##### 



FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2002

Commission File Number 1-09623

IVAX CORPORATION

|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 16-1003559                          
|                                                               |  |                                     
|(State or
other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

4400 Biscayne Boulevard, Miami, Florida 33137

---

(Address of principal executive offices) (Zip Code)


(305) 575-6000

---

(Registrants telephone number, including area code)


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

Yes [X]       No [   ]

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

194,554,951 shares of Common Stock, $.10 par value, outstanding as of July 26, 2002.



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##### 



IVAX CORPORATION

INDEX

|                                                                                                |  |  |          |   
|----------------------------------------------------------------------------------------------- |  |  | -------- | --
|                                                                                                |  |  | PAGE NO. |   
|                                                                                                |  |  |          |   
|PART I  FINANCIAL
INFORMATION                                                                  |  |  |          |   
|                                                                                               
|Item 1. Financial Statements                                                                    |  |  |          |   
|                                                                                               
|Consolidated Balance Sheets
as of June 30, 2002 and December 31, 2001                           |  |  |          | 2 
|                                                                                               
|Consolidated Statements of Operations
for the three and six months ended June 30, 2002 and 2001 |  |  |          | 3 
|                                                                                               
|Consolidated Statements of Shareholders Equity
for the six months ended June 30, 2002          |  |  |          | 5 
|                                                                                               
|Consolidated Statements of Cash Flows
for the six months ended June 30, 2002 and 2001           |  |  |          | 6 
|                                                                                               
|Notes to Consolidated Financial Statements                                                      |  |  |          | 8 
|                                                                                               
|Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations   |  |  |          | 16
|                                                                                               
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                              |  |  |          | 25
|                                                                                               
|                                                                                               
|PART II  OTHER
INFORMATION                                                                     |  |  |          |   
|                                                                                               
|Item 1. Legal Proceedings                                                                       |  |  |          | 28
|                                                                                               
|Item 4. Submission of Matters to a Vote of Security Holders                                     |  |  |          | 28
|                                                                                               
|Item 6. Exhibits and Reports on Form 8-K                                                        |  |  |          | 28



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##### 



PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)

|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |              |           |  |  | 
|-------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------ | -------- | --------- | ----------- | ------- | ------------ | --------- |  |  | 
|                                       |                                                                                                                                   |                                            |                                      |          |           | June 30,    |         | December 31,
|                                       |                                                                                                                                   |                                            |                                      |          |           | 2002        |         | 2001        
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   |                                            |                                      |          |           | (Unaudited) |         |              |           | 
|                                       |                                                                                                                                   |                                            |                                      | ASSETS   |           |             |         |              |           |  |  | 
|Current assets:                        |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       | Cash and cash equivalents                                                                                                         |                                            | $                                    | 149,419  |           |             | $       | 178,264      |          
|                                       | Marketable securities                                                                                                             |                                            |                                      | 26,081   |           |             |         | 154,842      |          
|                                       | Accounts receivable, net of allowances for doubtful
accounts of $22,002 in 2002 and $21,670 in 2001                               |                                            |                                      | 202,058  |           |             |         | 247,670      |          
|                                       | Inventories                                                                                                                       |                                            |                                      | 291,037  |           |             |         | 253,471      |          
|                                       | Other current assets                                                                                                              |                                            |                                      | 145,268  |           |             |         | 164,692      |          
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   | Total current assets                       |                                      |          | 813,863   |             |         |              | 998,939   | 
|Property, plant and equipment, net     |                                                                                                                                   |                                            | 377,637                              |          |           |             | 356,304 |             
|Goodwill, net                          |                                                                                                                                   |                                            | 414,239                              |          |           |             | 502,077 |             
|Intangible assets, net                 |                                                                                                                                   |                                            | 283,376                              |          |           |             | 187,479 |             
|Other assets                           |                                                                                                                                   |                                            | 51,650                               |          |           |             | 60,650  |             
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   | Total assets                               |                                      | $        | 1,940,765 |             |         | $            | 2,105,449 | 
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   |                                            | LIABILITIES AND SHAREHOLDERS EQUITY |          |           |             |         |              |           |  | 
|Current liabilities:                   |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       | Accounts payable                                                                                                                  |                                            | $                                    | 86,047   |           |             | $       | 97,465       |          
|                                       | Current portion of long-term debt                                                                                                 |                                            |                                      | 26,325   |           |             |         | 52,199       |          
|                                       | Loans payable                                                                                                                     |                                            |                                      | 19,160   |           |             |         | 13,249       |          
|                                       | Accrued income taxes payable                                                                                                      |                                            |                                      | 13,295   |           |             |         | 41,861       |          
|                                       | Accrued expenses and other current liabilities                                                                                    |                                            |                                      | 191,791  |           |             |         | 196,587      |          
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   | Total current liabilities                  |                                      |          | 336,618   |             |         |              | 401,361   | 
|Long-term debt, net of current portion |                                                                                                                                   |                                            | 910,016                              |          |           |             | 913,486 |             
|Other long-term liabilities            |                                                                                                                                   |                                            | 58,593                               |          |           |             | 57,536  |             
|Minority interest                      |                                                                                                                                   |                                            | 15,504                               |          |           |             | 14,712  |             
|Shareholders equity:                  |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       | Common stock, $.10 par value, authorized 437,500 shares,
issued and outstanding 194,987 shares in 2002 and 196,523 shares in 2001 |                                            |                                      | 19,498   |           |             |         | 19,652       |          
|                                       | Capital in excess of par value                                                                                                    |                                            |                                      | 318,831  |           |             |         | 328,095      |          
|                                       | Put options                                                                                                                       |                                            |                                      |         |           |             |         | 34,650       |          
|                                       | Retained earnings                                                                                                                 |                                            |                                      | 501,652  |           |             |         | 446,469      |          
|                                       | Accumulated other comprehensive loss                                                                                              |                                            |                                      | (219,947 | )         |             |         | (110,512     | )        
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   | Total shareholders equity                 |                                      |          | 620,034   |             |         |              | 718,354   | 
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             
|                                       |                                                                                                                                   | Total liabilities and shareholders equity |                                      | $        | 1,940,765 |             |         | $            | 2,105,449 | 
|                                       |                                                                                                                                   |                                            |                                      |          |           |             |         |             

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

2



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##### 



IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |         |  
|----------------------------------------------------- | --------------------------------------------------------------------------- | - | ------------ | ------- | ---------- | - | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                      |                                                                             |   | Three Months |         | Six Months
|                                                      |                                                                             |   |              |         |           
|                                                      |                                                                             |   | 2002         |         | 2001       |   | 2002    |         | 2001
|                                                      |                                                                             |   |              |         |            |   |         |         |     
|Period Ended June 30,                                 |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|(In thousands, except per share data)                 |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                     
|Net revenues                                          |                                                                             | $ | 280,406      |         |            | $ | 301,782 |         |      | $ | 552,628 |         |   | $ | 561,714 |        
|Cost of sales                                         |                                                                             |   | 149,843      |         |            |   | 143,339 |         |      |   | 300,090 |         |   |   | 267,063 |        
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Gross profit                                                                |   |              | 130,563 |            |   |         | 158,443 |      |   |         | 252,538 |   |   |         | 294,651 |  
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Operating expenses:                                   |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Selling                                                                     |   |              | 43,701  |            |   |         | 30,103  |      |   |         | 85,847  |   |   |         | 57,605  |  
|                                                      | General and administrative                                                  |   |              | 27,368  |            |   |         | 28,906  |      |   |         | 54,634  |   |   |         | 52,627  |  
|                                                      | Research and development                                                    |   |              | 18,330  |            |   |         | 20,020  |      |   |         | 37,384  |   |   |         | 38,903  |  
|                                                      | Amortization of intangible assets                                           |   |              | 3,918   |            |   |         | 4,229   |      |   |         | 6,932   |   |   |         | 7,823   |  
|                                                      | Restructuring costs                                                         |   |              | 1,794   |            |   |         | (220    | )    |   |         | 2,282   |   |   |         | (221    | )
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Total operating expenses                                                    |   |              | 95,111  |            |   |         | 83,038  |      |   |         | 187,079 |   |   |         | 156,737 |  
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Income from operations                                                      |   |              | 35,452  |            |   |         | 75,405  |      |   |         | 65,459  |   |   |         | 137,914 |  
|Other income (expense):                               |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Interest income                                                             |   |              | 3,026   |            |   |         | 9,933   |      |   |         | 5,425   |   |   |         | 13,741  |  
|                                                      | Interest expense                                                            |   |              | (12,312 | )          |   |         | (10,460 | )    |   |         | (24,720 | ) |   |         | (14,819 | )
|                                                      | Other income, net                                                           |   |              | 19,354  |            |   |         | 9,182   |      |   |         | 24,374  |   |   |         | 10,932  |  
|                                                      | Gain on partial sale of IVAX Diagnostics, Inc.                              |   |              |        |            |   |         |        |      |   |         |        |   |   |         | 10,278  |  
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Total other income, net                                                     |   |              | 10,068  |            |   |         | 8,655   |      |   |         | 5,079   |   |   |         | 20,132  |  
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Income from continuing operations before
income taxes and minority interest |   |              | 45,520  |            |   |         | 84,060  |      |   |         | 70,538  |   |   |         | 158,046 |  
|Provision for income taxes                            |                                                                             |   | 13,766       |         |            |   | 16,211  |         |      |   | 19,578  |         |   |   | 29,966  |        
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Income from continuing operations before
minority interest                  |   |              | 31,754  |            |   |         | 67,849  |      |   |         | 50,960  |   |   |         | 128,080 |  
|Minority interest                                     |                                                                             |   | (32          | )       |            |   | 14      |         |      |   | 62      |         |   |   | (85     | )      
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                                                      | Income from continuing operations                                           |   |              | 31,722  |            |   |         | 67,863  |      |   |         | 51,022  |   |   |         | 127,995 |  
|Cumulative effect of a change in accounting
principle |                                                                             |   |             |         |            |   |        |         |      |   | 4,161   |         |   |   |        |        
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Net income                                            |                                                                             | $ | 31,722       |         |            | $ | 67,863  |         |      | $ | 55,183  |         |   | $ | 127,995 |        
|                                                      |                                                                             |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        

(Continued)

3



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##### 



IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Continuation)

|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |         | 
|----------------------------------------------------- | ----------------------------------------------------- |  | ------------ | ------- | ---------- |  | ---- | ------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                                      |                                                       |  | Three Months |         | Six Months
|                                                      |                                                       |  |              |         |           
|                                                      |                                                       |  | 2002         |         | 2001       |  | 2002 |         | 2001
|                                                      |                                                       |  |              |         |            |  |      |         |     
|Period Ended June 30,                                 |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|(In thousands, except per share data)                 |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                     
|BASIC EARNINGS PER COMMON SHARE:                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                      | Continuing operations                                 |  | $            | 0.16    |            |  | $    | 0.34    |      |  | $ | 0.26    |  |  | $ | 0.64    | 
|                                                      | Cumulative effect of a change in accounting
principle |  |              |        |            |  |      |        |      |  |   | 0.02    |  |  |   |        | 
|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                      | Net income                                            |  | $            | 0.16    |            |  | $    | 0.34    |      |  | $ | 0.28    |  |  | $ | 0.64    | 
|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|DILUTED EARNINGS PER COMMON SHARE:                    |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                      | Continuing operations                                 |  | $            | 0.16    |            |  | $    | 0.33    |      |  | $ | 0.26    |  |  | $ | 0.62    | 
|                                                      | Cumulative effect of a change in accounting
principle |  |              |        |            |  |      |        |      |  |   | 0.02    |  |  |   |        | 
|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                      | Net income                                            |  | $            | 0.16    |            |  | $    | 0.33    |      |  | $ | 0.28    |  |  | $ | 0.62    | 
|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING: |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                      | Basic                                                 |  |              | 195,083 |            |  |      | 199,876 |      |  |   | 195,642 |  |  |   | 199,567 | 
|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        
|                                                      | Diluted                                               |  |              | 196,998 |            |  |      | 207,605 |      |  |   | 198,128 |  |  |   | 206,979 | 
|                                                      |                                                       |  |              |         |            |  |      |         |      |  |   |         |  |  |   |        

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

4



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##### 



IVAX CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
(Unaudited)
(In thousands)

|                          |                                           |                                                                                         |                    |        |              |   |            |      |           |   |           |         |          |   |               |         |               |   |             |   |        |   |          |   |          |   |         |         |          |         |  
|------------------------- | ----------------------------------------- | --------------------------------------------------------------------------------------- | ------------------ | ------ | ------------ | - | ---------- | ---- | --------- | - | --------- | ------- | -------- | - | ------------- | ------- | ------------- | - | ----------- | - | ------ | - | -------- | - | -------- | - | ------- | ------- | -------- | ------- | -
|                          |                                           |                                                                                         |                    |        | Common Stock |   |            |      |           |   |           |         |          |   |               |         |               |   | Accumulated |   |        |   |         
|                          |                                           |                                                                                         |                    |        |              |   | Capital in |      |           |   |           |         |          |   |               |         | Other         |   |             |   |       
|                          |                                           |                                                                                         |                    |        | Number of    |   |            |      |           |   | Excess of |         | Put      |   | Retained      |         | Comprehensive |   |             |   |       
|                          |                                           |                                                                                         |                    |        | Shares       |   | Amount     |      | Par Value |   | Options   |         | Earnings |   | Income (Loss) |         | Total        
|                          |                                           |                                                                                         |                    |        |              |   |            |      |           |   |           |         |          |   |               |         |              
|BALANCE,December 31, 2001 |                                           |                                                                                         | 196,523            |        |              | $ | 19,652     |      |           | $ | 328,095   |         |          | $ | 34,650        |         |               | $ | 446,469     |   |        | $ | (110,512 | ) |          | $ | 718,354 |        
|                          | Comprehensive loss:                       |                                                                                         |                    |        |              |   |            |      |           |   |           |         |          |   |               |         |               |   |             |   |        |   |          |   |          |   |         |         |         
|                          |                                           | Net income                                                                              |                    |        |             |   |            |      |          |   |           |         |         |   |               |         |              |   |             |   | 55,183 |   |          |   |         |   |         |         | 55,183   |        
|                          |                                           | Translation adjustment                                                                  |                    |        |             |   |            |      |          |   |           |         |         |   |               |         |              |   |             |   |       |   |          |   | (105,832 | ) |         |         | (105,832 | )      
|                          |                                           | Unrealized net loss on
available-for-sale equity
securities and derivatives,
net of tax |                    |        |             |   |            |      |          |   |           |         |         |   |               |         |              |   |             |   |       |   |          |   | (3,603   | ) |         |         | (3,603   | )      
|                          |                                           |                                                                                         |                    |        |              |   |            |      |           |   |           |         |          |   |               |         |               |   |             |   |        |   |          |   |          |   |         |        
|                          |                                           |                                                                                         | Comprehensive loss |        |              |  |            |      |           |  |           |         |          |  |               |         |               |  |             |   |        |  |          |   |          |  |         |         |          | (54,252 | )
|                          | Exercise of stock options                 |                                                                                         |                    | 577    |              |   |            | 58   |           |   |           | 4,700   |          |   |               |        |               |   |             |  |        |   |          |  |          |   |         | 4,758   |         
|                          | Tax benefit of option exercises           |                                                                                         |                    |       |              |   |            |     |           |   |           | 1,297   |          |   |               |        |               |   |             |  |        |   |          |  |          |   |         | 1,297   |         
|                          | Employee stock purchases                  |                                                                                         |                    | 33     |              |   |            | 3    |           |   |           | 499     |          |   |               |        |               |   |             |  |        |   |          |  |          |   |         | 502     |         
|                          | Repurchase and retirement of
common stock |                                                                                         |                    | (3,117 | )            |   |            | (312 | )         |   |           | (37,588 | )        |   |               | (12,725 | )             |   |             |  |        |   |          |  |          |   |         | (50,625 | )       
|                          | Shares issued to settle put options       |                                                                                         |                    | 971    |              |   |            | 97   |           |   |           | 21,828  |          |   |               | (21,925 | )             |   |             |  |        |   |          |  |          |   |         |        |         
|                          |                                           |                                                                                         |                    |        |              |   |            |      |           |   |           |         |          |   |               |         |               |   |             |   |        |   |          |   |          |   |         |        
|BALANCE,June 30, 2002     |                                           |                                                                                         | 194,987            |        |              | $ | 19,498     |      |           | $ | 318,831   |         |          | $ |              |         |               | $ | 501,652     |   |        | $ | (219,947 | ) |          | $ | 620,034 |        
|                          |                                           |                                                                                         |                    |        |              |   |            |      |           |   |           |         |          |   |               |         |               |   |             |   |        |   |          |   |          |   |         |        

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

5



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##### 



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

|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |          |          |         |  
|------------------------------------------------------------ | -------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------------------------------- | -------- | -------- | ------- | ------- | -------- | -------- | ------- | -
|                                                             |                                                                                  |                                                       |                                                                   |          | 2002     |         | 2001   
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |        
|Six Months Ended June 30,                                    |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|(In thousands)                                               |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                            
|Cash flows from operating activities:                        |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                             | Net income                                                                       |                                                       | $                                                                 | 55,183   |          |         | $       | 127,995  |         
|                                                             | Adjustments to reconcile net income to net cash
flows from operating activities: |                                                       |                                                                   |          |          |         |         |          |         
|                                                             |                                                                                  | Restructuring costs                                   |                                                                   |          | 2,282    |         |         |          | (221     | )      
|                                                             |                                                                                  | Depreciation and amortization                         |                                                                   |          | 26,668   |         |         |          | 22,688   |        
|                                                             |                                                                                  | Deferred tax provision (benefit)                      |                                                                   |          | 1,362    |         |         |          | (17,683  | )      
|                                                             |                                                                                  | Tax effect of stock option exercises                  |                                                                   |          | 1,297    |         |         |          | 7,751    |        
|                                                             |                                                                                  | Provision for doubtful accounts                       |                                                                   |          | 2,064    |         |         |          | 1,033    |        
|                                                             |                                                                                  | Provision for inventory obsolescence                  |                                                                   |          | 5,173    |         |         |          | 10,472   |        
|                                                             |                                                                                  | Interest accretion on QVAR note                       |                                                                   |          | 453      |         |         |          |         |        
|                                                             |                                                                                  | Minority interest in earnings                         |                                                                   |          | (62      | )       |         |          | 85       |        
|                                                             |                                                                                  | Equity in earnings of unconsolidated affiliates       |                                                                   |          | (502     | )       |         |          | (619     | )      
|                                                             |                                                                                  | Gain on sale of marketable securities                 |                                                                   |          | (797     | )       |         |          |         |        
|                                                             |                                                                                  | Gain on sale of product rights                        |                                                                   |          | (7,489   | )       |         |          | (7,347   | )      
|                                                             |                                                                                  | Losses
(gains) on sale of assets, net                 |                                                                   |          | 370      |         |         |          | (12,732  | )      
|                                                             |                                                                                  | Gains on extinguishment of debt                       |                                                                   |          | (9,570   | )       |         |          |         |        
|                                                             |                                                                                  | Cumulative effect of a change in accounting principle |                                                                   |          | (4,161   | )       |         |          |         |        
|                                                             |                                                                                  | Changes in operating assets and liabilities:          |                                                                   |          |          |         |         |          |          |        
|                                                             |                                                                                  |                                                       | Accounts receivable                                               |          |          | 37,813  |         |          |          | (29,665 | )
|                                                             |                                                                                  |                                                       | Inventories                                                       |          |          | (40,591 | )       |          |          | (12,906 | )
|                                                             |                                                                                  |                                                       | Other current assets                                              |          |          | 9,396   |         |          |          | (6,474  | )
|                                                             |                                                                                  |                                                       | Other assets                                                      |          |          | 3,538   |         |          |          | 3,482   |  
|                                                             |                                                                                  |                                                       | Accounts payable, accrued expenses, and other
current liabilities |          |          | (40,569 | )       |          |          | 7,313   |  
|                                                             |                                                                                  |                                                       | Other long-term liabilities                                       |          |          | 1,701   |         |          |          | (153    | )
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                             |                                                                                  |                                                       | Net cash flows from operating activities                          |          |          | 43,559  |         |          |          | 93,019  |  
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|Cash flows from investing activities:                        |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                             | Proceeds from sale of product rights                                             |                                                       |                                                                   | 7,489    |          |         |         | 3,097    |         
|                                                             | Capital expenditures                                                             |                                                       |                                                                   | (35,150  | )        |         |         | (24,071  | )       
|                                                             | Proceeds from sale of assets                                                     |                                                       |                                                                   |         |          |         |         | 44,912   |         
|                                                             | Acquisitions of intangible assets                                                |                                                       |                                                                   | (32,946  | )        |         |         | (10,907  | )       
|                                                             | Acquisitions of businesses, net of cash acquired                                 |                                                       |                                                                   | 6,417    |          |         |         | (79,809  | )       
|                                                             | Investment in affiliates                                                         |                                                       |                                                                   | 58       |          |         |         | (17,913  | )       
|                                                             | Purchases of marketable securities                                               |                                                       |                                                                   | (100,473 | )        |         |         | (238,092 | )       
|                                                             | Proceeds from sales of marketable securities                                     |                                                       |                                                                   | 226,420  |          |         |         |         |         
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                             |                                                                                  | Net cash flows from investing activities              |                                                                   |          | 71,815   |         |         |          | (322,783 | )      
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|Cash flows from financing activities:                        |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                             | Borrowings on long-term debt and loans payable                                   |                                                       |                                                                   | 9,436    |          |         |         | 723,785  |         
|                                                             | Payments on long-term debt and loans payable                                     |                                                       |                                                                   | (94,419  | )        |         |         | (17,413  | )       
|                                                             | Exercise of stock options and employee stock purchases                           |                                                       |                                                                   | 5,260    |          |         |         | 11,320   |         
|                                                             | Repurchase of common stock                                                       |                                                       |                                                                   | (50,625  | )        |         |         | (58,577  | )       
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|                                                             |                                                                                  | Net cash flows from financing activities              |                                                                   |          | (130,348 | )       |         |          | 659,115  |        
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|Effect of exchange rate changes on cash and cash equivalents |                                                                                  |                                                       | (13,871                                                           | )        |          |         | 2,126   |         
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|Net (decrease) increase in cash and cash equivalents         |                                                                                  |                                                       | (28,845                                                           | )        |          |         | 431,477 |         
|Cash and cash equivalents at the beginning of the year       |                                                                                  |                                                       | 178,264                                                           |          |          |         | 174,794 |         
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         
|Cash and cash equivalents at the end of the period           |                                                                                  | $                                                     | 149,419                                                           |          |          | $       | 606,271 |         
|                                                             |                                                                                  |                                                       |                                                                   |          |          |         |         |         

(Continued)

6



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##### 



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

|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |         |  | 
|--------------------------------------------------------------------- | --------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- | - | ------ |  | ---- | ------- | ------- |  | 
|                                                                      |                                               |                                                                                                                                     |   | 2002   |  | 2001
|                                                                      |                                               |                                                                                                                                     |   |        |  |     
|Six Months Ended June 30,                                             |                                               |                                                                                                                                     |   |        |  |      |         |        
|(In thousands)                                                        |                                               |                                                                                                                                     |   |        |  |      |         |        
|                                                                     
|Supplemental disclosures:                                             |                                               |                                                                                                                                     |   |        |  |      |         |        
|                                                                      | Interest paid                                 |                                                                                                                                     | $ | 22,895 |  |      | $       | 9,135   | 
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        
|                                                                      | Income tax payments                           |                                                                                                                                     | $ | 38,899 |  |      | $       | 34,100  | 
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        
|Supplemental schedule of non-cash investing and financing activities: |                                               |                                                                                                                                     |   |        |  |      |         |        
|                                                                      |                                               | Information with respect to acquisitions which were accounted for under
the purchase method of accounting is summarized as follows: |   |        |  |      |         |         |  | 
|Fair value of assets acquired                                         |                                               |                                                                                                                                     |   |        |  | $    | 83,886  |        
|Liabilities assumed                                                   |                                               |                                                                                                                                     |   |        |  |      | (56,088 | )      
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        
|Net assets acquired                                                   |                                               |                                                                                                                                     |   |        |  |      | 27,798  |        
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        
|Purchase price:                                                       |                                               |                                                                                                                                     |   |        |  |      |         |        
|                                                                      | Cash, net of cash acquired                    |                                                                                                                                     |   |        |  |      |         | 79,754  | 
|                                                                      | Acquisition costs                             |                                                                                                                                     |   |        |  |      |         | 55      | 
|                                                                      | Fair market value of stock and options issued |                                                                                                                                     |   |        |  |      |         | 77,056  | 
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        
|                                                                      | Total                                         |                                                                                                                                     |   |        |  |      |         | 156,865 | 
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        
|Goodwill                                                              |                                               |                                                                                                                                     |   |        |  | $    | 129,067 |        
|                                                                      |                                               |                                                                                                                                     |   |        |  |      |         |        

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

7



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##### 



IVAX CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In thousands, except per share data)

(1) GENERAL:

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

(2) INVENTORIES:

Inventories consist of the following:

|                |                   |   |          |         |              |   |         |         | 
|--------------- | ----------------- | - | -------- | ------- | ------------ | - | ------- | ------- | 
|                |                   |   | June 30, |         | December 31,
|                |                   |   | 2002     |         | 2001        
|                |                   |   |          |         |             
|Raw materials   |                   | $ | 114,876  |         |              | $ | 110,443 |        
|Work-in-process |                   |   | 52,423   |         |              |   | 34,820  |        
|Finished goods  |                   |   | 123,738  |         |              |   | 108,208 |        
|                |                   |   |          |         |              |   |         |        
|                | Total inventories |   | $        | 291,037 |              |   | $       | 253,471 | 
|                |                   |   |          |         |              |   |         |        

(3) EARNINGS PER SHARE:

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

|                                                                                                    |                           |  |              |        |            |  |         |        |      |  |         |        |  |  |         |        | 
|--------------------------------------------------------------------------------------------------- | ------------------------- |  | ------------ | ------ | ---------- |  | ------- | ------ | ---- |  | ------- | ------ |  |  | ------- | ------ | 
|                                                                                                    |                           |  | Three Months |        | Six Months
|                                                                                                    |                           |  |              |        |           
|                                                                                                    |                           |  | 2002         |        | 2001       |  | 2002    |        | 2001
|                                                                                                    |                           |  |              |        |            |  |         |        |     
|Period Ended June 30,                                                                               |                           |  |              |        |            |  |         |        |      |  |         |        |  |  |         |       
|                                                                                                   
|Basic weighted average number of shares outstanding                                                 |                           |  | 195,083      |        |            |  | 199,876 |        |      |  | 195,642 |        |  |  | 199,567 |       
|Effect of dilutive securities  stock options and warrants                                          |                           |  | 1,915        |        |            |  | 7,729   |        |      |  | 2,486   |        |  |  | 7,412   |       
|                                                                                                    |                           |  |              |        |            |  |         |        |      |  |         |        |  |  |         |       
|Diluted weighted average number of shares
outstanding                                               |                           |  | 196,998      |        |            |  | 207,605 |        |      |  | 198,128 |        |  |  | 206,979 |       
|                                                                                                    |                           |  |              |        |            |  |         |        |      |  |         |        |  |  |         |       
|Not included in the calculation of diluted earnings
per share because their impact is antidilutive: |                           |  |              |        |            |  |         |        |      |  |         |        |  |  |         |       
|                                                                                                    | Stock options outstanding |  |              | 14,264 |            |  |         | 250    |      |  |         | 9,960  |  |  |         | 346    | 
|                                                                                                    | Convertible debt          |  |              | 23,518 |            |  |         | 26,514 |      |  |         | 24,299 |  |  |         | 26,514 | 
|                                                                                                    | Put options               |  |              |       |            |  |         | 281    |      |  |         |       |  |  |         | 281    | 

8



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##### 



(4) REVENUES:

Net revenues are comprised of gross revenues less provisions for
expected customer returns, inventory credits, discounts, promotional allowances,
volume rebates, chargebacks and other allowances. The reserve balances related
to these provisions are included in Accounts receivable, net of allowances for
doubtful accounts and Accrued expenses and other current liabilities in the
accompanying consolidated balance sheets in the amounts of $133,723 and $97,093,
respectively, at June 30, 2002, and $115,752 and $88,955, respectively, at
December 31, 2001.

(5) INTANGIBLE ASSETS:

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

|                               |                                    |  |               |         |              |  |   |        |                   |  |          |  |              |  |   |         |  |  |   |        |  |  |  |  | 
|------------------------------ | ---------------------------------- |  | ------------- | ------- | ------------ |  | - | ------ | ----------------- |  | -------- |  | ------------ |  | - | ------- |  |  | - | ------ |  |  |  |  | 
|                               |                                    |  | June 30, 2002 |         |              |  |   |        | December 31, 2001
|                               |                                    |  |               |         |              |  |   |        |                  
|                               |                                    |  | Gross         |         |              |  |   |        |                   |  |          |  | Gross        |  |   |         |  |  |   |        | 
|                               |                                    |  | Carrying      |         | Accumulated  |  |   |        |                   |  | Carrying |  | Accumulated 
|                               |                                    |  | Amount        |         | Amortization |  |   |        |                   |  | Amount   |  | Amortization
|                               |                                    |  |               |         |              |  |   |        |                   |  |          |  |             
|Amortized intangible assets:   |                                    |  |               |         |              |  |   |        |                   |  |          |  |              |  |   |         |  |  |   |       
|                               | Patents and related licenses       |  | $             | 81,824  |              |  | $ | 43,709 |                   |  |          |  |              |  | $ | 73,031  |  |  | $ | 40,766 | 
|                               | Trademarks                         |  |               | 115,212 |              |  |   | 6,074  |                   |  |          |  |              |  |   | 112,958 |  |  |   | 2,114  | 
|                               | Licenses and other intangibles     |  |               | 117,557 |              |  |   | 6,026  |                   |  |          |  |              |  |   | 22,768  |  |  |   | 4,352  | 
|                               |                                    |  |               |         |              |  |   |        |                   |  |          |  |              |  |   |         |  |  |   |       
|                               | Total                              |  | $             | 314,593 |              |  | $ | 55,809 |                   |  |          |  |              |  | $ | 208,757 |  |  | $ | 47,232 | 
|                               |                                    |  |               |         |              |  |   |        |                   |  |          |  |              |  |   |         |  |  |   |       
|Unamortized intangible assets: |                                    |  |               |         |              |  |   |        |                   |  |          |  |              |  |   |         |  |  |   |       
|                               | Trademarks & product registrations |  | $             | 24,592  |              |  |   |        |                   |  |          |  |              |  | $ | 25,954  |  |  |   |        | 
|                               |                                    |  |               |         |              |  |   |        |                   |  |          |  |              |  |   |         |  |  |   |       

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

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

On April 22, 2002, IVAX acquired an exclusive U.S. license to the
patent rights to market QVAR (beclomethasone dipropionate HFA), an aerosol
inhaler prescribed to treat asthma. In addition, IVAX has an option to obtain
ownership of the U.S. QVAR trademark, as well as related patents and the New
Drug Application in five years. 3M Drug Delivery Systems will manufacture the
QVAR product for IVAX under a long-term contract. The purchase price was
allocated to the fair values of the assets acquired pursuant to an independent
appraisal resulting in a value of $27,140 for the license agreement, which is
being amortized over its 5 year life, and $67,116 for the option, which is not
being amortized. If the option is exercised, the value of the option will be
allocated to the underlying assets acquired by the exercise and appropriate
lives determined. The total consideration due under the contract, including
options and extensions, is $105,000, $21,000 of which was paid on the effective
date, $22,000 is due on

9



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##### 



the first anniversary, $31,000 is due on the second
anniversary, $26,000 is due on the third anniversary and $5,000 is due on the
fifth anniversary upon exercise of the option. IVAX also acquired a
non-exclusive worldwide license to certain 3M patents covering HFA formulations
of various asthma drugs.

(6) DEBT:

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

See Note 10, Recently Issued Accounting Standards, for a discussion of
the classification of gains on extinguishment of debt. During the first quarter
of 2002, IVAX repurchased $35,000 of 4.5% Convertible Senior Subordinated Notes
due 2008 for $28,797, plus accrued interest of $484, and wrote off debt issuance
costs of $828, resulting in a gain on extinguishment of debt of $6,203. During
the second quarter of 2002, IVAX repurchased $20,000 of 4.5% Convertible Senior
Subordinated Notes due 2008 for $15,363, plus accrued interest of $111, and
wrote off debt issuance costs of $442, resulting in a gain on extinguishment of
debt of $4,195.

As described in Note 5, payments for the acquisition of QVAR are due
through the third anniversary of the effective date. The payments carried no
stated interest rate and were discounted at the risk free interest rate of 3.7%
resulting in $73,709 of additional long-term debt as of June 30, 2002, including
accretion of interest, of which $22,000 is current.

(7) INCOME TAXES:

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

|                      |          |   |              |       |            |   |         |        |      |   |        |        |  |   |         |        | 
|--------------------- | -------- | - | ------------ | ----- | ---------- | - | ------- | ------ | ---- | - | ------ | ------ |  | - | ------- | ------ | 
|                      |          |   | Three Months |       | Six Months
|                      |          |   |              |       |           
|                      |          |   | 2002         |       | 2001       |   | 2002    |        | 2001
|                      |          |   |              |       |            |   |         |        |     
|Period Ended June 30, |          |   |              |       |            |   |         |        |      |   |        |        |  |   |         |       
|                     
|Current:              |          |   |              |       |            |   |         |        |      |   |        |        |  |   |         |       
|                      | Domestic |   | $            | 5,062 |            |   | $       | 29,562 |      |   | $      | 7,242  |  |   | $       | 40,706 | 
|                      | Foreign  |   |              | 6,083 |            |   |         | 3,217  |      |   |        | 10,974 |  |   |         | 6,943  | 
|Deferred              |          |   | 2,621        |       |            |   | (16,568 | )      |      |   | 1,362  |        |  |   | (17,683 | )     
|                      |          |   |              |       |            |   |         |        |      |   |        |        |  |   |         |       
|Total                 |          | $ | 13,766       |       |            | $ | 16,211  |        |      | $ | 19,578 |        |  | $ | 29,966  |       
|                      |          |   |              |       |            |   |         |        |      |   |        |        |  |   |         |       

The effective tax rate during the first six months of 2002 is less than
the statutory rate due primarily to low tax rates applicable to IVAX Puerto
Rico and Waterford, Ireland manufacturing operations. Payment of the current tax
provision for the year ended December 31, 2001, for domestic and foreign
operations will be reduced by $926 and $370, respectively, representing the
incremental impact of compensation expense deductions associated with
non-qualified stock option exercises during the current quarter. These amounts
were credited to Capital in excess of par value. As of June 30, 2002, a
domestic net deferred tax asset of $100,372 and an aggregate foreign net
deferred tax asset of $3,691 are included in Other current assets and Other
assets in the accompanying consolidated balance sheet. Realization of the net
deferred tax assets is dependent upon generating sufficient future domestic and
foreign taxable income. Although realization is not assured, management believes
it is more likely than not that the net deferred tax assets will be realized.

10



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##### 



(8) BUSINESS SEGMENT INFORMATION:

|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |         |  
|------------------------- | -------------------------------- | - | ------------ | ------- | ---------- | - | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                          |                                  |   | Three Months |         | Six Months
|                          |                                  |   |              |         |           
|                          |                                  |   | 2002         |         | 2001       |   | 2002    |         | 2001
|                          |                                  |   |              |         |            |   |         |         |     
|Revenues by Region        |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Period Ended June 30,     |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                         
|North America             |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | External sales                   |   | $            | 111,546 |            |   | $       | 162,246 |      |   | $       | 214,507 |   |   | $       | 300,989 |  
|                          | Intersegment sales               |   |              | 276     |            |   |         | 77      |      |   |         | 552     |   |   |         | 463     |  
|                          | Other revenues                   |   |              | 7,124   |            |   |         | 147     |      |   |         | 14,860  |   |   |         | 268     |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | Net revenues  North America     |   |              | 118,946 |            |   |         | 162,470 |      |   |         | 229,919 |   |   |         | 301,720 |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Europe                    |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | External sales                   |   |              | 80,906  |            |   |         | 75,910  |      |   |         | 166,189 |   |   |         | 146,198 |  
|                          | Intersegment sales               |   |              | 15,516  |            |   |         | 13,459  |      |   |         | 29,905  |   |   |         | 21,200  |  
|                          | Other revenues                   |   |              | 8,651   |            |   |         | 13,684  |      |   |         | 17,191  |   |   |         | 28,889  |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | Net revenues  Europe            |   |              | 105,073 |            |   |         | 103,053 |      |   |         | 213,285 |   |   |         | 196,287 |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Latin America             |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | External sales                   |   |              | 57,726  |            |   |         | 38,661  |      |   |         | 116,503 |   |   |         | 65,170  |  
|                          | Other revenues                   |   |              | 430     |            |   |         | 306     |      |   |         | 830     |   |   |         | 535     |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | Net revenues  Latin America     |   |              | 58,156  |            |   |         | 38,967  |      |   |         | 117,333 |   |   |         | 65,705  |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Corporate & Other         |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | External sales                   |   |              | 12,928  |            |   |         | 9,360   |      |   |         | 20,208  |   |   |         | 17,731  |  
|                          | Intersegment sales               |   |              | (15,792 | )          |   |         | (13,536 | )    |   |         | (30,457 | ) |   |         | (21,663 | )
|                          | Other revenues                   |   |              | 1,095   |            |   |         | 1,468   |      |   |         | 2,340   |   |   |         | 1,934   |  
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|                          | Net revenues  Corporate & Other |   |              | (1,769  | )          |   |         | (2,708  | )    |   |         | (7,909  | ) |   |         | (1,998  | )
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        
|Consolidated net revenues |                                  | $ | 280,406      |         |            | $ | 301,782 |         |      | $ | 552,628 |         |   | $ | 561,714 |        
|                          |                                  |   |              |         |            |   |         |         |      |   |         |         |   |   |         |        

|                                                            |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |         |  
|----------------------------------------------------------- | ----------------------------------------------------- | - | ------------ | ------ | ---------- | - | ------ | ------- | ---- | - | ------ | ------- | - | - | ------- | ------- | -
|                                                            |                                                       |   | Three Months |        | Six Months
|                                                            |                                                       |   |              |        |           
|                                                            |                                                       |   | 2002         |        | 2001       |   | 2002   |         | 2001
|                                                            |                                                       |   |              |        |            |   |        |         |     
|Profits by Region                                           |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|Period Ended June 30,                                       |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|                                                           
|Income from continuing operations
before minority interest: |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|                                                            | North America                                         |   | $            | 16,419 |            |   | $      | 62,543  |      |   | $      | 29,992  |   |   | $       | 97,629  |  
|                                                            | Europe                                                |   |              | 5,446  |            |   |        | (10,382 | )    |   |        | 14,888  |   |   |         | (10,306 | )
|                                                            | Latin America                                         |   |              | 13,288 |            |   |        | 1,783   |      |   |        | 17,466  |   |   |         | 3,088   |  
|                                                            | Corporate & Other                                     |   |              | (3,399 | )          |   |        | 13,905  |      |   |        | (11,386 | ) |   |         | 37,669  |  
|                                                            |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|Income from continuing operations                           |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|                                                            | Before minority interest                              |   |              | 31,754 |            |   |        | 67,849  |      |   |        | 50,960  |   |   |         | 128,080 |  
|                                                            |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|Net Income:                                                 |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|                                                            | Minority interest                                     |   |              | (32    | )          |   |        | 14      |      |   |        | 62      |   |   |         | (85     | )
|                                                            | Cumulative effect of a change in accounting principle |   |              |       |            |   |        |        |      |   |        | 4,161   |   |   |         |        |  
|                                                            |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        
|Net income                                                  |                                                       | $ | 31,722       |        |            | $ | 67,863 |         |      | $ | 55,183 |         |   | $ | 127,995 |        
|                                                            |                                                       |   |              |        |            |   |        |         |      |   |        |         |   |   |         |        

|                   |                   |   |           |         |      |   |         |         | 
|------------------ | ----------------- | - | --------- | ------- | ---- | - | ------- | ------- | 
|                   |                   |   | June 30, 
|                   |                   |   |          
|                   |                   |   | 2002      |         | 2001
|                   |                   |   |           |         |     
|Long-Lived Assets: |                   |   |           |         |      |   |         |        
|                   | North America     |   | $         | 306,290 |      |   | $       | 70,267  | 
|                   | Europe            |   |           | 265,458 |      |   |         | 210,956 | 
|                   | Latin America     |   |           | 431,074 |      |   |         | 175,720 | 
|                   | Corporate & Other |   |           | 110,048 |      |   |         | 111,572 | 
|                   |                   |   |           |         |      |   |         |        
|Total              |                   | $ | 1,112,870 |         |      | $ | 568,515 |        
|                   |                   |   |           |         |      |   |         |        

11



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##### 



(9) SHAREHOLDERS EQUITY:

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

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

(10) RECENTLY ISSUED ACCOUNTING STANDARDS:

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

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

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

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

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

12



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

|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |      | 
|---------------------------------------- | ------------------------------- | - | ------------ | ---- | ---------- | - | ------ | ---- | ---- | - | ------ | ---- |  | - | ------- | ---- | 
|                                         |                                 |   | Three Months |      | Six Months
|                                         |                                 |   |              |      |           
|                                         |                                 |   | 2002         |      | 2001       |   | 2002   |      | 2001
|                                         |                                 |   |              |      |            |   |        |      |     
|Period Ended June 30,                    |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                        
|Reported net income                      |                                 | $ | 31,722       |      |            | $ | 67,863 |      |      | $ | 55,183 |      |  | $ | 127,995 |     
|Addback: Goodwill amortization           |                                 |   |              |      |            |   | 2,090  |      |      |   |        |      |  |   | 3,302   |     
|Addback: Workforce in place amortization |                                 |   |              |      |            |   | 55     |      |      |   |        |      |  |   | 109     |     
|Adjust: Product intangible amortization  |                                 |   |              |      |            |   | 903    |      |      |   |        |      |  |   | 1,806   |     
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|Adjusted net income                      |                                 | $ | 31,722       |      |            | $ | 70,911 |      |      | $ | 55,183 |      |  | $ | 133,212 |     
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|Basic earnings per common share:         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Reported net income             |   | $            | 0.16 |            |   | $      | 0.34 |      |   | $      | 0.28 |  |   | $       | 0.64 | 
|                                         | Goodwill amortization           |   |              |      |            |   |        | 0.01 |      |   |        |      |  |   |         | 0.02 | 
|                                         | Product intangible amortization |   |              |      |            |   |        |     |      |   |        |      |  |   |         | 0.01 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Adjusted net income             |   | $            | 0.16 |            |   | $      | 0.35 |      |   | $      | 0.28 |  |   | $       | 0.67 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|Diluted earnings per common share:       |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Reported net income             |   | $            | 0.16 |            |   | $      | 0.33 |      |   | $      | 0.28 |  |   | $       | 0.62 | 
|                                         | Goodwill amortization           |   |              |      |            |   |        | 0.01 |      |   |        |      |  |   |         | 0.01 | 
|                                         | Product intangible amortization |   |              |      |            |   |        |     |      |   |        |      |  |   |         | 0.01 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Adjusted net income             |   | $            | 0.16 |            |   | $      | 0.34 |      |   | $      | 0.28 |  |   | $       | 0.64 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     

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

|                    |                       |   |              |         |              |   |          |         |   |   |         |         | 
|------------------- | --------------------- | - | ------------ | ------- | ------------ | - | -------- | ------- | - | - | ------- | ------- | 
|                    |                       |   | Balance      |         | Foreign      |   | Balance 
|                    |                       |   | December 31, |         | Exchange and |   | June 30,
|                    |                       |   | 2001         |         | Other        |   | 2002    
|                    |                       |   |              |         |              |   |         
|                   
|North America       |                       | $ | 3,972        |         |              | $ |         |         |   | $ | 3,972   |        
|Europe              |                       |   | 24,200       |         |              |   | 7,015    |         |   |   | 31,215  |        
|Latin America       |                       |   | 427,157      |         |              |   | (95,521  | )       |   |   | 331,636 |        
|Corporate and other |                       |   | 46,748       |         |              |   | 668      |         |   |   | 47,416  |        
|                    |                       |   |              |         |              |   |          |         |   |   |         |        
|                    | Consolidated goodwill |   | $            | 502,077 |              |   | $        | (87,838 | ) |   | $       | 414,239 | 
|                    |                       |   |              |         |              |   |          |         |   |   |         |        

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

(11) ACQUISITIONS:

On February 9, 2001, IVAX indirectly acquired IVAX Pharmaceuticals
Mexico, S.A. de C.V. (IVAX Mexico, formerly known as Laboratorios Fustery,
S.A. de C.V.), a Mexican pharmaceutical company, by purchasing the outstanding
securities of IVAX Mexicos parent, Maancirkel Holding B.V., a corporation
organized under the laws of The Netherlands, from Morcob CVA, an entity
organized

13



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

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

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

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

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

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

|                                |  |              |         |            |  |   |         | 
|------------------------------- |  | ------------ | ------- | ---------- |  | - | ------- | 
|                                |  | Three months |         | Six months
|                                |  | 2001         |         | 2001      
|                                |  |              |         |           
|Period Ended June 30,           |  |              |         |            |  |   |         | 
|                               
|Revenues                        |  | $            | 348,980 |            |  | $ | 678,002 | 
|Net income                      |  |              | 79,918  |            |  |   | 144,160 | 
|                               
|Diluted weighted average shares |  |              | 207,605 |            |  |   | 207,785 | 
|Diluted earnings per share      |  | $            | 0.38    |            |  | $ | 0.69    | 

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

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

On March 14, 2001, IVAX wholly-owned subsidiary, IVAX Diagnostics,
Inc., was merged with b2bstores.com, a non-operating company with approximately
$22,285 of cash, resulting in IVAX owning approximately 70% of the newly merged
public company. IVAX received 20,000 shares of b2bstores.com common stock in
exchange for all of the outstanding shares of IVAX Diagnostics, Inc. and
b2bstores.coms name was changed to IVAX Diagnostics, Inc. For accounting
purposes, this transaction was treated as a partial sale of IVAX Diagnostics,
Inc. in exchange for cash of b2bstores.com. IVAX elected income statement
recognition as its accounting policy for sales of subsidiary stock and recorded
a gain of $10,278. Deferred taxes were not recorded related to the gain as it
represents an outside basis difference and IVAX expects it can recover its
investment in IVAX Diagnostics, Inc. tax-free. Also

14



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##### 



recorded was $1,041 of
nondeductible compensation expense from outstanding options under the IVAX
Diagnostics, Inc. 1999 Stock Option Plan converting to a fair value plan as a
result of the merger. IVAX Diagnostics, Inc. is engaged in the development,
manufacture and marketing of diagnostic test kits, reagents and instruments.

(13) LEGAL PROCEEDINGS:

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

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

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

(14) SUBSEQUENT EVENTS:

From July 1, 2002, through July 26, 2002, IVAX repurchased 458 shares
of its common stock at a total cost, including commissions, of $4,934.

15



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##### 



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

The following discussion and analysis should be read in conjunction
with the consolidated financial statements, the related notes to consolidated
financial statements and managements discussion and analysis of financial
condition and results of operations included in our Annual Report on Form 10-K
for the year ended December 31, 2001, and the unaudited interim consolidated
financial statements and the related notes to unaudited interim consolidated
financial statements included in Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations

Six months ended June 30, 2002 compared to the six months ended June 30, 2001

Net income for the six months ended June 30, 2002, was $55 million, or
$.28 per diluted share, compared to $128 million, or $.62 per diluted share, for
the same period of the prior year. Income from continuing operations for the six
months ended June 30, 2002, was $51 million, or $.26 per diluted share, compared
to $128 million, or $.62 per diluted share, for the same period of the prior
year. As of January 1, 2002, we recorded a cumulative change in accounting
principle credit in the amount of $4.2 million, or $.02 per diluted share, in
accordance with Statement of Financial Accounting Standards (SFAS) No. 141,
Business Combinations.

Net Revenues and Gross Profit

Net revenues for the six months ended June 30, 2002, totaled $553
million, a decrease of $9 million, or 2%, from the $562 million reported in the
same period of the prior year. This decrease was comprised of decreases in net
revenues of $72 million from North American subsidiaries and $6 million from
other operations, partially offset by increases of $17 million from European
subsidiaries and $52 million from Latin American subsidiaries.

North American subsidiaries generated net revenues of $230 million for
the six months ended June 30, 2002, compared to $302 million for the same period
of the prior year. The $72 million, or 24%, decrease in net revenues was
primarily attributable to decreased volume and lower prices of our paclitaxel product and higher
sales returns and allowances, partially offset by increased volume and prices of
certain brand-equivalent pharmaceutical products, increased sales of proprietary
respiratory products and increased product development fees. North American
subsidiaries recorded provisions for sales returns and allowances that reduced
gross sales by $278 million during the six months ended June 30, 2002, and $139
million for the same period of the prior year. The increase of $139 million, or
100%, was primarily due to reduced net prices on certain brand-equivalent
pharmaceutical products and increased sales volume.

European subsidiaries generated net revenues of $213 million for the
six months ended June 30, 2002, compared to $196 million for the same period of
the prior year. The $17 million, or 9%, increase in net revenues was primarily
due to higher sales volumes and favorable effects of currency exchange rates,
partially offset by reduced product development fees and lower prices for
certain brand-equivalent products. European subsidiaries recorded provisions for
sales returns and allowances that reduced gross sales by $23 million during the
six months ended June 30, 2002, and $17 million for the same period of the prior
year.

Latin American subsidiaries generated net revenues of $117 million for
the six months ended June 30, 2002, compared to $65 million for the same period
of the prior year. The $52 million, or 79%, increase was primarily due to the
revenue generated by Laboratorio Chile S.A. (Lab Chile), which was

16



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acquired
July 5, 2001, partially offset by unfavorable effects of currency exchange
rates. Latin American subsidiaries recorded provisions for sales returns and
allowances that reduced gross sales by $18 million during the six months ended
June 30, 2002, and $3 million for the same period of the prior year. The $15
million, or 500%, increase was primarily due to the acquisition of Lab Chile.

Gross profit was $253 million (46% of net revenues) for the six months
ended June 30, 2002, compared to $295 million (52% of net revenues) for the same
period of the prior year. The decrease in gross profit percentage was primarily
attributable to reduced volume and pricing of our paclitaxel product. We are continuing to
experience increased competition for paclitaxel as well as our brand equivalent
albuterol products and the resulting pricing and volume pressures have
negatively impacted and may continue to negatively impact our revenues and gross
profits. Our results for the first six months of 2002 were also adversely
impacted by a significant currency devaluation in Argentina, reductions in
government purchases of our products in Mexico and continued pricing pressures
in the United States and the United Kingdom. Revenues from the sale
of our paclitaxel product did not contribute significantly to our
revenues and gross profits during the first six months of 2002 and,
because of the continuing price erosion and competition, are not
likely to contribute significantly in the near future to our North
American results. Our future net revenues and gross profits will depend
upon:



| |  |  | our ability to maintain our pricing and volume levels and
obtain a consistent supply of raw materials for paclitaxel;                   
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | our ability to obtain and
maintain FDA approval of our manufacturing facilities;                                                        
|
| |  |  | our ability to maintain a pipeline of products in development;                                                                          
|
| |  |  | our ability to develop and rapidly introduce new products;                                                                              
|
| |  |  | the timing of regulatory approval of such products;                                                                                     
|
| |  |  | our ability to manufacture such products efficiently;                                                                                   
|
| |  |  | the number and timing of regulatory approvals of competing
products; and                                                                
|
| |  |  | our ability to replace or renew license fees, royalties and
development service fees as the related agreements expire or
are terminated.

Operating Expenses

Selling expenses increased $28 million, or 49%, to $86 million (16% of
net revenues) for the six months ended June 30, 2002, compared to $58 million
(10% of net revenues) for the same period of the prior year. The increase was
due to higher expenses associated with the operations of Lab Chile and IVAX
Pharmaceuticals Mexico, S.A. de C.V. (IVAX Mexico, formerly known as
Laboratorios Fustery, S.A. de C.V.) and increased sales and promotional expenses
at IVAX Laboratories, our U.S. proprietary respiratory subsidiary, and our
European subsidiaries, partially offset by reduced sales and promotional
expenses at Elvetium Argentina and favorable effects of foreign currency rates.

General and administrative expenses increased $2 million, or 4%, to $55
million (10% of net revenues) for the six months ended June 30, 2002, compared
to $53 million (9% of net revenues) for the same period of the prior year. The
increase is primarily attributable to additional general and administrative
expenses from the operations of Lab Chile and IVAX Mexico and increased expenses
at North American pharmaceutical subsidiaries, partially offset by reduced
expenses at Elvetium Argentina, favorable effects of foreign currency rates and
lower professional fees at Corporate. In June 2002, we received $2.2 million in
partial settlement of a vitamin price-fixing class action lawsuit. In addition,
we paid $2.1 million to settle the Louisiana Wholesale Drug Co. v. Abbott
Laboratories and Valley Drug Co. v. Abbott Laboratories et al. cases, previously
reported in our Annual Report on Form 10-K for the year ended December 31, 2001.

Research and development expenses for the six months ended June 30,
2002, decreased $2 million, or 4%, to a total of $37 million (7% of net
revenues), compared to $39 million (7% of net revenues) for the same period of
the prior year. Our future level of research and development

17



---



##### 



expenditures will
depend on, among other things, the outcome of clinical testing of products under
development, delays or changes in government required testing and approval
procedures, technological and competitive developments, strategic marketing
decisions and liquidity.

During the first six months of 2002, we incurred $2 million of
restructuring costs, which were substantially paid out during the quarter, at
two subsidiaries, consisting primarily of employee termination benefits.

Other Income (Expense)

Interest income decreased $8 million and interest expense increased $10
million for the six months ended June 30, 2002, as compared to the same period
of the prior year primarily due to the cash purchases of Lab Chile on July 5, 2001,
and Nasarel and Nasalide on October 16, 2001, and the issuance of $725 million
of 4.5% Convertible Senior Subordinated Notes in 2001.

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

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

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

Net income for the three months ended June 30, 2002, was $32 million,
or $.16 per diluted share, compared to $68 million, or $.33 per diluted share,
for the same period of the prior year.

Net Revenues and Gross Profit

Net revenues for the three months ended June 30, 2002, totaled $280
million, a decrease of $22 million, or 7%, from the $302 million reported in the
same period of the prior year. This decrease was comprised of a reduction in net
revenues of $44 million from North American subsidiaries, partially offset by
increases in net revenues of $2 million from European subsidiaries, $19 million
from Latin American subsidiaries and $1 million from other operations.

North American subsidiaries generated net revenues of $119 million for
the three months ended June 30, 2002, compared to $163 million for the same
period of the prior year. The 27% decrease was primarily attributable
to decreased volume and lower
prices of our paclitaxel product and higher sales returns and allowances,
partially offset by increased volume and prices of certain brand-equivalent
pharmaceutical products,

18



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increased sales of proprietary respiratory products and
increased product development fees. North American subsidiaries recorded
provisions for sales returns and allowances that reduced gross sales by $146
million during the three months ended June 30, 2002, and $81 million for the
same period of the prior year. The increase of $65 million, or 80%, was
primarily due to reduced net prices on certain brand-equivalent pharmaceutical
products and increased sales volume.

European subsidiaries generated net revenues of $105 million for the
three months ended June 30, 2002, compared to $103 million for the same period
of the prior year. The 2% increase was primarily due to higher sales
volumes and favorable effects of currency exchange rates, partially offset by reduced
product development fees and lower prices for certain brand-equivalent products.
European subsidiaries recorded provisions for sales returns and allowances that
reduced gross sales by $11 million during the three months ended June 30, 2002,
and $7 million for the same period of the prior year.

Latin American subsidiaries generated net revenues of $58 million for
the three months ended June 30, 2002, compared to $39 million for the same
period of the prior year. The 49% increase was primarily due to the revenue
generated by Lab Chile, which was acquired July 5, 2001, partially offset by
reduced sales volume in Mexico and unfavorable effects of currency exchange
rates. Latin American subsidiaries recorded provisions for sales returns and
allowances that reduced gross sales by $8 million during the three months ended
June 30, 2002, and $1 million for the same period of the prior year. The $7
million, or 700%, increase was primarily due to the acquisition of Lab Chile.

Gross profit was $131 million (47% of net revenues) for the three
months ended June 30, 2002, compared to $158 million (53% of net revenues) for
the same period of the prior year. The decrease in gross profit percentage was
primarily attributable to reduced volume and pricing of our paclitaxel product. We are
continuing to experience increased competition for paclitaxel as well as our
brand equivalent albuterol products and the resulting pricing and volume
pressures have negatively impacted and may continue to negatively impact our
revenues and gross profits. Our results this quarter were also adversely
impacted by a significant currency devaluation in Argentina and by reductions in
government purchases of our products in Mexico.

Operating Expenses

Selling expenses increased $14 million, or 45%, to $44 million (16% of
net revenues) for the three months ended June 30, 2002, compared to $30 million
(10% of net revenues) for the same period of the prior year. The increase was
due to higher expenses associated with the operations of Lab Chile and IVAX
Mexico and increased sales and promotional expenses at IVAX Laboratories and our
European subsidiaries, partially offset by reduced sales and promotional
expenses at Elvetium Argentina and favorable effects of foreign currency rates.

General and administrative expenses decreased $2 million, or 5%, to $27
million (10% of net revenues) for the three months ended June 30, 2002, compared
to $29 million (10% of net revenues) for the same period of the prior year. The
decrease is primarily attributable to reduced general and administrative
expenses at Elvetium Argentina, favorable effects of foreign currency rates and
lower professional fees at Corporate, partially offset by increased expenses at
North American pharmaceutical subsidiaries and general and administrative
expenses from the operation of Lab Chile. In June 2002, we received $2.2 million
in partial settlement of a vitamin price-fixing class action lawsuit. In
addition, we paid $2.1 million to settle the Louisiana Wholesale Drug Co. v.
Abbott Laboratories and Valley Drug Co. v. Abbott Laboratories et al. cases,
previously reported in our Annual Report on Form 10-K for the year ended
December 31, 2001.

19



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Research and development expenses for the three months ended June 30,
2002, decreased $2 million, or 8%, to $18 million (7% of net revenues), compared
to the same period of the prior year. Our future level of research and
development expenditures will depend on, among other things, the outcome of
clinical testing of products under development, delays or changes in government
required testing and approval procedures, technological and competitive
developments, strategic marketing decisions and liquidity.

During the second quarter of 2002, we incurred $2 million of
restructuring costs, which were substantially paid out during the quarter, at
two subsidiaries, consisting primarily of employee termination benefits.

Other Income (Expense)

Interest income decreased $7 million and interest expense increased $2
million for the three months ended June 30, 2002, compared to the same period of
the prior year primarily due to the cash purchases of Lab Chile on July 5, 2001, and
Nasarel and Nasalide on October 16, 2001, and the issuance of $725 million of
4.5% Convertible Senior Subordinated Notes in 2001.

Other income, net increased $10 million for the three months ended June
30, 2002, compared to the same period of the prior year. During the second
quarter of 2002, we realized a gain of $4.2 million on the repurchase of
subordinated notes, earned a $4.3 million milestone as additional consideration
for the sale of Elmiron to ALZA Corporation during 1997, which is to be received
in the first quarter of 2003, and recorded a gain of $6.3 million on the sale of
certain intangible assets in the Czech Republic, which proceeds are due under
the contract in the third quarter of 2002.

Recently Issued Accounting Standards

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

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

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

In accordance with SFAS No. 141, Business Combinations,on January 1,
2002, $4.2 million of negative goodwill recorded in the balance sheet as of
December 31, 2001, was reversed through a

20



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cumulative effect of a change in
accounting principle. In addition, a workforce in place intangible asset in the
amount of $.7 million was reclassified to goodwill.

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

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

|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |      | 
|---------------------------------------- | ------------------------------- | - | ------------ | ---- | ---------- | - | ------ | ---- | ---- | - | ------ | ---- |  | - | ------- | ---- | 
|                                         |                                 |   | Three Months |      | Six Months
|                                         |                                 |   |              |      |           
|                                         |                                 |   | 2002         |      | 2001       |   | 2002   |      | 2001
|                                         |                                 |   |              |      |            |   |        |      |     
|Period Ended June 30,                    |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                        
|Reported net income                      |                                 | $ | 31,722       |      |            | $ | 67,863 |      |      | $ | 55,183 |      |  | $ | 127,995 |     
|Addback: Goodwill amortization           |                                 |   |              |      |            |   | 2,090  |      |      |   |        |      |  |   | 3,302   |     
|Addback: Workforce in place amortization |                                 |   |              |      |            |   | 55     |      |      |   |        |      |  |   | 109     |     
|Adjust: Product intangible amortization  |                                 |   |              |      |            |   | 903    |      |      |   |        |      |  |   | 1,806   |     
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|Adjusted net income                      |                                 | $ | 31,722       |      |            | $ | 70,911 |      |      | $ | 55,183 |      |  | $ | 133,212 |     
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|Basic earnings per common share:         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Reported net income             |   | $            | 0.16 |            |   | $      | 0.34 |      |   | $      | 0.28 |  |   | $       | 0.64 | 
|                                         | Goodwill amortization           |   |              |      |            |   |        | 0.01 |      |   |        |      |  |   |         | 0.02 | 
|                                         | Product intangible amortization |   |              |      |            |   |        |     |      |   |        |      |  |   |         | 0.01 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Adjusted net income             |   | $            | 0.16 |            |   | $      | 0.35 |      |   | $      | 0.28 |  |   | $       | 0.67 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|Diluted earnings per common share:       |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Reported net income             |   | $            | 0.16 |            |   | $      | 0.33 |      |   | $      | 0.28 |  |   | $       | 0.62 | 
|                                         | Goodwill amortization           |   |              |      |            |   |        | 0.01 |      |   |        |      |  |   |         | 0.01 | 
|                                         | Product intangible amortization |   |              |      |            |   |        |     |      |   |        |      |  |   |         | 0.01 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     
|                                         | Adjusted net income             |   | $            | 0.16 |            |   | $      | 0.34 |      |   | $      | 0.28 |  |   | $       | 0.64 | 
|                                         |                                 |   |              |      |            |   |        |      |      |   |        |      |  |   |         |     

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

|                    |                       |   |              |         |              |   |          |         |   |   |         |         | 
|------------------- | --------------------- | - | ------------ | ------- | ------------ | - | -------- | ------- | - | - | ------- | ------- | 
|                    |                       |   | Balance      |         | Foreign      |   | Balance 
|                    |                       |   | December 31, |         | Exchange and |   | June 30,
|                    |                       |   | 2001         |         | Other        |   | 2002    
|                    |                       |   |              |         |              |   |         
|                   
|North America       |                       | $ | 3,972        |         |              | $ |         |         |   | $ | 3,972   |        
|Europe              |                       |   | 24,200       |         |              |   | 7,015    |         |   |   | 31,215  |        
|Latin America       |                       |   | 427,157      |         |              |   | (95,521  | )       |   |   | 331,636 |        
|Corporate and other |                       |   | 46,748       |         |              |   | 668      |         |   |   | 47,416  |        
|                    |                       |   |              |         |              |   |          |         |   |   |         |        
|                    | Consolidated goodwill |   | $            | 502,077 |              |   | $        | (87,838 | ) |   | $       | 414,239 | 
|                    |                       |   |              |         |              |   |          |         |   |   |         |        

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

Liquidity and Capital Resources

At June 30, 2002, working capital was $477 million compared to $598
million at December 31, 2001. Cash and cash equivalents were $149 million at
June 30, 2002, compared to $178 million at December 31, 2001. Short-term
marketable securities were $26 million at June 30, 2002 compared to $155 million
at December 31, 2001.

Net cash of $44 million was provided by operating activities during the
first six months of 2002 compared to $93 million during the same period of the
prior year. The decrease in cash provided by operating activities was primarily
the result of reduced operating earnings and increases in inventories and
payments of accounts payable, partially offset by increased collections of
accounts receivable and decreases in other assets.

Net cash of $72 million was provided by investing activities during the
first six months of 2002 compared to $323 million used for investing activities
during the same period of the prior year. During the first six months of 2002,
our capital expenditures increased by approximately $11 million as compared to
the same period of the prior year. During the first six months of 2001, we also
received $45 million in proceeds from the sale of assets. During the first six
months of 2002 we spent $26 million to acquire intangible assets, net of $6.4
million refund of purchase price from the acquisition of IVAX Mexico, compared
to $109 million to acquire intangible assets and businesses and increase our
ownership interest in affiliates during the same period of the prior year.
During the first six months of 2002, we received $126 million net proceeds from
the sale of marketable securities compared to using $238 million to acquire
marketable securities during the same period of the prior year.

On March 1, 2002, we acquired from Syntex Pharmaceuticals International
Ltd. the non-U.S. rights to pharmaceutical products containing flunisolide
hemihydrate, sold under the tradenames Syntaris, Nasalide, Rhinalar, Locasyn and
Lokilan, for 10.2 million Swiss francs ($6.0 million at the February 28, 2002,
currency exchange rate). During April 2002, we entered into an agreement to
acquire the technical files and French marketing authorizations to substantially
all of the products comprising the generic pharmaceutical business of Merck &
Co., Inc.s subsidiary in France for total consideration of approximately $5
million payable half on signing and half in four months. On July 19, 2002, the
agreement was amended reducing the second payment to 2.6 million Euros ($2.5
million as of the August 2, 2002, payment date). We also acquired an exclusive
U.S. license to the patent rights to market QVAR (beclomethasone
dipropionate HFA), an aerosol inhaler prescribed to treat asthma. In addition,
we have an option to obtain ownership of the U.S. QVAR trademark, as well as
related patents and the New Drug Application in five years. 3M Drug Delivery
Systems will manufacture the QVAR product for us under a long-term contract. The
total consideration due under the contract, including options and extensions, is
$105 million, $21 million of which was paid on the effective date, $22 million
is due on the first anniversary, $31 million is due on the second anniversary,
$26 million is due on the third anniversary and $5 million is due on the fifth
anniversary upon exercise of the option. The payments carry no stated interest
rate and were discounted at the risk free rate of 3.7%.

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Net cash of $130 million was used by financing activities during the
first six months of 2002 compared to $659 million provided by financing
activities during the same period of the prior year primarily reflecting the
$725 million Convertible Senior Subordinated Notes sold in May of 2001. During
the first six months of 2002, we repaid $48 million of bank debt and repurchased
$55 million of our convertible debentures for $44.2 million, but reduced our
repurchases of common stock by $8 million compared to the same period of the
prior year. On March 15, 2002, our Board of Directors expanded the authorization
of our repurchase program by an additional 10 million shares of our common stock
or a like-valued amount of our convertible debentures.

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

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

Income Taxes

We recognized a $19.6 million tax provision for the six months ended
June 30, 2002, of which $11.8 million related to foreign operations. The
effective tax rate during the first quarter of 2002 is less than the statutory
rate due primarily to low tax rates applicable to our Puerto Rico and Waterford,
Ireland manufacturing operations.

As of June 30, 2002, domestic net deferred tax assets totaled $100.4
million and aggregate foreign net deferred tax assets totaled $3.7 million.
Realization of the net deferred tax assets is dependent upon generating
sufficient future domestic and foreign taxable income. Although realization is
not assured, we believe it is more likely than not that the net deferred tax
assets will be realized. Our estimates of future taxable income are subject to
revision due to, among other things, regulatory and competitive factors
affecting the pharmaceutical industries in the markets in which we operate. Such
factors are further discussed in managements discussion and analysis of
financial condition and results of operations included in our Annual Report on
Form 10-K for the year ended December 31, 2001.

Critical Accounting Policies

Revenue Recognition, Sales Returns and Allowances  Revenues and the
related cost of sales are recognized at the time product is shipped. Our
pharmaceutical revenues are affected by the level of provisions for estimated
returns, inventory credits, discounts, promotional allowances, volume rebates

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and chargebacks, as well as other sales allowances. The custom
in the pharmaceutical industry is generally to grant customers the right to
return purchased goods. In the brand equivalent pharmaceutical industry, this
custom has resulted in a practice of suppliers issuing inventory credits (also
known as shelf-stock adjustments) to customers based on the customers existing
inventory following decreases in the market price of the related brand
equivalent pharmaceutical product. We have contractual agreements
with many of our customers which require that we grant these
customers inventory credit following a price decrease. In other
cases, the determination to grant a credit is at our discretion. These credits
allow customers with established inventories to compete with those buying
product at the current market price, and allow us to maintain shelf space,
market share and customer loyalty.

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

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

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

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Foreign Currency Exchange Rate Risk  We have subsidiaries in more than
20 countries worldwide. During the six months ended June 30, 2002, sales outside
the United States accounted for approximately 61% of worldwide sales. Virtually
all of these sales were denominated in currencies of the local country. As such,
our reported profits and cash flows are exposed to changing exchange rates. If
the United States dollar weakens relative to the foreign currency, the earnings
generated in the foreign currency will, in effect, increase when converted into
United States dollars and vice versa. Although we do not speculate in the
foreign exchange market, we do from time to time manage exposures that arise in
the normal course of business related to fluctuations in foreign currency
exchange rates by entering into offsetting positions through the use of foreign
exchange forward contracts. As a result of exchange rate differences, net
revenues decreased by $8 million for the six months ended June 30, 2002, as
compared to the same period of the prior year. The effects of inflation on
consolidated net revenues and operating income were not significant. Certain
firmly committed transactions are hedged with foreign exchange forward
contracts. As exchange rates change, gains and losses on the exposed
transactions are partially offset by gains and losses related to the hedging
contracts. Both the exposed transactions and the hedging contracts are
translated at current spot rates, with gains and losses included in earnings.
Our derivative activities, which primarily consist of foreign exchange forward
contracts, are initiated primarily to hedge forecasted cash flows that are
exposed to foreign currency risk.

The foreign exchange forward contracts generally require us to exchange
local currencies for foreign currencies based on pre-established exchange rates
at the contracts maturity dates. If the counterparties to the exchange
contracts do not fulfill their obligations to deliver the contracted currencies,
we could be at risk for currency related fluctuations. We enter into these
contracts with counterparties that we believe to be creditworthy and do not
enter into any leveraged derivative transactions. As of June 30, 2002, we had
$15.4 million in foreign exchange forward contracts outstanding. During January
2002, we repaid $48 million of United States dollar denominated bank loans of
the Argentine operations assumed in the acquisition of Lab Chile resulting in a
pretax loss of $2.8 million.

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

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Disclosure Regarding Forward-Looking Statements

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



| |  |  | difficulties in product development and uncertainties related
to the timing or outcome of product development;                                                                                                                                                                                                       
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | the availability on commercially reasonable terms of raw
materials, particularly raw materials for our paclitaxel
product, and other third-party sourced products;                                                                                                                                                   
|
| |  |  | our dependence on sole or limited source suppliers and the
risk associated with a production interruption or shipment
delays at such suppliers;                                                                                                                                                                      
|
| |  |  | difficulties in manufacturing products;                                                                                                                                                                                                                                                                              
|
| |  |  | efficacy or safety concerns with respect to marketed products,
whether or not scientifically justified, leading to recalls,
withdrawals or declining sales;                                                                                                                                                          
|
| |  |  | that our proposed spending on facilities improvement and
expansion may not be as projected;                                                                                                                                                                                                                          
|
| |  |  | our ability to obtain and
maintain FDA approval of our manufacturing facilities, the failure of
which could result in production stoppage or delays;                                                                                                                                                                 
|
| |  |  | our ability to obtain
approval from the FDA to market new pharmaceutical products;                                                                                                                                                                                                                                   
|
| |  |  | the acceptance of new products by the medical community as
effective as alternative forms of treatment for indicated
conditions;                                                                                                                                                                                     
|
| |  |  | the outcome of any pending or
future litigation or investigation (including
patent, trademark and copyright litigation and the United Kingdom
National Health Service investigation), and the cost,
expenses and possible diversion of managements time and
attention arising from such litigation or investigation;
|
| |  |  | the impact of new regulations or court decisions regarding the
protection of patents and the exclusivity period for the
marketing of branded drugs;                                                                                                                                                                  
|
| |  |  | the impact of the adoption of certain accounting standards;                                                                                                                                                                                                                                                          
|
| |  |  | our success in acquiring or licensing proprietary technologies
that are necessary for our product development activities;                                                                                                                                                                                            
|
| |  |  | our ability to obtain and maintain a sufficient supply of
products to meet market demand;                                                                                                                                                                                                                            
|
| |  |  | the impact of political and economic instability in the
countries in which we operate, particularly Argentina and
other Latin American countries;                                                                                                                                                                    
|
| |  |  | our successful compliance with extensive, costly, complex and
evolving governmental regulations and restrictions;                                                                                                                                                                                                    
|
| |  |  | our ability to successfully compete in both the branded and
brand-equivalent pharmaceutical sectors; and                                                                                                                                                                                                             
|
| |  |  | other risks and uncertainties detailed herein and from time to
time in our Securities and Exchange Commission filings.                                                                                                                                                                                               

The information in this Form 10-Q is as of June 30, 2002 or, where
clearly indicated, as of the date of this filing. We undertake no
obligation to
publicly update any forward-looking statements, whether as a result of new
information, future events or otherwise. We also may make additional disclosures
in our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K that we may file from time to time with the Securities and
Exchange Commission. Please

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##### 



also note that we provide a cautionary discussion of
risks and uncertainties under the section entitled Risk Factors in our Annual
Report on Form 10-K for the year ended December 31, 2001. These are factors that
we think could cause our actual results to differ materially from expected
results. Other factors besides those listed here could also adversely affect us.

27



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##### 



PART II  OTHER INFORMATION

Item 1. Legal Proceedings

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

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

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

Our annual meeting of shareholders was held on June 27, 2002. The
following is a summary of the matters voted on at that meeting:

The shareholders elected nine Directors, constituting the entire Board
of Directors, to serve until the next annual meeting of shareholders and until
their respective successors are duly elected and qualified. The persons elected
to our Board of Directors and the number of votes cast for and withheld for each
nominee for director were as follows:

|                          |  |     |             |          |  |  |            | 
|------------------------- |  | --- | ----------- | -------- |  |  | ---------- | 
|Director                  |  | For |             | Withheld
|                          |  |     |             |         
|Mark Andrews              |  |     | 168,378,084 |          |  |  | 4,852,551  | 
|Ernst Biekert, Ph.D.      |  |     | 169,236,083 |          |  |  | 3,994,552  | 
|Charles M. Fernandez      |  |     | 168,339,098 |          |  |  | 4,891,537  | 
|Jack Fishman, Ph.D.       |  |     | 167,787,138 |          |  |  | 5,443,497  | 
|Neil Flanzraich           |  |     | 151,651,825 |          |  |  | 21,578,810 | 
|Phillip Frost, M.D.       |  |     | 151,665,727 |          |  |  | 21,564,908 | 
|Jane Hsiao, Ph.D.         |  |     | 151,664,290 |          |  |  | 21,586,345 | 
|Isaac Kaye                |  |     | 151,612,620 |          |  |  | 21,618,015 | 
|Richard C. Pfenniger, Jr. |  |     | 168,695,694 |          |  |  | 4,534,941  | 

In May 2002, Richard C.
Pfenninger, Jr., the Chief Executive Officer, Vice Chairman and a
Director of Whitman Education Group, Inc., was appointed to IVAX
Audit Committee. Phillip Frost, M.D., our Chairman and Chief
Executive Officer, continues to serve on the Compensation Committee
and is the Chairman of the Board of Directors at Whitman.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

|     |  |                                                                                                                                       |  |                
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------
|3.2  |  | Amended and Restated Bylaws                                                                                                           |  | Filed herewith.
|    
|99.1 |  | Certificate of the Chairman and Chief Executive Officer of IVAX
Corporation pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 |  | Filed herewith.
|    
|99.2 |  | Certificate of the Chief Financial Officer of IVAX Corporation
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002              |  | Filed herewith.

(b)  Reports on Form 8-K

On May 15, 2002, we filed a report under Item 5  Other Events on Form
8-K reporting our issuance of 444,000 shares of our common stock in settlement
of certain put option obligations.

On May 22, 2002, we filed a report on Form 8-K, as amended by Form
8-K/A filed on May 24, 2002, under Item 4  Changes in Registrants Certifying
Accountant reporting that our Board of Directors selected Ernst & Young LLP as
our independent auditors replacing Arthur Andersen LLP and under Item 5  Other
Events reporting our issuance of 367,700 shares of our common stock in
settlement of certain put option obligations.

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##### 



Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|      |  |                 |  |                                                                      
|----- |  | --------------- |  | ---------------------------------------------------------------------
|      |  |                 |  | IVAX Corporation                                                     
|     
|     
|     
|Date: |  | August 13, 2002 |  | By: /s/ Thomas E. Beier                                              
|      |  |                 |  |                                                                      
|      |  |                 |  | Thomas E.
Beier
Senior Vice President-Finance
Chief Financial Officer

29