Exhibit 99.3

Audited Financial Statements from Annual Report  U.S. GAAP

CONSOLIDATEDFINANCIAL STATEMENTS

U.S. GAAP

|MANAGEMENT'S REPORT  |                                            | 30
|-------------------- | ------------------------------------------ | --
|AUDITORS' REPORT     |                                            | 31
|FINANCIAL STATEMENTS |                                            |   
|                     | CONSOLIDATED BALANCE SHEETS                |   
|                     | CONSOLIDATED OPERATIONS                    |   
|                     | CONSOLIDATED SHAREHOLDERS' EQUITY          |   
|                     | CONSOLIDATED CASH FLOWS                    |   
|                     | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS |   

---



MANAGEMENT'SREPORT

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, Chartered Accountants, whose report indicating the scope of their audit and their opinion on the
consolidated financial statements is presented on the right.

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.

|signed                                               |  | signed                                               |  | signed                                             
|---------------------------------------------------- |  | ---------------------------------------------------- |  | ---------------------------------------------------
|Léon F. Gosselin                                     |  | David W. Mims                                        |  | Jean Vézina                                        
|President and Chief Executive Officer                |  | Executive Vice President and Chief Operating Officer |  | Vice President, Finance and Chief Financial Officer
|Mont-Saint-Hilaire, Quebec, Canada
November 11, 2003 |  |                                                      |  |                                                    

30            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, 2003, and 2002, and the consolidated statements of operations, shareholders' equity and cash
flows for each of the years in the three-year period ended September 30, 2003. 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 generally accepted auditing standards in Canada and with auditing standards generally accepted in the United States of America. 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, 2003 and 2002 and the results of its
operations and cash flows for each of the years in the three-year period ended September 30, 2003, in accordance with accounting principles generally accepted in the United Sates of
America.

On
November 11, 2003, 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.

As
disclosed in Note 2b) to the consolidated financial statements, the Company changed its method of accounting for goodwill and intangible assets as at October 1, 2001.

signed

General
Partnership
Chartered Accountants

Montreal,
Quebec, Canada
November 11, 2003

U.S. GAAP            31

---



CONSOLIDATEDBALANCE SHEETS

|                                                |                                                                                                                                                                  | September 30 |        
|----------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------ | -------
|
|
|
|Assets                                          |                                                                                                                                                                  |              |        
|Current assets                                  |                                                                                                                                                                  |              |        
|                                                | Cash and cash equivalents                                                                                                                                        |              | 37,773 
|                                                | Short-term investments available for sale (Note 5)                                                                                                               |              | 133,112
|                                                | Accounts receivable (Note 6)                                                                                                                                     |              | 19,685 
|                                                | Income taxes receivable                                                                                                                                          |              | 5,294  
|                                                | Inventories (Note 7)                                                                                                                                             |              | 20,163 
|                                                | Prepaid expenses and deposits                                                                                                                                    |              | 2,794  
|                                                | Deferred income taxes (Note 8)                                                                                                                                   |              | 6,214  
|                                                |                                                                                                                                                                  |              |        
|Total current assets                            |                                                                                                                                                                  | 225,035      |        
|Investments (Note 9)                            |                                                                                                                                                                  | 1,002        |        
|Property, plant and equipment, net (Note 10)    |                                                                                                                                                                  | 20,331       |        
|Intangible assets, net (Note 11)                |                                                                                                                                                                  | 265,423      |        
|Goodwill, net (Note 12)                         |                                                                                                                                                                  | 27,550       |        
|Deferred debt issue expenses, at amortized cost |                                                                                                                                                                  | 4,233        |        
|Deferred income taxes (Note 8)                  |                                                                                                                                                                  | 1,775        |        
|                                                |                                                                                                                                                                  |              |        
|Total assets                                    |                                                                                                                                                                  | 545,349      |        
|                                                |                                                                                                                                                                  |              |        
|Liabilities                                     |                                                                                                                                                                  |              |        
|Current liabilities                             |                                                                                                                                                                  |              |        
|                                                | Accounts payable and accrued liabilities (Note 14)                                                                                                               |              | 43,418 
|                                                | Income taxes payable                                                                                                                                             |              | 4,821  
|                                                | Instalments on long-term debt                                                                                                                                    |              | 1,528  
|                                                | Deferred income taxes (Note 8)                                                                                                                                   |              | 494    
|                                                |                                                                                                                                                                  |              |        
|Total current liabilities                       |                                                                                                                                                                  | 50,261       |        
|Long-term debt (Note 15)                        |                                                                                                                                                                  | 129,474      |        
|Deferred income taxes (Note 8)                  |                                                                                                                                                                  | 34,603       |        
|Non-controlling interest                        |                                                                                                                                                                  |             |        
|                                                |                                                                                                                                                                  |              |        
|Total liabilities                               |                                                                                                                                                                  | 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: 45,004,320 and 44,863,198 as at September 30, 2003 and 2002, respectively |              | 255,743
|Retained earnings                               |                                                                                                                                                                  | 63,634       |        
|Accumulated other comprehensive income (loss)   |                                                                                                                                                                  | 11,634       |        
|                                                |                                                                                                                                                                  |              |        
|Total shareholders' equity                      |                                                                                                                                                                  | 331,011      |        
|                                                |                                                                                                                                                                  |              |        
|Total liabilities and shareholders' equity      |                                                                                                                                                                  | 545,349      |        
|                                                |                                                                                                                                                                  |              |        

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

On behalf of the Board,

|signed           |  | signed            
|---------------- |  | ------------------
|Léon F. Gosselin |  | Dr. Claude Sauriol
|Director         |  | Director          

32            U.S. GAAP

---

CONSOLIDATEDOPERATIONS

|                                         |         | Years Ended September 30 |           
|---------------------------------------- | ------- | ------------------------ | ----------
|
|
|
|Revenue                                  |         | 179,084                  |           
|Cost of goods sold                       |         | 44,459                   |           
|Selling and administrative expenses      |         | 63,084                   |           
|Research and development expenses        |         | 12,098                   |           
|Acquired in-process research             |         | 12,000                   |           
|Depreciation and amortization            |         | 8,063                    |           
|                                         |         |                          |           
|                                         |         | 139,704                  |           
|                                         |         |                          |           
|Operating income                         |         | 39,380                   |           
|                                         |         |                          |           
|Financial expenses                       |         | 4,283                    |           
|Interest income                          |         | (1,639                   | )         
|Loss on foreign currency                 |         | 122                      |           
|Takeover-bid expenses                    |         | 3,697                    |           
|                                         |         |                          |           
|                                         |         | 6,463                    |           
|                                         |         |                          |           
|Income before income taxes               |         | 32,917                   |           
|Income taxes (Note 8)                    |         | 12,992                   |           
|                                         |         |                          |           
|Net income                               |         | 19,925                   |           
|                                         |         |                          |           
|Income per common share                  |         |                          |           
|                                         | Basic   |                          | 0.44      
|                                         | Diluted |                          | 0.44      
|Weighted average number of common shares |         |                          |           
|                                         | Basic   |                          | 44,914,944
|                                         | Diluted |                          | 45,607,992

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

U.S. GAAP            33

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CONSOLIDATEDSHAREHOLDERS' EQUITY

|                                                                              |  | Years Ended September 30 |  
|----------------------------------------------------------------------------- |  | ------------------------ | -
|
|
|Common shares (number)                                                        |  |                          |  
|Balance, beginning of year                                                    |  | 44,863,198               |  
|Shares issued following public offerings for cash                             |  |                         |  
|Shares issued following private investors' subscription for cash              |  |                         |  
|Shares issued following the exercise of the underwriters' option for cash     |  |                         |  
|Shares issued pursuant to the stock option plan for cash                      |  | 141,122                  |  
|Shares issued for the acquisition of assets                                   |  |                         |  
|Shares issued for the redemption of preferred shares and cumulative dividends |  |                         |  
|                                                                              |  |                          |  
|Balance, end of year                                                          |  | 45,004,320               |  
|                                                                              |  |                          |  
|Series A preferred shares (number)                                            |  |                          |  
|Balance, beginning of year                                                    |  |                         |  
|Shares redeemed by the issuance of common shares                              |  |                         |  
|                                                                              |  |                          |  
|Balance, end of year                                                          |  |                         |  
|                                                                              |  |                          |  
|
|Common shares                                                                 |  |                          |  
|Balance, beginning of year                                                    |  | 254,640                  |  
|Shares issued following public offerings for cash                             |  |                         |  
|Shares issued following private investors' subscription for cash              |  |                         |  
|Shares issued following the exercise of the underwriters' option for cash     |  |                         |  
|Shares issued pursuant to the stock option plan for cash                      |  | 1,103                    |  
|Shares issued for the acquisition of assets                                   |  |                         |  
|Shares issued for the redemption of preferred shares and cumulative dividends |  |                         |  
|                                                                              |  |                          |  
|Balance, end of year                                                          |  | 255,743                  |  
|                                                                              |  |                          |  
|Series A preferred shares                                                     |  |                          |  
|Balance, beginning of year                                                    |  |                         |  
|Shares redeemed by the issuance of common shares                              |  |                         |  
|                                                                              |  |                          |  
|Balance, end of year                                                          |  |                         |  
|                                                                              |  |                          |  
|Retained earnings                                                             |  |                          |  
|Balance, beginning of year                                                    |  | 43,709                   |  
|Net income                                                                    |  | 19,925                   |  
|Cumulative dividends on preferred shares                                      |  |                         |  
|                                                                              |  |                          |  
|Balance, end of year                                                          |  | 63,634                   |  
|                                                                              |  |                          |  
|Accumulated other comprehensive income (loss)                                 |  |                          |  
|Balance, beginning of year                                                    |  | (3,562                   | )
|Other comprehensive income (loss)                                             |  | 15,196                   |  
|                                                                              |  |                          |  
|Balance, end of year                                                          |  | 11,634                   |  
|                                                                              |  |                          |  
|Total shareholders' equity                                                    |  | 331,011                  |  
|                                                                              |  |                          |  
|Comprehensive income                                                          |  |                          |  
|Foreign currency translation adjustments                                      |  | 15,196                   |  
|Net income                                                                    |  | 19,925                   |  
|                                                                              |  |                          |  
|Total comprehensive income                                                    |  | 35,121                   |  
|                                                                              |  |                          |  

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

34            U.S. GAAP

---

CONSOLIDATEDCASH FLOWS

|                                                                |                                              | Years Ended September 30 |       
|--------------------------------------------------------------- | -------------------------------------------- | ------------------------ | ------
|
|
|
|Operations                                                      |                                              |                          |       
|Net income                                                      |                                              | 19,925                   |       
|Non-cash items                                                  |                                              |                          |       
|                                                                | Non-controlling interest                     |                          | (103  
|                                                                | Amortization of deferred debt issue expenses |                          | 646   
|                                                                | Other depreciation and amortization          |                          | 8,063 
|                                                                | Loss (gain) on disposal of assets            |                          | 1,130 
|                                                                | Foreign currency fluctuation                 |                          | 305   
|                                                                | Deferred income taxes                        |                          | 1,848 
|                                                                | Share in net loss of joint ventures          |                          | 106   
|                                                                | Changes in working capital items (Note 18)   |                          | 19,576
|                                                                |                                              |                          |       
|Cash flows from operating activities                            |                                              | 51,496                   |       
|                                                                |                                              |                          |       
|Financing                                                       |                                              |                          |       
|Long-term debt                                                  |                                              | 126,064                  |       
|Repayment of long-term debt                                     |                                              | (4,687                   | )     
|Deferred debt issue expenses                                    |                                              | (4,589                   | )     
|Non-controlling interest                                        |                                              |                         |       
|Issue of shares                                                 |                                              | 1,103                    |       
|                                                                |                                              |                          |       
|Cash flows from financing activities                            |                                              | 117,891                  |       
|                                                                |                                              |                          |       
|Investment                                                      |                                              |                          |       
|Acquisition of short-term investments                           |                                              | (133,112                 | )     
|Disposal of short-term investments                              |                                              | 60,740                   |       
|Acquisition of investments                                      |                                              |                         |       
|Disposal of investments                                         |                                              | 637                      |       
|Acquisition of property, plant and equipment                    |                                              | (4,291                   | )     
|Acquisition of intangible assets                                |                                              | (76,093                  | )     
|Other                                                           |                                              |                         |       
|Net cash used for business acquisitions (Note 4)                |                                              |                         |       
|                                                                |                                              |                          |       
|Cash flows from investment activities                           |                                              | (152,119                 | )     
|                                                                |                                              |                          |       
|Foreign exchange gain (loss) on cash held in foreign currencies |                                              | 528                      |       
|                                                                |                                              |                          |       
|Net increase in cash and cash equivalents                       |                                              | 17,796                   |       
|Cash and cash equivalents, beginning of year                    |                                              | 19,977                   |       
|                                                                |                                              |                          |       
|Cash and cash equivalents, end of year                          |                                              | 37,773                   |       
|                                                                |                                              |                          |       

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

U.S. GAAP            35

---

NOTES TO CONSOLIDATEDFINANCIAL STATEMENTS

U.S. GAAPSeptember 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







36            U.S. GAAP

---



2003
$

2002
$

2001
$Net income

19,925

21,188

11,825Add:Amortization of goodwill





1,400Amortization of intangible assets with indefinite life





3,048Adjusted net income

19,925

21,188

16,273Basic income per shareNet income

0.44

0.51

0.32Add:Amortization of goodwill





0.04Amortization of intangible assets with indefinite life





0.09Adjusted net income

0.44

0.51

0.45






U.S. GAAP            37

---

3.     ACCOUNTING POLICIES



38            U.S. GAAP

---



Methods

RatesBuildings

Diminishing balance and straight-line

4 to 10%Furniture and equipment

Diminishing balance and straight-line

10 to 20%Computer equipment

Diminishing balance and straight-line

20 to 50%Automotive equipment

Diminishing balance and straight-line

20 to 25%Leasehold and building improvements

Straight-line

10 to 20%Trademarks, trademark licenses and manufacturing rights

Straight-line

4 to 15%




U.S. GAAP            39

---



2003
$

2002
$

2001
$Net income as reported

19,925

21,188

11,825Total stock-based compensation expenses determined under fair value-based method

(3,369
)
(2,489
)
(1,415
)Pro-forma net income

16,556

18,699

10,410Basic income per shareAs reported

0.44

0.51

0.32Pro-forma

0.37

0.45

0.28Diluted income per shareAs reported

0.44

0.50

0.32Pro-forma

0.36

0.44

0.28




40            U.S. GAAP

---

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


U.S. GAAP            41

---



2002
(unaudited)
$

2001
(unaudited)
$Revenue

140,983

125,524Net income

20,802

11,136Net income per share

0.50

0.30






5.     SHORT-TERM INVESTMENTS



6.     ACCOUNTS RECEIVABLE

2003
$

2002
$Trade accounts, net of allowance for doubtful accounts of $613,000 ($403,000 in 2002)(a)

16,696

23,707Investments receivable within one year

1,102

142Taxes receivable

1,479

329Other

408

19119,685

24,369




42            U.S. GAAP

---



7.     INVENTORIES

2003
$

2002
$Raw materials and packaging material

8,441

3,841Work in progress

1,466

4,516Finished goods

10,256

11,38420,163

19,741


8.     INCOME TAXES



2003
$

2002
$Short-term deferred income tax assetsInventories

2,554

2,590Accounts payable and accrued liabilities

2,558

2,586Contingency provisions

1,102

1,1596,214

6,335Long-term deferred income tax assetsInvestments

16

14Property, plant and equipment



51Share issue expenses

1,746

2,380Unused operating losses

13

111,775

2,456Short-term deferred income tax liabilitiesAccounts receivable

318

Prepaid expenses

163

135Investments

13

12Deferred gain



122494

269Long-term deferred income tax liabilitiesInvestments



13Property, plant and equipment

1,993

1,625Intangible assets

31,801

31,275Goodwill

682

682Research and development expenses

127

61734,603

34,212


U.S. GAAP            43

---



2003
$

2002
$

2001
$Current

11,144

8,754

3,835DeferredCreation and reversal of temporary differences

2,678

2,234

205Operating losses





1,724Change in promulgated rates

(830
)
144

451,848

2,378

1,97412,992

11,132

5,809DomesticCurrent

(1,763
)
2,152

(972
)Deferred

574

1,704

3,536(1,189
)
3,856

2,564ForeignCurrent

12,907

6,602

4,807Deferred

1,274

674

(1,562
)14,181

7,276

3,24512,992

11,132

5,809




2003
$

2002
$

2001
$Combined basic rate applied to pre-tax income

11,057

11,525

6,597Increase (decrease) in taxes resulting from:Large corporations tax





59Change in promulgated rates

(830
)
144

45Difference with foreign tax rates

1,495

1,189

(548
)Non-deductible items

953

257

559Use of unrecorded prior years' losses



(231
)
Non-taxable items and other

(445
)
(1,713
)
(460
)Foreign withholding taxes

1,250

791

671Investment tax credits

(488
)
(830
)
(1,114
)12,992

11,132

5,809




44            U.S. GAAP

---

9.     INVESTMENTS

2003

2002$

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

578

1,156Note receivable, 8.5% beginning on January 1, 2002, maturing on January 1, 2004

936

936Investments in joint ventures accounted for using equity method

227

333Other

363

3982,104

2,823Investments receivable within one year

1,102

1421,002

2,681


10.   PROPERTY, PLANT AND EQUIPMENT

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


2003Cost

Accumulated depreciation

Net$

$

$Land

848



848Buildings

10,679

1,334

9,345Furniture and equipment

12,566

4,280

8,286Automotive equipment

53

25

28Computer equipment

2,253

1,573

680Leasehold and building improvements

1,139

240

89927,538

7,452

20,086




U.S. GAAP            45

---

11.   INTANGIBLE ASSETS

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


2002Cost

Accumulated depreciation

Net$

$

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

105,545

15,317

90,228Indefinite life

102,275

12,418

89,857207,820

27,735

180,085




$2004

5,9262005

6,1202006

6,3132007

6,3132008

6,313


12.   GOODWILL

2003

2002$

$Cost

31,161

31,161Accumulated amortization

3,611

3,611Net

27,550

27,550


46            U.S. GAAP

---

13.   AUTHORIZED LINE OF CREDIT



14.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

2003

2002$

$Accounts payable

9,232

5,373Contract rebates, product returns and accrued chargebacks

7,248

4,828Accrued interest on subordinated notes

3,038

Accrued royalty fees

4,820

2,881Accrued bonuses

2,883

1,670Acquired in-process research payable

7,000

Other accrued liabilities

6,297

9,546Contingency provisions

2,900

2,90043,418

27,198


15.   LONG-TERM DEBT

2003

2002$

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

125,000

Bank loans, interest rates varying between 4.84% and 7.15%, secured by immovable hypothecs on land and buildings having a net book value of $4,213,164 in 2003, payable in monthly instalments of $52,911, principal and
interest, maturing in 2005 and 2013.

2,576

2,565Obligations under capital leases, interest rates varying between 3.81% and 6.20%, (2.70% and 19.84% in 2002) payable in monthly instalments, principal and interest, maturing on different dates until 2008.

3,426

2,852Bank loans, prime rate plus 1.50% and 2.50% (6.00% and 7.00% as at September 30, 2002), secured by movable hypothecs on assets of a subsidiary.



482Balance of the purchase price of PHOTOFRIN of CDN$4,000,000 without interest, payable at the earliest of April 2004 or upon the receipt of a specific approval from a regulatory authority, in cash or in common shares,
at Axcan's sole discretion



2,704131,002

8,603Instalments due within one year

1,528

1,336129,474

7,267


U.S. GAAP            47

---



Obligations under capital leases
$

Other long-term loans
$2004

1,178

5082005

1,021

4652006

786

4082007

453

4232008

248

125,4402009 and thereafter

86

3323,772Interest included in the minimum lease payments

3463,426


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.




48            U.S. GAAP

---



2003

2002

2001Number
of options

Weighted average exercise price
$

Number
of options

Weighted average exercise price
$

Number
of options

Weighted average exercise price
$Balance, beginning of year

2,429,078

9.67

1,956,441

7.75

1,364,348

6.56Granted

531,850

11.36

684,050

13.38

772,433

10.30Exercised

(141,122
)
7.82

(127,489
)
5.89

(69,597
)
4.77Cancelled

(137,966
)
10.73

(83,924
)
9.58

(110,743
)
7.54Balance, end of year

2,681,840

10.12

2,429,078

9.67

1,956,441

7.75Options exercisable at end of year

965,909

9.00

614,716

7.79

337,708

6.11




Options outstanding

Options exercisableExercise price

Number

Weighted average remaining contractual life

Weighted average exercise price
$

Number

Weighted average exercise price
$$4.04  $5.50

46,400

4.9

4.35

27,400

4.71$5.51  $7.00

71,400

5.5

5.88

53,800

5.81$7.01  $8.50

779,096

6.5

7.28

434,316

7.31$8.51  $10.00

472,744

7.2

9.93

216,433

9.92$10.01  $11.50

448,350

8.6

10.88

43,300

10.90$11.51  $13.00

487,050

8.5

12.30

119,000

12.21$13.01  $14.03

376,800

8.4

13.99

71,660

14.012,681,840

7.6

10.12

965,909

9.00




U.S. GAAP            49

---



2003

2002

2001Expected option life (years)

6

6

6Volatility

46%

47%

50%Risk-free interest rate

4.43%

4.93%

5.64%Expected dividend










17.   FINANCIAL INFORMATION INCLUDED IN THE CONSOLIDATED STATEMENT OF OPERATIONS



2003
$

2002
$

2001
$Interest on long-term debt

3,340

159

2,820Bank charges

297

210

50Financing fees



282

Amortization of deferred debt issue expenses

646

247

4,283

898

2,870




2003
$

2002
$

2001
$Non-controlling interest

(103
)
(363
)
(249
)Rental expenses

1,228

1,148

994Depreciation of property, plant and equipment

3,467

2,486

755Amortization of intangible assets

4,596

5,060

9,674Amortization of goodwill





1,400Share in net loss of joint ventures

106

46

39


50            U.S. GAAP

---





2003

2002

2001BasicNet income

$
19,925

$
21,188

$
11,825Dividends on preferred shares








(301
)Income available to common shareholders

$
19,925

$
21,188

$
11,524Weighted average number of common shares outstanding


44,914,944


41,664,510


35,832,198Basic income per share

$
0.44

$
0.51

$
0.32DilutedNet income available to common shareholders on a diluted basis

$
19,925

$
21,188

$
11,524Weighted average number of common shares outstanding


44,914,944


41,664,510


35,832,198Effect of dilutive stock options


472,599


660,970


449,478Effect of dilutive purchase price


220,449


202,020


249,376Adjusted weighted average number of common shares outstanding


45,607,992


42,527,500


36,531,052Diluted income per share

$
0.44

$
0.50

$
0.32




U.S. GAAP            51

---

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



2003
$

2002
$

2001
$Accounts receivable

5,569

2,155

(7,243
)Income taxes receivable

(4,438
)
(406
)
2,902Inventories

(417
)
(2,546
)
(3,384
)Prepaid expenses

(892
)
(58
)
(195
)Accounts payable and accrued liabilities

16,547

3,814

(65
)Income taxes payable

3,207

823

(1,004
)19,576

3,782

(8,989
)




2003
$

2002
$

2001
$Interest received

1,427

787

1,010Interest paid

342

242

2,875Income taxes paid

12,417

7,672

2,028


19.   JOINT VENTURES



2003
$

2002
$

2001
$Current assets

217

190

186Total assets

649

606

623Current liabilities

393

248

220Total liabilities

422

273

245Revenue

659

725

696Expenses

765

771

735Net loss

(106
)
(46
)
(39
)Cash flows from:Operations

92

(8
)
(10
)Financing

4



25Investment

(11
)
10




52            U.S. GAAP

---

20.   SEGMENTED INFORMATION



2003
$

2002
$

2001
$RevenueCanadaDomestic sales

20,555

17,413

18,485Foreign sales

9,943

22,623

11,950United StatesDomestic sales

113,875

100,088

79,289Foreign sales

421

520

481FranceDomestic sales

26,975

11,409

Foreign sales

17,213

3,362

Other

2,649

1,188

6,374Inter-segment

(12,547
)
(24,199
)
(12,765
)179,084

132,404

103,814Operating income (loss)Canada

(6,086
)
5,413

3,563United States

40,879

27,750

16,382France

14,917

1,279

Other

(10,330
)
(1,870
)
23139,380

32,572

20,176Depreciation and amortizationCanada

1,380

1,516

938United States

3,729

3,890

9,479France

1,376

443

Other

1,578

1,697

1,4128,063

7,546

11,829Property, plant, equipment, intangible assets and goodwillCanada

14,622

13,782

14,237United States

133,695

135,839

136,920France

135,377

50,488

Other

29,610

27,612

28,783313,304

227,721

179,940Total assetsCanada

432,353

296,870

205,466United States

214,854

184,573

181,849France

156,700

58,938

Other

125,131

32,131

33,378Inter-segment

(383,689
)
(205,506
)
(174,209
)545,349

367,006

246,484


U.S. GAAP            53

---

21.   FINANCIAL INSTRUMENTS



2003

2002Fair value
$

Carrying amount
$

Fair value
$

Carrying amount
$AssetsCash and cash equivalents

37,773

37,773

19,977

19,977Short-term investments

133,112

133,112

60,740

60,740Accounts receivable

17,104

17,104

23,898

23,898Investments in a private company

b
)
578

b
)
1,156Note receivable

b
)
936

b
)
936Other investments

363

363

398

398LiabilitiesAccounts payable and accrued liabilities

43,418

43,418

27,198

27,198Long-term debt

131,002

131,002

8,295

8,603








54            U.S. GAAP

---



22.   COMMITMENTS AND CONTINGENCIES





$2004

1,0942005

7272006

2222007

442008

442,131










U.S. GAAP            55

---







56            U.S. GAAP

---



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



2003
$

2002
$

2001
$Earnings adjustments:Net earnings in accordance with U.S. GAAP

19,925

21,188

11,825Prepaid advertising costs(1)



(457
)
(404
)Acquired in-process research(2)

12,000



Amortization of goodwill(3)





(100
)Amortization of new product acquisition costs(2)

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

(2,292
)


Income tax impact of the above adjustments

(962
)
191

205Net earnings in accordance with Canadian GAAP

28,617

20,868

11,472Earnings per share in accordance with Canadian GAAPBasic

0.64

0.50

0.31Diluted

0.63

0.49

0.31


2003

2002U.S. GAAP
$

Canadian GAAP
$

U.S. GAAP
$

Canadian GAAP
$Balance sheet adjustments:Current assets (6)

225,035

225,203

133,858

134,048Investments (6)

1,002

775

2,681

2,348Property, plant and equipment (6)

20,331

20,351

20,086

20,105Intangible assets (2)

265,423

277,837

180,085

180,553Goodwill (3)(6)

27,550

29,342

27,550

29,342Deferred debt issue expenses

4,233

4,233

290

290Deferred income tax asset

1,775

1,775

2,456

2,456Current liabilities (6)

50,261

50,634

30,408

30,681Long-term debt (4)(7)

129,474

107,527

7,267

4,563Deferred income tax liability (2)(3)

34,603

35,742

34,212

34,389Non-controlling interest





332

332Shareholders' equityEquity component of purchase price (7)







2,704Equity component of convertible debt (4)



24,239



Capital stock (5)(8)

255,743

262,388

254,640

261,285Retained earnings (2)(3)(4)(5)(8)

63,634

63,211

43,709

34,594Accumulated foreign currency translation adjustments (8)

11,634

15,775

(3,562
)
594


U.S. GAAP            57

---

24.   SUBSEQUENT EVENT



58            U.S. GAAP

---

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