Exhibit 99.3

U.S. GAAP
CONSOLIDATED FINANCIAL STATEMENTS

|Management's Report  |                                            | 48
|-------------------- | ------------------------------------------ | --
|Auditors' Report     |                                            | 49
|Financial Statements |                                            |   
|                     | Consolidated Balance Sheets                |   
|                     | Consolidated Operations                    |   
|                     | Consolidated Shareholders' Equity          |   
|                     | Consolidated Cash Flows                    |   
|                     | Notes to Consolidated Financial Statements |   

---



MANAGEMENT'S REPORT

The
consolidated financial statements of Axcan Pharma Inc. and the other financial information included in this annual report are the responsibility of the Company's management.

These
consolidated financial statements and the other financial information have been prepared by management in accordance with accounting principles generally accepted in the
United States of America. This responsibility includes the selection of appropriate accounting principles and methods in the circumstances and the use of careful judgement in establishing
reasonable accounting estimates.

Management
maintains internal control systems designed among other things, to provide reasonable assurance that the Company's assets are adequately safeguarded and that the accounting
records are a reasonable basis to prepare relevant and reliable financial information.

The
Audit Committee is composed solely of external directors. This Committee meets with the external auditors and management to discuss matters relating to the audit, internal control
and financial information. The Committee also reviews the consolidated quarterly and annual financial statements.

These
consolidated financial statements have been audited by Raymond Chabot Grant Thornton, LLP, Chartered Accountants, whose report indicating the scope of their audit and their
opinion on the consolidated financial statements is presented below.

The
Board of Directors has approved the Company's financial statements on the recommendation of the Audit Committee.

The
Company decided, for the year beginning October 1, 2002, to switch from Canadian generally accepted accounting principles to generally accepted accounting principles in the
United States of America as its primary reporting convention. Consolidated financial statements in accordance with Canadian generally accepted accounting principles have also been prepared.

|GRAPHICLéon F. Gosselin
President and
Chief Executive Officer |  | GRAPHICDavid W. Mims
Executive Vice President
and Chief Operating Officer |  | GRAPHICJean Vézina
Vice President, Finance and
Chief Financial Officer
|------------------------------------------------------------- |  | ------------------------------------------------------------------------- |  | ----------------------------------------------------------------------

Mont-Saint-Hilaire,
Quebec, Canada
November 10, 2004

48            U.S. GAAP

---



AUDITORS' REPORT

TO THE SHAREHOLDERS OF AXCAN PHARMA INC.

We
have audited the consolidated balance sheets of Axcan Pharma Inc. as at September 30, 2004 and 2003 and the consolidated statements of operations, shareholders' equity
and cash flows for each of the years in the three-year period ended September 30, 2004. These financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) and with generally accepted auditing standards in Canada.
Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In
our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the Company as at September 30, 2004 and 2003 and the
results of its operations and its cash flows for each of the years in the three-year period ended September 30, 2004 in accordance with accounting principles generally accepted in
the United Sates of America.

On
November 10, 2004, we reported separately to the shareholders of Axcan Pharma Inc., on the consolidated financial statements for the same periods, prepared in accordance
with generally accepted accounting principles in Canada.

|GRAPHICChartered Accountants |  | 
|---------------------------- |  | 

Montreal, Quebec, Canada
November 10, 2004

U.S. GAAP            49

---



CONSOLIDATED BALANCE SHEETS

|September 30                                    |                                                                                                                                                                  | 2004    |         | 2003   
|----------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------- | -------
|
|Assets                                          |                                                                                                                                                                  |         |         |        
|Current assets                                  |                                                                                                                                                                  |         |         |        
|                                                | Cash and cash equivalents                                                                                                                                        |         | 21,979  |        
|                                                | Short-term investments available for sale (Note 5)                                                                                                               |         | 15,922  |        
|                                                | Accounts receivable (Note 6)                                                                                                                                     |         | 46,585  |        
|                                                | Income taxes receivable                                                                                                                                          |         | 9,196   |        
|                                                | Inventories (Note 7)                                                                                                                                             |         | 37,270  |        
|                                                | Prepaid expenses and deposits                                                                                                                                    |         | 3,494   |        
|                                                | Deferred income taxes (Note 8)                                                                                                                                   |         | 4,586   |        
|                                                |                                                                                                                                                                  |         |         |        
|Total current assets                            |                                                                                                                                                                  | 139,032 |         | 225,035
|Investments (Note 9)                            |                                                                                                                                                                  |        |         | 1,002  
|Property, plant and equipment, net (Note 10)    |                                                                                                                                                                  | 31,252  |         | 20,331 
|Intangible assets, net (Note 11)                |                                                                                                                                                                  | 407,875 |         | 265,423
|Goodwill, net (Note 12)                         |                                                                                                                                                                  | 27,467  |         | 27,550 
|Deferred debt issue expenses, at amortized cost |                                                                                                                                                                  | 3,088   |         | 4,233  
|Deferred income taxes (Note 8)                  |                                                                                                                                                                  | 930     |         | 1,775  
|                                                |                                                                                                                                                                  |         |         |        
|Total assets                                    |                                                                                                                                                                  | 609,644 |         | 545,349
|                                                |                                                                                                                                                                  |         |         |        
|Liabilities                                     |                                                                                                                                                                  |         |         |        
|Current liabilities                             |                                                                                                                                                                  |         |         |        
|                                                | Accounts payable and accrued liabilities (Note 14)                                                                                                               |         | 47,917  |        
|                                                | Income taxes payable                                                                                                                                             |         | 731     |        
|                                                | Instalments on long-term debt                                                                                                                                    |         | 1,778   |        
|                                                | Deferred income taxes (Note 8)                                                                                                                                   |         | 936     |        
|                                                |                                                                                                                                                                  |         |         |        
|Total current liabilities                       |                                                                                                                                                                  | 51,362  |         | 50,261 
|Long-term debt (Note 15)                        |                                                                                                                                                                  | 127,916 |         | 129,474
|Deferred income taxes (Note 8)                  |                                                                                                                                                                  | 38,290  |         | 34,603 
|                                                |                                                                                                                                                                  |         |         |        
|Total liabilities                               |                                                                                                                                                                  | 217,568 |         | 214,338
|                                                |                                                                                                                                                                  |         |         |        
|Commitments and contingencies (Note 22)         |                                                                                                                                                                  |         |         |        
|Shareholders' Equity                            |                                                                                                                                                                  |         |         |        
|Capital stock (Note 16)                         |                                                                                                                                                                  |         |         |        
|                                                | Series A preferred shares, without par value; shares authorized:
14,175,000; no shares issued                                                                    |         |        |        
|                                                | Series B preferred shares, without par value; shares authorized:
12,000,000; no shares issued                                                                    |         |        |        
|                                                | Common shares, without par value; unlimited shares authorized;
issued and outstanding: 45,562,336 and 45,004,320 as at September 30, 2004 and 2003, respectively |         | 260,643 |        
|Retained earnings                               |                                                                                                                                                                  | 112,362 |         | 63,634 
|Accumulated other comprehensive income          |                                                                                                                                                                  | 19,071  |         | 11,634 
|                                                |                                                                                                                                                                  |         |         |        
|Total shareholders' equity                      |                                                                                                                                                                  | 392,076 |         | 331,011
|                                                |                                                                                                                                                                  |         |         |        
|Total liabilities and shareholders' equity      |                                                                                                                                                                  | 609,644 |         | 545,349
|                                                |                                                                                                                                                                  |         |         |        

The
accompanying notes are an integral part of the consolidated financial statements.

|GRAPHICLéon F. Gosselin
Director |  | GRAPHICDr Claude Sauriol
Director
|-------------------------------- |  | ---------------------------------

50            U.S. GAAP

---



CONSOLIDATED OPERATIONS

|Years ended September 30                 |         | 2004    |            | 2003    |            | 2002    |           
|---------------------------------------- | ------- | ------- | ---------- | ------- | ---------- | ------- | ----------
|
|Revenue                                  |         | 243,634 |            | 179,084 |            | 132,404 |           
|                                         |         |         |            |         |            |         |           
|Cost of goods sold                       |         | 54,247  |            | 44,459  |            | 34,039  |           
|Selling and administrative expenses      |         | 76,365  |            | 63,084  |            | 49,392  |           
|Research and development expenses        |         | 19,866  |            | 12,098  |            | 8,855   |           
|Acquired in-process research             |         |        |            | 12,000  |            |        |           
|Depreciation and amortization            |         | 16,359  |            | 8,063   |            | 7,546   |           
|                                         |         |         |            |         |            |         |           
|                                         |         | 166,837 |            | 139,704 |            | 99,832  |           
|                                         |         |         |            |         |            |         |           
|Operating income                         |         | 76,797  |            | 39,380  |            | 32,572  |           
|                                         |         |         |            |         |            |         |           
|Financial expenses                       |         | 6,885   |            | 4,283   |            | 898     |           
|Interest income                          |         | (756    | )          | (1,639  | )          | (912    | )         
|Loss (gain) on foreign currency          |         | (313    | )          | 122     |            | 266     |           
|Takeover-bid expenses                    |         |        |            | 3,697   |            |        |           
|                                         |         |         |            |         |            |         |           
|                                         |         | 5,816   |            | 6,463   |            | 252     |           
|                                         |         |         |            |         |            |         |           
|Income before income taxes               |         | 70,981  |            | 32,917  |            | 32,320  |           
|Income taxes (Note 8)                    |         | 22,253  |            | 12,992  |            | 11,132  |           
|                                         |         |         |            |         |            |         |           
|Net income                               |         | 48,728  |            | 19,925  |            | 21,188  |           
|                                         |         |         |            |         |            |         |           
|Income per common share                  |         |         |            |         |            |         |           
|                                         | Basic   |         | 1.08       |         | 0.44       |         | 0.51      
|                                         | Diluted |         | 0.98       |         | 0.44       |         | 0.50      
|Weighted average number of common shares |         |         |            |         |            |         |           
|                                         | Basic   |         | 45,286,199 |         | 44,914,944 |         | 41,664,510
|                                         | Diluted |         | 52,787,964 |         | 45,607,992 |         | 42,527,500

The
accompanying notes are an integral part of the consolidated financial statements.

U.S. GAAP            51

---



CONSOLIDATED SHAREHOLDERS' EQUITY

|Years ended September 30                                                  |  | 2004       |  | 2003       |   | 2002       |  
|------------------------------------------------------------------------- |  | ---------- |  | ---------- | - | ---------- | -
|
|Common shares (number)                                                    |  |            |  |            |   |            |  
|Balance, beginning of year                                                |  | 45,004,320 |  | 44,863,198 |   | 38,412,133 |  
|Shares issued following public offerings for cash                         |  |           |  |           |   | 5,000,000  |  
|Shares issued following private investors' subscription for cash          |  |           |  |           |   | 208,044    |  
|Shares issued following the exercise of the underwriters' option for cash |  |           |  |           |   | 750,000    |  
|Shares issued pursuant to the stock option plan for cash                  |  | 558,016    |  | 141,122    |   | 127,489    |  
|Shares issued for the acquisition of assets                               |  |           |  |           |   | 365,532    |  
|                                                                          |  |            |  |            |   |            |  
|Balance, end of year                                                      |  | 45,562,336 |  | 45,004,320 |   | 44,863,198 |  
|                                                                          |  |            |  |            |   |            |  
|                                                                          |  | $          |  | $          |   | $          |  
|Common shares                                                             |  |            |  |            |   |            |  
|Balance, beginning of year                                                |  | 255,743    |  | 254,640    |   | 183,193    |  
|Shares issued following public offerings for cash                         |  |           |  |           |   | 54,312     |  
|Shares issued following private investors' subscription for cash          |  |           |  |           |   | 3,000      |  
|Shares issued following the exercise of the underwriters' option for cash |  |           |  |           |   | 8,625      |  
|Shares issued pursuant to the stock option plan for cash                  |  | 4,900      |  | 1,103      |   | 751        |  
|Shares issued for the acquisition of assets                               |  |           |  |           |   | 4,759      |  
|                                                                          |  |            |  |            |   |            |  
|Balance, end of year                                                      |  | 260,643    |  | 255,743    |   | 254,640    |  
|                                                                          |  |            |  |            |   |            |  
|Retained earnings                                                         |  |            |  |            |   |            |  
|Balance, beginning of year                                                |  | 63,634     |  | 43,709     |   | 22,521     |  
|Net income                                                                |  | 48,728     |  | 19,925     |   | 21,188     |  
|                                                                          |  |            |  |            |   |            |  
|Balance, end of year                                                      |  | 112,362    |  | 63,634     |   | 43,709     |  
|                                                                          |  |            |  |            |   |            |  
|Accumulated other comprehensive income (loss)                             |  |            |  |            |   |            |  
|Balance, beginning of year                                                |  | 11,634     |  | (3,562     | ) | (5,283     | )
|Foreign currency translation adjustments                                  |  | 7,437      |  | 15,196     |   | 1,721      |  
|                                                                          |  |            |  |            |   |            |  
|Balance, end of year                                                      |  | 19,071     |  | 11,634     |   | (3,562     | )
|                                                                          |  |            |  |            |   |            |  
|Total shareholders' equity                                                |  | 392,076    |  | 331,011    |   | 294,787    |  
|                                                                          |  |            |  |            |   |            |  
|Comprehensive income                                                      |  |            |  |            |   |            |  
|Foreign currency translation adjustments                                  |  | 7,437      |  | 15,196     |   | 1,721      |  
|Net income                                                                |  | 48,728     |  | 19,925     |   | 21,188     |  
|                                                                          |  |            |  |            |   |            |  
|Total comprehensive income                                                |  | 56,165     |  | 35,121     |   | 22,909     |  
|                                                                          |  |            |  |            |   |            |  

The
accompanying notes are an integral part of the consolidated financial statements.

52            U.S. GAAP

---



CONSOLIDATED CASH FLOWS

|Years ended September 30                                 |                                              | 2004     |         | 2003     |        | 2002    |      
|-------------------------------------------------------- | -------------------------------------------- | -------- | ------- | -------- | ------ | ------- | -----
|
|Operations                                               |                                              |          |         |          |        |         |      
|Net income                                               |                                              | 48,728   |         | 19,925   |        | 21,188  |      
|Non-cash items                                           |                                              |          |         |          |        |         |      
|                                                         | Non-controlling interest                     |          |        |          | (103   | )       | (363 
|                                                         | Amortization of deferred debt issue expenses |          | 1,144   |          | 646    |         | 247  
|                                                         | Other depreciation and amortization          |          | 16,359  |          | 8,063  |         | 7,546
|                                                         | Loss (gain) on disposal of assets            |          | (5      | )        | 1,130  |         |     
|                                                         | Foreign currency fluctuation                 |          | 342     |          | 305    |         | 507  
|                                                         | Deferred income taxes                        |          | 6,625   |          | 1,848  |         | 2,378
|                                                         | Share in net loss of joint ventures          |          | 455     |          | 106    |         | 46   
|                                                         | Changes in working capital items (Note 18)   |          | (50,288 | )        | 19,576 |         | 3,782
|                                                         |                                              |          |         |          |        |         |      
|Cash flows from operating activities                     |                                              | 23,360   |         | 51,496   |        | 35,331  |      
|                                                         |                                              |          |         |          |        |         |      
|Financing                                                |                                              |          |         |          |        |         |      
|Long-term debt                                           |                                              | 2,212    |         | 126,064  |        | 1,506   |      
|Repayment of long-term debt                              |                                              | (3,842   | )       | (4,687   | )      | (3,267  | )    
|Deferred debt issue expenses                             |                                              |         |         | (4,589   | )      | (537    | )    
|Issue of shares                                          |                                              | 4,900    |         | 1,103    |        | 65,039  |      
|                                                         |                                              |          |         |          |        |         |      
|Cash flows from financing activities                     |                                              | 3,270    |         | 117,891  |        | 62,741  |      
|                                                         |                                              |          |         |          |        |         |      
|Investment                                               |                                              |          |         |          |        |         |      
|Acquisition of short-term investments                    |                                              | (20,936  | )       | (133,112 | )      | (60,740 | )    
|Disposal of short-term investments                       |                                              | 138,074  |         | 60,740   |        |        |      
|Acquisition of investments                               |                                              |         |         |         |        | (16     | )    
|Disposal of investments                                  |                                              | 1,876    |         | 637      |        | 385     |      
|Acquisition of property, plant and equipment             |                                              | (13,409  | )       | (4,291   | )      | (2,881  | )    
|Disposal of property, plant and equipment                |                                              | 405      |         |         |        |        |      
|Acquisition of intangible assets                         |                                              | (149,628 | )       | (76,093  | )      | (1,561  | )    
|Disposal of intangible assets                            |                                              | 917      |         |         |        |        |      
|Other                                                    |                                              |         |         |         |        | 1,363   |      
|Net cash used for business acquisitions (Note 4)         |                                              |         |         |         |        | (31,302 | )    
|                                                         |                                              |          |         |          |        |         |      
|Cash flows from investment activities                    |                                              | (42,701  | )       | (152,119 | )      | (94,752 | )    
|                                                         |                                              |          |         |          |        |         |      
|Foreign exchange gain on cash held in foreign currencies |                                              | 277      |         | 528      |        | 142     |      
|                                                         |                                              |          |         |          |        |         |      
|Net increase (decrease) in cash and cash equivalents     |                                              | (15,794  | )       | 17,796   |        | 3,462   |      
|Cash and cash equivalents, beginning of year             |                                              | 37,773   |         | 19,977   |        | 16,515  |      
|                                                         |                                              |          |         |          |        |         |      
|Cash and cash equivalents, end of year                   |                                              | 21,979   |         | 37,773   |        | 19,977  |      
|                                                         |                                              |          |         |          |        |         |      

The
accompanying notes are an integral part of the consolidated financial statements.

U.S. GAAP            53

---





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS        September 30        Amounts in the tables are stated in thousands of U.S. dollars, except share related data.

1.     GOVERNING STATUTES AND NATURE OF OPERATIONS



2.     CHANGES IN ACCOUNTING POLICIES



54            U.S. GAAP

---





3.     ACCOUNTING POLICIES



U.S. GAAP            55

---





Buildings

4 to 10%Furniture and equipment

10 to 20%Computer equipment

20 to 50%Automotive equipment

20 to 25%Leasehold and building improvements

10 to 20%Trademarks, trademark licenses and manufacturing rights

4 to 15%




56            U.S. GAAP

---





2004

2003

2002$

$

$Net income as reported

48,728

19,925

21,188Total stock-based compensation expenses determined under fair value based method

4,286

3,369

2,489Pro-forma net income

44,442

16,556

18,699Basic income per shareAs reported

1.08

0.44

0.51Pro-forma

0.98

0.37

0.45Diluted income per shareAs reported

0.98

0.44

0.50Pro-forma

0.90

0.36

0.44




U.S. GAAP            57

---



4.     ACQUISITIONS



$Net assets acquired at the attributed valuesAssetsCash and cash equivalents

77Other working capital items

7,323Property, plant and equipment

9,433Intangible assets with indefinite life

29,175Goodwill

9,632Deferred income taxes

656Other assets

1,36357,659LiabilitiesAccounts payable

8,215Long-term debt

6,922Deferred income taxes

6,38421,52136,138ConsiderationCash

31,379Common shares issued

4,75936,138Net cash used for the acquisitions

31,302




(unaudited)$Revenue

140,983Net earnings

20,802Net earnings per share

0.50


58            U.S. GAAP

---





5.     SHORT-TERM INVESTMENTS



6.     ACCOUNTS RECEIVABLE

2004

2003$

$Trade accounts, net of allowance for doubtful accounts of $876,000 ($613,000 in 2003)(a)

44,320

16,696Investments receivable within one year



1,102Taxes receivable

1,978

1,479Other

287

40846,585

19,685




---



U.S. GAAP            59

---





7.     INVENTORIES

2004

2003$

$Raw materials and packaging material

10,311

8,441Work in progress

1,781

1,466Finished goods

25,178

10,25637,270

20,163


8.     INCOME TAXES



2004

2003$

$Short-term deferred income tax assetsInventories

376

2,554Prepaid expenses and deposits

167

Accounts payable and accrued liabilities

2,941

2,558Pending legal settlements

1,102

1,1024,586

6,214Long-term deferred income tax assetsInvestments



16Share issue expenses

930

1,746Unused operating losses



13930

1,775Short-term deferred income tax liabilitiesAccounts receivable

379

318Inventories

109

Prepaid expenses and deposits

434

163Investments

14

13936

494Long-term deferred income tax liabilitiesProperty, plant and equipment

2,484

1,993Intangible assets

34,619

31,801Goodwill

682

682Research and development expenses

505

12738,290

34,603


60            U.S. GAAP

---





2004

2003

2002$

$

$Current

15,628

11,144

8,754DeferredCreation and reversal of temporary differences

6,625

2,678

2,234Change in promulgated rates



(830
)
1446,625

1,848

2,37822,253

12,992

11,132DomesticCurrent

(338
)
(1,763
)
2,152Deferred

2,756

574

1,7042,418

(1,189
)
3,856ForeignCurrent

15,966

12,907

6,602Deferred

3,869

1,274

67419,835

14,181

7,27622,253

12,992

11,132




2004

2003

2002%

$

%

$

%

$Combined basic rate applied to pre-tax income

31.52

22,373

33.59

11,057

35.66

11,525Increase (decrease) in taxes resulting from:

0.04

29







Large corporations tax





(2.52
)
(830
)
0.44

144Change in promulgated rates

(2.47
)
(1,752
)
4.54

1,495

3.68

1,189Difference with foreign tax rates

1.79

1,268

2.90

953

0.79

257Non-deductible items









(0.71
)
(231
)Use of unrecorded prior years' losses

(0.65
)
(460
)
(1.35
)
(445
)
(5.30
)
(1,713
)Non-taxable items and other

2.76

1,958

3.80

1,250

2.45

791Foreign withholding taxes

(1.64
)
(1,163
)
(1.49
)
(488
)
(2.57
)
(830
)Investment tax credits

31.35

22,253

39.47

12,992

34.44

11,132




U.S. GAAP            61

---



9.     INVESTMENTS

2004

2003$

$Investments in preferred shares of a private company, at estimated net realizable value



578Note receivable, 8.5% beginning on January 1, 2002, maturing on January 1, 2004



936Investments in joint ventures accounted for using equity method



227Other



363

2,104Investments receivable within one year



1,102

1,002


10.   PROPERTY, PLANT AND EQUIPMENT

2004Cost

Accumulated depreciation

Net$

$

$Land

1,581



1,581Buildings

20,311

3,413

16,898Furniture and equipment

15,751

7,975

7,776Automotive equipment

65

14

51Computer equipment

7,542

3,126

4,416Leasehold and building improvements

810

280

53046,060

14,808

31,252


2003Cost

Accumulated depreciation

Net$

$

$Land

940



940Buildings

12,431

2,484

9,947Furniture and equipment

13,761

6,417

7,344Automotive equipment

54

1

53Computer equipment

3,822

2,085

1,737Leasehold and building improvements

522

212

31031,530

11,199

20,331




62            U.S. GAAP

---



11.   INTANGIBLE ASSETS

2004Cost

Accumulated depreciation

Net$

$

$Trademarks, trademark licenses and manufacturing rights with a:Finite life

280,034

29,869

250,165Indefinite life

170,127

12,417

157,710450,161

42,286

407,875


2003Cost

Accumulated depreciation

Net$

$

$Trademarks, trademark licenses and manufacturing rights with a:Finite life

111,327

19,998

91,329Indefinite life

186,512

12,418

174,094297,839

32,416

265,423




$2005

13,7442006

13,7442007

13,7442008

13,7442009

13,744


12.   GOODWILL

2004

2003$

$Cost

31,073

31,161Accumulated amortization

3,606

3,611Net

27,467

27,550


U.S. GAAP            63

---



13.   AUTHORIZED LINE OF CREDIT



14.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

2004

2003$

$Accounts payable

13,259

9,232Contract rebates, product returns and accrued chargebacks

8,853

7,248Accrued interest on subordinated notes

2,530

3,038Accrued royalty fees

5,340

4,820Accrued salaries

3,228

3,084Accrued bonuses

2,804

2,883Accrued research and development expenses

3,447

1,995Acquired in-process research payable



7,000Other accrued liabilities

5,556

1,218Pending legal settlements

2,900

2,90047,917

43,418


15.   LONG-TERM DEBT

2004

2003$

$Convertible subordinated notes, 4.25%, interest payable semi-annually starting October 15, 2003, convertible into 8,924,113 common shares, maturing April 15, 2008.(a)

125,000

125,000Bank loans, 3.80% (interest rates varying between 4.84% and 7.15% as at September 30, 2003), secured by immovable hypothecs on land and buildings having a net book value of $6,826,494 in 2004, payable in quarterly
instalments of $200,000, principal and interest, maturing in 2007.

2,174

2,576Obligations under capital leases, interest rates varying between 3.81% and 6.2% payable in monthly instalments, principal and interest, maturing on different dates until 2009.

2,520

3,426129,694

131,002Instalments due within one year

1,778

1,528127,916

129,474


64            U.S. GAAP

---



---



Obligations under capital leases

Other long term loans$

$2005

1,089

7922006

838

7602007

483

6222008

264

125,0002009

92

2,766Interest included in the minimum lease payments

2462,520


16.   CAPITAL STOCK



14,175,000

Series A, non-voting, annual preferential cumulative dividend of 5%, redeemable on or prior to June 8, 2001 at CDN$1.00 per share payable at the option of the Company in cash or by the issuance of common shares
or in any combination of cash and common shares.12,000,000

Series B, non-voting, redeemable on the fifth anniversary of their issuance at CDN$1.00 per share payable in cash or by the issuance of common shares at the option of the Company, convertible into common shares at the holder's option on the
basis of one common share for each 15 Series B preferred shares.




U.S. GAAP            65

---





2004

2003

2002Number of options

Weighted average exercise price

Number of options

Weighted average exercise price

Number of options

Weighted average exercise price$



$



$Balance, beginning of year

2,681,840

10.12

2,429,078

9.67

1,956,441

7.75Granted

738,350

15.44

531,850

11.36

684,050

13.38Exercised

(558,016
)
8.78

(141,122
)
7.82

(127,489
)
5.89Cancelled

(261,618
)
11.23

(137,966
)
10.73

(83,924
)
9.58Balance, end of year

2,600,556

11.86

2,681,840

10.12

2,429,078

9.67Options exercisable at end of year

954,459

9.93

965,909

9.00

614,716

7.79




Options outstandingOptions exercisableWeighted average remaining contractual lifeExercise price

Number

Weighted average exercise price

Number

Weighted average exercise price$



$$4.06    $5.00

17,000

5.23

4.06

11,000

4.06$5.01    $7.00

23,100

4.87

6.12

20,500

6.03$7.01    $10.00

809,586

5.84

8.42

527,549

8.30$10.01  $13.00

760,510

7.62

11.70

287,970

11.89$13.01  $16.00

707,360

8.40

13.56

107,440

14.00$16.01  $19.00

195,500

9.53

18.30



$19.01  $19.99

87,500

9.39

19.99



2,600,556

7.40

11.86

954,459

9.93




2004

2003

2002Expected option life (years)

6

6

6Volatility

44%

46%

47%Risk-free interest rate

4.17%

4.43%

4.93%Expected dividend










66            U.S. GAAP

---



17.   FINANCIAL INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF OPERATIONS



2004

2003

2002$

$

$Interest on long-term debt

5,614

3,340

159Bank charges

127

297

210Financing fees





282Amortization of deferred debt issue expenses

1,144

646

2476,885

4,283

898




2004

2003

2002$

$

$Shipping and handling expenses

4,349

3,477

2,763Advertising expenses

15,155

10,524

10,501




2004

2003

2002$

$

$Non-controlling interest



(103
)
(363
)Rental expenses

1,216

1,228

1,148Depreciation of property, plant and equipment

3,720

3,467

2,486Amortization of intangible assets

12,639

4,596

5,060Share in net loss of joint ventures

(455
)
(106
)
(46
)




2004

2003

2002$

$

$Net income available to common shareholdersBasic

48,728

19,925

21,188Financial expenses relating to the convertible subordinated notes

3,169



Net income available to common shareholders on a diluted basis

51,897

19,925

21,1882004

2003

2002Weighted average number of common sharesWeighted average number of common shares outstanding

45,286,199

44,914,944

41,664,510Effect of dilutive stock options

820,872

472,599

660,970Effect of dilutive purchase price



220,449

202,020Effect of dilutive convertible subordinated notes

6,680,893



Adjusted weighted average number of common shares outstanding

52,787,964

45,607,992

42,527,500Number of common shares outstanding as at November 9, 2004

45,562,336


U.S. GAAP            67

---





18.   FINANCIAL INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF CASH FLOWS



2004

2003

2002$

$

$Accounts receivable

(27,795
)
5,569

2,155Income taxes receivable

(3,773
)
(4,438
)
(406
)Inventories

(17,157
)
(417
)
(2,546
)Prepaid expenses and deposits

(703
)
(892
)
(58
)Accounts payable and accrued liabilities

3,191

16,547

3,814Income taxes payable

(4,051
)
3,207

823(50,288
)
19,576

3,782




2004

2003

2002$

$

$Interest received

1,035

1,427

787Interest paid

6,122

342

242Income taxes paid

23,620

12,417

7,672


19.   JOINT VENTURES



2004

2003

2002$

$

$Current assets

122

217

190Total assets

168

649

606Current liabilities

312

393

248Total liabilities

343

422

273Revenue

906

659

725Expenses

1,361

765

771Net loss

(455
)
(106
)
(46
)Cash flows from:Operations

(31
)
92

(8
)Financing

2

4

Investment



(11
)
10


68            U.S. GAAP

---



20.   SEGMENTED INFORMATION



2004

2003

2002%

%

%Customer A

24.3

15.6

20.2Customer B

18.4

18.6

18.8Customer C

13.1

15.4

13.355.8

49.6

52.3




2004

2003

2002$

$

$RevenueCanadaDomestic sales

28,002

20,555

17,413Foreign sales





United StatesDomestic sales

162,810

113,875

100,088Foreign sales

3,921



EuropeDomestic sales

43,830

39,971

13,099Foreign sales

4,846

4,531

1,696Other

225

152

108243,634

179,084

132,404Property, plant, equipment, intangible assets and goodwillCanada

40,401

14,622

13,782United States

131,242

133,695

135,839Europe

265,417

138,113

54,677Other

29,534

26,874

23,423466,594

313,304

227,721




U.S. GAAP            69

---



21.   FINANCIAL INSTRUMENTS



2004

2003Fair value

Carrying amount

Fair value

Carrying amount$

$

$

$AssetsCash and cash equivalents

21,979

21,979

37,773

37,773Short-term investments

15,922

15,922

133,112

133,112Accounts receivable

44,607

44,607

17,104

17,104Investments in a private company





b
)
578Note receivable





b
)
936Other investments





363

363LiabilitiesAccounts payable and accrued liabilities

47,917

47,917

43,418

43,418Long-term debt

162,674

129,694

154,283

131,002




22.   COMMITMENTS AND CONTINGENCIES



$2005

2,7252006

9532007

2972008

2632009

444,282


70            U.S. GAAP

---





U.S. GAAP            71

---





23.   SUMMARY OF DIFFERENCES BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES AND IN CANADA



2004

2003

2002$

$

$Earnings adjustmentsNet income in accordance with U.S. GAAP

48,728

19,925

21,188Prepaid advertising costs(1)





(457
)Acquired in-process research(2)



12,000

Amortization of new product acquisition costs(2)

(54
)
(54
)
(54
)Implicit interest on convertible debt(4)

(4,234
)
(2,292
)
Income tax impact of the above adjustments

20

(962
)
191Net earnings in accordance with Canadian GAAP

44,460

28,617

20,868Income per share in accordance with Canadian GAAPBasic

0.98

0.64

0.50Diluted

0.96

0.63

0.49


72            U.S. GAAP

---



2004

2003U.S. GAAP

Canadian GAAP

U.S. GAAP

Canadian GAAP$

$

$

$Balance sheet adjustmentsCurrent assets(6)

139,032

139,054

225,035

225,203Investments(6)





1,002

775Property, plant and equipment(6)

31,252

31,265

20,331

20,351Intangible assets(2)

407,875

420,235

265,423

277,837Goodwill(3)(6)

27,467

28,862

27,550

29,342Deferred debt issue expenses

3,088

3,088

4,233

4,233Deferred income tax asset

930

930

1,775

1,775Current liabilities(6)

51,362

51,430

50,261

50,634Long-term debt(4)

127,916

110,203

129,474

107,527Deferred income tax liability(2)(3)

38,290

39,376

34,603

35,742Shareholders' equityEquity component of convertible debt(4)



24,239



24,239Capital stock(5)(7)

260,643

267,288

255,743

262,388Retained earnings(2)(3)(4)(5)(7)

112,362

107,671

63,634

63,211Accumulated foreign currency translation adjustments(7)

19,071

23,227

11,634

15,775


---



U.S. GAAP            73

---





QuickLinks