Florida and North Carolina facilities           |                          |        | 8,199  |      |   |        | 4,650 |  |   |         | 5,838  | 
|                                                                  | Massachusetts aerosol facility                  |                          |        |       |      |   |        | 4,264 |  |   |         | 7,876  | 
|                                                                  |                                                 |                          |        |        |      |   |        |       | 
|                                                                  |                                                 | $                        | 56,265 |        |      | $ | 39,123 |       |  | $ | 104,489 |       
|                                                                  |                                                 |                          |        |        |      |   |        |       | 



48



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##### 





| |                                                                      
| | ---------------------------------------------------------------------
| | Useful life or Impairment of Goodwill and Other Long-Lived
    Assets



| |         
| | --------
| | Goodwill





| |                        
| | -----------------------
| | Other Intangible Assets







| |                   
| | ------------------
| | Impairment Charges





49



---



##### 











| |                                     
| | ------------------------------------
| | Assets and Liabilities Held For Sale





| |                                            
| | -------------------------------------------
| | Litigation Settlements and Related Accruals







| |             
| | ------------
| | Income Taxes



50



---



##### 



















| |                        
| | -----------------------
| | Self-Insurance Programs



51



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


CONSOLIDATED SELECTED FINANCIAL DATA




|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |         |         |         |  |         |         |         | 
|------------------------------------ | --------------------------------------------- | -------------------------------------------------------- | ------- | ------- | --------- |  | ------- | ------- | --------- |  | ------- | ------- | -------- | ---- | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                     |                                               | Years Ended December 31,                                 |        
|                                     |                                               |                                                          |        
|                                     |                                               | 2004                                                     |         |         | 2003      |  |         | 2002    |           |  | 2001    |         |          | 2000 |        
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | ($ in thousands, except for share and per share amounts) |        
|STATEMENTS OF OPERATIONS DATA(1)     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |         |         |         |  |         |        
|Revenues:                            |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |         |         |         |  |         |        
|                                     | Distributed products                          |                                                          | $       | 676,312 |           |  | $       | 657,098 |           |  | $       | 534,618 |          |      | $       | 495,241 |         |  | $       | 329,110 |        
|                                     | Andrx products                                |                                                          |         | 421,763 |           |  |         | 301,652 |           |  |         | 209,407 |          |      |         | 229,003 |         |  |         | 175,428 |        
|                                     | Licensing and royalties                       |                                                          |         | 46,765  |           |  |         | 80,080  |           |  |         | 17,340  |          |      |         | 13,648  |         |  |         | 14,966  |        
|                                     | Other                                         |                                                          |         | 247     |           |  |         | 7,508   |           |  |         | 9,615   |          |      |         | 11,149  |         |  |         | 456     |        
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | Total revenues                                           |         |         | 1,145,087 |  |         |         | 1,046,338 |  |         |         | 770,980  |      |         |         | 749,041 |  |         |         | 519,960 | 
|Cost of goods sold                   |                                               |                                                          | 799,714 |         |           |  | 704,212 |         |           |  | 623,399 |         |          |      | 483,834 |         |         |  | 306,508 |        
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | Gross profit                                             |         |         | 345,373   |  |         |         | 342,126   |  |         |         | 147,581  |      |         |         | 265,207 |  |         |         | 213,452 | 
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|Operating expenses:                  |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |         |         |         |  |         |        
|                                     | Selling, general and administrative(2)        |                                                          |         | 209,003 |           |  |         | 213,274 |           |  |         | 189,923 |          |      |         | 141,082 |         |  |         | 77,477  |        
|                                     | Research and development                      |                                                          |         | 40,505  |           |  |         | 52,235  |           |  |         | 51,479  |          |      |         | 52,846  |         |  |         | 45,467  |        
|                                     | Litigation settlements & other charges        |                                                          |         | 7,800   |           |  |         | 8,750   |           |  |         | 72,833  |          |      |         | 14,759  |         |  |         | 7,322   |        
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | Total operating expenses                                 |         |         | 257,308   |  |         |         | 274,259   |  |         |         | 314,235  |      |         |         | 208,687 |  |         |         | 130,266 | 
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | Income (loss) from operations                            |         |         | 88,065    |  |         |         | 67,867    |  |         |         | (166,654 | )    |         |         | 56,520  |  |         |         | 83,186  | 
|Other income (expense):              |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |         |         |         |  |         |        
|                                     | Equity in earnings (losses) of joint ventures |                                                          |         | 4,504   |           |  |         | 5,135   |           |  |         | 3,697   |          |      |         | 1,025   |         |  |         | (1,202  | )      
|                                     | Interest income                               |                                                          |         | 4,060   |           |  |         | 2,242   |           |  |         | 5,420   |          |      |         | 11,386  |         |  |         | 13,039  |        
|                                     | Interest expense                              |                                                          |         | (2,567  | )         |  |         | (2,641  | )         |  |         | (200    | )        |      |         |        |         |  |         | (767    | )      
|                                     | Gain on sale of assets                        |                                                          |         |        |           |  |         | 5,605   |           |  |         | 5,094   |          |      |         |        |         |  |         |        |        
|                                     | Minority interest in Cybear                   |                                                          |         |        |           |  |         |        |           |  |         |        |          |      |         |        |         |  |         | 4,146   |        
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | Income (loss) before income taxes                        |         |         | 94,062    |  |         |         | 78,208    |  |         |         | (152,643 | )    |         |         | 68,931  |  |         |         | 98,402  | 
|Provision (benefit) for income taxes |                                               |                                                          | 28,403  |         |           |  | 30,031  |         |           |  | (60,826 | )       |          |      | 31,385  |         |         |  | 39,870  |        
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        
|                                     |                                               | Net income (loss)                                        |         | $       | 65,659    |  |         | $       | 48,177    |  |         | $       | (91,817  | )    |         | $       | 37,546  |  |         | $       | 58,532  | 
|                                     |                                               |                                                          |         |         |           |  |         |         |           |  |         |         |          |      |        



52



---



##### 



Consolidated Selected Financial Data (Continued)


|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |           |            |         |   |           |            |        |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | -------------------------------------------------------- | ------ | ---------- | ------ | - | ------ | ---------- | ------ | - | --------- | ---------- | ------- | ---- | --------- | ---------- | ------- | - | --------- | ---------- | ------ | -
|                                                                                                                                                                    |         | Years Ended December 31,                                 |       
|                                                                                                                                                                    |         |                                                          |       
|                                                                                                                                                                    |         | 2004                                                     |        |            | 2003   |   |        | 2002       |        |   | 2001      |            |         | 2000 |          
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|                                                                                                                                                                    |         | ($ in thousands, except for share and per share amounts) |       
|EARNINGS (LOSS) PER SHARE:                                                                                                                                          |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |           |            |         |   |           |           
|ANDRX GROUP COMMON STOCK(3)(4)                                                                                                                                      |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |           |            |         |   |           |           
|Net income (loss) allocated to Andrx Group (including Cybear
    Group from January 1, 2000 through September 6,
    2000 & May 18, 2002 through December 31, 2004) |         | $                                                        | 65,659 |            |        | $ | 48,177 |            |        | $ | (85,873   | )          |         | $    | 72,862    |            |         | $ | 66,873    |           
|Premium on Conversion of Cybear Group common stock                                                                                                                  |         |                                                          |       |            |        |   |       |            |        |   | (526      | )          |         |      |          |            |         |   |          |           
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|                                                                                                                                                                    |         | Total net income (loss) allocated to Andrx Group         |        | $          | 65,659 |   |        | $          | 48,177 |   |           | $          | (86,399 | )    |           | $          | 72,862  |   |           | $          | 66,873 |  
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|Net income (loss) per share of Andrx Group common stock                                                                                                             |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |           |            |         |   |           |           
|                                                                                                                                                                    | Basic   |                                                          | $      | 0.90       |        |   | $      | 0.67       |        |   | $         | (1.22      | )       |      | $         | 1.04       |         |   | $         | 0.99       |       
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|                                                                                                                                                                    | Diluted |                                                          | $      | 0.89       |        |   | $      | 0.66       |        |   | $         | (1.22      | )       |      | $         | 1.01       |         |   | $         | 0.95       |       
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|Weighted average shares of Andrx Group common stock outstanding                                                                                                     |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |           |            |         |   |           |           
|                                                                                                                                                                    | Basic   |                                                          |        | 72,740,000 |        |   |        | 71,892,000 |        |   |           | 70,876,000 |         |      |           | 69,998,000 |         |   |           | 67,756,000 |       
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|                                                                                                                                                                    | Diluted |                                                          |        | 73,530,000 |        |   |        | 72,655,000 |        |   |           | 70,876,000 |         |      |           | 72,243,000 |         |   |           | 70,456,000 |       
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|CYBEAR GROUP COMMON STOCK(4)(5)                                                                                                                                     |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |           |            |         |   |           |           
|Net loss allocated to Cybear Group (from September 7, 2000
    through May 17, 2002)                                                                                |         |                                                          |        |            |        |   |        |            |        | $ | (5,944    | )          |         | $    | (35,316   | )          |         | $ | (8,341    | )         
|Premium on Conversion of Cybear Group common stock                                                                                                                  |         |                                                          |        |            |        |   |        |            |        |   | 526       |            |         |      |          |            |         |   |          |           
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|                                                                                                                                                                    |         | Total net loss allocated to Cybear Group                 |        |            |        |   |        |            |        |   |           | $          | (5,418  | )    |           | $          | (35,316 | ) |           | $          | (8,341 | )
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|Basic and diluted net loss per share of Cybear Group common stock                                                                                                   |         |                                                          |        |            |        |   |        |            |        | $ | (0.80     | )          |         | $    | (6.09     | )          |         | $ | (2.19     | )         
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          
|Basic and diluted weighted average shares of Cybear Group common
    stock outstanding                                                                              |         |                                                          |        |            |        |   |        |            |        |   | 6,743,000 |            |         |      | 5,802,000 |            |         |   | 3,801,000 |           
|                                                                                                                                                                    |         |                                                          |        |            |        |   |        |            |        |   |           |            |         |      |          



53



---



##### 



Consolidated Selected Financial Data (Continued)


|                      |                                |                  |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |         | 
|--------------------- | ------------------------------ | ---------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------- |  |  | - | ------- | 
|                      |                                | December 31,     |  
|                      |                                |                  |  
|                      |                                | 2004             |   |         | 2003 |  |   | 2002    |  |  | 2001 |         |  | 2000 |  
|                      |                                |                  |   |         |      |  |   |         |  |  |      |         |  |      |  
|                      |                                | ($ in thousands) |  
|BALANCE SHEET DATA(1) |                                |                  |   |         |      |  |   |         |  |  |      |         |  |      |   |         |  |  |   |        
|                      | Cash and cash equivalents      |                  | $ | 42,290  |      |  | $ | 67,498  |  |  | $    | 26,741  |  |      | $ | 15,241  |  |  | $ | 48,059  | 
|                      | Investments available-for-sale |                  |   | 167,777 |      |  |   | 137,625 |  |  |      | 70,923  |  |      |   | 230,183 |  |  |   | 288,750 | 
|                      | Total assets                   |                  |   | 989,713 |      |  |   | 958,446 |  |  |      | 789,479 |  |      |   | 789,214 |  |  |   | 669,416 | 
|                      | Retained earnings              |                  |   | 197,874 |      |  |   | 132,215 |  |  |      | 84,038  |  |      |   | 176,381 |  |  |   | 138,835 | 
|                      | Total stockholders equity     |                  |   | 698,761 |      |  |   | 622,901 |  |  |      | 565,707 |  |      |   | 647,894 |  |  |   | 559,797 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Certain prior year amounts have been reclassified to conform to
    the current year presentation. We reclassified from cash and
    cash equivalents to investments available-for-sale $42,750,
    $9,050, $47,070, and $67,550 as of December 31, 2003, 2002,
    2001, and 2000, respectively. We reclassified royalties on our
    generic version of Cardizem CD from selling, general and
    administrative to cost of goods sold in the amounts of $3,811,
    $3,330, $4,239 and $5,033 for the years ended December 31,
    2003, 2002, 2001, and 2000, respectively.
|   
|(2) | In 2002, Andrx adopted Statement of Financial Accounting
    Standards No. 142 Goodwill and Other Intangible
    Assets which resulted in goodwill no longer being subject
    to amortization. Goodwill amortization expense in 2001 and 2000
    was $4,967 and $1,850, respectively.                                                                                                                                                                                                                                                                                       
|   
|(3) | Andrx Group share and per share amounts reflect Andrxs
    March 2000 two-for-one stock split of Andrx common stock
    effected in the form of 100% stock dividends.                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|(4) | Effective May 17, 2002, all outstanding shares of Cybear
    Group common stock were converted to Andrx Group common stock.
    For periods subsequent to the May 2002 conversion, Andrx will
    only report earnings (loss) per share for Andrx Group common
    stock, which includes all of the former Cybear operating results
    from the effective date of the May 2002 conversion, and will no
    longer report separate earnings (loss) per share for the former
    Cybear Group common stock.                                                                      
|   
|(5) | The basic and diluted weighted average shares of Cybear common
    stock outstanding and diluted net loss per share of Cybear
    common stock, included herein for the period from
    January 1, 2002 to May 17, 2002, and years ended
    December 31, 2001 and 2000, reflect the July 31, 2001
    one-for-four reverse stock split for Cybear common stock.                                                                                                                                                                                                                

54



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


RESULTS OF OPERATIONS


Revenues and Gross Profit (Loss)


|                              |  |                          |           |   |      |   |           |      |  |   |         |   
|----------------------------- |  | ------------------------ | --------- | - | ---- | - | --------- | ---- |  | - | ------- | --
|                              |  | Years Ended December 31, |          
|                              |  |                          |          
|                              |  | 2004                     |           |   | 2003 |   |           | 2002 | 
|                              |  |                          |           |   |      |   |           |      | 
|                              |  | ($ in thousands)         |          
|Distributed Products          |  |                          |           |   |      |   |           |      |  |   |         |   
|Gross revenues                |  | $                        | 706,682   |   |      | $ | 684,549   |      |  | $ | 558,720 |   
|SRAs                          |  |                          | 30,370    |   |      |   | 27,451    |      |  |   | 24,102  |   
|SRAs as a % of gross revenues |  |                          | 4.3       | % |      |   | 4.0       | %    |  |   | 4.3     | % 
|Net revenues                  |  |                          | 676,312   |   |      |   | 657,098   |      |  |   | 534,618 |   
|Gross profit                  |  |                          | 124,778   |   |      |   | 120,229   |      |  |   | 100,968 |   
|Gross margin                  |  |                          | 18.4      | % |      |   | 18.3      | %    |  |   | 18.9    | % 
|Andrx Products  Generic      |  |                          |           |   |      |   |           |      |  |   |         |   
|Gross revenues                |  | $                        | 477,206   |   |      | $ | 378,468   |      |  | $ | 299,105 |   
|SRAs                          |  |                          | 132,839   |   |      |   | 123,454   |      |  |   | 115,232 |   
|SRAs as a % of gross revenues |  |                          | 27.8      | % |      |   | 32.6      | %    |  |   | 38.5    | % 
|Net revenues                  |  |                          | 344,367   |   |      |   | 255,014   |      |  |   | 183,873 |   
|Gross profit                  |  |                          | 126,312   |   |      |   | 115,629   |      |  |   | 34,518  |   
|Gross margin                  |  |                          | 36.7      | % |      |   | 45.3      | %    |  |   | 18.8    | % 
|Andrx Products  Brand        |  |                          |           |   |      |   |           |      |  |   |         |   
|Gross revenues                |  | $                        | 103,104   |   |      | $ | 58,162    |      |  | $ | 30,833  |   
|SRAs                          |  |                          | 25,708    |   |      |   | 11,524    |      |  |   | 5,299   |   
|SRAs as a % of gross revenues |  |                          | 24.9      | % |      |   | 19.8      | %    |  |   | 17.2    | % 
|Net revenues                  |  |                          | 77,396    |   |      |   | 46,638    |      |  |   | 25,534  |   
|Gross profit                  |  |                          | 47,271    |   |      |   | 33,794    |      |  |   | 12,271  |   
|Gross margin                  |  |                          | 61.1      | % |      |   | 72.5      | %    |  |   | 48.1    | % 
|Andrx Products  Total        |  |                          |           |   |      |   |           |      |  |   |         |   
|Gross revenues                |  | $                        | 580,310   |   |      | $ | 436,630   |      |  | $ | 329,938 |   
|SRAs                          |  |                          | 158,547   |   |      |   | 134,978   |      |  |   | 120,531 |   
|SRAs as a % of gross revenues |  |                          | 27.3      | % |      |   | 30.9      | %    |  |   | 36.5    | % 
|Net revenues                  |  |                          | 421,763   |   |      |   | 301,652   |      |  |   | 209,407 |   
|Gross profit                  |  |                          | 173,583   |   |      |   | 149,423   |      |  |   | 46,789  |   
|Gross margin                  |  |                          | 41.2      | % |      |   | 49.5      | %    |  |   | 22.3    | % 
|TOTAL PRODUCT REVENUES        |  |                          |           |   |      |   |           |      |  |   |         |   
|Gross revenues                |  | $                        | 1,286,992 |   |      | $ | 1,121,179 |      |  | $ | 888,658 |   
|SRAs                          |  |                          | 188,917   |   |      |   | 162,429   |      |  |   | 144,633 |   
|SRAs as a % of gross revenues |  |                          | 14.7      | % |      |   | 14.5      | %    |  |   | 16.3    | % 
|Net revenues                  |  |                          | 1,098,075 |   |      |   | 958,750   |      |  |   | 744,025 |   
|Gross profit                  |  |                          | 298,361   |   |      |   | 269,652   |      |  |   | 147,757 |   
|Gross margin                  |  |                          | 27.2      | % |      |   | 28.1      | %    |  |   | 19.9    | % 
|LICENSING AND ROYALTIES       |  |                          |           |   |      |   |           |      |  |   |         |   
|Net revenues                  |  | $                        | 46,765    |   |      | $ | 80,080    |      |  | $ | 17,340  |   
|Gross margin                  |  |                          | 100.0     | % |      |   | 100.0     | %    |  |   | 100.0   | % 
|OTHER                         |  |                          |           |   |      |   |           |      |  |   |         |   
|Net revenues                  |  | $                        | 247       |   |      | $ | 7,508     |      |  | $ | 9,615   |   
|Gross profit (loss)           |  |                          | 247       |   |      |   | (7,606    | )    |  |   | (17,516 | ) 
|Gross margin (loss)           |  |                          | 100.0     | % |      |   | (101.3    | )%   |  |   | (182.2  | )%
|TOTALS                        |  |                          |           |   |      |   |           |      |  |   |         |   
|Net revenues                  |  | $                        | 1,145,087 |   |      | $ | 1,046,338 |      |  | $ | 770,980 |   
|Gross profit                  |  |                          | 345,373   |   |      |   | 342,126   |      |  |   | 147,581 |   
|Gross margin                  |  |                          | 30.2      | % |      |   | 32.7      | %    |  |   | 19.1    | % 

55



---



##### 





|                          |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|------------------------- |  | ---------------------------- | ------ |  | --------- | - | ---------- | ----- |  | ------ | -------- | - |  | - | ------ | 
|                          |  | Year Ended December 31, 2004 |       
|                          |  |                              |       
|                          |  | Beginning                    |        |  |           |   | Credits    |       |  | End    |         
|                          |  | of the                       |        |  |           |   | Issued and |       |  | of the |         
|                          |  | Year                         |        |  | Provision |   |            | Other |  |        | Year     |  
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  | ($ in thousands)             |       
|Distributed Products      |  | $                            | 6,420  |  |           | $ | 30,370     |       |  | $      | (28,534  | ) |  | $ | 8,256  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|Andrx Products  Generic: |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|Discounts                 |  |                              | 2,104  |  |           |   | 10,524     |       |  |        | (11,170  | ) |  |   | 1,458  | 
|Customer rebates          |  |                              | 19,327 |  |           |   | 90,350     |       |  |        | (87,943  | ) |  |   | 21,734 | 
|Medicaid rebates          |  |                              | 2,708  |  |           |   | 3,289      |       |  |        | (4,379   | ) |  |   | 1,618  | 
|Chargebacks               |  |                              | 4,508  |  |           |   | 17,239     |       |  |        | (18,505  | ) |  |   | 3,242  | 
|Returns                   |  |                              | 3,801  |  |           |   | 7,831      |       |  |        | (7,168   | ) |  |   | 4,464  | 
|Shelf-Stock Adjustments   |  |                              | 8,351  |  |           |   | 3,606      |       |  |        | (3,195   | ) |  |   | 8,762  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  |                              | 40,799 |  |           |   | 132,839    |       |  |        | (132,360 | ) |  |   | 41,278 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|Andrx Products  Brand:   |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|Discounts                 |  |                              | 1,552  |  |           |   | 5,866      |       |  |        | (6,309   | ) |  |   | 1,109  | 
|Medicaid rebates          |  |                              | 1,830  |  |           |   | 6,479      |       |  |        | (4,382   | ) |  |   | 3,927  | 
|Managed care rebates      |  |                              | 1,908  |  |           |   | 5,322      |       |  |        | (4,090   | ) |  |   | 3,140  | 
|Returns                   |  |                              | 2,923  |  |           |   | 8,041      |       |  |        | (5,497   | ) |  |   | 5,467  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  |                              | 8,213  |  |           |   | 25,708     |       |  |        | (20,278  | ) |  |   | 13,643 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  | $                            | 55,432 |  |           | $ | 188,917    |       |  | $      | (181,172 | ) |  | $ | 63,177 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  

|                          |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|------------------------- |  | ---------------------------- | ------ |  | --------- | - | ---------- | ----- |  | ------ | -------- | - |  | - | ------ | 
|                          |  | Year Ended December 31, 2003 |       
|                          |  |                              |       
|                          |  | Beginning                    |        |  |           |   | Credits    |       |  | End    |         
|                          |  | of the                       |        |  |           |   | Issued and |       |  | of the |         
|                          |  | Year                         |        |  | Provision |   |            | Other |  |        | Year     |  
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  | ($ in thousands)             |       
|Distributed Products      |  | $                            | 3,052  |  |           | $ | 27,451     |       |  | $      | (24,083  | ) |  | $ | 6,420  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|Andrx Products  Generic: |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|Discounts                 |  |                              | 837    |  |           |   | 9,932      |       |  |        | (8,665   | ) |  |   | 2,104  | 
|Customer rebates          |  |                              | 11,481 |  |           |   | 87,579     |       |  |        | (79,733  | ) |  |   | 19,327 | 
|Medicaid rebates          |  |                              | 1,800  |  |           |   | 2,862      |       |  |        | (1,954   | ) |  |   | 2,708  | 
|Chargebacks               |  |                              | 2,795  |  |           |   | 11,838     |       |  |        | (10,125  | ) |  |   | 4,508  | 
|Returns                   |  |                              | 3,105  |  |           |   | 6,951      |       |  |        | (6,255   | ) |  |   | 3,801  | 
|Shelf-Stock Adjustments   |  |                              | 5,485  |  |           |   | 4,292      |       |  |        | (1,426   | ) |  |   | 8,351  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  |                              | 25,503 |  |           |   | 123,454    |       |  |        | (108,158 | ) |  |   | 40,799 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|Andrx Products  Brand:   |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|Discounts                 |  |                              | 590    |  |           |   | 2,818      |       |  |        | (1,856   | ) |  |   | 1,552  | 
|Medicaid rebates          |  |                              | 550    |  |           |   | 2,627      |       |  |        | (1,347   | ) |  |   | 1,830  | 
|Managed care rebates      |  |                              | 1,012  |  |           |   | 2,866      |       |  |        | (1,970   | ) |  |   | 1,908  | 
|Returns                   |  |                              | 86     |  |           |   | 3,213      |       |  |        | (376     | ) |  |   | 2,923  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  |                              | 2,238  |  |           |   | 11,524     |       |  |        | (5,549   | ) |  |   | 8,213  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  | $                            | 30,793 |  |           | $ | 162,429    |       |  | $      | (137,790 | ) |  | $ | 55,432 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  

56



---



##### 



|                          |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|------------------------- |  | ---------------------------- | ------ |  | --------- | - | ---------- | ----- |  | ------ | -------- | - |  | - | ------ | 
|                          |  | Year Ended December 31, 2002 |       
|                          |  |                              |       
|                          |  | Beginning                    |        |  |           |   | Credits    |       |  | End    |         
|                          |  | of the                       |        |  |           |   | Issued and |       |  | of the |         
|                          |  | Year                         |        |  | Provision |   |            | Other |  |        | Year     |  
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  | ($ in thousands)             |       
|Distributed Products      |  | $                            | 2,384  |  |           | $ | 24,102     |       |  | $      | (23,434  | ) |  | $ | 3,052  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|Andrx Products  Generic: |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|Discounts                 |  |                              | 727    |  |           |   | 9,427      |       |  |        | (9,317   | ) |  |   | 837    | 
|Customer rebates          |  |                              | 9,857  |  |           |   | 78,657     |       |  |        | (77,033  | ) |  |   | 11,481 | 
|Medicaid rebates          |  |                              | 1,388  |  |           |   | 2,521      |       |  |        | (2,109   | ) |  |   | 1,800  | 
|Chargebacks               |  |                              | 279    |  |           |   | 13,715     |       |  |        | (11,199  | ) |  |   | 2,795  | 
|Returns                   |  |                              | 1,808  |  |           |   | 6,619      |       |  |        | (5,322   | ) |  |   | 3,105  | 
|Shelf-Stock Adjustments   |  |                              | 11,097 |  |           |   | 4,293      |       |  |        | (9,905   | ) |  |   | 5,485  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  |                              | 25,156 |  |           |   | 115,232    |       |  |        | (114,885 | ) |  |   | 25,503 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|Andrx Products  Brand:   |  |                              |        |  |           |   |            |       |  |        |          |   |  |   |        | 
|Discounts                 |  |                              | 785    |  |           |   | 3,994      |       |  |        | (4,189   | ) |  |   | 590    | 
|Medicaid rebates          |  |                              | 702    |  |           |   | 264        |       |  |        | (416     | ) |  |   | 550    | 
|Managed care rebates      |  |                              | 976    |  |           |   | 999        |       |  |        | (963     | ) |  |   | 1,012  | 
|Returns                   |  |                              | 2,668  |  |           |   | 42         |       |  |        | (2,624   | ) |  |   | 86     | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  |                              | 5,131  |  |           |   | 5,299      |       |  |        | (8,192   | ) |  |   | 2,238  | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  
|                          |  | $                            | 32,671 |  |           | $ | 144,633    |       |  | $      | (146,511 | ) |  | $ | 30,793 | 
|                          |  |                              |        |  |           |   |            |       |  |        |          |  



|                                                            |       |                  |        |        |      |   |        |        | 
|----------------------------------------------------------- | ----- | ---------------- | ------ | ------ | ---- | - | ------ | ------ | 
|                                                            |       | December 31,     |       
|                                                            |       |                  |       
|                                                            |       | 2004             |        |        | 2003 |  
|                                                            |       |                  |        |        |      |  
|                                                            |       | ($ in thousands) |       
|Accruals included in accounts receivable, net               |       | $                | 31,219 |        |      | $ | 32,045 |       
|Accruals included in accrued expenses and other liabilities |       |                  | 31,958 |        |      |   | 23,387 |       
|                                                            |       |                  |        |        |      |  
|                                                            | Total |                  | $      | 63,177 |      |   | $      | 55,432 | 
|                                                            |       |                  |        |        |      |  



| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 31, 2004 Compared to Year Ended
    December 31, 2003



Revenues and Gross Profit (Loss)




| |                     
| | --------------------
| | Distributed Products





57



---



##### 





| |               
| | --------------
| | Andrx Products



| |                 
| | ----------------
| | Generic Products















58



---



##### 







| |               
| | --------------
| | Brand Products













59



---



##### 









| |                                
| | -------------------------------
| | Licensing and Royalties Revenue





| |                             
| | ----------------------------
| | Generic Wellbutrin SR/ Zyban





| |                 
| | ----------------
| | Generic Prilosec





| |               
| | --------------
| | Other Revenues



60



---



##### 



SG&A








Research and Development (R&D)






Litigation Settlements and Other Charges




Equity in Earnings of Joint Ventures




Interest Income




61



---



##### 





Interest Expense




Gain on Sale of Assets




Income Taxes




Weighted Average Shares Outstanding






| |                                                                          
| | -------------------------------------------------------------------------
| | Year Ended December 31, 2003 Compared to Year Ended
    December 31, 2002



Revenues and Gross Profit (Loss)




| |                     
| | --------------------
| | Distributed Products



62



---



##### 



Andrx Products




| |                 
| | ----------------
| | Generic Products













| |               
| | --------------
| | Brand Products



63



---



##### 











| |                        
| | -----------------------
| | Licensing and Royalties





| |               
| | --------------
| | Other Revenues





SG&A




64



---



##### 







R&D




Litigation Settlements and Other Charges






65



---



##### 



Equity in Earnings of Joint Ventures




Interest Income




Interest Expense




Gain on Sale of Assets




Income Taxes




Weighted Average Shares Outstanding






66



---



##### 



LIQUIDITY AND CAPITAL RESOURCES




Operating Activities










Investing Activities






67



---



##### 









Financing Activities










Sufficiency of Capital Resources








68



---



##### 















OUTLOOK


Managements Discussion and
Analysis of Financial Condition and Results of Operations Risk Factors. Outlook Managements Discussion and
Analysis of Financial Condition and Results of Operations.




| |                     
| | --------------------
| | Distributed Products



69



---



##### 













| |                       
| | ----------------------
| | Andrx Generic Products









70



---



##### 

















| |                     
| | --------------------
| | Andrx Brand Products



71



---



##### 













72



---



##### 













| |                                
| | -------------------------------
| | Licensing and Royalties Revenue







| |                   
| | ------------------
| | Cost of Goods Sold





Risks Relating to the
Pharmaceuticals Industry Generally and to Andrx
Specifically




73



---



##### 











| |              
| | -------------
| | SG&A Expenses





74



---



##### 



R&D Expenses






| |             
| | ------------
| | Income Taxes





| |                  
| | -----------------
| | Earnings Guidance



RECENT ACCOUNTING PRONOUNCEMENTS




| |                
| | ---------------
| | Inventory Costs





| |                    
| | -------------------
| | Share-Based Payment



75



---



##### 













| |                                                                         
| | ------------------------------------------------------------------------
| | Accounting for Income Taxes  the American Jobs
    Creation Act of 2004



LITIGATION






|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7a. | Quantitative and Qualitative Disclosure About Market
    Risk



76



---



##### 









77



---



##### 





|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data

|                                                                                                         |  |       |    | 
|-------------------------------------------------------------------------------------------------------- |  | ----- | -- | 
|                                                                                                         |  | Pages |   
|                                                                                                         |  |       |   
|ANDRX CORPORATION AND SUBSIDIARIES                                                                       |  |       |    | 
|Report of Independent Registered Public Accounting Firm                                                  |  |       | 79 | 
|Managements Report on Internal Control over Financial
    Reporting                                     |  |       | 80 | 
|Report of Independent Registered Public Accounting Firm                                                  |  |       | 81 | 
|Consolidated Balance Sheets as of December 31, 2004 and 2003                                             |  |       | 82 | 
|Consolidated Statements of Income for the years ended
    December 31, 2004, 2003 and 2002               |  |       | 83 | 
|Consolidated Statements of Stockholders Equity for the
    years ended December 31, 2004, 2003 and 2002 |  |       | 84 | 
|Consolidated Statements of Cash Flows for the years ended
    December 31, 2004, 2003 and 2002           |  |       | 86 | 
|Notes to Consolidated Financial Statements                                                               |  |       | 87 | 

78



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |                             
| | ----------------------------
| | /s/ Ernst & Young
    LLP   
| | Certified Public Accountants





79



---



##### 



MANAGEMENTS REPORT ON INTERNAL CONTROL


OVER FINANCIAL REPORTING












80



---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


















| |                             
| | ----------------------------
| | /s/ Ernst & Young
    LLP   
| | Certified Public Accountants





81



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS


|                                                          |                                                                                                                                                                            |                                            |         |         |         |  |         |         |         | 
|--------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------- | ------- |  | ------- | ------- | ------- | 
|                                                          |                                                                                                                                                                            | December 31,                               |        
|                                                          |                                                                                                                                                                            |                                            |        
|                                                          |                                                                                                                                                                            | 2004                                       |         |         | 2003    | 
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | (In thousands, except                      |        
|                                                          |                                                                                                                                                                            | share and per share                        |        
|                                                          |                                                                                                                                                                            | amounts)                                   |        
|ASSETS                                                   
|Current assets:                                           |                                                                                                                                                                            |                                            |         |         |         |  |         |        
|                                                          | Cash and cash equivalents                                                                                                                                                  |                                            | $       | 42,290  |         |  | $       | 67,498  |        
|                                                          | Short-term investments available-for-sale, at market value                                                                                                                 |                                            |         | 44,815  |         |  |         | 137,625 |        
|                                                          | Accounts receivable, net of allowance for doubtful accounts of
    $4,703 and $7,734 at December 31, 2004 and 2003,
    respectively                                       |                                            |         | 144,025 |         |  |         | 138,849 |        
|                                                          | Inventories                                                                                                                                                                |                                            |         | 197,304 |         |  |         | 193,079 |        
|                                                          | Deferred income tax assets, net                                                                                                                                            |                                            |         | 57,883  |         |  |         | 64,963  |        
|                                                          | Assets held for sale                                                                                                                                                       |                                            |         | 49,120  |         |  |         | 45,554  |        
|                                                          | Prepaid and other current assets                                                                                                                                           |                                            |         | 23,502  |         |  |         | 29,755  |        
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | Total current assets                       |         |         | 558,939 |  |         |         | 677,323 | 
|Long-term investments available-for-sale, at market value |                                                                                                                                                                            |                                            | 122,962 |         |         |  |        |        
|Property, plant and equipment, net                        |                                                                                                                                                                            |                                            | 284,105 |         |         |  | 236,991 |        
|Goodwill                                                  |                                                                                                                                                                            |                                            | 7,665   |         |         |  | 7,665   |        
|Other intangible assets, net                              |                                                                                                                                                                            |                                            | 7,106   |         |         |  | 13,721  |        
|Other assets                                              |                                                                                                                                                                            |                                            | 8,936   |         |         |  | 22,746  |        
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | Total assets                               |         | $       | 989,713 |  |         | $       | 958,446 | 
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                         
|LIABILITIES AND STOCKHOLDERS EQUITY                     
|Current liabilities:                                      |                                                                                                                                                                            |                                            |         |         |         |  |         |        
|                                                          | Accounts payable                                                                                                                                                           |                                            | $       | 105,715 |         |  | $       | 148,862 |        
|                                                          | Accrued expenses and other liabilities                                                                                                                                     |                                            |         | 136,169 |         |  |         | 144,241 |        
|                                                          | Liabilities held for sale                                                                                                                                                  |                                            |         | 3,489   |         |  |         | 4,255   |        
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | Total current liabilities                  |         |         | 245,373 |  |         |         | 297,358 | 
|Deferred income tax liabilities                           |                                                                                                                                                                            |                                            | 34,605  |         |         |  | 27,108  |        
|Other long-term liabilities                               |                                                                                                                                                                            |                                            | 10,974  |         |         |  | 11,079  |        
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | Total liabilities                          |         |         | 290,952 |  |         |         | 335,545 | 
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|Commitments and contingencies                             |                                                                                                                                                                            |                                            |         |         |         |  |         |        
|Stockholders equity:                                     |                                                                                                                                                                            |                                            |         |         |         |  |         |        
|                                                          | Convertible preferred stock; $0.001 par value,
    1,000,000 shares authorized; none issued and outstanding                                                                |                                            |         |        |         |  |         |        |        
|                                                          | Common stock; $0.001 par value, 200,000,000 shares
    authorized; 72,924,400 and 72,331,600 shares issued and
    outstanding at December 31, 2004 and 2003, respectively |                                            |         | 73      |         |  |         | 72      |        
|                                                          | Additional paid-in capital                                                                                                                                                 |                                            |         | 507,934 |         |  |         | 498,366 |        
|                                                          | Restricted stock units, net                                                                                                                                                |                                            |         | (6,471  | )       |  |         | (7,761  | )      
|                                                          | Retained earnings                                                                                                                                                          |                                            |         | 197,874 |         |  |         | 132,215 |        
|                                                          | Accumulated other comprehensive (loss) income, net of income
    taxes                                                                                                     |                                            |         | (649    | )       |  |         | 9       |        
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | Total stockholders equity                 |         |         | 698,761 |  |         |         | 622,901 | 
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 
|                                                          |                                                                                                                                                                            | Total liabilities and stockholders equity |         | $       | 989,713 |  |         | $       | 958,446 | 
|                                                          |                                                                                                                                                                            |                                            |         |         |         | 





82



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME


|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |           |            |  
|------------------------------------ | ----------------------------------------------------------------------------------------------- | ------------------------------------------------ | ------- | ------- | ---------- |  | ------- | ------- | ---------- |  | ------- | --------- | ---------- | -
|                                     |                                                                                                 | Years Ended December 31,                         |        
|                                     |                                                                                                 |                                                  |        
|                                     |                                                                                                 | 2004                                             |         |         | 2003       |  |         | 2002    |           
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | (In thousands, except share and                  |        
|                                     |                                                                                                 | per share amounts)                               |        
|Revenues:                            |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |          
|                                     | Distributed products                                                                            |                                                  | $       | 676,312 |            |  | $       | 657,098 |            |  | $       | 534,618   |           
|                                     | Andrx products                                                                                  |                                                  |         | 421,763 |            |  |         | 301,652 |            |  |         | 209,407   |           
|                                     | Licensing and royalties                                                                         |                                                  |         | 46,765  |            |  |         | 80,080  |            |  |         | 17,340    |           
|                                     | Other                                                                                           |                                                  |         | 247     |            |  |         | 7,508   |            |  |         | 9,615     |           
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Total revenues                                   |         |         | 1,145,087  |  |         |         | 1,046,338  |  |         |           | 770,980    |  
|Cost of goods sold                   |                                                                                                 |                                                  | 799,714 |         |            |  | 704,212 |         |            |  | 623,399 |          
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Gross profit                                     |         |         | 345,373    |  |         |         | 342,126    |  |         |           | 147,581    |  
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|Operating expenses:                  |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |          
|                                     | Selling, general and administrative                                                             |                                                  |         | 209,003 |            |  |         | 213,274 |            |  |         | 189,923   |           
|                                     | Research and development                                                                        |                                                  |         | 40,505  |            |  |         | 52,235  |            |  |         | 51,479    |           
|                                     | Litigation settlements and other charges                                                        |                                                  |         | 7,800   |            |  |         | 8,750   |            |  |         | 72,833    |           
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Total operating expenses                         |         |         | 257,308    |  |         |         | 274,259    |  |         |           | 314,235    |  
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Income (loss) from operations                    |         |         | 88,065     |  |         |         | 67,867     |  |         |           | (166,654   | )
|Other income (expense):              |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |          
|                                     | Equity in earnings of joint ventures                                                            |                                                  |         | 4,504   |            |  |         | 5,135   |            |  |         | 3,697     |           
|                                     | Interest income                                                                                 |                                                  |         | 4,060   |            |  |         | 2,242   |            |  |         | 5,420     |           
|                                     | Interest expense                                                                                |                                                  |         | (2,567  | )          |  |         | (2,641  | )          |  |         | (200      | )         
|                                     | Gain on sale of assets                                                                          |                                                  |         |        |            |  |         | 5,605   |            |  |         | 5,094     |           
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Income (loss) before income taxes                |         |         | 94,062     |  |         |         | 78,208     |  |         |           | (152,643   | )
|Provision (benefit) for income taxes |                                                                                                 |                                                  | 28,403  |         |            |  | 30,031  |         |            |  | (60,826 | )        
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Net income (loss)                                |         | $       | 65,659     |  |         | $       | 48,177     |  |         | $         | (91,817    | )
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|EARNINGS (LOSS) PER SHARE:           |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |          
|ANDRX GROUP COMMON STOCK:            |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |          
|                                     | Net income (loss) allocated to Andrx Group (including Cybear
    Group commencing May 18, 2002) |                                                  | $       | 65,659  |            |  | $       | 48,177  |            |  | $       | (85,873   | )         
|                                     | Premium on conversion of Cybear Group common stock                                              |                                                  |         |        |            |  |         |        |            |  |         | (526      | )         
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Total net income (loss) allocated to Andrx Group |         | $       | 65,659     |  |         | $       | 48,177     |  |         | $         | (86,399    | )
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     | Net income (loss) per share of Andrx Group common stock:                                        |                                                  |         |         |            |  |         |         |            |  |         |           |           
|                                     |                                                                                                 | Basic                                            |         | $       | 0.90       |  |         | $       | 0.67       |  |         | $         | (1.22      | )
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Diluted                                          |         | $       | 0.89       |  |         | $       | 0.66       |  |         | $         | (1.22      | )
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     | Weighted average shares of Andrx Group common stock outstanding:                                |                                                  |         |         |            |  |         |         |            |  |         |           |           
|                                     |                                                                                                 | Basic                                            |         |         | 72,740,000 |  |         |         | 71,892,000 |  |         |           | 70,876,000 |  
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Diluted                                          |         |         | 73,530,000 |  |         |         | 72,655,000 |  |         |           | 70,876,000 |  
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|CYBEAR GROUP COMMON STOCK:           |                                                                                                 |                                                  |         |         |            |  |         |         |            |  |         |          
|                                     | Net loss allocated to Cybear Group (through May 17, 2002)                                       |                                                  |         |         |            |  |         |         |            |  | $       | (5,944    | )         
|                                     | Premium on conversion of Cybear Group common stock                                              |                                                  |         |         |            |  |         |         |            |  |         | 526       |           
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     |                                                                                                 | Total net loss allocated to Cybear Group         |         |         |            |  |         |         |            |  |         | $         | (5,418     | )
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     | Basic and diluted net loss per share of Cybear Group common stock                               |                                                  |         |         |            |  |         |         |            |  | $       | (0.80     | )         
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           
|                                     | Basic and diluted weighted average shares of Cybear Group common
    stock outstanding          |                                                  |         |         |            |  |         |         |            |  |         | 6,743,000 |           
|                                     |                                                                                                 |                                                  |         |         |            |  |         |         |           





83



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |         |   |  |   |      |   |  |   |         |  
|------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---------- |  | ------------ | - | -- | ---------- |  |  | ---------- | ------ |  | -------- | -- | ------------- | ---------- | - | ------------- | -------- |  | - | ------ | - |  | ------ | ------- | - |  | - | ---- | - |  | - | ------- | -
|                                                                                            |  | Common Stock                             |            |  |              |   |    |            |  |  |            |        | 
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        | 
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            | Accum. |  |          |   
|                                                                                            |  | Andrx Group                              |            |  | Cybear Group |   |    | Additional |  |  | Restricted |        |  |          |    | Comprehensive |            |   | Comprehensive |         
|                                                                                            |  |                                          |            |  |              |   |    | Paid-in    |  |  | Stock      |        |  | Retained |    |               | Income     |   |               | Income   | 
|                                                                                            |  | Shares                                   |            |  | $            |   |    | Shares     |  |  | $          |        |  | Capital  |    |               | Units, Net |   |               | Earnings |  |   | (Loss) |   |  | (Loss) |        
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |        
|                                                                                            |  | (In thousands, except for share amounts) |           
|Balance, December 31, 2001                                                                  |  |                                          | 70,483,600 |  |              | $ | 70 |            |  |  | 6,743,000  |        |  | $        | 7  |               |            | $ | 471,035       |          |  | $ |       |   |  | $      | 176,381 |   |  | $ | 401  |   |  |   |         |  
|Shares of Andrx common stock issued in connection with exercises
    of stock options       |  |                                          | 863,500    |  |              |   | 2  |            |  |  |           |        |  |          |   |               |            |   | 4,332         |          |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Income tax benefit on exercises of Andrx stock options                                      |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 5,350         |          |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Shares of Andrx common stock issued in connection with the
    employee stock purchase plan |  |                                          | 89,100     |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 1,851         |          |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Shares of Andrx common stock issued upon conversion of Cybear
    common stock              |  |                                          | 65,000     |  |              |   |   |            |  |  | (6,743,000 | )      |  |          | (7 | )             |            |   | 533           |          |  |   |       |   |  |        | (526    | ) |  |   |     |   |  |   |         |  
|Issuance of restricted stock units                                                          |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 6,820         |          |  |   | (6,820 | ) |  |        |        |   |  |   |      |   |  |   |         |  
|Amortization of restricted stock units                                                      |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   |              |          |  |   | 295    |   |  |        |        |   |  |   |     |   |  |   |         |  
|CTEX Pharmaceuticals, Inc acquisition adjustment                                            |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | (1,993        | )        |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Unrealized loss on investments available-for-sale, net of income
    tax benefit of $110    |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   |              |          |  |   |       |   |  |        |        |   |  |   | (207 | ) |  | $ | (207    | )
|Net loss                                                                                    |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   |              |          |  |   |       |   |  |        | (91,817 | ) |  |   |     |   |  |   | (91,817 | )
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |        
|Comprehensive loss                                                                          |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |         |   |  |   |      |   |  | $ | (92,024 | )
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |        
|Balance, December 31, 2002                                                                  |  |                                          | 71,501,200 |  |              |   | 72 |            |  |  |           |        |  |          |   |               |            |   | 487,928       |          |  |   | (6,525 | ) |  |        | 84,038  |   |  |   | 194  |   |  |   |         |  
|Shares of Andrx common stock issued in connection with exercises
    of stock options       |  |                                          | 730,200    |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 3,360         |          |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Income tax benefit on exercises of Andrx stock options                                      |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 3,135         |          |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Shares of Andrx common stock issued in connection with the
    employee stock purchase plan |  |                                          | 100,200    |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 1,233         |          |  |   |       |   |  |        |        |   |  |   |     |   |  |   |         |  
|Issuance of restricted stock units, net of forfeitures                                      |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   | 2,710         |          |  |   | (2,710 | ) |  |        |        |   |  |   |     |   |  |   |         |  
|Amortization of restricted stock units                                                      |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   |              |          |  |   | 1,474  |   |  |        |        |   |  |   |     |   |  |   |         |  
|Unrealized loss on investments available-for-sale, net of income
    tax benefit of $109    |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   |              |          |  |   |       |   |  |        |        |   |  |   | (185 | ) |  | $ | (185    | )
|Net income                                                                                  |  |                                          |           |  |              |   |   |            |  |  |           |        |  |          |   |               |            |   |              |          |  |   |       |   |  |        | 48,177  |   |  |   |     |   |  |   | 48,177  |  
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |        
|Comprehensive income                                                                        |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |         |   |  |   |      |   |  | $ | 47,992  |  
|                                                                                            |  |                                          |            |  |              |   |    |            |  |  |            |        |  |          |    |               |            |   |               |          |  |   |        |   |  |        |        
|Balance, December 31, 2003                                                                  |  |                                          | 72,331,600 |  |              |   | 72 |            |  |  |           |        |  |          |   |               |            |   | 498,366       |          |  |   | (7,761 | ) |  |        | 132,215 |   |  |   | 9    |   |  |   |         |  



84



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY  (Continued)


|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   |        |          |   |               |            |  |               |          |   |  |        |        |   |        |   |         |  |  |   |      |   |  |   |        |  
|------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------- | ---------- |  | ------------ | - | ---------- | ------ |  | ---------- | - | ------ | -------- | - | ------------- | ---------- |  | ------------- | -------- | - |  | ------ | ------ | - | ------ | - | ------- |  |  | - | ---- | - |  | - | ------ | -
|                                                                                                                                      |  | Common Stock                             |            |  |              |   |            |        |  |            |   |       
|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   |       
|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   | Accum. |          |   |              
|                                                                                                                                      |  | Andrx Group                              |            |  | Cybear Group |   | Additional |        |  | Restricted |   |        |          |   | Comprehensive |            |  | Comprehensive |         
|                                                                                                                                      |  |                                          |            |  |              |   | Paid-In    |        |  | Stock      |   |        | Retained |   |               | Income     |  |               | Income   |  
|                                                                                                                                      |  | Shares                                   |            |  | $            |   |            | Shares |  |            | $ |        | Capital  |   |               | Units, Net |  |               | Earnings |   |  | (Loss) |        |   | (Loss) |  
|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   |        |          |   |               |            |  |               |          |   |  |        |        |   |        |  
|                                                                                                                                      |  | (In thousands, except for share amounts) |           
|Balance, December 31, 2003                                                                                                            |  |                                          | 72,331,600 |  |              | $ | 72         |        |  |            |  |        |          | $ |              |            |  | $             | 498,366  |   |  | $      | (7,761 | ) |        | $ | 132,215 |  |  | $ | 9    |   |  |   |        |  
|Shares of Andrx common stock issued in connection with exercises
    of stock options                                                 |  |                                          | 493,000    |  |              |   | 1          |        |  |            |  |        |          |   |              |            |  |               | 6,033    |   |  |        |       |   |        |   |        |  |  |   |     |   |  |   |        |  
|Income tax benefit on exercises of Andrx stock options and
    issuance of common stock in connection with restricted stock
    units |  |                                          |           |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               | 2,455    |   |  |        |       |   |        |   |        |  |  |   |     |   |  |   |        |  
|Shares of Andrx common stock issued in connection with the
    employee stock purchase plan                                           |  |                                          | 72,200     |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               | 1,465    |   |  |        |       |   |        |   |        |  |  |   |     |   |  |   |        |  
|Shares of Andrx common stock issued in connection with
    restricted stock units                                                     |  |                                          | 27,600     |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               | (116     | ) |  |        |       |   |        |   |        |  |  |   |     |   |  |   |        |  
|Issuance of restricted stock units, net of forfeitures                                                                                |  |                                          |           |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               | 249      |   |  |        | (249   | ) |        |   |        |  |  |   |      |   |  |   |        |  
|Amortization of restricted stock units                                                                                                |  |                                          |           |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               |         |   |  |        | 1,539  |   |        |   |        |  |  |   |     |   |  |   |        |  
|CTEX Pharmaceuticals, Inc acquisition adjustment                                                                                      |  |                                          |           |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               | (518     | ) |  |        |       |   |        |   |        |  |  |   |     |   |  |   |        |  
|Unrealized loss on investments available-for-sale, net of income
    tax benefit of $403                                              |  |                                          |           |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               |         |   |  |        |       |   |        |   |        |  |  |   | (658 | ) |  | $ | (658   | )
|Net income                                                                                                                            |  |                                          |           |  |              |   |           |        |  |            |  |        |          |   |              |            |  |               |         |   |  |        |       |   |        |   | 65,659  |  |  |   |     |   |  |   | 65,659 |  
|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   |        |          |   |               |            |  |               |          |   |  |        |        |   |        |   |        
|Comprehensive income                                                                                                                  |  |                                          |            |  |              |   |            |        |  |            |   |        |          |   |               |            |  |               |          |   |  |        |        |   |        |   |         |  |  |   |      |   |  | $ | 65,001 |  
|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   |        |          |   |               |            |  |               |          |   |  |        |        |   |        |   |        
|Balance, December 31, 2004                                                                                                            |  |                                          | 72,924,400 |  |              | $ | 73         |        |  |            |  |        |          | $ |              |            |  | $             | 507,934  |   |  | $      | (6,471 | ) |        | $ | 197,874 |  |  | $ | (649 | ) |  |   |        |  
|                                                                                                                                      |  |                                          |            |  |              |   |            |        |  |            |   |        |          |   |               |            |  |               |          |   |  |        |        |   |        |   |        





85



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |          |         |         |         |  
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------------------- | ------ | ------- | -------- | -------- | ------ | ------- | -------- | -------- | ------- | ------- | ------- | -
|                                                                            |                                                                                                        | Years Ended December 31,                                                        |                                                         
|                                                                            |                                                                                                        |                                                                                 |                                                         
|                                                                            |                                                                                                        | 2004                                                                            |                                                          |                                                      | 2003   |         |          | 2002     |       
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            |                                                                                                        | (In thousands)                                                                  |                                                         
|Cash flows from operating activities:                                       |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |         
|                                                                            | Net income (loss)                                                                                      |                                                                                 | $                                                        | 65,659                                               |        |         | $        | 48,177   |        |         | $        | (91,817  | )      
|                                                                            | Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities: |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |          |        
|                                                                            |                                                                                                        | Depreciation and amortization                                                   |                                                          |                                                      | 34,568 |         |          |          | 29,063 |         |          |          | 22,072  |        
|                                                                            |                                                                                                        | Provision for (recoveries of) allowance for doubtful accounts
    receivable    |                                                          |                                                      | (273   | )       |          |          | 4,340  |         |          |          | 13,178  |        
|                                                                            |                                                                                                        | Non-cash impairment charges                                                     |                                                          |                                                      | 18,472 |         |          |          | 12,123 |         |          |          | 19,583  |        
|                                                                            |                                                                                                        | Gain on sale of assets                                                          |                                                          |                                                      |       |         |          |          | (5,605 | )       |          |          | (5,094  | )      
|                                                                            |                                                                                                        | Amortization of restricted stock units, net                                     |                                                          |                                                      | 1,539  |         |          |          | 1,474  |         |          |          | 295     |        
|                                                                            |                                                                                                        | Equity in earnings of joint ventures                                            |                                                          |                                                      | (4,504 | )       |          |          | (5,135 | )       |          |          | (3,697  | )      
|                                                                            |                                                                                                        | Deferred income tax provision (benefit)                                         |                                                          |                                                      | 8,923  |         |          |          | 12,850 |         |          |          | (25,803 | )      
|                                                                            |                                                                                                        | Income tax benefit on exercises of stock options and restricted
    stock units |                                                          |                                                      | 2,455  |         |          |          | 3,135  |         |          |          | 5,350   |        
|                                                                            |                                                                                                        | Changes in operating assets and liabilities:                                    |                                                          |                                                      |        |         |          |          |        |         |          |          |         |        
|                                                                            |                                                                                                        |                                                                                 | Accounts receivable                                      |                                                      |        | (4,903  | )        |          |        | (15,616 | )        |          |         | (13,164 | )      
|                                                                            |                                                                                                        |                                                                                 | Inventories                                              |                                                      |        | (1,975  | )        |          |        | (72,279 | )        |          |         | 11,594  |        
|                                                                            |                                                                                                        |                                                                                 | Prepaid and other assets                                 |                                                      |        | 16,062  |          |          |        | (6,207  | )        |          |         | (3,954  | )      
|                                                                            |                                                                                                        |                                                                                 | Income tax refund (payment)                              |                                                      |        | 639     |          |          |        | 51,695  |          |          |         | (838    | )      
|                                                                            |                                                                                                        |                                                                                 | Accounts payable, accrued expenses and other liabilities |                                                      |        | (48,798 | )        |          |        | 85,183  |          |          |         | 28,326  |        
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            |                                                                                                        |                                                                                 |                                                          | Net cash provided by (used in) operating activities  |        |         | 87,864   |          |        |         | 143,198  |          |         |         | (43,969 | )
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|Cash flows from investing activities:                                       |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |         
|                                                                            | Purchases of investments available-for-sale                                                            |                                                                                 |                                                          | (448,586                                             | )      |         |          | (299,383 | )      |         |          | (158,833 | )      
|                                                                            | Maturities of investments available-for-sale                                                           |                                                                                 |                                                          | 417,374                                              |        |         |          | 232,496  |        |         |          | 317,886  |        
|                                                                            | Purchases of property, plant and equipment, net                                                        |                                                                                 |                                                          | (88,283                                              | )      |         |          | (39,455  | )      |         |          | (112,290 | )      
|                                                                            | Proceeds from the sale of assets                                                                       |                                                                                 |                                                          |                                                     |        |         |          | 5,875    |        |         |          | 1,550    |        
|                                                                            | Distributions from joint ventures                                                                      |                                                                                 |                                                          | 5,174                                                |        |         |          | 4,646    |        |         |          | 949      |        
|                                                                            | Acquisition of product rights                                                                          |                                                                                 |                                                          | (5,350                                               | )      |         |          | (10,100  | )      |         |          | (100     | )      
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            |                                                                                                        |                                                                                 |                                                          | Net cash provided by (used in) investing activities  |        |         | (119,671 | )        |        |         | (105,921 | )        |         |         | 49,162  |  
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|Cash flows from financing activities:                                       |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |         
|                                                                            | Proceeds from issuances of common stock in connection with
    exercises of stock options              |                                                                                 |                                                          | 6,034                                                |        |         |          | 3,360    |        |         |          | 4,332    |        
|                                                                            | Proceeds from issuances of common stock in connection with the
    employee stock purchase plan        |                                                                                 |                                                          | 1,465                                                |        |         |          | 1,233    |        |         |          | 1,851    |        
|                                                                            | Principal payments on capital lease obligations                                                        |                                                                                 |                                                          | (900                                                 | )      |         |          | (843     | )      |         |          | (146     | )      
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            |                                                                                                        |                                                                                 |                                                          | Net cash provided by financing activities            |        |         | 6,599    |          |        |         | 3,750    |          |         |         | 6,037   |  
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            |                                                                                                        |                                                                                 |                                                          | Net increase (decrease) in cash and cash equivalents |        |         | (25,208  | )        |        |         | 41,027   |          |         |         | 11,230  |  
|Cash and cash equivalents, beginning of year                                |                                                                                                        |                                                                                 | 67,498                                                   |                                                      |        |         | 26,471   |          |        |         | 15,241   |         
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|Cash and cash equivalents, end of year                                      |                                                                                                        | $                                                                               | 42,290                                                   |                                                      |        | $       | 67,498   |          |        | $       | 26,471   |         
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|Supplemental disclosure of cash flow information:                           |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |         
|                                                                            | Interest paid                                                                                          |                                                                                 | $                                                        | 1,660                                                |        |         | $        | 1,709    |        |         | $        | 200      |        
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            | Income taxes paid (received)                                                                           |                                                                                 | $                                                        | (639                                                 | )      |         | $        | (51,695  | )      |         | $        | 838      |        
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|Supplemental disclosure of non-cash investing and financing
    activities: |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |        |         |          |         
|                                                                            | Assets acquired through capital leases                                                                 |                                                                                 | $                                                        |                                                     |        |         | $        | 1,234    |        |         | $        | 1,549    |        
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            | Issuance of restricted stock units, net                                                                |                                                                                 | $                                                        | 249                                                  |        |         | $        | 2,710    |        |         | $        | 6,820    |        
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            | Acquisition of CTEX Pharmaceuticals, Inc., adjustment                                                  |                                                                                 | $                                                        | (518                                                 | )      |         | $        |         |        |         | $        | (1,993   | )      
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       
|                                                                            | Conversion of Cybear Group common stock into Andrx Group common
    stock                              |                                                                                 |                                                          |                                                      |        |         |          |          |        |         | $        | 2,537    |        
|                                                                            |                                                                                                        |                                                                                 |                                                          |                                                      |        |         |          |          |       





86



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004, 2003 and 2002


(In thousands, except for share and per share amounts)




|    |        
|--- | -------
|(1) | General





| |   |                                                                                                                                                                                                                                 
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | develops, manufactures and commercializes generic versions of
    controlled-release, niche and immediate-release pharmaceutical
    products, including oral contraceptives; and                                               
|
| |  | distributes pharmaceuticals, primarily generics, which have been
    commercialized by others, as well as our own, primarily to
    independent pharmacies, pharmacy chains, pharmacy buying groups
    and physicians offices.









| |                                                                               
| | ------------------------------------------------------------------------------
| | The Equity Reorganization and 2002 Conversion of Cybear
    Group Common Stock





87



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##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                           
|--- | ------------------------------------------
|(2) | Summary of Significant Accounting Policies



| |                      
| | ---------------------
| | Basis of Presentation





| |                 
| | ----------------
| | Use of Estimates





| |                          
| | -------------------------
| | Cash and Cash Equivalents





| |                               
| | ------------------------------
| | Investments Available-for-Sale





| |                         
| | ------------------------
| | Accounts Receivable, Net





88



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                                                             |  |                          |        |   |      |   |         |      |  |   |        |  
|---------------------------------------------------------------------------- |  | ------------------------ | ------ | - | ---- | - | ------- | ---- |  | - | ------ | -
|                                                                             |  | Years Ended December 31, |       
|                                                                             |  |                          |       
|                                                                             |  | 2004                     |        |   | 2003 |   |         | 2002 | 
|                                                                             |  |                          |        |   |      |   |         |      | 
|Beginning of year                                                            |  | $                        | 7,734  |   |      | $ | 15,495  |      |  | $ | 7,663  |  
|Provision for (recoveries of) allowance for doubtful accounts
    receivable |  |                          | (273   | ) |      |   | 4,340   |      |  |   | 13,178 |  
|Write-offs, net                                                              |  |                          | (2,758 | ) |      |   | (12,101 | )    |  |   | (5,346 | )
|                                                                             |  |                          |        |   |      |   |         |      | 
|End of year                                                                  |  | $                        | 4,703  |   |      | $ | 7,734   |      |  | $ | 15,495 |  
|                                                                             |  |                          |        |   |      |   |         |      | 





| |            
| | -----------
| | Inventories



89



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                       
| | ----------------------
| | Pre-Launch Inventories







90



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                                   
| | ----------------------------------
| | Property, Plant and Equipment, Net



|                               |  |  |                                       | 
|------------------------------ |  |  | ------------------------------------- | 
|Buildings                      |  |  | 20-40 years                           | 
|Manufacturing equipment        |  |  | 10 years                              | 
|Laboratory equipment           |  |  | 5 years                               | 
|Leasehold improvements         |  |  | Lesser of asset life or term of lease | 
|Computer hardware and software |  |  | 3-7 years                             | 
|Furniture and fixtures         |  |  | 5 years                               | 
|Automobiles                    |  |  | Lesser of asset life or term of lease | 





| |         
| | --------
| | Goodwill





| |                             
| | ----------------------------
| | Other Intangible Assets, Net





| |                                            
| | -------------------------------------------
| | Impairment or Disposal of Long-Lived Assets



91



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                     
| | ------------------------------------
| | Assets and Liabilities Held For Sale

tm




| |                                                                
| | ---------------------------------------------------------------
| | Revenue Recognition, including Sales Returns and
    Allowances











92



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                         |  |                          |          |   |      |   |          |      |  |   |          |  
|------------------------ |  | ------------------------ | -------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                         |  | Years Ended December 31, |         
|                         |  |                          |         
|                         |  | 2004                     |          |   | 2003 |   |          | 2002 | 
|                         |  |                          |          |   |      |   |          |      | 
|Beginning of year        |  | $                        | 55,432   |   |      | $ | 30,793   |      |  | $ | 32,671   |  
|Provision                |  |                          | 188,917  |   |      |   | 162,429  |      |  |   | 144,633  |  
|Credits issued and other |  |                          | (181,172 | ) |      |   | (137,790 | )    |  |   | (146,511 | )
|                         |  |                          |          |   |      |   |          |      | 
|End of year              |  | $                        | 63,177   |   |      | $ | 55,432   |      |  | $ | 30,793   |  
|                         |  |                          |          |   |      |   |          |      | 



|                                                            |       |              |        |        |      |   |        |        | 
|----------------------------------------------------------- | ----- | ------------ | ------ | ------ | ---- | - | ------ | ------ | 
|                                                            |       | December 31, |       
|                                                            |       |              |       
|                                                            |       | 2004         |        |        | 2003 |  
|                                                            |       |              |        |        |      |  
|Accruals included in accounts receivable, net               |       | $            | 31,219 |        |      | $ | 32,045 |       
|Accruals included in accrued expenses and other liabilities |       |              | 31,958 |        |      |   | 23,387 |       
|                                                            |       |              |        |        |      |  
|                                                            | Total |              | $      | 63,177 |      |   | $      | 55,432 | 
|                                                            |       |              |        |        |      |  



93



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |            
| | -----------
| | Advertising





| |                            
| | ---------------------------
| | Shipping and Handling Costs





| |                                        
| | ---------------------------------------
| | Research and Development (R&D) Expenses





| |                         
| | ------------------------
| | Stock-Based Compensation



94



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |          |  
|----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------ | - | ------- | ---- |  | - | ------- | - |  | - | -------- | -
|                                                                                                |                                                                                                                                                        | Years Ended December 31, |  
|                                                                                                |                                                                                                                                                        |                          |  
|                                                                                                |                                                                                                                                                        | 2004                     |   |         | 2003 |  |   | 2002    |  
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|ANDRX GROUP                                                                                     |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|Net income (loss) allocated to Andrx Group (including Cybear
    Group commencing May 18, 2002) |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|                                                                                                | As reported                                                                                                                                            |                          | $ | 65,659  |      |  | $ | 48,177  |   |  | $ | (86,399  | )
|                                                                                                | Add: stock-based employee compensation expense included in
    reported net income (loss), net of related tax effect                                   |                          |   | 970     |      |  |   | 914     |   |  |   | 183      |  
|                                                                                                | Deduct: total stock-based employee compensation expense
    determined under the fair value-based method for all awards, net
    of related tax effect |                          |   | (14,673 | )    |  |   | (22,538 | ) |  |   | (21,142  | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|                                                                                                | Pro forma net income (loss)                                                                                                                            |                          | $ | 51,956  |      |  | $ | 26,553  |   |  | $ | (107,358 | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|Basic net income (loss) per Andrx Group common share                                            |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|                                                                                                | As reported                                                                                                                                            |                          | $ | 0.90    |      |  | $ | 0.67    |   |  | $ | (1.22    | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|                                                                                                | Pro forma                                                                                                                                              |                          | $ | 0.71    |      |  | $ | 0.37    |   |  | $ | (1.51    | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|Diluted net income (loss) per Andrx Group common share                                          |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|                                                                                                | As reported                                                                                                                                            |                          | $ | 0.89    |      |  | $ | 0.66    |   |  | $ | (1.22    | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|                                                                                                | Pro forma                                                                                                                                              |                          | $ | 0.71    |      |  | $ | 0.37    |   |  | $ | (1.51    | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|CYBEAR GROUP                                                                                    |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|Net loss allocated to Cybear Group (January 1 through
    May 17, 2002)                         |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|                                                                                                | As reported                                                                                                                                            |                          |   |         |      |  |   |         |   |  | $ | (5,418   | )
|                                                                                                | Deduct: total stock-based employee compensation expense
    determined under the fair value-based method for all awards, net
    of related tax effect |                          |   |         |      |  |   |         |   |  |   | (1,230   | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|                                                                                                | Pro forma net loss                                                                                                                                     |                          |   |         |      |  |   |         |   |  | $ | (6,648   | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|Basic & diluted net loss per Cybear Group common share                                          |                                                                                                                                                        |                          |   |         |      |  |   |         |   |  |   |         
|                                                                                                | As reported                                                                                                                                            |                          |   |         |      |  |   |         |   |  | $ | (0.80    | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  
|                                                                                                | Pro forma                                                                                                                                              |                          |   |         |      |  |   |         |   |  | $ | (0.99    | )
|                                                                                                |                                                                                                                                                        |                          |   |         |      |  |   |         |  

95



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                |  |              |     |   |      |  |     |      |  |  |     |  
|------------------------------- |  | ------------ | --- | - | ---- |  | --- | ---- |  |  | --- | -
|                                |  | Years Ended  |    
|                                |  | December 31, |    
|                                |  |              |    
|                                |  | 2004         |     |   | 2003 |  |     | 2002 | 
|                                |  |              |     |   |      |  |     |      | 
|Risk-free interest rate         |  |              | 3.1 | % |      |  | 3.0 | %    |  |  | 3.0 | %
|Average life of options (years) |  |              | 5.9 |   |      |  | 5.6 |      |  |  | 6.5 |  
|Average volatility              |  |              | 83  | % |      |  | 86  | %    |  |  | 91  | %
|Dividend yield                  |  |              |    |   |      |  |    |      |  |  |    |  







| |               
| | --------------
| | Legal Expenses





| |                    
| | -------------------
| | Litigation Accruals





| |                        
| | -----------------------
| | Self-Insurance Programs





| |             
| | ------------
| | Income Taxes



96



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |                          
| | -------------------------
| | Earnings (Loss) Per Share





| |              
| | -------------
| |  Andrx Group



97



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                            |                           |                                                        |            |  |         |  |            |      |         |  |            |  |   | 
|----------------------------------------------------------- | ------------------------- | ------------------------------------------------------ | ---------- |  | ------- |  | ---------- | ---- | ------- |  | ---------- |  | - | 
|                                                            |                           | Years Ended December 31,                               |           
|                                                            |                           |                                                        |           
|                                                            |                           | 2004                                                   |            |  | 2003    |  |            | 2002 |        
|                                                            |                           |                                                        |            |  |         |  |            |      |        
|Basic weighted average shares of common stock outstanding   |                           |                                                        | 72,740,000 |  |         |  | 71,892,000 |      |         |  | 70,876,000 | 
|                                                            | Effect of dilutive items: |                                                        |            |  |         |  |            |      |         |  |            |  |  
|                                                            |                           | Stock options and unvested restricted stock units, net |            |  | 790,000 |  |            |      | 763,000 |  |            |  |  | 
|                                                            |                           |                                                        |            |  |         |  |            |      |        
|Diluted weighted average shares of common stock outstanding |                           |                                                        | 73,530,000 |  |         |  | 72,655,000 |      |         |  | 70,876,000 | 
|                                                            |                           |                                                        |            |  |         |  |            |      |        
|Anti-dilutive weighted average common stock equivalents     |                           |                                                        | 4,164,000  |  |         |  | 4,269,000  |      |         |  | 7,087,000  | 
|                                                            |                           |                                                        |            |  |         |  |            |      |        



| |               
| | --------------
| |  Cybear Group





| |                                    
| | -----------------------------------
| | Fair Value of Financial Instruments





| |                             
| | ----------------------------
| | Concentration of Credit Risk







98



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Comprehensive Income (Loss)





| |                  
| | -----------------
| | Business Segments





| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements



| |                  
| | -----------------
| |  Inventory Costs





| |                      
| | ---------------------
| |  Share-Based Payment







99



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                                           
| | --------------------------------------------------------------------------
| |  Accounting for Income Taxes  the
    American Jobs Creation Act of 2004





| |                  
| | -----------------
| | Reclassifications





|    |                                     
|--- | ------------------------------------
|(3) | Assets and Liabilities Held for Sale



100



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |                                    |                                 |   |        |        |  |   |        |        | 
|-------------------------- | ---------------------------------- | ------------------------------- | - | ------ | ------ |  | - | ------ | ------ | 
|                           |                                    | December 31,                    |  
|                           |                                    |                                 |  
|                           |                                    | 2004                            |   |        | 2003   | 
|                           |                                    |                                 |   |        |        | 
|Assets held for sale:      |                                    |                                 |   |        |        |  |   |       
|                           | Inventories                        |                                 | $ | 14,581 |        |  | $ | 16,831 |       
|                           | Deferred income tax assets         |                                 |   | 599    |        |  |   | 190    |       
|                           | Other current assets               |                                 |   | 2,848  |        |  |   | 35     |       
|                           | Property, plant and equipment, net |                                 |   | 887    |        |  |   | 2,182  |       
|                           | Goodwill                           |                                 |   | 26,316 |        |  |   | 26,316 |       
|                           | Other intangible assets, net       |                                 |   | 3,889  |        |  |   |       |       
|                           |                                    |                                 |   |        |        | 
|                           |                                    | Total assets held for sale      |   | $      | 49,120 |  |   | $      | 45,554 | 
|                           |                                    |                                 |   |        |        | 
|Liabilities held for sale: |                                    |                                 |   |        |        |  |   |       
|                           | Obligations under capital leases   |                                 | $ | 1,530  |        |  | $ | 2,430  |       
|                           | Deferred income tax liabilities    |                                 |   | 1,959  |        |  |   | 1,825  |       
|                           |                                    |                                 |   |        |        | 
|                           |                                    | Total liabilities held for sale |   | $      | 3,489  |  |   | $      | 4,255  | 
|                           |                                    |                                 |   |        |        | 



| |               
| | --------------
| | Capital Leases



|                                               |                                             |   |      |       | 
|---------------------------------------------- | ------------------------------------------- | - | ---- | ----- | 
|2005                                           |                                             | $ | 863  |      
|2006                                           |                                             |   | 701  |      
|2007                                           |                                             |   | 25   |      
|                                               |                                             |   |     
|                                               | Total minimum lease payments                |   |      | 1,589 | 
|Imputed interest                               |                                             |   | (59  | )    
|                                               |                                             |   |     
|                                               | Present value of net minimum lease payments |   |      | 1,530 | 
|Current portion                                |                                             |   | (819 | )    
|                                               |                                             |   |     
|Long-term portion of capital lease obligations |                                             | $ | 711  |      
|                                               |                                             |   |     



|                         |  |              |        |   |      |   |        |  
|------------------------ |  | ------------ | ------ | - | ---- | - | ------ | -
|                         |  | December 31, |       
|                         |  |              |       
|                         |  | 2004         |        |   | 2003 |  
|                         |  |              |        |   |      |  
|Computer equipment       |  | $            | 640    |   |      | $ | 675    |  
|Automobiles              |  |              | 2,131  |   |      |   | 2,533  |  
|                         |  |              |        |   |      |  
|                         |  |              | 2,771  |   |      |   | 3,208  |  
|Accumulated amortization |  |              | (1,884 | ) |      |   | (1,026 | )
|                         |  |              |        |   |      |  
|                         |  | $            | 887    |   |      | $ | 2,182  |  
|                         |  |              |        |   |      |  

101



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                         
|--- | ------------------------
|(4) | Collaborative Agreements



| |                 
| | ----------------
| | Generic Prilosec







| |                              
| | -----------------------------
| | Generic OTC Claritin Products





| |                            
| | ---------------------------
| | Generic Wellbutrin SR/Zyban





| |                     
| | --------------------
| | Generic Glucotrol XL



102



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |           
| | ----------
| | Cardura XL





| |                                    
| | -----------------------------------
| | Generic Oral Contraceptive Products





| |                                                             
| | ------------------------------------------------------------
| | Actos and Extended-Release Metformin Combination
    Product





| |              
| | -------------
| | Generic Paxil





| |        
| | -------
| | Anexsia



103



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |             
|--- | ------------
|(5) | Dispositions



| |                                                          
| | ---------------------------------------------------------
| | Sale of Massachusetts Aerosol Manufacturing
    Operation







| |                         
| | ------------------------
| | Sales of Internet Assets







| |                    
| | -------------------
| | Brand Product Lines



104



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                               
|--- | ------------------------------
|(6) | Investments Available-For-Sale



|                                                             |  |                   |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|------------------------------------------------------------ |  | ----------------- | ------- | ----- | ---------- | - | ----- | ---------- |  | - | ------ | - |  | - | ------- | 
|                                                             |  | December 31, 2004 |        
|                                                             |  |                   |        
|                                                             |  |                   |         | Gross |            |   | Gross |            |  |  
|                                                             |  | Amortized         |         |       | Unrealized |   |       | Unrealized |  |   | Market |  
|                                                             |  | Cost              |         |       | Gains      |   |       | Losses     |  |   | Value  |  
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|Short-term:                                                  |  |                   |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|U.S. and government agency securities                        |  | $                 | 7,917   |       |            | $ |      |            |  | $ | (36    | ) |  | $ | 7,881   | 
|State, municipal and local agency securities                 |  |                   | 12,597  |       |            |   |      |            |  |   | (39    | ) |  |   | 12,558  | 
|Investment grade corporate debt                              |  |                   | 6,593   |       |            |   |      |            |  |   | (17    | ) |  |   | 6,576   | 
|Taxable, tax-advantaged and tax-free auction rate securities |  |                   | 17,800  |       |            |   |      |            |  |   |       |   |  |   | 17,800  | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|                                                             |  |                   | 44,907  |       |            |   |      |            |  |   | (92    | ) |  |   | 44,815  | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|Long-term:                                                   |  |                   |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|U.S. and government agency securities                        |  |                   | 50,469  |       |            |   | 1     |            |  |   | (463   | ) |  |   | 50,007  | 
|State, municipal and local agency securities                 |  |                   | 13,204  |       |            |   | 2     |            |  |   | (83    | ) |  |   | 13,123  | 
|Investment grade corporate debt                              |  |                   | 53,255  |       |            |   |      |            |  |   | (423   | ) |  |   | 52,832  | 
|Taxable, tax-advantaged and tax-free auction rate securities |  |                   | 7,000   |       |            |   |      |            |  |   |       |   |  |   | 7,000   | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|                                                             |  |                   | 123,928 |       |            |   | 3     |            |  |   | (969   | ) |  |   | 122,962 | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|                                                             |  | $                 | 168,835 |       |            | $ | 3     |            |  | $ | (1,061 | ) |  | $ | 167,777 | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  

|                                                             |  |                   |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|------------------------------------------------------------ |  | ----------------- | ------- | ----- | ---------- | - | ----- | ---------- |  | - | ------ | - |  | - | ------- | 
|                                                             |  | December 31, 2003 |        
|                                                             |  |                   |        
|                                                             |  |                   |         | Gross |            |   | Gross |            |  |  
|                                                             |  | Amortized         |         |       | Unrealized |   |       | Unrealized |  |   | Market |  
|                                                             |  | Cost              |         |       | Gains      |   |       | Losses     |  |   | Value  |  
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|Short-term:                                                  |  |                   |         |       |            |   |       |            |  |   |        |   |  |   |         | 
|U.S. and government agency securities                        |  | $                 | 6,000   |       |            | $ | 19    |            |  | $ |       |   |  | $ | 6,019   | 
|State, municipal and local agency securities                 |  |                   | 76,872  |       |            |   | 51    |            |  |   | (61    | ) |  |   | 76,862  | 
|Investment grade corporate debt                              |  |                   | 1,978   |       |            |   | 16    |            |  |   |       |   |  |   | 1,994   | 
|Taxable, tax-advantaged and tax-free auction rate securities |  |                   | 52,772  |       |            |   |      |            |  |   | (22    | ) |  |   | 52,750  | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  
|                                                             |  | $                 | 137,622 |       |            | $ | 86    |            |  | $ | (83    | ) |  | $ | 137,625 | 
|                                                             |  |                   |         |       |            |   |       |            |  |   |        |  



105



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                      |  |           |         |  |        |   |         | 
|--------------------- |  | --------- | ------- |  | ------ | - | ------- | 
|                      |  | Amortized |         |  | Market |  
|                      |  | Cost      |         |  | Value  |  
|                      |  |           |         |  |        |  
|Less than one year    |  | $         | 27,107  |  |        | $ | 27,015  | 
|Greater than one year |  |           | 141,728 |  |        |   | 140,762 | 
|                      |  |           |         |  |        |  
|                      |  | $         | 168,835 |  |        | $ | 167,777 | 
|                      |  |           |         |  |        |  





|    |                                   
|--- | ----------------------------------
|(7) | Inventories and Cost of Goods Sold



|                |  |                   |         |  |                   |   |        |       |  |   |            |  |  |            |         |  |       |   |        |  |  |   |         | 
|--------------- |  | ----------------- | ------- |  | ----------------- | - | ------ | ----- |  | - | ---------- |  |  | ---------- | ------- |  | ----- | - | ------ |  |  | - | ------- | 
|                |  | December 31, 2004 |         |  | December 31, 2003 |  
|                |  |                   |         |  |                   |  
|                |  | Commercial        |         |  | Pre-launch        |   |        | Total |  |   | Commercial |  |  | Pre-launch |         |  | Total |  
|                |  |                   |         |  |                   |   |        |       |  |   |            |  |  |            |         |  |       |  
|Raw materials   |  | $                 | 17,841  |  |                   | $ | 7,603  |       |  | $ | 25,444     |  |  | $          | 22,556  |  |       | $ | 9,232  |  |  | $ | 31,788  | 
|Work in process |  |                   | 12,274  |  |                   |   | 2,623  |       |  |   | 14,897     |  |  |            | 11,247  |  |       |   | 2,828  |  |  |   | 14,075  | 
|Finished goods  |  |                   | 155,444 |  |                   |   | 1,519  |       |  |   | 156,963    |  |  |            | 146,819 |  |       |   | 397    |  |  |   | 147,216 | 
|                |  |                   |         |  |                   |   |        |       |  |   |            |  |  |            |         |  |       |  
|                |  | $                 | 185,559 |  |                   | $ | 11,745 |       |  | $ | 197,304    |  |  | $          | 180,622 |  |       | $ | 12,457 |  |  | $ | 193,079 | 
|                |  |                   |         |  |                   |   |        |       |  |   |            |  |  |            |         |  |       |  





106



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                  |                                                 |                          |        |        |      |   |        |       |  |   |         |        | 
|----------------------------------------------------------------- | ----------------------------------------------- | ------------------------ | ------ | ------ | ---- | - | ------ | ----- |  | - | ------- | ------ | 
|                                                                  |                                                 | Years Ended December 31, |       
|                                                                  |                                                 |                          |       
|                                                                  |                                                 | 2004                     |        |        | 2003 |   |        | 2002  | 
|                                                                  |                                                 |                          |        |        |      |   |        |       | 
|Production related write-offs                                     |                                                 | $                        | 18,712 |        |      | $ | 11,509 |       |  | $ | 12,246  |       
|Write-offs of pre-launch inventories                              |                                                 |                          | 11,319 |        |      |   | 6,903  |       |  |   | 66,779  |       
|Impairment charges:                                               |                                                 |                          |        |        |      |   |        |       |  |   |         |       
|                                                                  | North Carolina facility                         |                          |        | 14,535 |      |   |        |      |  |   |         |       | 
|                                                                  | Entex product rights                            |                          |        | 3,500  |      |   |        |      |  |   |         |       | 
|                                                                  | Massachusetts facility, inventory and severance |                          |        |       |      |   |        | 7,851 |  |   |         | 11,750 | 
|                                                                  | Florida machinery and equipment                 |                          |        |       |      |   |        | 3,946 |  |   |         |       | 
|Under-utilization and inefficiencies of manufacturing operations: |                                                 |                          |        |        |      |   |        |       |  |   |         |       
|                                                                  | Florida and North Carolina facilities           |                          |        | 8,199  |      |   |        | 4,650 |  |   |         | 5,838  | 
|                                                                  | Massachusetts aerosol facility                  |                          |        |       |      |   |        | 4,264 |  |   |         | 7,876  | 
|                                                                  |                                                 |                          |        |        |      |   |        |       | 
|                                                                  |                                                 | $                        | 56,265 |        |      | $ | 39,123 |       |  | $ | 104,489 |       
|                                                                  |                                                 |                          |        |        |      |   |        |       | 



107



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                   
|--- | ----------------------------------
|(8) | Property, Plant and Equipment, Net



|                                                |  |              |         |   |      |   |         |  
|----------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                |  | December 31, |        
|                                                |  |              |        
|                                                |  | 2004         |         |   | 2003 |  
|                                                |  |              |         |   |      |  
|Land                                            |  | $            | 10,824  |   |      | $ | 10,786  |  
|Buildings                                       |  |              | 81,569  |   |      |   | 41,000  |  
|Manufacturing equipment                         |  |              | 112,467 |   |      |   | 103,278 |  
|Laboratory equipment                            |  |              | 16,113  |   |      |   | 14,805  |  
|Leasehold improvements                          |  |              | 32,212  |   |      |   | 29,958  |  
|Computer hardware and software                  |  |              | 51,619  |   |      |   | 42,228  |  
|Furniture and fixtures                          |  |              | 12,016  |   |      |   | 10,418  |  
|Automobiles                                     |  |              | 112     |   |      |   | 83      |  
|                                                |  |              |         |   |      |  
|                                                |  |              | 316,932 |   |      |   | 252,556 |  
|Less: accumulated depreciation and amortization |  |              | (90,770 | ) |      |   | (62,706 | )
|                                                |  |              |         |   |      |  
|                                                |  |              | 226,162 |   |      |   | 189,850 |  
|Construction in progress                        |  |              | 57,943  |   |      |   | 47,141  |  
|                                                |  |              |         |   |      |  
|                                                |  | $            | 284,105 |   |      | $ | 236,991 |  
|                                                |  |              |         |   |      |  







108



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                             
|--- | ----------------------------
|(9) | Other Intangible Assets, Net



|               |                          |                                    |        |                 |       |              |          |        |        |  |         |  |  |  |    |  |  | 
|-------------- | ------------------------ | ---------------------------------- | ------ | --------------- | ----- | ------------ | -------- | ------ | ------ |  | ------- |  |  |  | -- |  |  | 
|               |                          |                                    |        |                 |       | Amortization |         
|               |                          |                                    |        | Periods (Years) |      
|               |                          | December 31,                       |        |                 |       |             
|               |                          |                                    |        |                 |       |              | Weighted |       
|               |                          | 2004                               |        |                 | 2003  |              |          | Range  |        |  | Average | 
|               |                          |                                    |        |                 |       |              |          |        |        |  |         | 
|Product rights |                          | $                                  | 13,895 |                 |       | $            | 17,045   |        |        |  | 2-8     |  |  |  | 5  | 
|               | Accumulated amortization |                                    |        | (7,868          | )     |              |          | (4,508 | )      |  |         |  |  |  |    |  | 
|Patents        |                          |                                    | 1,569  |                 |       |              | 1,569    |        |        |  | 14      |  |  |  | 14 | 
|               | Accumulated amortization |                                    |        | (490            | )     |              |          | (385   | )      |  |         |  |  |  |    |  | 
|               |                          |                                    |        |                 |       |              |          |        |        |  |         | 
|               |                          | Total other intangible assets, net |        | $               | 7,106 |              |          | $      | 13,721 |  |         |  |  |  |    |  |  | 
|               |                          |                                    |        |                 |       |              |          |        |        |  |         | 







109



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                              
|---- | -----------------------------
|(10) | Unconsolidated Joint Ventures













|     |                                       
|---- | --------------------------------------
|(11) | Accrued Expenses and Other Liabilities



|                                            |  |              |         |  |      |   |         | 
|------------------------------------------- |  | ------------ | ------- |  | ---- | - | ------- | 
|                                            |  | December 31, |        
|                                            |  |              |        
|                                            |  | 2004         |         |  | 2003 |  
|                                            |  |              |         |  |      |  
|Tax accruals, excluding payroll taxes       |  | $            | 56,397  |  |      | $ | 44,973  | 
|SRAs                                        |  |              | 31,958  |  |      |   | 23,387  | 
|Payroll, payroll taxes and related benefits |  |              | 22,016  |  |      |   | 19,214  | 
|Litigation settlements                      |  |              |        |  |      |   | 23,736  | 
|Other                                       |  |              | 25,798  |  |      |   | 32,931  | 
|                                            |  |              |         |  |      |  
|                                            |  | $            | 136,169 |  |      | $ | 144,241 | 
|                                            |  |              |         |  |      |  

110



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |             
|---- | ------------
|(12) | Income Taxes



|                                             |         |                          |        |       |        |  |        |        |        |  |         |         |         |  
|-------------------------------------------- | ------- | ------------------------ | ------ | ----- | ------ |  | ------ | ------ | ------ |  | ------- | ------- | ------- | -
|                                             |         | Years Ended December 31, |       
|                                             |         |                          |       
|                                             |         | 2004                     |        |       | 2003   |  |        | 2002   |       
|                                             |         |                          |        |       |        |  |        |        |       
|Current provision (benefit):                 |         |                          |        |       |        |  |        |        |        |  |         |        
|                                             | Federal |                          | $      | 1,678 |        |  | $      |       |        |  | $       | (27,774 | )      
|                                             | State   |                          |        |      |        |  |        |       |        |  |         |        |        
|                                             |         |                          |        |       |        |  |        |        |       
|                                             |         |                          | 1,678  |       |        |  |       |        |        |  | (27,774 | )      
|                                             |         |                          |        |       |        |  |        |        |       
|Deferred provision (benefit):                |         |                          |        |       |        |  |        |        |        |  |         |        
|                                             | Federal |                          |        | 7,155 |        |  |        | 12,156 |        |  |         | (22,907 | )      
|                                             | State   |                          |        | 1,768 |        |  |        | 694    |        |  |         | (2,896  | )      
|                                             |         |                          |        |       |        |  |        |        |       
|                                             |         |                          | 8,923  |       |        |  | 12,850 |        |        |  | (25,803 | )      
|                                             |         |                          |        |       |        |  |        |        |       
|Change in accrual for tax contingencies, net |         |                          | 17,802 |       |        |  | 17,181 |        |        |  |        |        
|Change in valuation allowance                |         |                          |       |       |        |  |       |        |        |  | (7,249  | )      
|                                             |         |                          |        |       |        |  |        |        |       
|                                             |         | Total                    |        | $     | 28,403 |  |        | $      | 30,031 |  |         | $       | (60,826 | )
|                                             |         |                          |        |       |        |  |        |        |       



|                                                                                 |  |              |      |   |      |  |      |      |  |  |       |   
|-------------------------------------------------------------------------------- |  | ------------ | ---- | - | ---- |  | ---- | ---- |  |  | ----- | --
|                                                                                 |  | Years Ended  |     
|                                                                                 |  | December 31, |     
|                                                                                 |  |              |     
|                                                                                 |  | 2004         |      |   | 2003 |  |      | 2002 | 
|                                                                                 |  |              |      |   |      |  |      |      | 
|Federal statutory rate                                                           |  |              | 35.0 | % |      |  | 35.0 | %    |  |  | (35.0 | )%
|State income taxes, net of federal effect                                        |  |              | 2.0  |   |      |  | 2.0  |      |  |  | (1.9  | ) 
|Change in valuation allowance on net deferred income tax assets                  |  |              |     |   |      |  |     |      |  |  | (4.8  | ) 
|Reversal of tax contingency accruals, net                                        |  |              | (7.7 | ) |      |  |     |      |  |  |      |   
|Non-deductible goodwill amortization and write-offs and
    reorganization costs |  |              |     |   |      |  |     |      |  |  | 1.0   |   
|Other, net                                                                       |  |              | 0.9  |   |      |  | 1.4  |      |  |  | 0.9   |   
|                                                                                 |  |              |      |   |      |  |      |      | 
|Effective tax rate                                                               |  |              | 30.2 | % |      |  | 38.4 | %    |  |  | (39.8 | )%
|                                                                                 |  |              |      |   |      |  |      |      | 

111



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |                                                                             |                                                          |   |        |        |  |   |        |        | 
|-------------------------------- | --------------------------------------------------------------------------- | -------------------------------------------------------- | - | ------ | ------ |  | - | ------ | ------ | 
|                                 |                                                                             | December 31,                                             |  
|                                 |                                                                             |                                                          |  
|                                 |                                                                             | 2004                                                     |   |        | 2003   | 
|                                 |                                                                             |                                                          |   |        |        | 
|DEFERRED INCOME TAX ASSETS:      |                                                                             |                                                          |   |        |        |  |   |       
|                                 | Credits and loss carryforwards                                              |                                                          | $ | 5,243  |        |  | $ | 13,549 |       
|                                 | Allowance for doubtful accounts receivable                                  |                                                          |   | 1,348  |        |  |   | 2,837  |       
|                                 | Operating accruals                                                          |                                                          |   | 50,630 |        |  |   | 47,253 |       
|                                 | Cybear product development                                                  |                                                          |   | 1,261  |        |  |   | 1,514  |       
|                                 |                                                                             |                                                          |   |        |        | 
|                                 |                                                                             | Total deferred income tax assets                         |   |        | 58,482 |  |   |        | 65,153 | 
|                                 | Deferred income tax assets reclassified to assets held for sale             |                                                          |   | (599   | )      |  |   | (190   | )     
|                                 |                                                                             |                                                          |   |        |        | 
|                                 |                                                                             | Total deferred income tax assets per balance sheets      |   | $      | 57,883 |  |   | $      | 64,963 | 
|                                 |                                                                             |                                                          |   |        |        | 
|DEFERRED INCOME TAX LIABILITIES: |                                                                             |                                                          |   |        |        |  |   |       
|                                 | Tax over book depreciation and amortization                                 |                                                          | $ | 36,564 |        |  | $ | 28,933 |       
|                                 | Deferred income tax liability reclassified to liabilities held
    for sale |                                                          |   | (1,959 | )      |  |   | (1,825 | )     
|                                 |                                                                             |                                                          |   |        |        | 
|                                 |                                                                             | Total deferred income tax liabilities per balance sheets |   | $      | 34,605 |  |   | $      | 27,108 | 
|                                 |                                                                             |                                                          |   |        |        | 









|                  |  |              |        |  
|----------------- |  | ------------ | ------ | -
|                  |  | Year Ended   |       
|                  |  | December 31, |       
|                  |  | 2002         |       
|                  |  |              |       
|Beginning of year |  | $            | 7,249  |  
|Utilized          |  |              | (7,249 | )
|                  |  |              |       
|End of year       |  | $            |       |  
|                  |  |              |       



112



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












|     |            
|---- | -----------
|(13) | Commitments



| |                       
| | ----------------------
| | Secured Line of Credit





| |                              
| | -----------------------------
| | Royalties on Generic Products





113



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                            
| | ---------------------------
| | Royalties on Brand Products





| |                      
| | ---------------------
| | Employment Agreements





| |                 
| | ----------------
| | Operating Leases



|           |  |            |        |  |          |   |               |               |  |   |        | 
|---------- |  | ---------- | ------ |  | -------- | - | ------------- | ------------- |  | - | ------ | 
|           |  | Total      |        |  |          |   | Minimum Lease |              
|           |  | Obligation |        |  | Sublease |   |               | Payments, Net | 
|           |  |            |        |  |          |   |               |               | 
|2005       |  | $          | 12,619 |  |          | $ | (786          | )             |  | $ | 11,833 | 
|2006       |  |            | 11,730 |  |          |   | (792          | )             |  |   | 10,938 | 
|2007       |  |            | 10,878 |  |          |   | (852          | )             |  |   | 10,026 | 
|2008       |  |            | 8,756  |  |          |   | (852          | )             |  |   | 7,904  | 
|2009       |  |            | 7,222  |  |          |   | (852          | )             |  |   | 6,370  | 
|Thereafter |  |            | 18,885 |  |          |   | (1,633        | )             |  |   | 17,252 | 
|           |  |            |        |  |          |   |               |               | 
|           |  | $          | 70,090 |  |          | $ | (5,767        | )             |  | $ | 64,323 | 
|           |  |            |        |  |          |   |               |               | 





| |                     
| | --------------------
| | Purchase Commitments



114



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|     |                           
|---- | --------------------------
|(14) | Related Party Transactions









|     |                     
|---- | --------------------
|(15) | Stockholders Equity







115



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                                         
| | --------------------------------------------------------
| | 2000 Stock Option Plan and 1993 Stock Incentive
    Plan















116



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








| |                
| | ---------------
| |  Stock Options



ANDRX COMMON STOCK


|                  |  |              |            |   |                          |   |       |      |  |           |           |  |  |        |       |  |       |  |           |  |  |   |       | 
|----------------- |  | ------------ | ---------- | - | ------------------------ | - | ----- | ---- |  | --------- | --------- |  |  | ------ | ----- |  | ----- |  | --------- |  |  | - | ----- | 
|                  |  | Outstanding  |            |   | Exercisable              |  
|                  |  |              |            |   |                          |  
|                  |  | Number of    |            |   | Exercise Price per Share |   |       |      |  | Wtd. Avg. |          
|                  |  | Shares Under |            |   |                          |   |       |      |  | Exercise  |          
|                  |  | Option       |            |   | Low                      |   |       | High |  |           | Wtd. Avg. |  |  | Shares |       |  | Price | 
|                  |  |              |            |   |                          |   |       |      |  |           |           |  |  |        |       |  |       | 
|December 31, 2001 |  |              | 6,912,122  |   |                          | $ | 1.62  |      |  | $         | 85.00     |  |  | $      | 35.49 |  |       |  | 2,747,798 |  |  | $ | 13.88 | 
|Granted           |  |              | 1,550,777  |   |                          |   | 17.94 |      |  |           | 45.50     |  |  |        | 34.67 |  |       |  |           |  |  |   |       | 
|Exercised         |  |              | (863,495   | ) |                          |   | 1.62  |      |  |           | 47.83     |  |  |        | 5.02  |  |       |  |           |  |  |   |       | 
|Forfeited         |  |              | (1,167,404 | ) |                          |   | 6.82  |      |  |           | 85.00     |  |  |        | 56.38 |  |       |  |           |  |  |   |       | 
|                  |  |              |            |   |                          |   |       |      |  |           |           |  |  |        |       |  |       | 
|December 31, 2002 |  |              | 6,432,000  |   |                          |   | 1.62  |      |  |           | 85.00     |  |  |        | 35.96 |  |       |  | 2,932,891 |  |  |   | 25.37 | 
|Granted           |  |              | 2,349,998  |   |                          |   | 8.85  |      |  |           | 35.63     |  |  |        | 18.52 |  |       |  |           |  |  |   |       | 
|Exercised         |  |              | (730,150   | ) |                          |   | 22.17 |      |  |           | 1.62      |  |  |        | 4.60  |  |       |  |           |  |  |   |       | 
|Forfeited         |  |              | (1,573,254 | ) |                          |   | 3.49  |      |  |           | 85.00     |  |  |        | 33.71 |  |       |  |           |  |  |   |       | 
|                  |  |              |            |   |                          |   |       |      |  |           |           |  |  |        |       |  |       | 
|December 31, 2003 |  |              | 6,478,594  |   |                          |   | 2.74  |      |  |           | 85.00     |  |  |        | 33.71 |  |       |  | 3,024,878 |  |  |   | 34.37 | 
|Granted           |  |              | 1,931,495  |   |                          |   | 17.77 |      |  |           | 30.00     |  |  |        | 26.00 |  |       |  |           |  |  |   |       | 
|Exercised         |  |              | (493,012   | ) |                          |   | 2.99  |      |  |           | 29.94     |  |  |        | 12.23 |  |       |  |           |  |  |   |       | 
|Forfeited         |  |              | (1,121,416 | ) |                          |   | 4.98  |      |  |           | 85.00     |  |  |        | 33.97 |  |       |  |           |  |  |   |       | 
|                  |  |              |            |   |                          |   |       |      |  |           |           |  |  |        |       |  |       | 
|December 31, 2004 |  |              | 6,795,661  |   |                          | $ | 2.74  |      |  | $         | 85.00     |  |  | $      | 32.94 |  |       |  | 3,493,297 |  |  | $ | 36.65 | 
|                  |  |              |            |   |                          |   |       |      |  |           |           |  |  |        |       |  |       | 

|                                         |  |                        |                   |  |               |  |      |           |  |   |        |  |           |       |           |  |  |   |       | 
|---------------------------------------- |  | ---------------------- | ----------------- |  | ------------- |  | ---- | --------- |  | - | ------ |  | --------- | ----- | --------- |  |  | - | ----- | 
|                                         |  | Exercisable Options at |                  
|Options Outstanding at December 31, 2004 |  |                        | December 31, 2004 | 
|                                         |  |                        |                   | 
|                                         |  | Number of              |                   |  | Wtd. Avg.     |  |      | Wtd. Avg. |  |   |        |  | Wtd. Avg. |      
|Range of                                 |  | Shares Under           |                   |  | Remaining     |  |      | Exercise  |  |   |        |  | Exercise  |      
|Exercise Prices                          |  | Option                 |                   |  | Life in Years |  |      | Price     |  |   | Shares |  |           | Price |          
|                                         |  |                        |                   |  |               |  |      |           |  |   |        |  |           |       |          
|$ 2.74 - $16.62                          |  |                        | 1,787,621         |  |               |  | 4.97 |           |  | $ | 13.00  |  |           |       | 1,209,821 |  |  | $ | 12.41 | 
|17.77 -  25.64                           |  |                        | 2,305,715         |  |               |  | 8.11 |           |  |   | 23.71  |  |           |       | 462,445   |  |  |   | 21.90 | 
|27.28 -  58.50                           |  |                        | 1,402,523         |  |               |  | 5.87 |           |  |   | 41.66  |  |           |       | 868,809   |  |  |   | 45.13 | 
|62.19 -  77.73                           |  |                        | 1,263,402         |  |               |  | 6.56 |           |  |   | 66.80  |  |           |       | 923,862   |  |  |   | 66.31 | 
|85.00 -  85.00                           |  |                        | 36,400            |  |               |  | 5.85 |           |  |   | 85.00  |  |           |       | 28,360    |  |  |   | 85.00 | 
|                                         |  |                        |                   |  |               |  |      |           |  |   |        |  |           |       |          
|2.74 -  85.00                            |  |                        | 6,795,661         |  |               |  | 6.52 |           |  |   | 32.94  |  |           |       | 3,493,297 |  |  |   | 36.65 | 
|                                         |  |                        |                   |  |               |  |      |           |  |   |        |  |           |       |          



117



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| |  Restricted Stock Units





|     |  |   |       | 
|---- |  | - | ----- | 
|2005 |  | $ | 2,032 | 
|2006 |  |   | 1,856 | 
|2007 |  |   | 1,461 | 
|2008 |  |   | 1,030 | 
|2009 |  |   | 92    | 
|     |  |   |      
|     |  | $ | 6,471 | 
|     |  |   |      





| |                             
| | ----------------------------
| | Employee Stock Purchase Plan





|     |             
|---- | ------------
|(16) | 401(k) Plans





|     |                             
|---- | ----------------------------
|(17) | Litigation and Contingencies



| |                                       
| | --------------------------------------
| | Ongoing Patent Infringement Litigation



118



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                           
| | --------------------------
| | Naproxen Sodium (Naprelan)





| |                                 
| | --------------------------------
| | Metoprolol Succinate (Toprol-XL)





| |                 
| | ----------------
| | Sodium Valproate





| |                                 
| | --------------------------------
| | Paroxetine Hydrochloride (Paxil)



119



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                      
| | ---------------------
| | Omeprazole (Prilosec)





| |                                        
| | ---------------------------------------
| | Resolved Patent Infringement Litigation



| |                                               
| | ----------------------------------------------
| | Bupropion Hydrochloride (Wellbutrin SR/ Zyban)





| |                                                                      
| | ---------------------------------------------------------------------
| | Fosinopril Sodium and Fosinopril HCTZ (Monopril and Monopril
    HCT)



120



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                         
| | ------------------------
| | Ongoing Other Litigation



| |                        
| | -----------------------
| | Drug Pricing Litigation





| |                                 
| | --------------------------------
| | Cardizem CD Antitrust Litigation







121



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                        
| | ---------------------------------------
| | Wellbutrin SR Related Securities Claims





| |               
| | --------------
| | PPA Litigation





| |                           
| | --------------------------
| | Lemelson Patent Litigation





| |                      
| | ---------------------
| | Other Pending Matters



122



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                            
| | ---------------------------
| | Litigation Resolved in 2004



| |                                 
| | --------------------------------
| | Tiazac Related Securities Claims





| |                     
| | --------------------
| | Trademark Litigation





| |                    
| | -------------------
| | Famotidine (Pepcid)



123



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                           
| | --------------------------
| | Burnett Employment Dispute





| |                                       
| | --------------------------------------
| | Alpharma Breach of Contract Litigation







| |              
| | -------------
| | Contingencies

Risks Relating to the Pharmaceuticals
Industry Generally and to Andrx Specifically








124



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Tax Matters





|     |                                         
|---- | ----------------------------------------
|(18) | Litigation Settlements and Other Charges



|                                              |  |                          |       |  |      |   |       |      |  |   |        | 
|--------------------------------------------- |  | ------------------------ | ----- |  | ---- | - | ----- | ---- |  | - | ------ | 
|                                              |  | Years Ended December 31, |      
|                                              |  |                          |      
|                                              |  | 2004                     |       |  | 2003 |   |       | 2002 | 
|                                              |  |                          |       |  |      |   |       |      | 
|Litigation settlement charge and legal claims |  | $                        | 7,800 |  |      | $ | 8,750 |      |  | $ | 65,000 | 
|POL goodwill and intangible impairment        |  |                          |      |  |      |   |      |      |  |   | 7,833  | 
|                                              |  |                          |       |  |      |   |       |      | 
|                                              |  | $                        | 7,800 |  |      | $ | 8,750 |      |  | $ | 72,833 | 
|                                              |  |                          |       |  |      |   |       |      | 









|     |                                    
|---- | -----------------------------------
|(19) | Selected Quarterly Data (Unaudited)

|                                         |  |         |         |  |         |   |         |         |  |   |         |  |  |       |         |  |  |   |         | 
|---------------------------------------- |  | ------- | ------- |  | ------- | - | ------- | ------- |  | - | ------- |  |  | ----- | ------- |  |  | - | ------- | 
|                                         |  | 2004    |        
|                                         |  |         |        
|                                         |  | First   |         |  | Second  |   |         | Third   |  |   | Fourth  |  |  |      
|                                         |  | Quarter |         |  | Quarter |   |         | Quarter |  |   | Quarter |  |  | Total |        
|                                         |  |         |         |  |         |   |         |         |  |   |         |  |  |       |        
|Distributed products revenue             |  | $       | 173,495 |  |         | $ | 163,327 |         |  | $ | 158,123 |  |  | $     | 181,367 |  |  | $ | 676,312 | 
|Andrx products revenue                   |  |         | 98,500  |  |         |   | 114,743 |         |  |   | 106,050 |  |  |       | 102,470 |  |  |   | 421,763 | 
|Licensing and royalties                  |  |         | 20,135  |  |         |   | 12,489  |         |  |   | 8,033   |  |  |       | 6,108   |  |  |   | 46,765  | 
|Cost of goods sold                       |  |         | 190,251 |  |         |   | 209,657 |         |  |   | 190,912 |  |  |       | 208,894 |  |  |   | 799,714 | 
|Litigation settlements and other charges |  |         |        |  |         |   | 7,800   |         |  |   |        |  |  |       |        |  |  |   | 7,800   | 
|Net income                               |  |         | 26,662  |  |         |   | 6,444   |         |  |   | 11,801  |  |  |       | 20,752  |  |  |   | 65,659  | 
|Basic net income per share               |  |         | 0.37    |  |         |   | 0.09    |         |  |   | 0.16    |  |  |       | 0.28    |  |  |   | 0.90    | 
|Diluted net income per share             |  |         | 0.36    |  |         |   | 0.09    |         |  |   | 0.16    |  |  |       | 0.28    |  |  |   | 0.89    | 

125



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                         |  |         |         |  |         |   |         |         |  |   |         |  |  |       |         |  |  |   |         | 
|---------------------------------------- |  | ------- | ------- |  | ------- | - | ------- | ------- |  | - | ------- |  |  | ----- | ------- |  |  | - | ------- | 
|                                         |  | 2003    |        
|                                         |  |         |        
|                                         |  | First   |         |  | Second  |   |         | Third   |  |   | Fourth  |  |  |      
|                                         |  | Quarter |         |  | Quarter |   |         | Quarter |  |   | Quarter |  |  | Total |        
|                                         |  |         |         |  |         |   |         |         |  |   |         |  |  |       |        
|Distributed products revenue             |  | $       | 154,617 |  |         | $ | 161,506 |         |  | $ | 168,334 |  |  | $     | 172,641 |  |  | $ | 657,098 | 
|Andrx products revenue                   |  |         | 48,432  |  |         |   | 76,679  |         |  |   | 74,489  |  |  |       | 102,052 |  |  |   | 301,652 | 
|Licensing and royalties                  |  |         | 31,013  |  |         |   | 33,054  |         |  |   | 9,588   |  |  |       | 6,425   |  |  |   | 80,080  | 
|Cost of goods sold                       |  |         | 159,860 |  |         |   | 172,864 |         |  |   | 170,958 |  |  |       | 200,530 |  |  |   | 704,212 | 
|Litigation settlements and other charges |  |         |        |  |         |   | 7,500   |         |  |   |        |  |  |       | 1,250   |  |  |   | 8,750   | 
|Net income                               |  |         | 6,356   |  |         |   | 14,477  |         |  |   | 11,741  |  |  |       | 15,603  |  |  |   | 48,177  | 
|Basic net income per share               |  |         | 0.09    |  |         |   | 0.20    |         |  |   | 0.16    |  |  |       | 0.22    |  |  |   | 0.67    | 
|Diluted net income per share             |  |         | 0.09    |  |         |   | 0.20    |         |  |   | 0.16    |  |  |       | 0.21    |  |  |   | 0.66    | 













|     |         
|---- | --------
|(20) | Segments



Distributed Products




126



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Generic Products




Brand Products




Corporate and Other








|                                               |  |                                               |         |  |          |   |         |          |  |   |             |   |  |              |         |   |  |   |           | 
|---------------------------------------------- |  | --------------------------------------------- | ------- |  | -------- | - | ------- | -------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | --------- | 
|                                               |  | As of or for the Year Ended December 31, 2004 |        
|                                               |  |                                               |        
|                                               |  | Distributed                                   |         |  | Generic  |   |         | Brand    |  |   | Corporate & |   |  |             
|                                               |  | Products                                      |         |  | Products |   |         | Products |  |   | Other       |   |  | Consolidated |        
|                                               |  |                                               |         |  |          |   |         |          |  |   |             |   |  |              |        
|Revenues                                       |  | $                                             | 676,423 |  |          | $ | 387,659 |          |  | $ | 81,005      |   |  | $            |        |   |  | $ | 1,145,087 | 
|Income (loss) from operations                  |  |                                               | 53,673  |  |          |   | 123,963 |          |  |   | (35,653     | ) |  |              | (53,918 | ) |  |   | 88,065    | 
|Equity in earnings of joint ventures           |  |                                               |        |  |          |   | 4,504   |          |  |   |            |   |  |              |        |   |  |   | 4,504     | 
|Interest income                                |  |                                               |        |  |          |   |        |          |  |   | 1           |   |  |              | 4,059   |   |  |   | 4,060     | 
|Interest expense                               |  |                                               |        |  |          |   |        |          |  |   | 94          |   |  |              | 2,473   |   |  |   | 2,567     | 
|Gain on sale of assets                         |  |                                               |        |  |          |   |        |          |  |   |            |   |  |              |        |   |  |   |          | 
|Depreciation and amortization                  |  |                                               | 2,923   |  |          |   | 20,026  |          |  |   | 6,036       |   |  |              | 5,583   |   |  |   | 34,568    | 
|Purchase of property, plant and equipment, net |  |                                               | 940     |  |          |   | 77,410  |          |  |   | 239         |   |  |              | 9,694   |   |  |   | 88,283    | 
|Total assets                                   |  |                                               | 202,576 |  |          |   | 397,204 |          |  |   | 76,440      |   |  |              | 313,493 |   |  |   | 989,713   | 

127



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                               |  |                                               |         |  |          |   |         |          |  |   |             |   |  |              |         |   |  |   |           | 
|---------------------------------------------- |  | --------------------------------------------- | ------- |  | -------- | - | ------- | -------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | --------- | 
|                                               |  | As of or for the Year Ended December 31, 2003 |        
|                                               |  |                                               |        
|                                               |  | Distributed                                   |         |  | Generic  |   |         | Brand    |  |   | Corporate & |   |  |             
|                                               |  | Products                                      |         |  | Products |   |         | Products |  |   | Other       |   |  | Consolidated |        
|                                               |  |                                               |         |  |          |   |         |          |  |   |             |   |  |              |        
|Revenues                                       |  | $                                             | 657,098 |  |          | $ | 336,197 |          |  | $ | 53,043      |   |  | $            |        |   |  | $ | 1,046,338 | 
|Income (loss) from operations                  |  |                                               | 46,223  |  |          |   | 140,485 |          |  |   | (66,846     | ) |  |              | (51,995 | ) |  |   | 67,867    | 
|Equity in earnings of joint ventures           |  |                                               |        |  |          |   | 5,135   |          |  |   |            |   |  |              |        |   |  |   | 5,135     | 
|Interest income                                |  |                                               |        |  |          |   |        |          |  |   |            |   |  |              | 2,242   |   |  |   | 2,242     | 
|Interest expense                               |  |                                               |        |  |          |   |        |          |  |   | 127         |   |  |              | 2,514   |   |  |   | 2,641     | 
|Gain on sale of assets                         |  |                                               |        |  |          |   | 3,730   |          |  |   | 1,875       |   |  |              |        |   |  |   | 5,605     | 
|Depreciation and amortization                  |  |                                               | 4,299   |  |          |   | 17,848  |          |  |   | 4,940       |   |  |              | 1,976   |   |  |   | 29,063    | 
|Purchase of property, plant and equipment, net |  |                                               | 4,102   |  |          |   | 28,375  |          |  |   | 994         |   |  |              | 5,984   |   |  |   | 39,455    | 
|Total assets                                   |  |                                               | 231,779 |  |          |   | 365,497 |          |  |   | 88,159      |   |  |              | 273,011 |   |  |   | 958,446   | 

|                                               |  |                                               |         |  |          |   |         |          |  |   |             |   |  |              |         |   |  |   |          |  
|---------------------------------------------- |  | --------------------------------------------- | ------- |  | -------- | - | ------- | -------- |  | - | ----------- | - |  | ------------ | ------- | - |  | - | -------- | -
|                                               |  | As of or for the Year Ended December 31, 2002 |        
|                                               |  |                                               |        
|                                               |  | Distributed                                   |         |  | Generic  |   |         | Brand    |  |   | Corporate & |   |  |             
|                                               |  | Products                                      |         |  | Products |   |         | Products |  |   | Other       |   |  | Consolidated |        
|                                               |  |                                               |         |  |          |   |         |          |  |   |             |   |  |              |        
|Revenues                                       |  | $                                             | 534,618 |  |          | $ | 208,127 |          |  | $ | 28,235      |   |  | $            |        |   |  | $ | 770,980  |  
|Income (loss) from operations                  |  |                                               | 32,006  |  |          |   | (12,930 | )        |  |   | (85,835     | ) |  |              | (99,895 | ) |  |   | (166,654 | )
|Equity in earnings of joint ventures           |  |                                               |        |  |          |   | 3,697   |          |  |   |            |   |  |              |        |   |  |   | 3,697    |  
|Interest income                                |  |                                               |        |  |          |   |        |          |  |   |            |   |  |              | 5,420   |   |  |   | 5,420    |  
|Interest expense                               |  |                                               |        |  |          |   |        |          |  |   |            |   |  |              | 200     |   |  |   | 200      |  
|Gain on sale of assets                         |  |                                               |        |  |          |   |        |          |  |   | 5,094       |   |  |              |        |   |  |   | 5,094    |  
|Depreciation and amortization                  |  |                                               | 3,289   |  |          |   | 12,526  |          |  |   | 5,488       |   |  |              | 769     |   |  |   | 22,072   |  
|Purchase of property, plant and equipment, net |  |                                               | 13,916  |  |          |   | 96,321  |          |  |   | 808         |   |  |              | 1,245   |   |  |   | 112,290  |  
|Total assets                                   |  |                                               | 232,774 |  |          |   | 289,817 |          |  |   | 69,021      |   |  |              | 197,867 |   |  |   | 789,479  |  





|                                             |                                        |                          |         |         |      |   |         |         |  |   |         |         | 
|-------------------------------------------- | -------------------------------------- | ------------------------ | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                             |                                        | Years Ended December 31, |        
|                                             |                                        |                          |        
|                                             |                                        | 2004                     |         |         | 2003 |   |         | 2002    | 
|                                             |                                        |                          |         |         |      |   |         |         | 
|Controlled-release generic products          |                                        | $                        | 271,722 |         |      | $ | 208,883 |         |  | $ | 129,270 |        
|Immediate-release and niche generic products |                                        |                          | 72,645  |         |      |   | 46,131  |         |  |   | 54,603  |        
|                                             |                                        |                          |         |         |      |   |         |         | 
|                                             | Total generic product sales, net       |                          |         | 344,367 |      |   |         | 255,014 |  |   |         | 183,873 | 
|Licensing and royalties                      |                                        |                          | 43,292  |         |      |   | 77,379  |         |  |   | 17,267  |        
|Other                                        |                                        |                          |        |         |      |   | 3,804   |         |  |   | 6,987   |        
|                                             |                                        |                          |         |         |      |   |         |         | 
|                                             | Total Generic Product Segment revenues |                          | $       | 387,659 |      |   | $       | 336,197 |  |   | $       | 208,127 | 
|                                             |                                        |                          |         |         |      |   |         |         | 



|     |                 
|---- | ----------------
|(21) | Subsequent Event



128



---



##### 



ANDRX CORPORATION AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












129



---



##### 





|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure





|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Disclosure Controls and Procedures




Internal Control Over Financial Reporting




|        |                                                                    
|------- | -------------------------------------------------------------------
|Part A. | Managements Report on Internal Control Over Financial
    Reporting





|        |                                                                        
|------- | -----------------------------------------------------------------------
|Part B. | Attestation Report of Independent Registered Public
    Accounting Firm





|        |                                                         
|------- | --------------------------------------------------------
|Part C. | Changes in Internal Control Over Financial
    Reporting





|         |      
|-------- | -----
|Item 9B. | Other



PART III




|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant





Investor.Relations@andrx.com


130



---



##### 





|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation





|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management





|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions





|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



PART IV




|         |                                            
|-------- | -------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules.













|        |    |     |             |                                                                                                                                                                                                        
|------- | -- | --- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|No.     |    |     | Description
|        |    |     |            
|        | 2  | .2  |             | Agreement and Plan of Merger and Reorganization dated
    March 23, 2000 among Andrx Corporation, Cybear, Inc., New
    Andrx Corporation, Andrx Acquisition Corp., and Cybear
    Acquisition Corp.(3)
|        | 2  | .3  |             | Agreement and Plan of Merger dated January 9, 2001, among
    Andrx Corporation, Mediconsult Acquisition Corp. and
    Mediconsult.com, Inc.(4)                                                        
|        | 3  | .1  |             | Registrants Amended and Restated Certificate of
    Incorporation(6)                                                                                                                                  
|        | 3  | .2  |             | Registrants Amended and Restated Bylaws dated
    April 9, 2004(25)                                                                                                                                   
|        | 4  | .1  |             | Specimen Certificate of Andrx Corporation  Andrx
    Group Common Stock(7)                                                                                                                            
|        | 4  | .3  |             | Rights Agreement, dated as of March 20, 2003, between Andrx
    Corporation and American Stock Transfer &
    Trust Company as rights agent(8)                                                         
|        | 4  | .4  |             | Revised Specimen Certificate of Andrx Corporation 
    Andrx Group Common Stock(19)                                                                                                                   
|        | 10 | .1  |             | Form of Stock Incentive Plan, as amended(9)*                                                                                                                                                           
|        | 10 | .6  |             | Royalty Agreement between the Registrant and Chih-Ming J.
    Chen(9)*                                                                                                                                 
|        | 10 | .7  |             | Form of Indemnification Agreement between the Registrant and
    officers and directors(9)*                                                                                                            
|        | 10 | .14 |             | Lease Agreement relating to the premises at 4001 SW 47th Avenue,
    Ft. Lauderdale, Florida(9)                                                                                                        

131



---



##### 



|        |    |     |             |                                                                                                                                                                                                       
|------- | -- | --- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|No.     |    |     | Description
|        |    |     |            
|        | 10 | .15 |             | Lease Agreement related to the premises at 4011 SW 47th Avenue,
    Ft. Lauderdale, Florida(9)                                                                                                        
|        | 10 | .16 |             | Lease Agreement relating to the premises at 3436 University
    Drive, Davie, Florida(9)                                                                                                              
|        | 10 | .30 |             | First Amendment to Lease Agreement relating to the premises
    located at 3436 University Drive, Davie, Florida(10)                                                                                  
|        | 10 | .31 |             | Third Addendum to Lease between the Registrant and New Town
    Centre, Ltd., relating to the premises at 4011 S.W. Avenue,
    Davie, Florida(11)                                                    
|        | 10 | .32 |             | Fourth Addendum to Lease between the Registrant and New Town
    Commerce Centre, Ltd., relating to the premises at 4011 S.W.
    47th Avenue, Davie, Florida(11)                                     
|        | 10 | .33 |             | Lease by and between Registrant and New Town Commerce Center,
    Ltd., relating to the premises at 4111 S.W. 47th Avenue, Davie,
    Florida(11)                                                     
|        | 10 | .34 |             | Amendment to Royalty Agreement between the Registrant and
    Chih-Ming J. Chen, Ph.D.(12)*                                                                                                           
|        | 10 | .36 |             | Lease Agreement relating to the premises at 2915 Weston
    Road, Weston, Florida(12)                                                                                                                 
|        | 10 | .39 |             | Lease Agreement relating to the premises at 180 Passaic
    Avenue, Fairfield, New Jersey(24)                                                                                                         
|        | 10 | .42 |             | 2000 Stock Option Plan(6)*                                                                                                                                                                            
|        | 10 | .45 |             | Tax Sharing Agreement(6)                                                                                                                                                                              
|        | 10 | .53 |             | Lease Agreement relating to the premises at 2945 West
    Corporate Lakes Boulevard, Weston, Florida(14)                                                                                              
|        | 10 | .54 |             | Amendment to Tax Sharing Agreement(14)                                                                                                                                                                
|        | 10 | .55 |             | Lease Agreement Relating to the premises at 3040 Universal
    Boulevard, Suite #150, Weston, Florida(14)                                                                                             
|        | 10 | .59 |             | Termination Agreement with Geneva Pharmaceuticals, Inc.(2)(15)                                                                                                                                        
|        | 10 | .60 |             | Employment Agreement between the Registrant and Scott Lodin(15)*                                                                                                                                      
|        | 10 | .61 |             | Employment Agreement between the Registrant and Angelo C.
    Malahias(15)*                                                                                                                           
|        | 10 | .62 |             | Separation Agreement between the Registrant and Chih Ming
    Chen, Ph.D.(15)*                                                                                                                        
|        | 10 | .63 |             | Separation Agreement between the Registrant and Alan P.
    Cohen(15)*                                                                                                                                
|        | 10 | .64 |             | Employee Stock Purchase Plan, as amended(16)*                                                                                                                                                         
|        | 10 | .66 |             | Employment Agreement between Registrant and Richard J. Lane,
    former Chief Executive Officer*(17)                                                                                                  
|        | 10 | .67 |             | Commercialization Agreement among Andrx Pharmaceuticals, Inc.,
    Genpharm, Inc. and Kremers Urban Development Co. dated as of
    October 30, 2002(22)(2)                                           
|        | 10 | .68 |             | Credit Agreement dated as of December 30, 2002, among Andrx
    Corporation and its subsidiaries, Bank of America, N.A., as
    agent and the lenders party thereto(22)                               
|        | 10 | .69 |             | First Amendment to Credit Agreement dated as of
    December 30, 2002, among Andrx Corporation and its
    subsidiaries, Bank of America, N.A., as agent and the lenders
    party thereto.(22)       
|        | 10 | .70 |             | Employment Agreement between the Registrant and Lawrence J.
    Rosenthal(22)*                                                                                                                        
|        | 10 | .73 |             | Form of 2003 Indemnification Agreement between Registrant and
    directors(22)*                                                                                                                      
|        | 10 | .74 |             | 2000 Stock Option Plan, as amended and restated(20)(*)                                                                                                                                                
|        | 10 | .75 |             | Employee Stock Purchase Plan, as amended(21)(*)                                                                                                                                                       
|        | 10 | .77 |             | Termination Agreement and Release between the Registrant and
    Richard J. Lane(25)(*)                                                                                                               
|        | 10 | .81 |             | Employment Agreement between the registrant and Thomas P.
    Rice(25)(*)                                                                                                                             
|        | 10 | .82 |             | Exclusivity Transfer Agreement by and among, Andrx
    Pharmaceuticals, LLC, Andrx Pharmaceuticals, Inc., Impax
    Laboratories, Inc. and Teva Pharmaceuticals Curacao, N.V.(2)(25)                  
|        | 10 | .83 |             | First Amendment to Exclusivity Transfer agreement by and among
    Andrx Pharmaceuticals, LLC, Andrx Pharmaceuticals, Inc., Impax
    Laboratories, Inc. and Teva Pharmaceuticals Curacao, N.V.(2)(25)
|        | 10 | .86 |             | Employment Cessation Agreement between Andrx Corporation and
    Elliot F. Hahn, Ph.D. dated November 15, 2004(26)(*)                                                                                 

132



---



##### 



|        |    |     |             |                                                                                                                                                                                                
|------- | -- | --- | ----------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|No.     |    |     | Description
|        |    |     |            
|        | 10 | .87 |             | Amended and Restated Employment Agreement between Andrx
    Corporation and Larry Rosenthal(23)*                                                                                               
|        | 10 | .88 |             | Form of Restricted Stock Unit Agreement between Andrx
    Corporation and Angelo C. Malahias, Scott Lodin and Lawrence
    Rosenthal entered into December 1, 2002(1)*                         
|        | 10 | .89 |             | Restricted Stock Unit Agreement between Andrx Corporation and
    Thomas P. Rice dated February 27, 2004(1)*                                                                                   
|        | 10 | .90 |             | Amendment No. 1 to the Termination Agreement with Sandoz
    Inc. (f.k.a. as Geneva Pharmaceuticals, Inc.)(1)(2)                                                                               
|        | 10 | .91 |             | Form of Stock Option Agreement (as of January 1, 2005) for
    grants under the Amended and Restated 2000 Stock Option Plan(1)*                                                                
|        | 10 | .92 |             | Compensation Committee resolution dated September 2, 2004,
    regarding Thomas P. Rice compensation(1)*                                                                                       
|        | 10 | .93 |             | Summary Discussion of Board of Director Compensation as of
    March 22, 2004(1)*                                                                                                              
|        | 10 | .94 |             | Form of Restricted Stock Unit Agreement between Andrx
    Corporation and members of the Board of Directors(1)*                                                                                
|        | 10 | .95 |             | Second Amendment to Credit Agreement dated as of
    December 31, 2002, among Andrx Corporation and its
    subsidiaries, Bank of America, N.A., as agent and the lenders
    party thereto.(1)
|        | 21 | .1  |             | Subsidiaries of the Registrant(1)                                                                                                                                                              
|        | 23 | .1  |             | Consent of Independent Registered Public Accounting Firm(1)                                                                                                                                    
|        | 31 | .1  |             | Certification of Chief Executive Officer pursuant to
    Rule 13a-15(e) and Rule 15d-15(e), promulgated under
    the Securities Exchange Act of 1934, as amended(1)                           
|        | 31 | .2  |             | Certification of Chief Financial Officer pursuant to
    Rule 13a-15(e) and Rule 15d-15(e), promulgated under
    the Securities Exchange Act of 1934, as amended(1)                           
|        | 32 |     |             | Certification of Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, As adopted
    pursuant Section 906 of the Sarbanes-Oxley Act of 2002(1)          






| |   |                                             
| | - | --------------------------------------------
| | * | Management Compensation Plan or arrangement.



| |     |                                                                                                                                                                                                                                                             
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Filed herewith.                                                                                                                                                                                                                                             
|
| | (2) | Confidential treatment requested for certain portions of this
    Exhibit pursuant to Rule 24b-2 under the Securities
    Exchange Act of 1934, as amended, which portions are omitted and
    filed separately with the Securities and Exchange Commission.
|
| | (3) | Filed as an exhibit of the same number in Andrx
    Corporations Annual Report on Form 10-K for the year
    ended December 31, 1999, and incorporated herein by
    reference.                                                                            
|
| | (4) | Filed as exhibit 2.1 to Andrx Corporations
    Form 8-K filed January 17, 2001, and incorporated
    herein by reference.                                                                                                                                  
|
| | (5) | Filed as an exhibit of the same number to Andrx
    Corporations Registration Statement on Form S-4 (File
    No. 333-54926).                                                                                                                              
|
| | (6) | Filed as an exhibit of the same number to Andrx
    Corporations Registration Statement on Form S-4 (File
    No. 333-38226) filed May 31, 2000.                                                                                                           
|
| | (7) | Filed as an exhibit of the same number to Andrx
    Corporations Form 8-A12G filed September 6, 2000.                                                                                                                                                      
|
| | (8) | Filed as an exhibit of the same number to Andrx
    Corporations Form 8-K filed March 21, 2003, and
    incorporated herein by reference.                                                                                                                  
|
| | (9) | Filed as an exhibit of the same number to Andrx
    Corporations Registration Statement on Form S-1 filed
    on April 17, 1996 (File No. 333-03614) and
    incorporated herein by reference.                                                             



|     |                                                                                                                                                                                 
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(10) | Filed as an exhibit of the same number in Andrx
    Corporations Annual Report on Form 10-K for the year
    ended December 31, 1996, and incorporated herein by
    reference.

133



---



##### 





|     |                                                                                                                                                                                       
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(11) | Filed as an exhibit of the same number in Andrx
    Corporations Report on Form 10-K for the year ended
    December 31, 1997, and incorporated herein by reference.                 
|    
|(12) | Filed as an exhibit of the same number in Andrx
    Corporations Quarterly Report on Form 10-Q for the
    period ended September 30, 1998, and incorporated herein by
    reference.
|    
|(13) | Filed as Annex C to Andrx Corporations Registration
    Statement on Form S-4 (File No. 333-54926).                                                                                  
|    
|(14) | Filed as an exhibit of the same number in Andrx
    Corporations Annual Report on Form 10-K for the year
    ended December 31, 2000, and incorporated by reference.                 
|    
|(15) | Filed as an exhibit of the same number in Andrx
    Corporations Quarterly Report on Form 10-Q for the
    period ended September 30, 2001, and incorporated by
    reference.       
|    
|(16) | Filed as an exhibit to Andrx Corporations Form S-8
    (File No. 333-84672) dated March 21, 2002.                                                                                    
|    
|(17) | Filed as an exhibit of the same number in Andrx
    Corporations Quarterly Report on Form 10-Q for the
    period ended June 30, 2002, and incorporated by reference.                
|    
|(18) | Filed as an exhibit of the same number to Andrx
    Corporations Form 8-K filed June 19, 2002, and
    incorporated herein by reference.                                             
|    
|(19) | Filed as an exhibit of the same number in Andrx
    Corporations Quarterly Report on Form 10-Q for the
    period ended March 31, 2003, and incorporated by reference.               
|    
|(20) | Filed as Annex B to Andrx Corporations
    Schedule 14A (Amendment No. 1) filed on May 7,
    2003.                                                                                  
|    
|(21) | Filed as Annex C to Andrx Corporations
    Schedule 14A (Amendment No. 1) filed on May 7,
    2003.                                                                                  
|    
|(22) | Filed as an exhibit of the same number in Andrx
    Corporations Annual Report on Form 10-K for the year
    ended December 31, 2002, and incorporated by reference.                 
|    
|(23) | Filed as an exhibit of the same number to Andrx
    Corporations Form 8-K filed March 8, 2005, and
    incorporated by reference.                                                    
|    
|(24) | Filed as an exhibit of the same number in Andrx
    Corporations Annual Report on Form 10-K for the year
    ended December 31, 2003, and incorporated by reference.                 
|    
|(25) | Filed as an exhibit of the same number in Andrx
    Corporations Quarterly Report on Form 10-Q for the
    period ended March 31, 2004, and incorporated by reference.               
|    
|(26) | Filed as an exhibit of the same number to Andrx
    Corporations Form 8-K filed November 18, 2004,
    and incorporated herein by reference.                                         









134



---



##### 



SIGNATURES






| |                  
| | -----------------
| | ANDRX CORPORATION



| |     |                   
| | --- | ------------------
| | By: | /s/ Thomas P. Rice

| |                        
| | -----------------------
| |                        
| | Thomas P. Rice         
| | Chief Executive Officer



| |     |                   
| | --- | ------------------
| | By: | /s/ John M. Hanson

| |                                                  
| | -------------------------------------------------
| |                                                  
| | John M. Hanson                                   
| | Senior Vice President and Chief Financial Officer





|                                                   |  |                                                                                          |  |               |  | 
|-------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | ------------- |  | 
|Signatures                                         |  | Title                                                                                    |  | Date         
|                                                   |  |                                                                                          |  |              
|                                                  
|/s/ Thomas P. RiceThomas
    P. Rice               |  | Chief Executive Officer and Director
    (Principal Executive Officer)                   |  | March 9, 2005
|                                                  
|/s/ John M. HansonJohn
    M. Hanson               |  | Senior Vice President and
    Chief Financial Officer
    (Principal Accounting Officer) |  | March 9, 2005
|                                                  
|/s/ Tamara A. BaumTamara
    A. Baum               |  | Director                                                                                 |  | March 9, 2005
|                                                  
|/s/ Joseph E. BreslinJoseph
    E. Breslin         |  | Director                                                                                 |  | March 9, 2005
|                                                  
|/s/ Lawrence J. DuBowLawrence
    J. DuBow         |  | Director                                                                                 |  | March 9, 2005
|                                                  
|/s/ Carter H. EckertCarter
    H. Eckert           |  | Director                                                                                 |  | March 9, 2005
|                                                  
|/s/ Irwin C. GersonIrwin
    C. Gerson             |  | Director                                                                                 |  | March 9, 2005
|                                                  
|/s/ Elliot F. Hahn, Ph.D.Elliot
    F. Hahn, Ph.D. |  | Chairman Emeritus and Director                                                           |  | March 9, 2005
|                                                  
|/s/ Melvin Sharoky, M.D.Melvin
    Sharoky, M.D.   |  | Director                                                                                 |  | March 9, 2005

135