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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 December 31, 2005
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
   ANDRX CORPORATION
  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
  x o
  o x
  x o
 o
  x o o
  o x
   DOCUMENTS INCORPORATED BY REFERENCE




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® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ® ®
  FORWARD-LOOKING STATEMENTS
   2




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PART I
 ITEM 1. BUSINESS
 Merger Agreement With Watson Pharmaceuticals, Inc.
  Overview
  
    
    develops and commercializes generic versions of primarily controlled-release
pharmaceutical products as well as oral contraceptives and selective immediate-release
products;
    
    distributes pharmaceutical products, primarily generics, which have been commercialized
by others, as well as our own, primarily to independent and chain pharmacies and
physicians offices; and
    
    develops and manufactures pharmaceutical products for other pharmaceutical companies,
including combination products and controlled-release formulations.
   Business Strategy
  Research and Development (R&D)
  3




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Strategic Alliances, Collaborative Agreements and Dispositions
 Collaborative Agreements and Strategic
Alliances
  
    
    the launch of generic Tiazac following the settlement of the patent litigation
with the brand holder,
    
    our launch of generic Glucotrol XL following the agreement with Pfizer Inc. and ALZA
Corporation,
    
    Kremers Urban Development Company (KUDCos) launch of generic Prilosec, and
access to the shared exclusivities, following their settlement with us and Genpharm
Inc.,
    
    the launch of Impax Laboratories Inc.s generic Wellbutrin SR/Zyban by Teva Pharmaceuticals
Curacao N.V. following an exclusivity transfer agreement with us, Impax and Teva,
    
    Perrigos launch of OTC generic Claritin-D 24 and generic Claritin RediTabs
following the brand companys move of the Claritin products to the OTC market,
    
    Ranbaxy Pharmaceuticals, Inc.s launch of generic Monopril-HCT following our
agreement to transfer the remaining portion of our 180-day period of market
exclusivity for generic Monopril-HCT; and
    
    our agreement with Amphastar Pharmaceuticals to market generic Lovenox in the
U.S. pharmacy retail market.
 4




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Generic Pharmaceuticals
  Regulation  Pharmaceuticals  ANDA Process  Generic Pharmaceuticals Note 18 of Notes
to Consolidated Financial Statements
  5




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Approximate Numberof Approved ANDAsGeneric Product*
    
    Comparable Brand Name
    
    Launch Date
    

(including Andrx)**Controlled-Release:Diltiazem HCl ER (Diltia XT)
    
    Dilacor XR
    
    1997
    
    
    3Diltiazem HCl ER (Cartia XT)
    
    Cardizem CD
    
    1999
    
    
    4Potassium
Chloride Extended-Release
    
    K-Dur
    
    2002
    
    
    5Naproxen Sodium ER
    
    Naprelan
    
    2002
    
    
    1Loratadine/Pseudoephedrine Sulfate (1)
    
    Claritin-D 24
    
    2003
    
    
    3Diltiazem HCl ER (Taztia XT)
    
    Tiazac
    
    2003
    
    
    2Glipizide Extended-Release (2)
    
    Glucotrol XL
    
    2003
    
    
    1Metformin Hydrochloride Extended-Release  500mg
    
    Glucophage XR
    
    2004
    
    
    >5Metformin Hydrochloride Extended-Release  750mg
    
    Glucophage XR
    
    2005
    
    
    >5Oral Contraceptives:Norgestimate and Ethinyl Estradiol (Previfem) (4)
    
    Ortho Cyclen-28
    
    2004
    
    
    2Norgestimate and Ethinyl Estradiol
(Tri-Previfem) (4)
    
    Ortho Tri-Cyclen
    
    2004
    
    
    2Immediate-Release and Other:Albuterol Inhalation Aerosol (3)
    
    Ventolin
    
    2001
    
    
    4Metformin Hydrochloride (5)
    
    Glucophage
    
    2002
    
    
    >5Acetaminophen and Codeine Phosphate
    
    Tylenol and Codeine Tablets
    
    2003
    
    
    >5Mirtazapine
    
    Remeron
    
    2003
    
    
    >5Loratadine Orally Disintegrating (1)
    
    Claritin RediTabs
    
    2004
    
    
    2Benazepril Hydrochloride
    
    Lotensin
    
    2004
    
    
    >5Benazepril Hydrochloride and Hydrochlorothiazide
    
    Lotensin HCT
    
    2004
    
    
    >5Hydrocodone Bitartrate and Acetaminophen
    
    Vicodin HP
    
    2004
    
    
    4Hydrocodone Bitartrate and Ibuprofen
    
    Vicoprofen
    
    2004
    
    
    3Paroxetine Hydrochloride (6)
    
    Paxil
    
    2004
    
    
    5Cilostazol (6)
    
    Pletal
    
    2004
    
    
    >5Fosinopril
    
    Monopril
    
    2006
    
    
    >5Joint-Venture Products:***Ketoprofen ER (7)
    
    Oruvail
    
    1999
    
    
    2Famotidine (8)
    
    Pepcid
    
    2001
    
    
    >5Lovastatin Tablets USP (8)
    
    Mevacor
    
    2003
    
    
    >5Distribution AgreementSupply AgreementSubsidiaries of AndrxConsent of Independent Registered Public Accounting FirmSection 302 CEO CertificationSection 302 CFO CertificationSection 906 CEO and CFO Certification
  
 *
    
    Manufactured and marketed by Andrx, unless
otherwise indicated. Andrx trade names are
reflected in the parenthetical to the right of
the chemical name.**
    
    Represents our best estimate of the number of approved ANDAs. In certain cases, approved ANDAs have not
been launched. Specifically, ANDAs for generic
Cardizem CD and Tiazac have been approved, but
have not been launched. Number of approved
ANDAs excludes authorized generics marketed
based on an approved NDA.***
    
    Sales of the joint-venture products are not
included in sales of Andrx products, but rather
are included in distributed product revenues.(1)
    
    Marketed by Perrigo Company as an OTC product.(2)
    
    Supplied by Pfizer Inc.(3)
    
    Manufactured by Armstrong Pharmaceuticals, Inc.(4)
    
    Marketed by Teva USA.(5)
    
    Manufactured by both Andrx and Mova Pharmaceutical Corporation.(6)
    
    Manufactured by Genpharm, Inc. or its affiliate, Alphapharm Pty. Ltd.(7)
    
    Manufactured by Andrx in connection with our ANCIRC joint venture.(8)
    
    Manufactured by Carlsbad Technology, Inc. in connection with our CARAN joint venture. 6




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Risk Factors
    Generic Product Pipeline
  7




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Collaborative Agreements and Strategic Alliances
  2006
 
    
    Our January 2006 agreement with InvaGen Pharmaceuticals, Inc. to jointly
commercialize up to 11 ANDAs with total brand sales exceeding $13 billion according
to IMS data for the 12 months ended September 30, 2005. Pursuant to this agreement,
InvaGen will be responsible for all formulation work, U.S. regulatory submissions
and manufacture of each of the products and we will be responsible for sales and
marketing efforts and coordination of legal activities, if any. In addition to the
projects that will be jointly commercialized, the agreement also provides that at
our option, we may site transfer manufacturing of certain products to InvaGens
facility.
 2005
 
    
    Our May 2005 agreement with Amphastar, a California-based generic and specialty
pharmaceutical company to obtain from Amphastar certain exclusive marketing rights
for both strengths of their proposed generic version of Aventis Pharmaceuticals,
Inc.s Lovenox (enoxaparin sodium) injectable product. To obtain such rights, we
paid $4.5 million upon execution of the agreement, and we will make an additional
$5.5 million payment to Amphastar once certain milestones relating to the product
are achieved, including obtaining FDA approval and a favorable resolution of the
pending patent litigation. In exchange, we will receive up to 50% of the net
profits, as defined, generated from sales of Amphastars product in the U.S. retail
pharmacy market. Under certain specified conditions, we have the right to receive a
refund of the amounts we paid to Amphastar.
 2004
 
    
    Our March 2004 and October 2004 agreements to
market in the U.S. Genpharms generic versions of Paxil and Pletal, respectively.
 
    
    Our September 2004 agreement with Ranbaxy 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, as defined, from the
sale of this product for a period of time.
 2003
 
    
    Our January 2003 agreement with Perrigo 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. Claritin-D 24 was launched in June 2003 and
Claritin RediTabs was launched in January 2004. We have indefinitely deferred our
attempts to scale-up and validate our OTC generic version of Claritin D-12, which
was approved in January 2004.
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
    
    Our July 2003 agreement with Impax and Teva pertaining to the
respective ANDAs for generic versions of Wellbutrin SR 150mg and Zyban. As a result of
being unable to obtain final marketing approval within a specified period of time,
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 150mg 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
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 generic Glucotrol XL product (including any strength
thereof) supplied by Pfizer and/or to manufacture and market our ANDA product(s) in
exchange for a royalty. Though we launched all three strengths of
generic Glucotrol XL,
supplied by Pfizer, in December 2003, we continue to work toward gaining FDA
approval to launch our own versions of this product within the context of our
resource planning. The agreement with Pfizer expires in November 2008. If
we launch our own ANDA of Glucotrol XL, pursuant to the terms of the ANCIRC
Partnership Agreement, as amended, Watson Pharmaceuticals may be entitled to a royalty on net
sales, as defined.
    
    Our October 2003 agreement where we sold our Massachusetts aerosol manufacturing
operation to Amphastar and agreed, under certain circumstances, to continue to
purchase certain minimum quantities of albuterol metered-dose inhaler (MDI) for at
least one year, which we renewed for another two years in November 2004.
    
    Our December 2003 agreement with Teva providing for our
formulation, submission to the FDA and manufacture of certain oral contraceptive
products to be marketed in both the U.S. and Canada by Teva as part of its
larger product line of oral contraceptive products.
    
    Our December 2003 agreement to co-develop and manufacture a combination brand
product consisting of Takedas Actos (pioglitazone) and
our approved 505(b)(2) NDA extended-release metformin, each of which products is
administered once-a-day for the treatment of Type 2 diabetes.
 2002
 
    
    Following the court decision in October 2002 that our product infringed certain
listed patents of the brand holder, 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. Subject to final audit and
adjustment, our share of KUDCos net profits, as defined, continued until February
2006. We believe we have maintained our exclusivity on the 40mg strength and are
attempting to commercialize the value of that exclusivity period.
 Customer Arrangements
  9




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Critical Accounting Policies and Estimates
 Revenue Recognition
 Joint Ventures
  
    
    CARAN, which is a 50/50 joint venture with Carlsbad Technologies, Inc.
established in August 2000. Through this joint venture, Carlsbad developed and
currently manufactures generic versions of Pepcid and Mevacor (Carlsbad previously
manufactured generic Prozac), which we are currently selling under the Andrx
Pharmaceuticals, Inc. label; and
 
    
    ANCIRC, which is a 50/50 joint venture with Watson Pharmaceuticals, Inc.
originally established in 1994 for the development, manufacture and sale of up to
eight generic products. We are currently selling one ANCIRC product, a generic
version of Oruvail, for which we share profits, as defined, equally with Watson. We
previously sold a generic version of Trental, but discontinued sales of generic
Trental due to price erosion. In November 2000, the ANCIRC partners agreed to
discontinue the joint ventures effort to develop, manufacture and sell the
remaining six products. If we elected to continue the efforts to develop,
manufacture and sell the six remaining ANCIRC products, Watson may
become entitled,
under certain conditions, to a royalty on the net sales we would derive from the
commercialization of those products, including our ANDA of Glucotrol XL. Other than
Glucotrol XL, we have discontinued our development efforts with respect to all of
the other the ANCIRC product candidates.
 Pharmaceutical Distribution Operations
   10




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®
     Brand Pharmaceuticals
  11




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NDA Process Brand Pharmaceuticals
     Andrx Therapeutics (Contract Services Segment)
  12




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Patents and Other Intellectual Property Rights
 Our Proprietary Controlled-Release Drug Delivery Technologies
   Patents and Other Intellectual Property Rights
  ®
  Active Pharmaceutical Ingredients
  13




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Manufacturing and Quality
     Risk Factors.
 14




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Information Systems
   Regulation - Pharmaceuticals
 ANDA Process Generic Pharmaceuticals
   15




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NDA Process  Brand Pharmaceuticals
   Patent Infringement Litigation
 Note 18 of Notes to Consolidated Financial Statements
 Product Patent Challenge History and Commercialization
  Dilacor
XR
 Cardizem
CD See
 Prilosec
 18




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Tiazac
 Naprelan
 Wellbutrin
SR/Zyban
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Glucotrol
XL
 Claritin-D
24/Reditabs/D 12
 Monopril
 Sodium Valproate
 Toprol-XL
 Biaxin XL
 Concerta 
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Seasonality
  Backlog
  Personnel
  Distribution
    
    
    Generic
    
    
    Contract Services
    
    
    Corporate
    
    
    TotalResearch and Development
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    127Manufacturing
    
    
    
    
    
    
    379
    
    
    
    
    
    
    
    
    
    
    
    379Quality
    
    
    
    
    
    
    229
    
    
    
    
    
    
    
    
    
    
    
    229Regulatory Affairs
    
    
    
    
    
    
    16
    
    
    
    
    
    
    
    
    
    
    
    16Sales & Marketing
    
    
    234
    
    
    
    12
    (1)
    
    
    
    
    
    
    
    
    
    
    246Administration (excluding
Information Systems)
    
    
    83
    
    
    
    26
    
    
    
    2
    
    
    
    139
    (2)
    
    
    250Information Systems
    
    
    30
    
    
    
    13
    
    
    
    
    
    
    
    44
    
    
    
    87Warehouse/Shipping/Maintenance
    
    
    222
    
    
    
    124
    
    
    
    
    
    
    
    
    
    
    
    346569
    
    
    
    926
    
    
    
    2
    
    
    
    183
    
    
    
    1,680
 
 (1)
    
    Includes the business development group.(2)
    
    Includes our shared services department, which is
primarily comprised of accounts receivable and accounts payable employees. 21




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EXECUTIVE OFFICERS
  Executive OfficerName
    
    Age
    
    Position
    
    SinceThomas P. Rice
    
    55
    
    Andrx Corporation  Chief Executive
    
    2004Officer and a DirectorAngelo C. Malahias
    
    44
    
    Andrx Corporation  President and Chief
    
    1996Financial OfficerThomas R. Giordano
    
    55
    
    Andrx Corporation  Senior Vice President
    
    2004and Chief Information OfficerRobert I. Goldfarb
    
    50
    
    Andrx Corporation  Senior Vice President,
    
    2005General Counsel and SecretaryIan J. Watkins
    
    43
    
    Andrx Corporation  Senior Vice President
    
    2003of Human ResourcesLawrence J. Rosenthal
    
    60
    
    Andrx Pharmaceuticals, Inc.  President
    
    2002Nicholas F. Cappuccino, Ph.D.
    
    53
    
    Andrx
Pharmaceuticals, Inc.  Executive Vice President and Chief
Scientific and Technical Officer
    
    2005Albert Paonessa, III
    
    46
    
    Anda, Inc.  Executive Vice President and
    
    2005Chief Operating Officer
 Thomas P. Rice
 Angelo C. Malahias
 Thomas R. Giordano
 22




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Robert I. Goldfarb
 Ian J. Watkins
 Lawrence J. Rosenthal
 Nicholas F. Cappuccino, Ph.D.
 Albert Paonessa III
  23




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ITEM 1B. RISK FACTORS
  RISKS RELATING TO ANDRX
 Our business may suffer if the FDA initiates an enforcement action against us for violations of
cGMP or we remain on OAI status for an extended period of time.
  As we are dependent on a small number of products, a loss of revenues from Cartia XT and, to a
lesser extent, certain other products could adversely affect our results of operations, financial
condition and cash flows.
  Our business could suffer as a result of manufacturing issues.
  24




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Our distribution business concentrates on generic products and is therefore subject to the risks of
the generic industry.
  The pharmaceutical industry is highly competitive.
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If we are unable to successfully develop, commercialize, obtain approval and launch new products,
our operating results will suffer.
  
    
    avoiding the commercialization delays which may result under the regulatory process,
including our placement in OAI status;
    
    remaining at all times in compliance with regulatory standards and the
specifications set forth in our ANDAs;
    
    successfully satisfying the FDAs approval process, including, among other things,
the major and minor amendment process;
    
    successfully validating and scaling-up production to commercial levels in a timely
manner;
    
    securing, on a timely basis and on commercially reasonable terms, all of the API
required for the manufacture of our products; and
    
    successfully defending legal actions and Citizen Petitions brought by our direct
competitors or others who seek to prevent or delay the commercialization of our
products.
  Litigation may delay or prevent us from manufacturing and commercializing our products.
  26




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Note 18 of Notes to
Consolidated Financial Statements Note 18 of Notes to Consolidated
Financial Statements
 Commercialization of our products prior to the final resolution of a patent infringement litigation
with respect to such product, could expose us to significant damages if the outcome of such
litigation is unfavorable and could impair our reputation.
  27




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Citizen Petitions may delay the approval of our products.
  If we are unable to obtain sufficient supplies of API 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.
  28




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We are dependent on our primary courier service.
   We may need to rely on licenses to proprietary technologies, which may be difficult or expensive to
obtain.
   29




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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.
  Our internal controls may not be sufficient to ensure timely and reliable financial information.
  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.
  30




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The loss of our key personnel could cause our business to suffer.
  Sales of our generic products may suffer if generic product introductions are 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 Citizen 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.
  Our business could suffer if we experience difficulties in integrating any technologies, products
and businesses we acquire or attempt to acquire, or if we incur significant charges to earnings
with respect to such acquisitions or strategic transactions.
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Our business could suffer from rising insurance costs, the unavailability of insurance or other
events.
    We have entered into a consent decree with the SEC, and future SEC investigations could result in
the imposition of severe penalties.
  32




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We have entered into a consent decree with the FTC and our agreements with third parties may be
subject to FTC review and approval.
  RISKS RELATING TO THE PHARMACEUTICAL INDUSTRY GENERALLY
 Our failure to comply with FDA, DEA, licensure and other regulatory requirements could adversely
affect our business.
    33




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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.
     34




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Our product approvals may be delayed by additional regulatory requests by the FDA, including major
and/or minor amendments.
  We are subject to Therapeutic Equivalent Substitution, Medicare and Medicaid Reimbursement and
Price Reporting, and we and other drug manufacturers may be the target of governmental
investigations and related pricing litigation.
   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.
  35




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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.
  36




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ITEM 1C. UNRESOLVED STAFF COMMENTS
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ITEM 2. PROPERTIES
  Location
    
    
    Approximate Sq. Feet
    
    
    Primary UseDavie, Florida 
4955 Orange Drive
    
    
    
    242,000
    
    
    
    Manufacturing, R&D,
WarehouseDavie, Florida 
4001 SW 47th Avenue
    
    
    
    48,000
    
    
    
    Manufacturing,Davie, Florida 
4011 SW 47th Avenue
    
    
    
    46,800
    
    
    
    Manufacturing, WarehouseSunrise, Florida 
Marina West Warehouse
    
    
    
    276,200
    
    
    
    WarehouseWeston, Florida 
2945 W Corporate Lakes Blvd
(Building E)
    
    
    
    128,800
    
    
    
    R&DMorrisville, North Carolina
    
    
    
    480,300
    
    
    
    (Presently Unoccupied)Davie, Florida 
4360 Oaks Road
    
    
    
    22,000
    
    
    
    WarehouseDavie, Florida 
4380 Oaks Road
    
    
    
    13,400
    
    
    
    WarehouseFt. Lauderdale, FL 
4491 S. State Rd. 7
Suite 200
    
    
    
    4,700
    
    
    
    AdministrationWeston, Florida 
2915 Weston Road
    
    
    
    152,200
    
    
    
    Distribution, Sales and
MarketingGroveport, Ohio
    
    
    
    354,700
    
    
    
    DistributionGrand Island, New York
    
    
    
    11,000
    
    
    
    Sales and MarketingHackensack, New Jersey
    
    
    
    8,100
    
    
    
    (Presently Unoccupied)Weston, Florida 
3040 Universal Blvd
    
    
    
    28,100
    
    
    
    Corporate AdministrationPlantation, Florida 
    
    
    
    40,000
    
    
    
    Corporate Administration, Sales and Marketing
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ITEM 3. LEGAL PROCEEDINGS
 Note 18 of Notes to Consolidated Financial Statements
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  39




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##### Table of Contents



PART II
 ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 (A)
    
    Market Information
   Andrx Common StockMarket PriceHigh
    
    
    Low2005First Quarter
    
    $
    24.47
    
    
    $
    20.55Second Quarter
    
    
    23.38
    
    
    
    19.15Third Quarter
    
    
    22.50
    
    
    
    12.74Fourth Quarter
    
    
    18.45
    
    
    
    14.352004First Quarter
    
    $
    30.87
    
    
    $
    23.55Second Quarter
    
    
    29.35
    
    
    
    22.24Third Quarter
    
    
    28.10
    
    
    
    16.95Fourth Quarter
    
    
    23.63
    
    
    
    14.09
  (B)
    
    Holders
  (C)
    
    Dividends
  40




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##### Table of Contents



(D)
    
    Securities Authorized for Issuance under Equity Compensation Plans
 1
 Number of
    
    
    
    
    
    
    Number of securitiessecurities to be
    
    
    
    
    
    
    remaining availableissued upon
    
    
    Weighted-average
    
    
    for future issuanceexercise of
    
    
    exercise price of
    
    
    under equityoutstanding
    
    
    outstanding
    
    
    compensation plansoptions, warrants
    
    
    options, warrants
    
    
    (excluding securitiesand rights
    
    
    and rights
    
    
    reflected in column (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity compensation plans
approved by security holders:1993 Stock Option Plan and
2000 Stock Option Plan
    
    
    6,108,100
    (2)
    
    $
    35.35
    (3)
    
    
    6,206,500Employee Stock Purchase Plan
    
    
    
    
    
    
    N/A
    
    
    
    328,400Equity compensations plans not
approved by security holders
    
    
    
    
    
    
    N/A
    
    
    
    N/ATotal
    
    
    6,108,100
    (2)
    
    $
    35.35
    (3)
    
    
    6,534,900
 
 (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 912,100 RSUs. Excludes approximately 1,400 options to
purchase Andrx common stock with exercise prices ranging from $314 to
$18,491 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 1,400
Andrx common stock options converted in the May 2002 Cybear conversion with exercise prices
ranging from $314 to $18,491.  41




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ITEM 6. SELECTED FINANCIAL DATA
  42




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ITEM 7. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OVERVIEW
 Merger Agreement With Watson Pharmaceuticals, Inc.
  Our Business
  
    
    develops and commercializes generic versions of primarily controlled-release
pharmaceutical products as well as oral contraceptives, and selective immediate-release
products;
    
    distributes pharmaceutical products, primarily generics, which have been commercialized
by others, as well as our own, primarily to independent and chain pharmacies and
physicians offices; and
    
    develops and manufactures pharmaceutical products for other pharmaceutical companies,
including combination products and controlled-release formulations.
     43




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Key Performance Factors
     44




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Forward-Looking Statements
   45




---



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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
   Revenue Recognition, including Sales Allowances
      46




---



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Returns
  47




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Chargebacks
  Shelf Stock Adjustments
   48




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Allowance for Doubtful Accounts
  49




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Years Ended December 31,($ in thousands)2005
    
    
    2004
    
    
    2003Beginning of year
    
    $
    4,703
    
    
    $
    7,734
    
    
    $
    15,495Provision for doubtful accounts
    
    
    657
    
    
    
    (273
    )
    
    
    4,340Write-offs, net
    
    
    (1,736
    )
    
    
    (2,758
    )
    
    
    (12,101
    )End of year
    
    $
    3,624
    
    
    $
    4,703
    
    
    $
    7,734
  Inventories and Cost of Goods Sold
  Pre-Launch Inventories
   50




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51




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December 31,2005
    
    
    2004($ in thousands)Raw materials
    
    $
    17,005
    
    
    $
    7,603Work in process
    
    
    497
    
    
    
    2,623Finished goods
    
    
    899
    
    
    
    1,519$
    18,401
    
    
    $
    11,745
  Charges to Cost of Goods Sold
  Years Ended December 31,($ in thousands)2005
    
    
    2004
    
    
    2003Charges related to production of
commercial inventories
    
    $
    9,011
    
    
    $
    18,712
    
    
    $
    11,509Consulting fees
    
    
    6,283
    
    
    
    5,233
    
    
    
    876Charges related to pre-launch
inventories
    
    
    16,322
    
    
    
    11,319
    
    
    
    6,903Impairment charges:North Carolina facility
    
    
    10,000
    
    
    
    14,535
    
    
    
    Entex product rights
    
    
    
    
    
    
    3,500
    
    
    
    Massachusetts facility,
inventory and severance
    
    
    
    
    
    
    
    
    
    
    7,851Florida machinery and equipment
    
    
    888
    
    
    
    
    
    
    
    3,946Under-utilization and
inefficiencies of manufacturing
operations:Florida facilities
    
    
    10,282
    
    
    
    5,240
    
    
    
    3,159North Carolina facility
    
    
    1,215
    
    
    
    2,959
    
    
    
    1,491Massachusetts aerosol facility
    
    
    
    
    
    
    
    
    
    
    4,264$
    54,001
    
    
    $
    61,498
    
    
    $
    39,999
  52




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Useful life or Impairment of Goodwill and Other Long-Lived Assets
 Goodwill
  Other Intangible Assets
   53




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Impairment Charges
     Assets and Liabilities Held For Sale
  54




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Litigation Settlements and Related Liabilities
   Income Taxes
      55




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Self-Insurance Programs
  56




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ANDRX CORPORATION AND SUBSIDIARIES
 CONSOLIDATED SELECTED FINANCIAL DATA
  Years Ended December 31,($ in thousands, except for per share amounts)2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001STATEMENTS OF OPERATIONS DATA (1)Revenues:Distributed products
    
    $
    667,662
    
    
    $
    676,312
    
    
    $
    657,098
    
    
    $
    534,618
    
    
    $
    495,241Andrx products
    
    
    316,134
    
    
    
    421,763
    
    
    
    301,652
    
    
    
    209,407
    
    
    
    229,003Licensing, royalties and other
    
    
    58,229
    
    
    
    47,749
    
    
    
    87,588
    
    
    
    26,955
    
    
    
    24,797Total revenues
    
    
    1,042,025
    
    
    
    1,145,824
    
    
    
    1,046,338
    
    
    
    770,980
    
    
    
    749,041Operating expenses:Cost of goods sold
    
    
    781,217
    
    
    
    799,714
    
    
    
    704,212
    
    
    
    623,399
    
    
    
    483,834Selling, general and administrative
(2)
    
    
    180,462
    
    
    
    209,003
    
    
    
    213,274
    
    
    
    189,923
    
    
    
    141,082Research and development
    
    
    44,456
    
    
    
    41,242
    
    
    
    52,235
    
    
    
    51,479
    
    
    
    52,846Other
    
    
    26,316
    
    
    
    7,800
    
    
    
    8,750
    
    
    
    72,833
    
    
    
    14,759Total operating expenses
    
    
    1,032,451
    
    
    
    1,057,759
    
    
    
    978,471
    
    
    
    937,634
    
    
    
    692,521Income (loss) from operations
    
    
    9,574
    
    
    
    88,065
    
    
    
    67,867
    
    
    
    (166,654
    )
    
    
    56,520Other income (expense):Equity in earnings of unconsolidated
joint ventures
    
    
    3,289
    
    
    
    4,504
    
    
    
    5,135
    
    
    
    3,697
    
    
    
    1,025Interest income
    
    
    11,127
    
    
    
    4,060
    
    
    
    2,242
    
    
    
    5,420
    
    
    
    11,386Interest expense
    
    
    (1,936
    )
    
    
    (2,567
    )
    
    
    (2,641
    )
    
    
    (200
    )
    
    
    Write-off of unamortized issuance
costs upon termination of credit
facility
    
    
    (1,160
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gains on sale of assets
    
    
    
    
    
    
    
    
    
    
    5,605
    
    
    
    5,094
    
    
    
    Income (loss) before income taxes
    
    
    20,894
    
    
    
    94,062
    
    
    
    78,208
    
    
    
    (152,643
    )
    
    
    68,931Provision (benefit) for income taxes
    
    
    (41,572
    )
    
    
    28,403
    
    
    
    30,031
    
    
    
    (60,826
    )
    
    
    31,385Net income (loss)
    
    $
    62,466
    
    
    $
    65,659
    
    
    $
    48,177
    
    
    $
    (91,817
    )
    
    $
    37,546
  57




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ANDRX CORPORATION AND SUBSIDIARIES
 CONSOLIDATED SELECTED FINANCIAL DATA (Continued)
 Years Ended December 31,($ in thousands, except for per share amounts)2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001EARNINGS (LOSS) PER SHARE:ANDRX GROUP COMMON STOCK (3)Net income (loss) allocated to Andrx
Group (including Cybear Group
after May 18, 2002)
    
    $
    62,466
    
    
    $
    65,659
    
    
    $
    48,177
    
    
    $
    (85,873
    )
    
    $
    72,862Premium on Conversion of Cybear
Group common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (526
    )
    
    
    Total net income (loss) allocated to
Andrx Group
    
    $
    62,466
    
    
    $
    65,659
    
    
    $
    48,177
    
    
    $
    (86,399
    )
    
    $
    72,862Earnings (loss) per share of
Andrx Group common stockBasic
    
    $
    0.85
    
    
    $
    0.90
    
    
    $
    0.67
    
    
    $
    (1.22
    )
    
    $
    1.04Diluted
    
    $
    0.85
    
    
    $
    0.89
    
    
    $
    0.66
    
    
    $
    (1.22
    )
    
    $
    1.01Weighted average shares of Andrx
Group common stock outstandingBasic
    
    
    73,271
    
    
    
    72,740
    
    
    
    71,892
    
    
    
    70,876
    
    
    
    69,998Diluted
    
    
    73,640
    
    
    
    73,530
    
    
    
    72,655
    
    
    
    70,876
    
    
    
    72,243CYBEAR GROUP COMMON STOCK (3)(4)Net loss allocated to Cybear Group
(from January 1, 2001 through
May 17, 2002)
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,944
    )
    
    $
    (35,316
    )Premium on Conversion of Cybear
Group common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    526
    
    
    
    Total net loss allocated to Cybear
Group
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (5,418
    )
    
    $
    (35,316
    )Basic and diluted loss per share
of Cybear Group common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    (0.80
    )
    
    $
    (6.09
    )Basic and diluted weighted average
shares of Cybear Group common
stock outstanding
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,743
    
    
    
    5,802
  58




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ANDRX CORPORATION AND SUBSIDIARIES
 CONSOLIDATED SELECTED FINANCIAL DATA (Continued)
 December 31,($ in thousands)2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001BALANCE SHEET DATA (1)Cash and cash equivalents
    
    $
    34,066
    
    
    $
    42,290
    
    
    $
    67,498
    
    
    $
    26,741
    
    
    $
    15,241Total investments available-for-sale
    
    
    371,062
    
    
    
    167,777
    
    
    
    137,625
    
    
    
    70,923
    
    
    
    230,183Total assets (5)
    
    
    1,170,916
    
    
    
    970,614
    
    
    
    944,356
    
    
    
    781,634
    
    
    
    776,895Retained earnings
    
    
    260,340
    
    
    
    197,874
    
    
    
    132,215
    
    
    
    84,038
    
    
    
    176,381Total stockholders equity
    
    
    776,910
    
    
    
    698,761
    
    
    
    622,901
    
    
    
    565,707
    
    
    
    647,894
 
 (1)
    
    Through March 27, 2005, sales of Andrx brand products were included in Andrx products
revenues in the Statement of Operations Data herein. On March 28, 2005, we consummated
agreements with First Horizon for the sale and licensing of certain rights and assets related
to our former Fortamet and Altoprev brand pharmaceutical products, and the manufacturing and
supply of these products, for which we received $85,000. The $85,000 received from First
Horizon was deferred and is being recognized as licensing, royalties and other revenue over
the ten-year term of the manufacturing and supply agreement. We are also entitled to receive
royalties of 8% and 15% of net sales, as defined, from First Horizons sales of Fortamet and
Altoprev, respectively, until a respective product encounters generic competition. The
contract manufacturing revenues related to Fortamet and Altoprev will be included in
licensing, royalties and other revenue, and the related costs will be included in cost of
goods sold. Subsequent to the First Horizon transaction, we decided to terminate
substantially all of our brand business employees, which effectively completed the disposition
of the business and recorded $9,948 in personnel related charges in SG&A and $4,248 of
non-cash charges for the year ended December 31, 2005. As a result of our exiting this
business, the brand business goodwill was deemed to have no implied fair value and
accordingly, we recorded a non-cash goodwill impairment charge of $26,316 shown as other
operating expense in our 2005 Statement of Operations Data herein (see Note 3 of Notes to
Consolidated Financial Statements for further discussion.)(2)
    
    In 2002, Andrx adopted Statement of Financial Accounting Standards 142 Goodwill and Other
Intangible Assets which resulted in goodwill no longer being subject to amortization.
Goodwill amortization expense in 2001 was $4,967.(3)
    
    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 only
reports 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 no
longer reports separate earnings (loss) per share for the former Cybear Group common stock.(4)
    
    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 the year ended December 31, 2001, reflect the July 31, 2001 one-for-four
reverse stock split for Cybear common stock.(5)
    
    For the years ended December 31, 2004, 2003, 2002 and 2001, we reclassified certain sales
allowances of $19,099, $14,090, $7,845 and $12,319, respectively, from accrued expenses and
other liabilities to accounts receivable, net, reducing total assets. 59




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ANDRX CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS
Revenues and Gross Profit
 Years Ended December 31,($ in thousands)2005
    
    
    2004
    
    
    2003Distributed ProductsGross revenues
    
    $
    702,855
    
    
    $
    706,682
    
    
    $
    684,549Sales allowances
    
    
    35,193
    
    
    
    30,370
    
    
    
    27,451Sales allowances as a % of gross revenues
    
    
    5.0
    %
    
    
    4.3
    %
    
    
    4.0
    %Net revenues
    
    
    667,662
    
    
    
    676,312
    
    
    
    657,098Gross profit
    
    
    132,947
    
    
    
    124,778
    
    
    
    120,229Gross margin
    
    
    19.9
    %
    
    
    18.4
    %
    
    
    18.3
    %Andrx Products  GenericGross revenues
    
    $
    460,606
    
    
    $
    496,622
    
    
    $
    396,679Sales allowances
    
    
    158,338
    
    
    
    135,998
    
    
    
    128,025Sales allowances as a % of gross revenues
    
    
    34.4
    %
    
    
    27.4
    %
    
    
    32.3
    %Net revenues
    
    
    302,268
    
    
    
    360,624
    
    
    
    268,654Gross profit
    
    
    85,676
    
    
    
    133,566
    
    
    
    124,542Gross margin
    
    
    28.3
    %
    
    
    37.0
    %
    
    
    46.4
    %Andrx Products  BrandGross revenues
    
    $
    17,293
    
    
    $
    83,688
    
    
    $
    39,951Sales allowances
    
    
    3,427
    
    
    
    22,549
    
    
    
    6,953Sales allowances as a % of gross revenues
    
    
    19.8
    %
    
    
    26.9
    %
    
    
    17.4
    %Net revenues
    
    
    13,866
    
    
    
    61,139
    
    
    
    32,998Gross profit
    
    
    8,672
    
    
    
    40,017
    
    
    
    24,881Gross margin
    
    
    62.5
    %
    
    
    65.5
    %
    
    
    75.4
    %Andrx Products  TotalGross revenues
    
    $
    477,899
    
    
    $
    580,310
    
    
    $
    436,630Sales allowances
    
    
    161,765
    
    
    
    158,547
    
    
    
    134,978Sales allowances as a % of gross revenues
    
    
    33.8
    %
    
    
    27.3
    %
    
    
    30.9
    %Net revenues
    
    
    316,134
    
    
    
    421,763
    
    
    
    301,652Gross profit
    
    
    94,348
    
    
    
    173,583
    
    
    
    149,423Gross margin
    
    
    29.8
    %
    
    
    41.2
    %
    
    
    49.5
    %TOTAL PRODUCT REVENUESGross revenues
    
    $
    1,180,754
    
    
    $
    1,286,992
    
    
    $
    1,121,179Sales allowances
    
    
    196,958
    
    
    
    188,917
    
    
    
    162,429Sales allowances as a % of gross revenues
    
    
    16.7
    %
    
    
    14.7
    %
    
    
    14.5
    %Net revenues
    
    
    983,796
    
    
    
    1,098,075
    
    
    
    958,750Gross profit
    
    
    227,295
    
    
    
    298,361
    
    
    
    269,652Gross margin
    
    
    23.1
    %
    
    
    27.2
    %
    
    
    28.1
    %LICENSING, ROYALTIES AND OTHERNet revenues
    
    $
    58,229
    
    
    $
    47,749
    
    
    $
    87,588Gross profit
    
    
    33,513
    
    
    
    47,749
    
    
    
    72,474Gross margin
    
    
    57.6
    %
    
    
    100.0
    %
    
    
    82.7
    %TOTALSNet revenues
    
    $
    1,042,025
    
    
    $
    1,145,824
    
    
    $
    1,046,338Gross profit
    
    
    260,808
    
    
    
    346,110
    
    
    
    342,126Gross margin
    
    
    25.0
    %
    
    
    30.2
    %
    
    
    32.7
    %
 60




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Year Ended December 31, 2005($ in thousands)Beginning
    
    
    
    
    
    
    Credits
    
    
    EndOf The
    
    
    
    
    
    
    Issued And
    
    
    Of theYear
    
    
    Provision
    
    
    Other
    
    
    YearDistributed Products
    
    $
    8,256
    
    
    $
    35,193
    
    
    $
    (35,327
    )
    
    $
    8,122Andrx Products  Generic:Discounts
    
    
    1,952
    
    
    
    8,615
    
    
    
    (8,915
    )
    
    
    1,652Customer rebates
    
    
    21,734
    
    
    
    75,636
    
    
    
    (75,858
    )
    
    
    21,512Medicaid rebates
    
    
    1,660
    
    
    
    8,325
    
    
    
    (3,068
    )
    
    
    6,917Managed care rebates
    
    
    1,180
    
    
    
    1,039
    
    
    
    (963
    )
    
    
    1,256Chargebacks
    
    
    3,242
    
    
    
    55,328
    
    
    
    (43,866
    )
    
    
    14,704Returns
    
    
    7,498
    
    
    
    7,414
    
    
    
    (9,902
    )
    
    
    5,010Shelf-Stock Adjustments
    
    
    8,762
    
    
    
    1,981
    
    
    
    (4,740
    )
    
    
    6,00346,028
    
    
    
    158,338
    
    
    
    (147,312
    )
    
    
    57,054Andrx Products  Brand:Discounts
    
    
    615
    
    
    
    1,059
    
    
    
    (1,674
    )
    
    
    Medicaid rebates
    
    
    3,885
    
    
    
    1,106
    
    
    
    (4,923
    )
    
    
    68Managed care rebates
    
    
    1,960
    
    
    
    471
    
    
    
    (2,105
    )
    
    
    326Returns
    
    
    2,433
    
    
    
    791
    
    
    
    (2,339
    )
    
    
    8858,893
    
    
    
    3,427
    
    
    
    (11,041
    )
    
    
    1,279$
    63,177
    
    
    $
    196,958
    
    
    $
    (193,680
    )
    
    $
    66,455
 Year Ended December 31, 2004($ in thousands)Beginning
    
    
    
    
    
    
    Credits
    
    
    EndOf The
    
    
    
    
    
    
    Issued And
    
    
    Of theYear
    
    
    Provision
    
    
    Other
    
    
    YearDistributed Products
    
    $
    6,420
    
    
    $
    30,370
    
    
    $
    (28,534
    )
    
    $
    8,256Andrx Products  Generic:Discounts
    
    
    2,914
    
    
    
    10,894
    
    
    
    (11,856
    )
    
    
    1,952Customer rebates
    
    
    19,327
    
    
    
    90,350
    
    
    
    (87,943
    )
    
    
    21,734Medicaid rebates
    
    
    2,753
    
    
    
    3,352
    
    
    
    (4,445
    )
    
    
    1,660Managed care rebates
    
    
    1,001
    
    
    
    1,497
    
    
    
    (1,318
    )
    
    
    1,180Chargebacks
    
    
    4,508
    
    
    
    17,239
    
    
    
    (18,505
    )
    
    
    3,242Returns
    
    
    5,201
    
    
    
    9,060
    
    
    
    (6,763
    )
    
    
    7,498Shelf-Stock Adjustments
    
    
    8,351
    
    
    
    3,606
    
    
    
    (3,195
    )
    
    
    8,76244,055
    
    
    
    135,998
    
    
    
    (134,025
    )
    
    
    46,028Andrx Products  Brand:Discounts
    
    
    742
    
    
    
    5,496
    
    
    
    (5,623
    )
    
    
    615Medicaid rebates
    
    
    1,785
    
    
    
    6,416
    
    
    
    (4,316
    )
    
    
    3,885Managed care rebates
    
    
    907
    
    
    
    3,825
    
    
    
    (2,772
    )
    
    
    1,960Returns
    
    
    1,523
    
    
    
    6,812
    
    
    
    (5,902
    )
    
    
    2,4334,957
    
    
    
    22,549
    
    
    
    (18,613
    )
    
    
    8,893$
    55,432
    
    
    $
    188,917
    
    
    $
    (181,172
    )
    
    $
    63,177
 61




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##### Table of Contents



Year Ended December 31, 2003($ in thousands)Beginning
    
    
    
    
    
    
    Credits
    
    
    EndOf The
    
    
    
    
    
    
    Issued And
    
    
    Of theYear
    
    
    Provision
    
    
    Other
    
    
    YearDistributed Products
    
    $
    3,052
    
    
    $
    27,451
    
    
    $
    (24,083
    )
    
    $
    6,420Andrx Products  Generic:Discounts
    
    
    1,427
    
    
    
    11,302
    
    
    
    (9,815
    )
    
    
    2,914Customer rebates
    
    
    11,481
    
    
    
    87,579
    
    
    
    (79,733
    )
    
    
    19,327Medicaid rebates
    
    
    1,900
    
    
    
    2,928
    
    
    
    (2,075
    )
    
    
    2,753Managed care rebates
    
    
    912
    
    
    
    1,354
    
    
    
    (1,265
    )
    
    
    1,001Chargebacks
    
    
    2,795
    
    
    
    11,838
    
    
    
    (10,125
    )
    
    
    4,508Returns
    
    
    3,191
    
    
    
    8,732
    
    
    
    (6,722
    )
    
    
    5,201Shelf-Stock Adjustments
    
    
    5,485
    
    
    
    4,292
    
    
    
    (1,426
    )
    
    
    8,35127,191
    
    
    
    128,025
    
    
    
    (111,161
    )
    
    
    44,055Andrx Products  Brand:Discounts
    
    
    
    
    
    
    1,448
    
    
    
    (706
    )
    
    
    742Medicaid rebates
    
    
    450
    
    
    
    2,561
    
    
    
    (1,226
    )
    
    
    1,785Managed care rebates
    
    
    100
    
    
    
    1,512
    
    
    
    (705
    )
    
    
    907Returns
    
    
    
    
    
    
    1,432
    
    
    
    91
    
    
    
    1,523550
    
    
    
    6,953
    
    
    
    (2,546
    )
    
    
    4,957$
    30,793
    
    
    $
    162,429
    
    
    $
    (137,790
    )
    
    $
    55,432
  December 31,($ in thousands)2005
    
    
    2004Accounts receivable, net
    
    $
    53,046
    
    
    $
    50,318Accrued expenses and other liabilities
    
    
    13,409
    
    
    
    12,859Total
    
    $
    66,455
    
    
    $
    63,177
 62




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##### Table of Contents



Year Ended December 31, 2005 ( 2005) Compared to Year Ended December 31, 2004 (2004)
  Revenues and Gross Profit
 Distributed Products
   Andrx Products
 Generic Products
   63




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##### Table of Contents



64




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##### Table of Contents



Disposition of Brand Business
  65




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##### Table of Contents



Licensing, Royalties and Other Revenue
  Company
    
    Product(s)
    
    2005
    
    
    2004First Horizon
    
    Altoprev
    
    $
    17,106
    
    
    $
    First Horizon
    
    Fortamet
    
    
    13,443
    
    
    
    KUDCo
    
    Generic Prilosec
    
    
    7,160
    
    
    
    8,157Mallinckrodt
    
    Generic Anexsia
    
    
    7,004
    
    
    
    3,328Takeda
    
    Pioglitazone/ extended-release metformin
    
    
    5,281
    
    
    
    Teva/Impax
    
    Generic Wellbutrin SR150 mg/Zyban
    
    
    3,567
    
    
    
    33,234Ranbaxy
    
    Generic Monopril-HCT
    
    
    2,254
    
    
    
    1,212Teva
    
    Generic oral contraceptives
    
    
    2,175
    
    
    
    737Other
    
    Various
    
    
    239
    
    
    
    1,081$
    58,229
    
    
    $
    47,749
      66




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##### Table of Contents



Revenues and Costs Related to First Horizon
  Contract manufacturing revenue
    
    $
    16,058Amortization of deferred revenue
    
    
    6,375Licensing and royalties
    
    
    8,116Total revenue
    
    $
    30,549
  SG&A
      67




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##### Table of Contents



R&D
   Other Operating Expenses
   Equity in Earnings of Unconsolidated Joint Ventures
  Interest Income
  Interest Expense
  68




---



##### Table of Contents



Write-Off of Unamortized Issuance Costs upon Termination of Credit Facility
  Income Taxes
     69




---



##### Table of Contents



Year Ended December 31, 2004 Compared to Year Ended December 31, 2003 (2003)
  Revenues and Gross Profit (Loss)
 Distributed Products
  Andrx Products
 Generic Products
       70




---



##### Table of Contents



Brand Products
   71




---



##### Table of Contents



Licensing, Royalties and Other Revenue
  Company
    
    Product(s)
    
    2004
    
    
    2003Teva/Impax
    
    Generic Wellbutrin SR150 mg /Zyban
    
    $
    33,234
    
    
    $
    KUDCo
    
    Generic Prilosec
    
    
    8,157
    
    
    
    76,658Mallinckrodt
    
    Generic Anexsia
    
    
    3,328
    
    
    
    1,851Ranbaxy
    
    Generic Monopril-HCT
    
    
    1,212
    
    
    
    Armstrong
    
    Generic Albuterol
    
    
    
    
    
    
    3,802Teva
    
    Generic oral contraceptives
    
    
    737
    
    
    
    Takeda
    
    Pioglitazone/extended-release metformin
    
    
    
    
    
    
    375Other
    
    Various
    
    
    1,081
    
    
    
    4,902$
    47,749
    
    
    $
    87,588
   72




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##### Table of Contents



SG&A
    R&D
  Litigation Settlements and Other Charges
  Equity in Earnings of Unconsolidated Joint Ventures
  73




---



##### Table of Contents



Interest Income
  Interest Expense
  Gains on Sale of Assets
  Income Taxes
  LIQUIDITY AND CAPITAL RESOURCES
 Operating Activities
   74




---



##### Table of Contents



Investing Activities
     75




---



##### Table of Contents



Financing Activities
     Sufficiency of Capital Resources
      76




---



##### Table of Contents



Payment due by period($ in thousands)Less than
    
    
    1-3
    
    
    3-5
    
    
    More thanContractual Obligations
    
    Total
    
    
    1 year
    
    
    years
    
    
    years
    
    
    5 yearsOperating lease obligations
    
    $
    128,189
    
    
    $
    11,274
    
    
    $
    22,253
    
    
    $
    18,487
    
    
    $
    76,175Purchase obligations
    
    
    1,950
    
    
    
    1,950
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    130,139
    
    
    $
    13,224
    
    
    $
    22,253
    
    
    $
    18,487
    
    
    $
    76,175
  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
 Merger Agreement With Watson Pharmaceuticals, Inc.
  FDA Status
  77




---



##### Table of Contents



Distributed Products
      78




---



##### Table of Contents



Andrx
Products - Generic
     79




---



##### Table of Contents



80




---



##### Table of Contents



Approximate Number
    
    
    Annual Brand Sales (2)Generic Version of:
    
    
    of submitted ANDAs(1)
    
    
    (in millions)Biaxin XL
    
    
    
    4
    
    
    


    $300Toprol-XL
    
    
    
    3
    
    
    
    $
    1,400Concerta
    
    
    
    2
    
    
    


    $800Lovenox
    
    
    
    3
    
    
    
    $600
(for U.S. retail pharmacy market)
 
 (1)
    
    Excludes potential authorized generics.(2)
    
    According to IMS Data from October 1, 2004 through September 30, 2005.       81




---



##### Table of Contents



Licensing, Royalties and Other Revenue
  .
      82




---



##### Table of Contents



Cost of Goods Sold
     83




---



##### Table of Contents



SG&A
  R&D
   Income Taxes
  Earnings Guidance
  84




---



##### Table of Contents



RECENT ACCOUNTING PRONOUNCEMENTS
 Inventory Costs
  Share-Based Payment
     85




---



##### Table of Contents



Accounting
for Income Taxes  the American Jobs Creation Act of 2004
  Accounting Changes and Error Corrections
  LITIGATION
  86




---



##### Table of Contents



87




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 ANDRX CORPORATION AND SUBSIDIARIES
    
    PAGESManagements Report on Internal Control Over Financial Reporting
    
    89Report of Independent Registered Public Accounting Firm
    
    90Report of Independent Registered Public Accounting Firm
    
    91Consolidated Balance Sheets as of December 31, 2005 and 2004
    
    92Consolidated Statements of Income for the years ended December 31, 2005, 2004 and 2003
    
    93Consolidated Statements of Stockholders Equity
for the years ended December 31, 2005, 2004 and 2003
    
    94Consolidated Statements of Cash Flows
for the years ended December 31, 2005, 2004 and 2003
    
    96Notes to Consolidated Financial Statements
    
    97
 88




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL
OVER FINANCIAL REPORTING
      89




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      
 
 90




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        
 
 91




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Consolidated Balance Sheets
 December 31,2005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    34,066
    
    
    $
    42,290Short-term investments available-for-sale, at market value
    
    
    247,957
    
    
    
    44,815Accounts receivable, net of allowance for doubtful accounts of
$3,624and $4,703 at December 31, 2005 and 2004, respectively
    
    
    148,186
    
    
    
    124,926Inventories
    
    
    235,040
    
    
    
    197,304Deferred income tax assets, net
    
    
    70,926
    
    
    
    57,883Assets held for sale
    
    
    
    
    
    
    49,120Prepaid and other current assets
    
    
    15,152
    
    
    
    23,502Total current assets
    
    
    751,327
    
    
    
    539,840Long-term investments available-for-sale, at market value
    
    
    123,105
    
    
    
    122,962Property, plant and equipment, net
    
    
    274,051
    
    
    
    284,105Goodwill
    
    
    7,665
    
    
    
    7,665Other intangible assets, net
    
    
    4,590
    
    
    
    7,106Other assets
    
    
    10,178
    
    
    
    8,936Total assets
    
    $
    1,170,916
    
    
    $
    970,614LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    169,664
    
    
    $
    105,715Accrued expenses and other liabilities
    
    
    91,146
    
    
    
    117,070Liabilities held for sale
    
    
    
    
    
    
    3,489Total current liabilities
    
    
    260,810
    
    
    
    226,274Deferred income tax liabilities
    
    
    33,702
    
    
    
    34,605Deferred revenue
    
    
    99,494
    
    
    
    10,974Total liabilities
    
    
    394,006
    
    
    
    271,853Commitments and contingenciesStockholders equity:Convertible preferred stock; $0.001 par value, 1,000 shares
authorized; none issued and outstanding
    
    
    
    
    
    
    Common stock; $0.001 par value, 200,000 shares authorized;
73,567 and 72,924 shares issued and outstanding at
December 31, 2005 and 2004, respectively
    
    
    74
    
    
    
    73Additional paid-in capital
    
    
    532,376
    
    
    
    507,934Restricted stock units, net
    
    
    (14,634
    )
    
    
    (6,471
    )Retained earnings
    
    
    260,340
    
    
    
    197,874Accumulated other comprehensive loss, net of income tax benefit
    
    
    (1,246
    )
    
    
    (649
    )Total stockholders equity
    
    
    776,910
    
    
    
    698,761Total liabilities and stockholders equity
    
    $
    1,170,916
    
    
    $
    970,614
  92




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##### Table of Contents



Andrx Corporation and Subsidiaries
Consolidated Statements of Income
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Revenues:Distributed products
    
    $
    667,662
    
    
    $
    676,312
    
    
    $
    657,098Andrx products
    
    
    316,134
    
    
    
    421,763
    
    
    
    301,652Licensing, royalties and other
    
    
    58,229
    
    
    
    47,749
    
    
    
    87,588Total revenues
    
    
    1,042,025
    
    
    
    1,145,824
    
    
    
    1,046,338Operating expenses:Cost of goods sold
    
    
    781,217
    
    
    
    799,714
    
    
    
    704,212Selling, general and administrative
    
    
    180,462
    
    
    
    209,003
    
    
    
    213,274Research and development
    
    
    44,456
    
    
    
    41,242
    
    
    
    52,235Goodwill impairment charge
    
    
    26,316
    
    
    
    
    
    
    
    Litigation settlements and other charges
    
    
    
    
    
    
    7,800
    
    
    
    8,750Total operating expenses
    
    
    1,032,451
    
    
    
    1,057,759
    
    
    
    978,471Income from operations
    
    
    9,574
    
    
    
    88,065
    
    
    
    67,867Other income (expense):Equity in earnings of unconsolidated joint ventures
    
    
    3,289
    
    
    
    4,504
    
    
    
    5,135Interest income
    
    
    11,127
    
    
    
    4,060
    
    
    
    2,242Interest expense
    
    
    (1,936
    )
    
    
    (2,567
    )
    
    
    (2,641
    )Write-off of unamortized issuance costs upon
termination of credit facility
    
    
    (1,160
    )
    
    
    
    
    
    
    Gains on sale of assets
    
    
    
    
    
    
    
    
    
    
    5,605Income before income taxes
    
    
    20,894
    
    
    
    94,062
    
    
    
    78,208Provision (benefit) for income taxes
    
    
    (41,572
    )
    
    
    28,403
    
    
    
    30,031Net income
    
    $
    62,466
    
    
    $
    65,659
    
    
    $
    48,177Earnings per share:Basic
    
    $
    0.85
    
    
    $
    0.90
    
    
    $
    0.67Diluted
    
    $
    0.85
    
    
    $
    0.89
    
    
    $
    0.66Weighted average shares of common stock outstanding:Basic
    
    
    73,271
    
    
    
    72,740
    
    
    
    71,892Diluted
    
    
    73,640
    
    
    
    73,530
    
    
    
    72,655
  93




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##### Table of Contents



ANDRX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Accum.Other
    
    
    Compre-Common Stock
    
    
    Additional
    
    
    Restricted
    
    
    
    
    
    
    Compre-
    
    
    hensivePaid-In
    
    
    Stock
    
    
    Retained
    
    
    hensive
    
    
    IncomeShares
    
    
    $
    
    
    Capital
    
    
    Units, Net
    
    
    Earnings
    
    
    Inc. (Loss)
    
    
    (Loss)Balance, December 31, 2002
    
    
    71,501
    
    
    $
    72
    
    
    $
    487,928
    
    
    $
    (6,525
    )
    
    $
    84,038
    
    
    $
    194Common stock
issued in connection with
exercises of stock options
    
    
    730
    
    
    
    
    
    
    
    3,360
    
    
    
    
    
    
    
    
    
    
    
    Common stock
issued in connection with the
employee stock purchase plan
    
    
    100
    
    
    
    
    
    
    
    1,233
    
    
    
    
    
    
    
    
    
    
    
    Income tax benefit on exercises
of stock options
    
    
    
    
    
    
    
    
    
    
    3,135
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    48,177Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    47,992Balance, December 31, 2003
    
    
    72,331
    
    
    
    72
    
    
    
    498,366
    
    
    
    (7,761
    )
    
    
    132,215
    
    
    
    9Common stock
issued in connection with
exercises of stock options
    
    
    493
    
    
    
    1
    
    
    
    6,033
    
    
    
    
    
    
    
    
    
    
    
    Common stock
issued in connection with the
employee stock purchase plan
    
    
    72
    
    
    
    
    
    
    
    1,465
    
    
    
    
    
    
    
    
    
    
    
    Common stock
issued in connection with
vesting of restricted stock units
    
    
    28
    
    
    
    
    
    
    
    (116
    )
    
    
    
    
    
    
    
    
    
    
    Income tax benefit on exercises
of stock options and restricted
stock units
    
    
    
    
    
    
    
    
    
    
    2,455
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    65,659Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    65,001Balance, December 31, 2004
    
    
    72,924
    
    
    $
    73
    
    
    $
    507,934
    
    
    $
    (6,471
    )
    
    $
    197,874
    
    
    $
    (649
    )
  94




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##### Table of Contents



ANDRX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
  Accum.Other
    
    
    Compre-Common Stock
    
    
    Additional
    
    
    Restricted
    
    
    
    
    
    
    Compre-
    
    
    hensivePaid-In
    
    
    Stock
    
    
    Retained
    
    
    hensive
    
    
    IncomeShares
    
    
    $
    
    
    Capital
    
    
    Units, Net
    
    
    Earnings
    
    
    Inc. (Loss)
    
    
    (Loss)Balance, December 31, 2004
    
    
    72,924
    
    
    $
    73
    
    
    $
    507,934
    
    
    $
    (6,471
    )
    
    $
    197,874
    
    
    $
    (649
    )Common stock
issued in connection with
exercises of stock options
    
    
    519
    
    
    
    1
    
    
    
    5,212
    
    
    
    
    
    
    
    
    
    
    
    Common stock
issued in connection with the
employee stock purchase plan
    
    
    60
    
    
    
    
    
    
    
    983
    
    
    
    
    
    
    
    
    
    
    
    Common stock
issued in connection with
vesting of restricted stock units
    
    
    64
    
    
    
    
    
    
    
    (540
    )
    
    
    
    
    
    
    
    
    
    
    Income tax benefit on exercises
of stock options and restricted
stock units
    
    
    
    
    
    
    
    
    
    
    1,756
    
    
    
    
    
    
    
    
    
    
    
    Issuance of restricted stock
units, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    11,592
    
    
    
    (11,592
    )
    
    
    
    
    
    
    Amortization of restricted
stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,429
    
    
    
    
    
    
    
    Non-cash compensation
expense related to modification
of stock options
    
    
    
    
    
    
    
    
    
    
    7,048
    
    
    
    
    
    
    
    
    
    
    
    CTEX Pharmaceuticals, Inc;
acquisition adjustment
    
    
    
    
    
    
    
    
    
    
    (1,609
    )
    
    
    
    
    
    
    
    
    
    
    Unrealized loss on investments
available-for-sale, net of income
tax benefit of $350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (597
    )
    
    $
    (597
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,466
    
    
    
    
    
    
    
    62,466Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    61,869Balance, December 31, 2005
    
    
    73,567
    
    
    $
    74
    
    
    $
    532,376
    
    
    $
    (14,634
    )
    
    $
    260,340
    
    
    $
    (1,246
    )
  95




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##### Table of Contents



Andrx Corporation and Subsidiaries
Consolidated Statements of Cash Flows
 Years Ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net income
    
    $
    62,466
    
    
    $
    65,659
    
    
    $
    48,177Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    35,530
    
    
    
    34,568
    
    
    
    29,063Provision for doubtful accounts
    
    
    657
    
    
    
    (273
    )
    
    
    4,340Non-cash impairment charges
    
    
    38,203
    
    
    
    18,472
    
    
    
    12,123Non-cash compensation expense related to stock options
    
    
    7,048
    
    
    
    
    
    
    
    Write-off of unamortized issuance costs upon termination of
credit facility
    
    
    1,160
    
    
    
    
    
    
    
    Amortization of restricted stock units, net
    
    
    3,429
    
    
    
    1,539
    
    
    
    1,474Amortization of deferred revenue
    
    
    (6,480
    )
    
    
    (105
    )
    
    
    (732
    )Equity in earnings of unconsolidated joint ventures
    
    
    (3,289
    )
    
    
    (4,504
    )
    
    
    (5,135
    )Deferred income tax provision (benefit)
    
    
    (11,965
    )
    
    
    8,923
    
    
    
    12,850Change in liabilities for uncertain tax positions
    
    
    (32,802
    )
    
    
    17,802
    
    
    
    17,181Income tax benefit on exercises of stock options and
restricted stock units
    
    
    1,756
    
    
    
    2,455
    
    
    
    3,135Gains on sale of assets
    
    
    
    
    
    
    
    
    
    
    (5,605
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (23,917
    )
    
    
    106
    
    
    
    (9,371
    )Inventories
    
    
    (23,155
    )
    
    
    (1,975
    )
    
    
    (72,279
    )Prepaid and other current assets
    
    
    1,314
    
    
    
    13,440
    
    
    
    (6,045
    )Other assets
    
    
    181
    
    
    
    2,622
    
    
    
    (162
    )Income tax refund (payment)
    
    
    (5,979
    )
    
    
    639
    
    
    
    51,695Accounts payable
    
    
    63,949
    
    
    
    (43,228
    )
    
    
    69,091Accrued expenses and other liabilities
    
    
    6,616
    
    
    
    (28,276
    )
    
    
    (16,602
    )Deferred revenue
    
    
    10,000
    
    
    
    
    
    
    
    10,000Net cash provided by operating activities
    
    
    124,722
    
    
    
    87,864
    
    
    
    143,198Cash flows from investing activities:Purchases of total investments available-for-sale
    
    
    (710,744
    )
    
    
    (448,586
    )
    
    
    (299,383
    )Maturities and sales of total investments available-for-sale
    
    
    506,512
    
    
    
    417,374
    
    
    
    232,496Purchases of property, plant and equipment, net
    
    
    (28,986
    )
    
    
    (88,283
    )
    
    
    (39,455
    )Proceeds from the sale and licensing of assets and rights
    
    
    85,000
    
    
    
    
    
    
    
    5,875Distributions from unconsolidated joint ventures
    
    
    5,206
    
    
    
    5,174
    
    
    
    4,646Refund of deposit for product rights
    
    
    10,000
    
    
    
    
    
    
    
    Payment for product rights
    
    
    (4,600
    )
    
    
    (5,350
    )
    
    
    (10,100
    )Net cash used in investing activities
    
    
    (137,612
    )
    
    
    (119,671
    )
    
    
    (105,921
    )Cash flows from financing activities:Proceeds from issuances of common stock in connection
with exercises of stock options
    
    
    5,213
    
    
    
    6,034
    
    
    
    3,360Proceeds from issuances of common stock in connection
with the employee stock purchase plan
    
    
    983
    
    
    
    1,465
    
    
    
    1,233Principal payments on capital lease obligations
    
    
    (1,530
    )
    
    
    (900
    )
    
    
    (843
    )Net cash provided by financing activities
    
    
    4,666
    
    
    
    6,599
    
    
    
    3,750Net increase (decrease) in cash and cash equivalents
    
    
    (8,224
    )
    
    
    (25,208
    )
    
    
    41,027Cash and cash equivalents, beginning of year
    
    
    42,290
    
    
    
    67,498
    
    
    
    26,471Cash and cash equivalents, end of year
    
    $
    34,066
    
    
    $
    42,290
    
    
    $
    67,498Supplemental disclosure of cash flow information:Interest paid
    
    $
    1,240
    
    
    $
    1,660
    
    
    $
    1,709Income taxes paid (received)
    
    $
    5,979
    
    
    $
    (639
    )
    
    $
    (51,695
    )Supplemental disclosure of non-cash investing and
financing activities:Assets acquired through capital leases
    
    $
    
    
    
    $
    
    
    
    $
    1,234Issuance of restricted stock units, net
    
    $
    11,592
    
    
    $
    249
    
    
    $
    2,710Adjustment to acquisition of CTEX Pharmaceuticals, Inc.
    
    $
    (1,609
    )
    
    $
    (518
    )
    
    $
    
  96




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (1)
    
    General
 Merger Agreement With Watson Pharmaceuticals, Inc.
     Andrx Corporations Business
  
    
    develops and commercializes generic versions of primarily controlled-release
pharmaceutical products, as well as oral contraceptives, and selective immediate-release
products;
    
    distributes pharmaceutical products, primarily generics, which have been commercialized
by others, as well as its own, primarily to independent and chain pharmacies and
physicians offices; and
    
    develops and manufactures pharmaceutical products for other pharmaceutical companies,
including combination products and controlled-release formulations.
  ® ®
   97




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  (2)
    
    Summary of Significant Accounting Policies
 Basis of Presentation
   Use of Estimates
  Cash and Cash Equivalents
  Investments Available-for-Sale
  Accounts Receivable, Net
  98




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Years Ended December 31,2005
    
    
    2004
    
    
    2003Beginning of year
    
    $
    4,703
    
    
    $
    7,734
    
    
    $
    15,495Provision for doubtful accounts
    
    
    657
    
    
    
    (273
    )
    
    
    4,340Write-offs, net
    
    
    (1,736
    )
    
    
    (2,758
    )
    
    
    (12,101
    )End of year
    
    $
    3,624
    
    
    $
    4,703
    
    
    $
    7,734
  Inventories
  99




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Pre-Launch Inventories
      100




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
    Property, Plant and Equipment, Net
  Land improvements
    
    15 yearsBuildings
    
    40 yearsManufacturing equipment
    
    10 yearsLaboratory equipment
    
    5 yearsComputer hardware and software
    
    3-7 yearsFurniture and fixtures
    
    5-7 yearsAutomobiles
    
    4-5 yearsLeasehold improvements
    
    Lesser of asset life or term of lease
   101




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 Goodwill
  Other Intangible Assets, Net
  Impairment or Disposal of Long-Lived Assets
  Assets and Liabilities Held For Sale
 ® ®
 102




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 Revenue Recognition, including Sales Allowances
       103




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Years Ended December 31,2005
    
    
    2004
    
    
    2003Beginning of year
    
    $
    63,177
    
    
    $
    55,432
    
    
    $
    30,793Provision
    
    
    196,958
    
    
    
    188,917
    
    
    
    162,429Credits issued and other
    
    
    (193,680
    )
    
    
    (181,172
    )
    
    
    (137,790
    )End of year
    
    $
    66,455
    
    
    $
    63,177
    
    
    $
    55,432
  December 31,2005
    
    
    2004Accounts receivable, net
    
    $
    53,046
    
    
    $
    50,318Accrued expenses and other liabilities
    
    
    13,409
    
    
    
    12,859Total
    
    $
    66,455
    
    
    $
    63,177
    104




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
     Advertising
  Shipping and Handling Costs
  R&D Expenses
  Stock-Based Compensation
  105




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Years Ended December 31,2005
    
    
    2004
    
    
    2003Net income:As reported
    
    $
    62,466
    
    
    $
    65,659
    
    
    $
    48,177Add: stock-based employee
compensation expense
included in reported net
income, net of related tax
effect
    
    
    6,600
    
    
    
    970
    
    
    
    914Deduct: total stock-based
employee compensation
expense determined under the
fair value-based method for
all awards, net of related
tax effect
    
    
    (30,320
    )
    
    
    (14,673
    )
    
    
    (22,538
    )Pro forma net income
    
    $
    38,746
    
    
    $
    51,956
    
    
    $
    26,553Basic net income per common shareAs reported
    
    $
    0.85
    
    
    $
    0.90
    
    
    $
    0.67Pro forma
    
    $
    0.53
    
    
    $
    0.71
    
    
    $
    0.37Diluted net income per common shareAs reported
    
    $
    0.85
    
    
    $
    0.89
    
    
    $
    0.66Pro forma
    
    $
    0.53
    
    
    $
    0.71
    
    
    $
    0.37
   106




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Risk-free interest rate
    
    
    4.2
    %
    
    
    3.1
    %
    
    
    3.0
    %Average life of options (years)
    
    
    6.0
    
    
    
    5.9
    
    
    
    5.6Average volatility
    
    
    70
    %
    
    
    83
    %
    
    
    86
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    
   Legal Expenses
  Litigation Settlements and Related Liabilities
  Self-Insurance Programs
  107




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 Leases
  Income Taxes
    Earnings Per Share
  108




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Basic weighted average shares of common stock outstanding
    
    
    73,271
    
    
    
    72,740
    
    
    
    71,892Effect of dilutive items:Stock options and unvested RSUs, net
    
    
    369
    
    
    
    790
    
    
    
    763Diluted weighted average shares of common stock outstanding
    
    
    73,640
    
    
    
    73,530
    
    
    
    72,655Anti-dilutive weighted average common stock equivalents
    
    
    4,840
    
    
    
    4,164
    
    
    
    4,269
 Fair Value of Financial Instruments
  Concentration of Credit Risk
    ® ® ®
 Comprehensive Income
  109




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Business Segments
  Recent Accounting Pronouncements
 -Inventory Costs
  -Share-Based Payment
    110




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 Stock-Based Compensation
 -Accounting for Income Taxes  the American Jobs Creation Act of 2004
  -Accounting Changes and Error Corrections
  Reclassifications
  111




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (3)
    
    Dispositions
 Fortamet and Altoprev
      112




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   December 31,2004Assets held for sale:Inventories
    
    $
    14,581Deferred income tax assets
    
    
    599Other current assets
    
    
    2,848Property, plant and equipment, net
    
    
    887Goodwill
    
    
    26,316Other intangible assets, net
    
    
    3,889Total assets held for sale
    
    $
    49,120Liabilities held for sale:Obligations under capital leases
    
    $
    1,530Deferred income tax liabilities
    
    
    1,959Total liabilities held for sale
    
    $
    3,489
  Sale of Massachusetts Aerosol Manufacturing Operation
  Sales of Internet Assets
  113




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (4)
    
    Collaborative Agreements
 Generic Prilosec
 ®
  Generic OTC Claritin Products
 ® ® ®
 Generic Wellbutrin SR/Zyban
 ® ®
 Generic Glucotrol XL
 ®
 114




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Cardura XL
 ®
 Generic Oral Contraceptive Products
 ® ®
  Actos and Extended-Release Metformin Combination Product
 ®
 115




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Generic Paxil
 ®
 Generic Cardizem CD and Tiazac
  Anexsia
  Generic Lovenox
 ®
  InvaGen
Pharmaceuticals Inc.
  116




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (5)
    
    Investments Available-For-Sale
  December 31, 2005Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort-term:U.S. and government agency
securities
    
    $
    54,031
    
    
    $
    
    
    
    $
    (421
    )
    
    $
    53,610State, municipal and local agency
securities
    
    
    2,069
    
    
    
    
    
    
    
    (12
    )
    
    
    2,057Investment grade corporate debt
    
    
    139,211
    
    
    
    1
    
    
    
    (575
    )
    
    
    138,637Taxable, tax-advantaged and
tax-free auction rate securities
    
    
    53,649
    
    
    
    6
    
    
    
    (2
    )
    
    
    53,653248,960
    
    
    
    7
    
    
    
    (1,010
    )
    
    
    247,957Long-term:U.S. and government agency
securities
    
    
    28,067
    
    
    
    
    
    
    
    (349
    )
    
    
    27,718State, municipal and local agency
securities
    
    
    5,098
    
    
    
    
    
    
    
    (47
    )
    
    
    5,051Investment grade corporate debt
    
    
    68,866
    
    
    
    4
    
    
    
    (535
    )
    
    
    68,335Asset-backed obligations
    
    
    22,076
    
    
    
    5
    
    
    
    (80
    )
    
    
    22,001124,107
    
    
    
    9
    
    
    
    (1,011
    )
    
    
    123,105$
    373,067
    
    
    $
    16
    
    
    $
    (2,021
    )
    
    $
    371,062
 December 31, 2004Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    Losses
    
    
    ValueShort-term:U.S. and government agency
securities
    
    $
    7,917
    
    
    $
    
    
    
    $
    (36
    )
    
    $
    7,881State, municipal and local agency
securities
    
    
    12,597
    
    
    
    
    
    
    
    (39
    )
    
    
    12,558Investment grade corporate debt
    
    
    6,593
    
    
    
    
    
    
    
    (17
    )
    
    
    6,576Taxable, tax-advantaged and
tax-free auction rate securities
    
    
    17,800
    
    
    
    
    
    
    
    
    
    
    
    17,80044,907
    
    
    
    
    
    
    
    (92
    )
    
    
    44,815Long-term:U.S. and government agency
securities
    
    
    50,469
    
    
    
    1
    
    
    
    (463
    )
    
    
    50,007State, municipal and local agency
securities
    
    
    13,204
    
    
    
    2
    
    
    
    (83
    )
    
    
    13,123Investment grade corporate debt
    
    
    53,255
    
    
    
    
    
    
    
    (423
    )
    
    
    52,832Taxable, tax-advantaged and
tax-free auction rate securities
    
    
    7,000
    
    
    
    
    
    
    
    
    
    
    
    7,000123,928
    
    
    
    3
    
    
    
    (969
    )
    
    
    122,962$
    168,835
    
    
    $
    3
    
    
    $
    (1,061
    )
    
    $
    167,777
 117




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Amortized
    
    
    MarketCost
    
    
    ValueLess than one year
    
    $
    195,311
    
    
    $
    194,304Greater than one year
    
    
    177,756
    
    
    
    176,758$
    373,067
    
    
    $
    371,062
  (6)
    
    Inventories and Cost of Goods Sold
  December 31, 2005
    
    
    December 31, 2004Commercial
    
    
    Pre-launch
    
    
    Total
    
    
    Commercial
    
    
    Pre-launch
    
    
    TotalRaw materials
    
    $
    16,052
    
    
    $
    17,005
    
    
    $
    33,057
    
    
    $
    17,841
    
    
    $
    7,603
    
    
    $
    25,444Work in process
    
    
    15,280
    
    
    
    497
    
    
    
    15,777
    
    
    
    12,274
    
    
    
    2,623
    
    
    
    14,897Finished goods
    
    
    185,307
    
    
    
    899
    
    
    
    186,206
    
    
    
    155,444
    
    
    
    1,519
    
    
    
    156,963$
    216,639
    
    
    $
    18,401
    
    
    $
    235,040
    
    
    $
    185,559
    
    
    $
    11,745
    
    
    $
    197,304
  ® ® ®
 118




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Years Ended December 31,($ in thousands)2005
    
    
    2004
    
    
    2003Charges related to production of
commercial inventories
    
    $
    9,011
    
    
    $
    18,712
    
    
    $
    11,509Consulting fees
    
    
    6,283
    
    
    
    5,233
    
    
    
    876Charges related to pre-launch
inventories
    
    
    16,322
    
    
    
    11,319
    
    
    
    6,903Impairment charges:North Carolina facility
    
    
    10,000
    
    
    
    14,535
    
    
    
    Entex product rights
    
    
    
    
    
    
    3,500
    
    
    
    Massachusetts facility,
inventory and severance
    
    
    
    
    
    
    
    
    
    
    7,851Florida machinery and equipment
    
    
    888
    
    
    
    
    
    
    
    3,946Under-utilization and
inefficiencies of manufacturing
operations:Florida facilities
    
    
    10,282
    
    
    
    5,240
    
    
    
    3,159North Carolina facility
    
    
    1,215
    
    
    
    2,959
    
    
    
    1,491Massachusetts aerosol facility
    
    
    
    
    
    
    
    
    
    
    4,264$
    54,001
    
    
    $
    61,498
    
    
    $
    39,999
    119




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 ®
  (7)
    
    Property, Plant and Equipment, Net
  December 31,2005
    
    
    2004Land and land improvements
    
    $
    10,921
    
    
    $
    10,824Buildings
    
    
    94,369
    
    
    
    81,569Manufacturing equipment
    
    
    133,341
    
    
    
    112,467Laboratory equipment
    
    
    16,703
    
    
    
    16,113Leasehold improvements
    
    
    32,697
    
    
    
    32,212Computer hardware and software
    
    
    54,688
    
    
    
    51,619Furniture and fixtures
    
    
    11,185
    
    
    
    12,016Automobiles
    
    
    137
    
    
    
    112354,041
    
    
    
    316,932Less: accumulated depreciation and amortization
    
    
    (117,267
    )
    
    
    (90,770
    )236,774
    
    
    
    226,162Construction in progress
    
    
    37,277
    
    
    
    57,943$
    274,051
    
    
    $
    284,105
    120




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (8)
    
    Other Intangible Assets, Net
  Amortization Periods(Years)December 31,Weighted2005
    
    
    2004
    
    
    Range
    
    
    AverageProduct rights
    
    $
    18,995
    
    
    $
    13,895
    
    
    
    2-8
    
    
    
    4.6Accumulated amortization
    
    
    (15,379
    )
    
    
    (7,868
    )Patents
    
    
    1,569
    
    
    
    1,569
    
    
    
    14
    
    
    
    14Accumulated amortization
    
    
    (595
    )
    
    
    (490
    )Total other intangible assets, net
    
    $
    4,590
    
    
    $
    7,106
    
    
    
    2-14
    
    
    
    5.2
    Years Ended December 31,2005
    
    
    2004Decrease in net income
    
    $
    (1,925
    )
    
    $
    (963
    )Decrease in basic and diluted earnings per common share
    
    $
    (0.03
    )
    
    $
    (0.01
    )
 121




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (9)
    
    Unconsolidated Joint Ventures
  ® ®
 ® ® ®
   (10)
    
    Accrued Expenses and Other Liabilities
  December 31,2005
    
    
    2004Taxes, excluding payroll taxes
    
    $
    22,981
    
    
    $
    56,397Sales allowances
    
    
    13,409
    
    
    
    12,859Payroll, payroll taxes and related benefits
    
    
    21,304
    
    
    
    22,016Other
    
    
    33,452
    
    
    
    25,798$
    91,146
    
    
    $
    117,070
 122




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (11)
    
    Deferred Revenue
  First HorizonFortamet
    
    
    Altoprev
    
    
    Takeda
    
    
    Other
    
    
    TotalBalance as of January 1, 2005
    
    $
    
    
    
    $
    
    
    
    $
    10,000
    
    
    $
    974
    
    
    $
    10,974Additions
    
    
    50,000
    
    
    
    35,000
    
    
    
    10,000
    
    
    
    
    
    
    
    95,000Amortization
    
    
    (3,750
    )
    
    
    (2,625
    )
    
    
    
    
    
    
    (105
    )
    
    
    (6,480
    )Balance as of December 31, 2005
    
    $
    46,250
    
    
    $
    32,375
    
    
    $
    20,000
    
    
    $
    869
    
    
    $
    99,494
 (12)
    
    Licensing, Royalties and Other Revenue
  Years Ended December 31,Company
    
    Product(s)
    
    2005
    
    
    2004
    
    
    2003First Horizon
    
    Altoprev
    
    $
    17,106
    
    
    $
    
    
    
    $
    First Horizon
    
    Fortamet
    
    
    13,443
    
    
    
    
    
    
    
    KUDCo
    
    Generic Prilosec
    
    
    7,160
    
    
    
    8,157
    
    
    
    76,658Mallinckrodt
    
    Generic Anexsia
    
    
    7,004
    
    
    
    3,328
    
    
    
    1,851Takeda
    
    Pioglitazone/extended-release metformin
    
    
    5,281
    
    
    
    
    
    
    
    375Teva/Impax
    
    Generic Wellbutrin SR150 mg /Zyban
    
    
    3,567
    
    
    
    33,234
    
    
    
    Ranbaxy
    
    Generic Monopril-HCT
    
    
    2,254
    
    
    
    1,212
    
    
    
    Teva
    
    Generic oral contraceptives
    
    
    2,175
    
    
    
    737
    
    
    
    Armstrong
    
    Generic Albuterol
    
    
    
    
    
    
    
    
    
    
    3,802Other
    
    Various
    
    
    239
    
    
    
    1,081
    
    
    
    4,902$
    58,229
    
    
    $
    47,749
    
    
    $
    87,588
     123




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  (13)
    
    Income Taxes
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Current provision:Federal
    
    $
    3,195
    
    
    $
    1,678
    
    
    $
    State
    
    
    
    
    
    
    
    
    
    
    3,195
    
    
    
    1,678
    
    
    
    Deferred provision (benefit):Federal
    
    
    (11,491
    )
    
    
    7,155
    
    
    
    12,156State
    
    
    (474
    )
    
    
    1,768
    
    
    
    694(11,965
    )
    
    
    8,923
    
    
    
    12,850Change in liabilities for
uncertain tax positions, net
    
    
    (32,802
    )
    
    
    17,802
    
    
    
    17,181Total
    
    $
    (41,572
    )
    
    $
    28,403
    
    
    $
    30,031
  Years Ended December 31,2005
    
    
    2004
    
    
    2003Federal statutory rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State income taxes, net of federal effect
    
    
    2.0
    
    
    
    2.0
    
    
    
    2.0Reversal of liabilities for uncertain
tax positions, net
    
    
    (157.0
    )
    
    
    (7.7
    )
    
    
    Recognition of the benefit of net
operating loss carryforward
    
    
    (79.6
    )
    
    
    
    
    
    
    Other, net
    
    
    0.6
    
    
    
    0.9
    
    
    
    1.4Effective tax rate
    
    
    (199.0
    )%
    
    
    30.2
    %
    
    
    38.4
    %
 124




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  December 31,2005
    
    
    2004DEFERRED INCOME TAX ASSETS:Credits and loss carryforwards
    
    $
    14,397
    
    
    $
    5,243Operating allowances and liabilities
    
    
    56,529
    
    
    
    53,239Total deferred income tax assets
    
    
    70,926
    
    
    
    58,482Deferred income tax assets reclassified to assets held for
sale
    
    
    
    
    
    
    (599
    )Total deferred income tax assets per balance sheets
    
    $
    70,926
    
    
    $
    57,883DEFERRED INCOME TAX LIABILITIES:Tax over book depreciation and amortization
    
    $
    33,702
    
    
    $
    36,564Deferred income tax liability reclassified to liabilities held
for sale
    
    
    
    
    
    
    (1,959
    )Total deferred income tax liabilities per balance sheets
    
    $
    33,702
    
    
    $
    34,605
     125




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   (14)
    
    Commitments
 Secured Line of Credit
  Royalties on Products
    Employment Agreements
  126




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
      Operating Leases
  Minimum LeaseTotal Obligation
    
    
    Sublease
    
    
    Payments, Net2006
    
    $
    12,764
    
    
    $
    (1,490
    )
    
    $
    11,2742007
    
    
    12,483
    
    
    
    (1,272
    )
    
    
    11,2112008
    
    
    12,228
    
    
    
    (1,186
    )
    
    
    11,0422009
    
    
    11,206
    
    
    
    (1,199
    )
    
    
    10,0072010
    
    
    9,692
    
    
    
    (1,212
    )
    
    
    8,480Thereafter
    
    
    77,297
    
    
    
    (1,122
    )
    
    
    76,175$
    135,670
    
    
    $
    (7,481
    )
    
    $
    128,189
  Purchase Commitments
  127




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (15)
    
    Related Party Transactions
     128




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 (16)
    
    Stockholders Equity
   2000 Stock Option Plan and 1993 Stock Incentive Plan
     129




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Stock Options
  Outstanding
    
    
    ExercisableNumber of
    
    
    Exercise Price Per Share
    
    
    
    
    
    
    Wtd. Avg.Shares Under
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    ExerciseOption
    
    
    Low
    
    
    High
    
    
    Wtd. Avg.
    
    
    Shares
    
    
    PriceDecember 31, 2002
    
    
    6,432
    
    
    $
    1.62
    
    
    $
    85.00
    
    
    $
    35.96
    
    
    
    2,933
    
    
    $
    25.37Granted
    
    
    2,350
    
    
    
    8.85
    
    
    
    35.63
    
    
    
    18.52Exercised
    
    
    (730
    )
    
    
    22.17
    
    
    
    1.62
    
    
    
    4.60Forfeited
    
    
    (1,573
    )
    
    
    3.49
    
    
    
    85.00
    
    
    
    33.71December 31, 2003
    
    
    6,479
    
    
    
    2.74
    
    
    
    85.00
    
    
    
    33.71
    
    
    
    3,025
    
    
    
    34.37Granted
    
    
    1,931
    
    
    
    17.77
    
    
    
    30.00
    
    
    
    26.00Exercised
    
    
    (493
    )
    
    
    2.99
    
    
    
    29.94
    
    
    
    12.23Forfeited
    
    
    (1,121
    )
    
    
    4.98
    
    
    
    85.00
    
    
    
    33.97December 31, 2004
    
    
    6,796
    
    
    
    2.74
    
    
    
    85.00
    
    
    
    32.94
    
    
    
    3,493
    
    
    
    36.65Granted
    
    
    18
    
    
    
    21.60
    
    
    
    22.32
    
    
    
    21.73Exercised
    
    
    (519
    )
    
    
    2.74
    
    
    
    23.81
    
    
    
    10.05Forfeited
    
    
    (1,099
    )
    
    
    8.34
    
    
    
    85.00
    
    
    
    32.22December 31, 2005
    
    
    5,196
    
    
    $
    5.04
    
    
    $
    85.00
    
    
    $
    35.35
    
    
    
    4,834
    
    
    $
    36.82
 Options Outstanding
    
    Exercisable OptionsAt December 31, 2005
    
    At December 31, 2005Number of
    
    Wtd. Avg.
    
    Wtd. Avg.
    
    
    
    
    
    Wtd. Avg.Range of
    
    Shares Under
    
    Remaining
    
    Exercise
    
    
    
    
    
    ExerciseExercise Prices
    
    Option
    
    Life in Years
    
    Price
    
    Shares
    
    Price$5.04 -
$16.62
    
    
    1,160
    
    
    
    4.54
    
    
    $
    14.31
    
    
    
    913
    
    
    $
    14.3217.77-25.31
    
    
    804
    
    
    
    5.54
    
    
    
    21.71
    
    
    
    688
    
    
    
    22.1925.64-25.64
    
    
    942
    
    
    
    8.07
    
    
    
    25.64
    
    
    
    943
    
    
    
    25.6427.28-47.83
    
    
    911
    
    
    
    4.46
    
    
    
    38.78
    
    
    
    911
    
    
    
    38.7849.25-67.50
    
    
    890
    
    
    
    5.19
    
    
    
    61.72
    
    
    
    890
    
    
    
    61.7270.85-85.00
    
    
    489
    
    
    
    5.85
    
    
    
    72.04
    
    
    
    489
    
    
    
    72.04$5.04-$85.00
    
    
    5,196
    
    
    
    5.56
    
    
    $
    35.35
    
    
    
    4,834
    
    
    $
    36.82
 130




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
     - RSUs
   2006
    
    $
    3,6602007
    
    
    3,3372008
    
    
    2,9672009
    
    
    1,8482010
    
    
    1,225Thereafter
    
    
    1,597$
    14,634
  131




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   ESPP
  (17)
    
    401(k)Plan
  (18)
    
    Litigation and Contingencies
 Ongoing Patent Infringement Litigation
  Naproxen Sodium (Naprelan)
 ®
 132




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Omeprazole (Prilosec)
  Clarithromycin ER (Biaxin XL)
 ®
 133




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Metoprolol Succinate (Toprol-XL)
 ®
 Sodium Valproate
 ®
 Methylphenidate (Concerta)
  Diltiazem HCl ER (Cardizem LA)
 ®
 134




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Diltiazem HCl in Canada
   ®
 Other Pending Litigation
 FDA Related Securities Claims
  Mallinckrodt Claim
  135




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Drug Pricing Litigation
 ®
   Lemelson Patent Litigation
  Shareholders Derivative Actions
  136




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
     Resolved Litigation
 Cardizem CD Antitrust Litigation
    137




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Wellbutrin SR Related Securities Claims
  PPA Litigation
  Other Pending Matters
  138




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 Litigation Settlements and Other Charges
  Contingencies
       139




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
   Tax Matters
  (19)
    
    Selected Quarterly Data (Unaudited)
 2005First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalTotal revenues
    
    $
    278,383
    
    
    $
    261,710
    
    
    $
    256,957
    
    
    $
    244,975
    
    
    $
    1,042,025Cost of goods sold
    
    
    201,154
    
    
    
    199,640
    
    
    
    185,929
    
    
    
    194,494
    
    
    
    781,217Net income
    
    
    35,337
    
    
    
    7,998
    
    
    
    10,870
    
    
    
    8,261
    
    
    
    62,466Basic net income per share
    
    
    0.48
    
    
    
    0.11
    
    
    
    0.15
    
    
    
    0.11
    
    
    
    0.85Diluted net income per share
    
    
    0.48
    
    
    
    0.11
    
    
    
    0.15
    
    
    
    0.11
    
    
    
    0.85
 2004First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    TotalTotal revenues
    
    $
    292,175
    
    
    $
    290,716
    
    
    $
    272,286
    
    
    $
    290,647
    
    
    $
    1,145,824Cost of goods sold
    
    
    190,251
    
    
    
    209,657
    
    
    
    190,912
    
    
    
    208,894
    
    
    
    799,714Net income
    
    
    26,662
    
    
    
    6,444
    
    
    
    11,801
    
    
    
    20,752
    
    
    
    65,659Basic net income per share
    
    
    0.37
    
    
    
    0.09
    
    
    
    0.16
    
    
    
    0.28
    
    
    
    0.90Diluted net income per share
    
    
    0.36
    
    
    
    0.09
    
    
    
    0.16
    
    
    
    0.28
    
    
    
    0.89
 140




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
          (20)
    
    Segments
  141




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Distributed Products
  Generic Products
  Brand Products
  Contract Services
  142




---



##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
  Corporate and Other
     As of or for the Year Ended December 31, 2005Distributed
    
    
    Generic
    
    
    Brand
    
    
    Contract
    
    
    CorporateProducts
    
    
    Products
    
    
    Products
    
    
    Services
    
    
    & Other
    
    
    ConsolidatedRevenues
    
    $
    667,744
    
    
    $
    310,828
    
    
    $
    13,863
    
    
    $
    49,485
    
    
    $
    105
    
    
    $
    1,042,025Income (loss) from operations
    
    
    56,113
    
    
    
    44,760
    
    
    
    (47,119
    )
    
    
    12,944
    
    
    
    (57,124
    )
    
    
    9,574Equity in earnings of joint
ventures
    
    
    
    
    
    
    3,289
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,289Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,127
    
    
    
    11,127Interest expense
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    1
    
    
    
    1,920
    
    
    
    1,936Write-off of unamortized
issuance costs upon
termination of credit
facility
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,160
    
    
    
    1,160Depreciation and amortization
    
    
    2,327
    
    
    
    19,657
    
    
    
    221
    
    
    
    6,324
    
    
    
    7,001
    
    
    
    35,530Purchases of property, plant
and
equipment, net
    
    
    2,245
    
    
    
    24,721
    
    
    
    (900
    )
    
    
    
    
    
    
    2,920
    
    
    
    28,986Total assets
    
    
    246,236
    
    
    
    396,858
    
    
    
    
    
    
    
    21,237
    
    
    
    506,585
    
    
    
    1,170,916
 As of or for the Year Ended December 31, 2004Distributed
    
    
    Generic
    
    
    Brand
    
    
    Contract
    
    
    CorporateProducts
    
    
    Products
    
    
    Products
    
    
    Services
    
    
    & Other
    
    
    ConsolidatedRevenues
    
    $
    676,423
    
    
    $
    388,396
    
    
    $
    61,284
    
    
    $
    19,585
    
    
    $
    136
    
    
    $
    1,145,824Income (loss) from operations
    
    
    53,673
    
    
    
    124,970
    
    
    
    (43,633
    )
    
    
    8,335
    
    
    
    (55,280
    )
    
    
    88,065Equity in earnings of joint
ventures
    
    
    
    
    
    
    4,504
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,504Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,060
    
    
    
    4,060Interest expense
    
    
    
    
    
    
    
    
    
    
    94
    
    
    
    
    
    
    
    2,473
    
    
    
    2,567Depreciation and amortization
    
    
    2,923
    
    
    
    20,026
    
    
    
    2,411
    
    
    
    3,348
    
    
    
    5,860
    
    
    
    34,568Purchases of property, plant
and
equipment, net
    
    
    940
    
    
    
    77,410
    
    
    
    239
    
    
    
    
    
    
    
    9,694
    
    
    
    88,283Total assets
    
    
    201,389
    
    
    
    386,398
    
    
    
    64,937
    
    
    
    5,873
    
    
    
    312,017
    
    
    
    970,614
 143




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##### Table of Contents



Andrx Corporation and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2005
 As of or for the Year Ended December 31, 2003Distributed
    
    
    Generic
    
    
    Brand
    
    
    Contract
    
    
    CorporateProducts
    
    
    Products
    
    
    Products
    
    
    Services
    
    
    & Other
    
    
    ConsolidatedRevenues
    
    $
    657,098
    
    
    $
    336,197
    
    
    $
    34,221
    
    
    $
    15,491
    
    
    $
    3,331
    
    
    $
    1,046,338Income (loss) from operations
    
    
    46,223
    
    
    
    140,485
    
    
    
    (76,327
    )
    
    
    10,764
    
    
    
    (53,278
    )
    
    
    67,867Equity in earnings of joint
Ventures
    
    
    
    
    
    
    5,135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,135Interest income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,242
    
    
    
    2,242Interest expense
    
    
    
    
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    2,514
    
    
    
    2,641Gains on sale of assets
    
    
    
    
    
    
    3,730
    
    
    
    875
    
    
    
    
    
    
    
    1,000
    
    
    
    5,605Depreciation and amortization
    
    
    4,299
    
    
    
    17,848
    
    
    
    1,356
    
    
    
    1,820
    
    
    
    3,740
    
    
    
    29,063Purchases of property, plant
and
equipment, net
    
    
    4,102
    
    
    
    28,375
    
    
    
    989
    
    
    
    
    
    
    
    5,989
    
    
    
    39,455Total assets
    
    
    231,131
    
    
    
    355,612
    
    
    
    60,061
    
    
    
    22,107
    
    
    
    275,445
    
    
    
    944,356
    Years Ended December 31,2005
    
    
    2004
    
    
    2003Controlled-release
    
    $
    226,629
    
    
    $
    271,722
    
    
    $
    208,883Immediate-release and oral contraceptives
    
    
    69,429
    
    
    
    72,645
    
    
    
    46,131Subtotal
    
    
    296,058
    
    
    
    344,367
    
    
    
    255,014Licensing, royalties and other
    
    
    14,770
    
    
    
    44,029
    
    
    
    81,183Total Generic Product Segment revenues
    
    $
    310,828
    
    
    $
    388,396
    
    
    $
    336,197
 144




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##### Table of Contents



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
  145




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##### Table of Contents



PART III
 ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
   Investor.Relations@andrx.com
 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.
  146




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##### Table of Contents



PART IV
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
       ExhibitNo.(1)
    
    Description
    
    Method of Filing2.2
    
    
    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.
    
    Incorporated by
reference to
Exhibit 2.2 to our
Annual Report on
Form 10-K for the
year ended December
31, 1999.2.3
    
    
    Agreement and Plan of Merger dated
January 9, 2001, among Andrx Corporation,
Mediconsult Acquisition Corp. and
Mediconsult.com, Inc.
    
    Incorporated by
reference to
Exhibit 2.1 to our
Form 8-K filed
January 17, 2001.2.5
    
    

Agreement
and Plan of Merger by and among Watson Pharmaceuticals, Inc., Water
Delaware, Inc. and Andrx Corporation dated March 12, 2006.
    
    Incorporated by
reference to
Exhibit 2.1 to
our Form 8-K filed March 13, 2006.3.1
    
    
    Andrx Corporations Second Amended and
Restated Certificate of Incorporation
    
    Incorporated by
reference to
Exhibit 3.1 to
Quarterly Report on
Form 10-Q for the
period ended March
31, 2004.3.2
    
    
    Andrx Corporations Amended and Restated
Bylaws dated April 9, 2004
    
    Incorporated by
reference to
Exhibit 3.2 to
Quarterly Report on
Form 10-Q for the
period ended March
31, 2004.4.1
    
    
    Specimen Certificate of Andrx Corporation
- Andrx Group Common Stock
    
    Incorporated by
reference to
Exhibit 4.1 to our
Form 8-A12G filed
September 6, 2000.4.3
    
    
    Rights Agreement, dated as of March 20,
2003, between Andrx Corporation and
American Stock Transfer & Trust Company
as rights agent
    
    Incorporated by
reference to
Exhibit 4.3 to our
Form 8-K filed
March 21, 2003.4.4
    
    
    Revised Specimen Certificate of Andrx
Corporation  Andrx Group Common Stock
    
    Incorporated by
reference to
Exhibit 4.4 to our
Quarterly Report on
Form 10-Q for the
period ended March
31, 2003.4.5
    
    

Amendment
to Rights Agreement dated as of March 12, 2006 between Andrx
Corporation and American Stock Transfer & Trust Company
    
    Incorporated by
reference to
Exhibit 4.5 to our
Form 8-K filed March 13, 2006.10.1
    
    
    Form of Stock Incentive Plan, as amended*
    
    Incorporated by
reference to
Exhibit 10.1 to our
Registration
Statement on Form
S-1 filed on April
17, 1996 (File No.
333-03614).10.6
    
    
    Royalty Agreement between Andrx
Corporation and Chih-Ming J. Chen*
    
    Incorporated by
reference to
Exhibit 10.6 to our
Registration
Statement on Form
S-1 filed on April
17, 1996 (File No.
333-03614).
 147




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##### Table of Contents



ExhibitNo.(1)
    
    Description
    
    Method of Filing10.7
    
    
    Form of Indemnification Agreement between
Andrx Corporation and officers and
directors*
    
    Incorporated by
reference to
Exhibit 10.7 to our
Registration
Statement on Form
S-1 filed on April
17, 1996 (File No.
333-03614).10.34
    
    
    Amendment to Royalty Agreement between
Andrx Corporation and Chih-Ming J. Chen,
Ph.D*
    
    Incorporated by
reference to
Exhibit 10.34 to
our Quarterly
Report on Form 10-Q
for the period
ended September 30,
1998.10.42
    
    
    2000 Stock Option Plan*
    
    Incorporated by
reference to
Exhibit 10.42 to
our Registration
Statement on Form
S-4 (File No.
333-38226) filed
May 31, 2000.10.45
    
    
    Tax Sharing Agreement
    
    Incorporated by
reference to
Exhibit 10.45 to
our Registration
Statement on Form
S-4 (File No.
333-38226) filed
May 31, 2000.10.54
    
    
    Amendment to Tax Sharing Agreement
    
    Incorporated by
reference to
Exhibit 10.54 to
our Annual Report
on Form 10-K for
the year ended
December 31, 2000.10.59
    
    
    Termination Agreement with Geneva
Pharmaceuticals, Inc.
    
    Incorporated by
reference to
Exhibit 10.59 to
our Quarterly
Report on Form 10-Q
for the period
ended September 30,
2001Confidential
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.10.61
    
    
    Employment Agreement between Andrx
Corporation and Angelo C. Malahias *
    
    Incorporated by
reference to
Exhibit 10.61 to
our Quarterly
Report on Form 10-Q
for the period
ended September 30,
2001.10.62
    
    
    Separation Agreement between Andrx
Corporation and Chih Ming Chen, Ph.D.*
    
    Incorporated by
reference to
Exhibit 10.62 to
our Quarterly
Report on Form 10-Q
for the period
ended September 30,
2001.10.63
    
    
    Separation Agreement between the Andrx
Corporation and Alan P. Cohen *
    
    Incorporated by
reference to
Exhibit 10.63 to
our Quarterly
Report on Form 10-Q
for the period
ended September 30,
2001.10.64
    
    
    Employee Stock Purchase Plan, as amended*
    
    Incorporated by
reference to
Exhibit 10.64 to
our Form S-8 (File
No. 333-84672)
dated March 21,
2002.10.66
    
    
    Employment Agreement between Andrx
Corporation and Richard J. Lane, former
Chief Executive Officer*
    
    Incorporated by
reference to
Exhibit 10.66 to
our Quarterly
Report on Form 10-Q
for the period
ended June 30,
2002.10.67
    
    
    Commercialization Agreement among Andrx
Pharmaceuticals, Inc., Genpharm, Inc. and
Kremers Urban Development Co. dated as of
October 30, 2002
    
    Incorporated by
reference to
Exhibit 10.67 to
our Annual Report
on Form 10-K for
the year ended
December 31, 2002.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.
 148




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##### Table of Contents



ExhibitNo.(1)
    
    Description
    
    Method of Filing10.73
    
    
    Form of 2003 Indemnification Agreement
between Andrx Corporation and directors*
    
    Incorporated by
reference to
Exhibit 10.73 to
our Annual Report
on Form 10-K for
the year ended
December 31, 2002.10.74
    
    
    2000 Stock Option Plan, as amended and
restated*
    
    Incorporated by
reference to
Exhibit 10.74 to
our Schedule 14A
(Amendment No.1)
filed on May 7,
2003.10.75
    
    
    Employee Stock Purchase Plan, as amended*
    
    Incorporated by
reference to
Exhibit 10.75 to
our Schedule 14A
(Amendment No.1)
filed on May 7,
2003.10.77
    
    
    Termination Agreement and Release between
Andrx Corporation and Richard J. Lane*
    
    Incorporated by
reference to
Exhibit 10.77 to
our Quarterly
Report on Form 10-Q
for the period
ended March 31,
2004.10.81
    
    
    Employment Agreement between Andrx
Corporation and Thomas P. Rice*
    
    Incorporated by
reference to
Exhibit 10.81 to
our Quarterly
Report on Form 10-Q
for the period
ended March 31,
2004.10.82
    
    
    Exclusivity Transfer Agreement by and
among, Andrx Pharmaceuticals, LLC, Andrx
Pharmaceuticals, Inc., Impax
Laboratories, Inc. and Teva
Pharmaceuticals Curacao, N.V.
    
    Incorporated by
reference to
Exhibit 10.82 to
our Quarterly
Report on Form 10-Q
for the period
ended March 31,
2004.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.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.
    
    Incorporated by
reference to
Exhibit 10.83 to
our Quarterly
Report on Form 10-Q
for the period
ended March 31,
2004.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.10.86
    
    
    Employment Cessation Agreement between
Andrx Corporation and Elliot F. Hahn,
Ph.D. dated November 15, 2004*
    
    Incorporated by
reference to
Exhibit 10.86 to
our Form 8-K filed
November 18, 2004.10.87
    
    
    Amended and Restated Employment Agreement
between Andrx Corporation and Larry
Rosenthal*
    
    Incorporated by
reference to
Exhibit 10.87 to
our Form 8-K filed
March 8, 2005.10.88
    
    
    Form of Restricted Stock Unit Agreement
between Andrx Corporation and Angelo C.
Malahias, Scott Lodin and Lawrence
Rosenthal entered into December 1, 2002*
    
    Incorporated by
reference to
Exhibit 10.88 to
our Annual Report
on Form 10-K filed
March 9, 2005.10.89
    
    
    Restricted Stock Unit Agreement between
Andrx Corporation and Thomas P. Rice
dated February 27, 2004*
    
    Incorporated by
reference to
Exhibit 10.89 to
our Annual Report
on Form 10-K filed
March 9, 2005.
 149




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##### Table of Contents



ExhibitNo.(1)
    
    Description
    
    Method of Filing10.90
    
    
    Amendment No. 1 to the Termination
Agreement with Sandoz Inc. (f.k.a. as
Geneva Pharmaceuticals, Inc.)
    
    Incorporated by
reference to
Exhibit 10.90 to
our Annual Report
on Form 10-K filed
March 9, 2005.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.10.91
    
    
    Form of Stock Option Agreement (as of
January 1, 2005) for grants under the
Amended and Restated 2000 Stock Option
Plan*
    
    Incorporated by
reference to
Exhibit 10.91 to
our Annual Report
on Form 10-K filed
March 9, 2005.10.92
    
    
    Compensation Committee resolution dated
September 2, 2004, regarding Thomas P.
Rice compensation*
    
    Incorporated by
reference to
Exhibit 10.92 to
our Annual Report
on Form 10-K filed
March 9, 2005.10.93
    
    
    Summary Discussion of Board of Director
Compensation as of March 22, 2004*
    
    Incorporated by
reference to
Exhibit 10.93 to
our Annual Report
on Form 10-K filed
March 9, 2005.10.94
    
    
    Form of Restricted Stock Unit Agreement
between Andrx Corporation and members of
the Board of Directors*
    
    Incorporated by
reference to
Exhibit 10.94 to
our Annual Report
on Form 10-K filed
March 9, 2005.10.96
    
    
    Summary of Restricted Stock Unit Grants[*]
    
    Incorporated by
reference to
Exhibit 10.96 to
our Form 8-K filed
March 23, 2005.10.97
    
    
    Summary of Compensatory Matters[*]
    
    Incorporated by
reference to
Exhibit 10.97 to
our Form 8-K filed
April 7, 2005.10.98
    
    
    Summary of Restricted Stock Unit Grant to
Named Executive Officers[*]
    
    Incorporated by
reference to
Exhibit 10.98 to
our Form 8-K filed
April 18, 2005.10.99
    
    
    Summary Discussion of Acceleration of
Options on March 2, 2005[*]
    
    Incorporated by
reference to
Exhibit 10.99 to
our Quarterly
Report on Form 10-Q
filed May 4, 2005.10.100
    
    
    Agreement to License and Purchase by and
among Andrx Labs, LLC, Andrx
Laboratories, Inc., Andrx Laboratories
(NJ), Inc., Andrx EU Ltd. and First
Horizon Pharmaceutical Corporation dated
as of March 2, 2005
    
    Incorporated by
reference to
Exhibit 10.100 to
our Quarterly
Report on Form 10-Q
filed May 4, 2005.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.10.101
    
    
    Manufacturing and Supply Agreement
between Andrx Pharmaceuticals, Inc. and
First Horizon Pharmaceutical Corporation
dated as of March 28, 2005
    
    Incorporated by
reference to
Exhibit 10.101 to
our Quarterly
Report on Form 10-Q
filed May 4, 2005.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.
 150




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##### Table of Contents



ExhibitNo.(1)
    
    Description
    
    Method of Filing10.102
    
    
    Distribution Agreement between Amphastar
Pharmaceuticals, Inc. and Andrx
Pharmaceuticals, Inc. dated as of May 2,
2005
    
    Filed herewith.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.10.103
    
    
    Separation Agreement between Andrx
Corporation and Scott Lodin dated as of
September 15, 2005[*]
    
    Incorporated by
reference to
Exhibit 10.103 to
our Form 8-K filed
September 21, 2005.10.104
    
    
    Restricted Stock Unit Agreement between
Andrx Corporation and Thomas P. Rice
dated as of April 14, 2005[*]
    
    Incorporated by
reference to
Exhibit 104 to our
Quarterly Report on
Form 10-Q filed
November 7, 2005.10.105
    
    
    Restricted Stock Unit Agreement between
Andrx Corporation and Angelo C. Malahias
dated as of April 14, 2005[*]
    
    Incorporated by
reference to
Exhibit 10.105 to
our Quarterly
Report on Form 10-Q
filed November 7,
2005.10.106
    
    
    Restricted Stock Unit Agreement between
Andrx Corporation and Lawrence J.
Rosenthal dated as of April 14, 2005[*]
    
    Incorporated by
reference to
Exhibit 10.106 to
our Quarterly
Report on Form 10-Q
filed November 7,
2005.10.107
    
    
    Summary Discussion of Dr. Hahn Cash
Compensation as a Board Member[*]
    
    Incorporated by
reference to
Exhibit 10.106 to
our Form 8-K filed
December 16, 2005.10.108
    
    
    Summary of RSU Awards to Board of
Directors and Named Executive Officers[*]
    
    Incorporated by
reference to
Exhibit 10.108 to
our Form 8-K filed
March 6, 2006.10.109
    
    
    Supply Agreement between Andrx
Pharmaceuticals, Inc. and Pfizer Inc.
dated as of September 4, 2003
    
    Filed herewith.
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.21.1
    
    
    Subsidiaries of Andrx Corporation
    
    Filed herewith.23.1
    
    
    Consent of Independent Registered Public
Accounting Firm
    
    Filed herewith.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
    
    Filed herewith.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
    
    Filed herewith.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
    
    Filed herewith.
 
 *
    
    Management Compensation Plan or arrangement.      151




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##### Table of Contents



SIGNATURES
  ANDRX CORPORATIONBy:
    /s/ Thomas P. RiceThomas P. RiceChief Executive OfficerBy:
    /s/ Angelo C. MalahiasAngelo C. MalahiasPresident and Chief Financial Officer   Signatures
    
    Title
    
    Date/s/ Thomas P. Rice

Thomas P. Rice
    
    Chief Executive Officer and Director
(Principal Executive Officer)
    
    March 16, 2006/s/ Angelo C. Malahias

Angelo C. Malahias
    
    President and Chief Financial Officer
(Principal Accounting Officer)
    
    March 16, 2006/s/ Tamara A. Baum

Tamara A. Baum
    
    Director
    
    March 16, 2006/s/ Joseph E. Breslin

Joseph E. Breslin
    
    Director
    
    March 16, 2006/s/ Lawrence J. DuBow

Lawrence J. DuBow
    
    Director
    
    March 16, 2006/s/ Carter H. Eckert

Carter H. Eckert
    
    Director
    
    March 16, 2006/s/ Irwin C. Gerson

Irwin C. Gerson
    
    Director
    
    March 16, 2006/s/ Elliot F. Hahn, Ph.D.

Elliot F. Hahn, Ph.D.
    
    Director
    
    March 16, 2006/s/ Melvin Sharoky, M.D.

Melvin Sharoky, M.D.
    
    Director
    
    March 16, 2006
 152