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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 Commission file number 1-9860
 
 Barr Pharmaceuticals, Inc.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    42-1612474(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S.  Employer
Identification No.)225 Summit Ave 
Montvale, New Jersey
    
    07645-1523(Address of principal executive offices)
    
    (Zip Code)
 201-930-3300
(Registrants telephone number)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on
which registered:Common Stock, Par Value $0.01
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 þ o
 o þ
 þ o
 o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
       2




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##### 



BARR PHARMACEUTICALS, INC.
 INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2007
 PagePART IItem 1:
    
    Business
    
    
    3Item 1A:
    
    Risk Factors
    
    
    28Item 1B:
    
    Unresolved Staff Comments
    
    
    36Item 2:
    
    Properties
    
    
    37Item 3:
    
    Legal Proceedings
    
    
    38Item 4:
    
    Submission of Matters to a Vote of Security Holders
    
    
    44PART IIItem 5:
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    44Item 6:
    
    Selected Financial Data
    
    
    45Item 7:
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    46Item 7A:
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    77Item 8:
    
    Financial Statements and Supplementary Data
    
    
    77Item 9:
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosures
    
    
    77Item 9A:
    
    Controls and Procedures
    
    
    78Item 9B:
    
    Other Information
    
    
    81PART IIIItem 10:
    
    Directors, Executive Officers and Corporate Governance
    
    
    82Item 11:
    
    Executive Compensation
    
    
    82Item 12:
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    82Item 13:
    
    Certain Relationships and Related Transactions and Director Independence
    
    
    82Item 14:
    
    Principal Accounting Fees and Services
    
    
    82PART IVItem 15:
    
    Exhibits and Financial Statement Schedules
    
    
    83SIGNATURES
    
    
    87Index to Financial Statements and Financial Statement Schedule
    
    
    F-1EX-10.4: AMENDED AND RESTATED NON-QUALIFIED DEFERRED COMPENSATION PLANEX-10.11: AMENDED AND RESTATED EXCESS SAVINGS AND RETIREMENT PLANEX-10.31: AMENDMENT TO EMPLOYMENT AGREEMENTEX-21.0: SUBSIDIARIESEX-23.1: CONSENT OF DELOITTE & TOUCHE LLPEX-23.2: CONSENT OF KPMG HUNGARIA KFT.EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.0: CERTIFICATIONS
  2




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PART I
 
 ITEM 1. BUSINESS
 Safe Harbor Statement and Market Data
   Change in Fiscal Year
  OVERVIEW
  Generics
    3




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Proprietary Products
  ® TM ® ® 
 Biologics
  General Information
     PLIVA Acquisition
  4




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
    
    all U.S. commercial operations have been consolidated under Barr Laboratories,
Inc. or Duramed Pharmaceuticals, Inc.;
    
    we have moved all PLIVA proprietary products sold previously under the Odyssey
label to our Duramed label;
    
    we have moved all U.S. PLIVA generic products sold previously under the PLIVA
label to our Barr label;
    
    all U.S. sales and marketing and related administrative activities have been
consolidated;
    
    we have transferred products between our European and U.S. manufacturing sites
to optimize manufacturing efficiency and capacity utilization;
    
    we are on schedule to substantially shut down PLIVAs U.S. manufacturing
facilities by the end of 2008;
    
    we have successfully completed the divestiture of PLIVAs Veterina animal health
business and PLIVAs operations in Italy and Spain;
    
    senior personnel from Barr and PLIVA have been transferred and relocated outside
their home countries to work in functions including commercial operations, finance,
quality control and human resources;
    
    we have established global product selection, product development and business
development processes;
    
    we have established global operational departments and their integration has
been substantially completed;
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
    
    our Forest, Virginia facility became the single point of
distribution for all generic products in the United States; and
    
    we completed the FTC-ordered divestitures of four products.
 GENERIC PHARMACEUTICALS
     
    
    those with complex formulation or development characteristics;
    
    those requiring specialized manufacturing capabilities;
    
    those where sourcing the raw material may be difficult; and
    
    those that must overcome unusual regulatory or legal challenges, including
patent challenges.
    Filings and Approvals
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United States
  
    
    filed 30 abbreviated new drug applications (ANDAs) with the FDA;
    
    received FDA approvals for 19 generic products, including
tentative approvals; and
    
    launched 14 new generic products.
  Europe and ROW
  Operations in our Key Non-US Markets
 Germany.
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Croatia.
 Poland.
 Russia.
 Generic Product Portfolio
  Oral Contraceptives ® ® ®
  8




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Fentanyl Citrate.
 Sumamed/Azithromycin. ®
 Katadolon (flupirtin
  FiscalTransition2007
    
    Period
    
    2006
    
    2005Oral contraceptives
    
    
    24
    %
    
    
    53
    %
    
    
    48
    %
    
    
    53
    %Desmopressin
    
    
    *
    
    
    
    *
    
    
    
    13
    %
    
    
    *
 
 *
    
    Denotes less than 10% in the period indicated. Sales and Marketing
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FiscalTransition2007
    
    Period
    
    2006
    
    2005McKesson Drug Company
    
    
    15
    %
    
    
    17
    %
    
    
    22
    %
    
    
    15
    %Cardinal Health
    
    
    *
    
    
    
    *
    
    
    
    10
    %
    
    
    13
    %AmeriSource Bergen
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    10
    %Walgreens
    
    
    *
    
    
    
    11
    %
    
    
    13
    %
    
    
    15
    %CVS
    
    
    *
    
    
    
    *
    
    
    
    12
    %
    
    
    12
    %
 
 *
    
    Denotes less than 10% in the period indicated. Patent Challenges
  Our Patent Challenge History
  
    
    ADDERALL XR.ADDERALL XR is a once-daily, extended-release, mixed salt
amphetamine product that is indicated for the treatment of ADHD. In August 2006,
we entered into a product acquisition agreement, a product development
agreement, and settlement and license agreements with Shire plc to settle our
pending patent infringement dispute. Under the terms of the agreements, we (1)
purchased Shires ADDERALL® (immediate-release mixed amphetamine salts) tablets
for $63.0 million; (2) granted Shire a license to obtain regulatory approval for
and market in certain specified territories our SEASONIQUE extended-cycle oral
contraceptive product, along with five products in various stages of
development, for an initial $25.0 million payment for previously incurred
product development expenses, and for reimbursement of development expenses
incurred going forward, up to a maximum of $140.0 million over an eight-year
period, not to exceed $30.0 million per year; and (3) are able to launch a
generic version of ADDERALL XR on April 1, 2009, more than nine years earlier
than the last-to-expire Shire listed patent.
    
    Desmopressin.Desmopressin is the generic equivalent of Ferring B.V.s
DDAVP® Tablets. DDAVP Tablets are indicated as antidiuretic
replacement therapy in the management of central diabetes insipidus and for the
management of the temporary polyuria and polydipsia following head trauma or
surgery in the pituitary region. DDAVP is also indicated for the management of
primary nocturnal enuresis. Following the February 2005 summary judgment ruling
by the U.S. District Court for the Southern District of New York that the patent
alleged to cover DDAVP is unenforceable and not infringed by our product, we
launched Desmopressin Acetate tablets, 0.1 mg and 0.2 mg, on July 5, 2005. In
February 2006, the Federal Circuit Court affirmed the District Courts ruling
that the patent at issue is unenforceable. In October 2006, the U.S. Supreme
Court denied Ferrings petition for a writ of certiorari.
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
    
    Modafinil.Modafinil is the generic equivalent of Cephalons
Provigil®. In February 2006, we entered into an agreement with
Cephalon to settle our pending patent infringement dispute in the U.S. related
to Provigil. Under the terms of the settlement, Cephalon granted us a
non-exclusive, royalty-bearing right to market and sell a generic version of
Provigil in the U.S. Our license will become effective in October 2011, unless
Cephalon obtains a pediatric extension for Provigil, in which case we would be
permitted entry in April 2012. Cephalon has announced that it has been granted a
pediatric extension for Provigil. We may be allowed to enter at an earlier date
based upon the entry of another generic version of Provigil.
    
    Niacin.Niacin is the generic equivalent of Abbott Laboratories (formerly
Kos Pharmaceuticals) NIASPAN® product. In April 2005, we entered
into co-promotion, licensing and manufacturing, and settlement and license
agreements relating to the resolution of the patent litigation involving
NIASPAN. Under the terms of the agreements, we: (1) co-promote the current
NIASPANand ADVICOR® products (the Kos Products) to
obstetricians, gynecologists and other practitioners with a focus on womens
healthcare in the U.S. using our 93-person specialty sales force, and in return
we receive a royalty based upon overall sales of the Kos Products, whether by
Kos or our sales force; (2) serve as a stand-by, alternate supply source for the
Kos Products; and (3) will be allowed to launch generic versions of the Kos
Products on September 20, 2013, about four years before the last of the
applicable Kos patents is set to expire.
 Pending Patent Challenges
  11




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($ millions as of December 31, 2007)
 MARKETANDA NAME(Brand Product)
    
    VALUEAlendronate Sodium (Fosamax®)
    
    $
    1,836.3Alfuzosin Hydrochloride Extended Release (Uroxatral®)
    
    
    154.0Argatroban Injection (Argatroban®)
    
    
    114.6Aripiprazole (Abilify® and ABILIFY® Discmelt)
    
    
    2,347.4Aspirin/Extended-Release Dipyridamole (Aggrenox®)
    
    
    297.4Dexmethylphenidate Hydrochloride (Focalin® XR)
    
    
    268.8Drospirenone and Ethinyl Estradiol (YASMIN®)
    
    
    572.0Fexofenadine (Allegra® Tablets, Allegra® Capsules and Allegra®D)
    
    
    1,153.9Galantamine Hydrobromide (RAZADYNE®)
    
    
    116.0Galantamine Hydrobromide (RAZADYNE®ER)
    
    
    109.3Levalbuterol Hydrochloride (Xopenex®)
    
    
    633.2Methylphenidate Hydrochloride (Ritalin® LA)
    
    
    105.4Norethindrone/Ethjnyl Estradiol (Femcon® FE)
    
    
    46.1Norgestimate/Ethjnyl Estradiol (TRI-CYCLEN LO®)
    
    
    407.9Olopatadine Hydrochloride (Patanol®)
    
    
    301.0Pramipexole Dihydrochloride (MIRAPEX®)
    
    
    350.2Raloxifene Hydrochloride (EVISTA®)
    
    
    690.8Temozolomide (TEMODAR®)
    
    
    286.0Thalidomide (Thalomid®)
    
    
    400.1Tramadol HCl & Acetaminophen (ULTRACET®)
    
    
    101.9Triamcinolone Acetonide (NASACORT® AQ)
    
    
    369.1Zolpidem Tartrate (AMBIEN® CR)
    
    
    932.8TOTAL
    
    $
    11,594.2
 
 *
    
    Source: IMS Health  twelve months sales ended December 31, 2007.  Fexofenadine (Allegra Tablet ®
  12




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PROPRIETARY PHARMACEUTICALS
    ®
    Proprietary Product Portfolio
  13




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
    
    SEASONIQUE® (Levonorgestrel/Ethinyl Estradiol and Ethinyl Estradiol)
extended-cycle oral contraceptive
    
    PLAN B OTC/Rx (Levonorgestrel) emergency oral contraceptive
    
    PARAGARD® T 380A (Intrauterine Copper Contraceptive) IUD
    
    ENJUVIA (Synthetic Conjugated Estrogens, B) hormone therapy
    
    MIRCETTE® (Desogestrel and Ethinyl Estradiol) oral contraceptive
    
    NIASPAN® (Niacin Extended-Release Tablets) for high cholesterol (marketed
under agreement with Kos Pharmaceuticals, Inc., a wholly owned subsidiary of Abbott)
    
    ADVICOR® (Niacin Extended-Release/Lovastatin Tablets) for high cholesterol
(also marketed under agreement with Kos Pharmaceuticals, Inc.)
  SEASONIQUE ® .
  PLAN B  Emergency Contraceptive.
 (SM)
 PARAGARD® IUC.
 ENJUVIA 
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®
 ® ®
 ® ® ® ® ®
  Transition
    
    Fiscal2007
    
    Period
    
    2006
    
    2005PLAN B
    
    
    21
    %
    
    
    14
    %
    
    
    *
    
    
    
    *PARAGARD
    
    
    16
    %
    
    
    16
    %
    
    
    11
    %
    
    
    *SEASONALE
    
    
    *
    
    
    
    14
    %
    
    
    30
    %
    
    
    31
    %CENESTIN
    
    
    *
    
    
    
    *
    
    
    
    11
    %
    
    
    16
    %LOESTRIN
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    15
    %
 
 *
    
    Denotes less than 10% in the period indicated. Products in Development
  Bijuva  (Synthetic Conjugated Estrogens, A) Cream.
 Transvaginal Ring (TVR) Products.
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Vaccines.
 Sales and Marketing
  
    
    Our Womens Healthcare Sales Force, which has approximately 200 sales
representatives, currently promotes SEASONIQUE extended-cycle oral contraceptive,
our ENJUVIA hormone therapy products and our PLAN B OTC/Rx emergency contraceptive
product to womens healthcare practitioners. This sales force may market additional
womens healthcare products we develop or acquire.
    
    Our Specialty Sales Force, which has 90 sales representatives, promotes the
PARAGARD IUD product and MIRCETTE to obstetricians, gynecologists and other
practitioners with a focus on womens healthcare. This sales force also promotes
NIASPAN and ADVICOR cholesterol treatments under a co-promotion agreement with Kos
Pharmaceuticals, Inc. that we entered into in April 2005.
    
    Our Institutional Sales Force, which has approximately 40 sales representatives,
promotes the Companys proprietary products at teaching hospitals and other
institutions, targeting attending physicians and OB/GYN residents. In addition,
this sales force promotes our generic injectable products to various hospitals.
  Transition
    
    Fiscal2007
    
    Period
    
    2006
    
    2005McKesson Drug Company
    
    
    32
    %
    
    
    36
    %
    
    
    30
    %
    
    
    26
    %Cardinal Health
    
    
    25
    %
    
    
    16
    %
    
    
    15
    %
    
    
    20
    %Integrated Commercialization
Services
    
    
    16
    %
    
    
    15
    %
    
    
    11
    %
    
    
    *AmeriSource Bergen
    
    
    *
    
    
    
    *
    
    
    
    *
    
    
    
    11
    %
 
 *
    
    Denotes less than 10% in the period indicated. 16




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BIOLOGICS
   ®
     17




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RESEARCH AND DEVELOPMENT
  RAW MATERIALS
 ®
  PATENTS AND PROPRIETARY RIGHTS
   18




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GOVERNMENT REGULATION
 United States
  Abbreviated New Drug Application Process
      19




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Patent Challenges
       20




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Patent Challenge Process
    Mova Pharmaceutical Corp. v.
Shalala Mylan Pharmaceuticals v.
Shalala
 21




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
    
    Only one 30-month stay allowed per drug;
    
    Product-by-product exclusivity;
    
    Shared 180-day exclusivity in limited circumstances;
    
    Counterclaim for an Orange Book delisting allowed; and
    
    180-day exclusivity cannot be triggered by a district court decision.
   New Drug Application Process
   
    
    In Phase I, which frequently begins with the initial introduction of the
compound into healthy human subjects prior to introduction into patients, the
product is tested for safety, adverse effects, dosage, tolerance absorption,
metabolism, excretion and other elements of clinical pharmacology.
    
    Phase II typically involves studies in a small sample of the intended patient
population to assess the efficacy of the compound for a specific indication, to
determine dose tolerance and
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the optimal dose range, and to gather additional
information relating to safety and potential adverse effects.
    
    Phase III trials are undertaken to further evaluate clinical safety and
efficacy in an expanded patient population at typically dispersed study sites,
in order to determine the overall risk-benefit ratio of the compound and to
provide an adequate basis for product labeling.
     United States Drug Enforcement Agency (DEA)
  Medicaid
  23




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Medicare
  Other Countries
     24




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Government Relations Activities
  COMPETITION
  
    
    the generic divisions and subsidiaries of brand pharmaceutical companies,
including Sandoz US, a subsidiary of Novartis AG;
    
    large independent domestic and international generic manufacturers including
Mylan Inc., Watson Pharmaceuticals, Inc., Teva Pharmaceuticals and distributors
with large product lines where there is competition with some of our products;
    
    generic manufacturers in Europe such as Ratiopharm, Gedeon Richter Ltd,
Actavis and Krka d.d.;
    
    generic manufacturers in India that have certain cost advantages over U.S.
generic manufacturers, such as Ranbaxy and Dr. Reddys; and
    
    brand pharmaceutical companies whose therapies compete with our generic and
proprietary products, including Johnson & Johnson, Wyeth, Bayer and Warner
Chilcott.
  
    
    filing new patents on drugs whose original patent protection is about to
expire;
    
    obtaining patents on next-generation products reflecting, for example
changes in formulation, means of delivery or other product improvement
modifications;
    
    increasing marketing initiatives;
    
    launching authorized generic versions of their branded products;
    
    using the Citizens Petition process to request amendments to FDA
standards;
    
    pricing the brand product below the already reduced price of the generic
product in certain formularies in order to maintain a favored reimbursement
status; and
    
    commencing litigation.
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
    
    focus our proprietary and generic product development in areas of historical
strength or competitive advantage;
    
    target generic products for development that have unique characteristics,
including difficulty in sourcing raw materials, difficulty in formulation or
establishing bioequivalence, and manufacturing that requires unique facilities,
processes or expertise;
    
    develop innovative, cost-effective proprietary products that serve unmet
medical needs; and
    
    make significant investments in plant and equipment to improve our
efficiency.
  EMPLOYEES
  26




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INSURANCE
    ENVIRONMENTAL
  27




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ITEM 1A. RISK FACTORS
  Our disclosure and analysis in this Form 10-K contain some forward-looking statements that set
forth anticipated results based on managements plans and assumptions. From time to time, we also
provide forward-looking statements in other materials we release to the public as well as oral
forward-looking statements. Such statements give our current expectations or forecasts of future
events; they do not relate strictly to historical or current facts. We have tried, wherever
possible, to identify such statements by using words such as anticipate, estimate, expect,
project, intend, plan, believe, target, forecast and similar expressions in connection
with any discussion of future operating or financial performance. In particular, these include
statements relating to future actions, prospective products or product approvals, potential
acquisitions, future performance or results of current and anticipated products, sales efforts,
expenses, foreign exchange rates, the outcome of contingencies, such as legal proceedings, and
financial results.
 We cannot guarantee that any forward-looking statement will be realized, although we believe
we have been prudent in our plans and assumptions. Achievement of future results is subject to
risks, uncertainties and potentially inaccurate assumptions. Should known or unknown risks or
uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could
differ materially from past results and those anticipated, estimated or projected. You should bear
this in mind as you consider forward-looking statements.
 We undertake no obligation to publicly update forward-looking statements, whether as a result
of new information, future events or otherwise. You are advised, however, to consult any further
disclosures we make on related subjects in our reports on forms 10-Q and 8-K filed with the SEC.
Also note that we provide the following cautionary discussion of risks, uncertainties and possibly
inaccurate assumptions relevant to our businesses. These are factors that, individually or in the
aggregate, we think could cause our actual results to differ materially from expected and
historical results. We note these factors for investors as permitted by the Private Securities
Litigation Reform Act of 1995. You should understand that it is not possible to predict or identify
all such factors. Consequently, you should not consider the following to be a complete discussion
of all potential risks or uncertainties.
 Our success depends on our ability to successfully develop and commercialize additional
pharmaceutical products
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##### Table of Contents



Impact on our revenues and profits as competition is introduced
   Resolving Paragraph IV patent challenges
  
    
    legislation currently pending in Congress that, if passed as currently
written, could significantly limit the ability of brand and generic companies to
settle patent litigation under the Hatch-Waxman Act;
    
    patent reform legislation proposals that would
make it more difficult to invalidate patents or render them
unenforceable;
    
    an increase in the number of competitors who pursue patent challenges could
make it more difficult for us to be the first to file a Paragraph IV
certification on a patent protected product;
    
    a branded companys decision to launch an authorized generic version of a
product will reduce our market share and lower the revenues and gross profits we
could have otherwise earned if an authorized generic were not launched;
    
    claims brought by third parties, including the FTC, various states Attorneys
General and other third-party payers challenging the legality of our settlement
agreements could affect the way in which we resolve our patent challenges with
the brand pharmaceutical companies; and
    
    the efforts of brand companies to use legislative and regulatory tactics to
delay the launch of generic products.
 Impact of At Risk Launches
 ®
 29




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Uncertainty associated with pharmaceutical pricing, reimbursement and related matters
  Managed Care Trends
  Government Regulation
    30




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Product Manufacturing
  Dependence on Third Parties
   Customer Consolidation
  Acquisitions
  Integration of PLIVA
  31




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##### Table of Contents




    
    the necessity of coordinating and consolidating geographically separated
organizations, systems and facilities, including as they relate to disclosure
controls and internal controls for purposes of regulations promulgated under the
Sarbanes-Oxley Act;
    
    the successful integration of our management and personnel with that of PLIVA
and retaining key employees; and
    
    changes in intellectual property legal protections and remedies, trade
regulations and procedures and actions affecting approval, production, pricing,
reimbursement and marketing of products.
  
    
    our ability to satisfy obligations with respect to the $1.8 billion of debt
outstanding as of December 31, 2007 that we incurred to help finance this
transaction, a significant portion of which is at a variable rate of interest
based upon LIBOR;
    
    charges associated with this transaction, including additional depreciation
and amortization of acquired assets and interest expense which have impacted,
and will continue to negatively impact, our net income;
    
    our ability to accurately forecast financial results is affected by a
significant increase in the scope and complexity of our business;
    
    our international-based revenues and expenses are subject to foreign currency
exchange rate fluctuations; and
    
    to the extent goodwill or intangible assets associated with the acquisition
become impaired, we may be required to incur material charges to our earnings
for those impairments.
  We have substantial indebtedness which requires us to apply a substantial portion of our cash flows
from operation to service our indebtedness.
  
    
    making additional product acquisitions;
    
    completing additional business combinations;
    
    investing in all contemplated capital projects;
    
    securing additional debt;
    
    having a competitive advantage over our competitors that have less debt; and
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
    
    having the ability to invest larger portions of our excess cash flow from operations
in marketable securities.
 Volatility in interest rates, commodity prices and credit markets may adversely affect our
financial condition, result of operations or cash flows
  
    
    our ability to invest in higher earning marketable securities in both the short-term
and long-term markets;
    
    our ability to raise additional liquidity due to credit concerns in the capital
markets;
    
    our ability to liquidate certain investments under our marketable securities
portfolio (including auction-rate securities) due to credit concerns in the capital
markets; and
    
    our exposure to the volatile interest rate market and the inability to secure
favorable interest rates.
 We are subject to risks associated with doing business outside of the United States
  
    
    changes in non-U.S. medical reimbursement policies and programs;
    
    multiple non-U.S. regulatory requirements that are subject to change and that
could restrict our ability to manufacture and sell our products;
    
    compliance with anti-bribery laws such as the U.S. Foreign Corrupt Practices
Act and similar anti-bribery laws in other jurisdictions, as discussed in
further detail below;
    
    different local product preferences and product requirements;
    
    trade protection measures and import or export licensing requirements;
    
    difficulty in establishing, staffing and managing non-U.S. operations;
    
    different labor regulations;
    
    changes in environmental, health and safety laws;
    
    potentially negative consequences from changes in or interpretations of tax
laws;
    
    political instability and actual or anticipated military or political
conflicts;
    
    economic instability, inflation, recession, and interest rate or foreign
currency fluctuations; and
    
    minimal or diminished protection of intellectual property in some countries.
  33




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We are subject to the restrictions imposed by the U.S. Foreign Corrupt Practices Act and
similar worldwide anti-bribery laws
  Changes in foreign currency exchange rates may adversely affect our results
  Cost and Expense Control/Unusual Events
  Legal Proceedings
  Availability of Product Liability Insurance
  Exposure to Environmental Laws and Regulations
  34




---



##### Table of Contents




    
    the generation, storage, use and transportation of hazardous materials;
    
    emissions or discharges of substances into the environment;
    
    investigation and remediation of hazardous substances or materials at various
sites; and
    
    the health and safety of our employees.
    Managing Rapidly Growing Operations
  Changes in Laws and Accounting Standards
  Terrorist Activity
  35




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  36




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##### Table of Contents



ITEM 2. PROPERTIES
  Owned/Location
    
    Sq. Feet
    
    Leased
    
    Principal Usage(s)Montvale, NJ
    
    
    142,500
    
    
    Leased
    
    AdministrativeWoodcliff Lake, NJ
    
    
    90,000
    
    
    Leased
    
    AdministrativeEast Hanover, NJ
    
    
    280,000
    
    
    Leased/Owned
    
    Manufacturing; Warehousing; Administrative. (18,500 sqft owned)Pomona, NY
    
    
    181,000
    
    
    Owned
    
    R&D; Laboratories; Administrative; Manufacturing; WarehousingNorth Tonawanda, NY
    
    
    23,500
    
    
    Leased
    
    ManufacturingCincinnati, OH
    
    
    305,000
    
    
    Owned
    
    Manufacturing; Laboratories; Packaging; Warehousing; AdministrativeBala Cynwyd, PA
    
    
    39,000
    
    
    Leased
    
    Proprietary R&D; AdministrativeForest, VA
    
    
    20,000
    
    
    Owned
    
    Adenovirus FacilityForest, VA
    
    
    407,000
    
    
    Owned
    
    Administrative; Warehousing; Packaging; DistributionWashington, D.C.
    
    
    8,700
    
    
    Leased
    
    Government AffairsBrno, Czech Republic
    
    
    453,200
    
    
    Owned
    
    Manufacturing; API; Warehousing; Engineering; R&D; AdministrativeZagreb, Croatia, PbF
    
    
    1,277,900
    
    
    Owned
    
    Administrative, Manufacturing, Packaging, R&D, API, WarehousingZagreb, Croatia, Vukovarska
    
    
    175,500
    
    
    Owned
    
    Administrative HeadquartersZagreb, Croatia, SM
    
    
    579,300
    
    
    Owned
    
    API; Biologics; WarehousingZagreb, Croatia, HL
    
    
    96,700
    
    
    Owned
    
    Manufacturing; Packaging, WarehousingZagreb,
Croatia, Jagićeva
    
    
    18,000
    
    
    Owned
    
    AdministrativeRadebeul, Germany
    
    
    8,300
    
    
    Owned
    
    AdministrativeKrakow, Poland
    
    
    948,500
    
    
    Owned
    
    Manufacturing; Warehousing; Engineering; Administrative
  37




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##### Table of Contents



ITEM 3. LEGAL PROCEEDINGS
 Litigation Settlement
  Pending Litigation Matters
    Patent Matters
 Fexofenadine Hydrochloride Suit
    38




---



##### Table of Contents



Product Liability Matters
 Hormone Therapy Litigation
  39




---



##### Table of Contents



Antitrust Matters
 Ciprofloxacin (Cipro®) Antitrust Class Actions
         40




---



##### Table of Contents



Ovcon Antitrust Proceedings
        Provigil Antitrust Proceedings
 ®
 
 41




---



##### Table of Contents



Medicaid Reimbursement Cases
            42




---



##### Table of Contents



Breach of Contract Action
  Other Litigation
  Government Inquiries
     43




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##### Table of Contents



ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
 (a) Market for Barrs Common Equity
  High
    
    
    LowYear Ended December 31, 2007:First quarter
    
    $
    56.66
    
    
    $
    45.77Second quarter
    
    
    55.10
    
    
    
    45.41Third quarter
    
    
    57.25
    
    
    
    49.49Fourth quarter
    
    
    58.38
    
    
    
    50.59Transition PeriodThree months ended September 30, 2006
    
    $
    59.25
    
    
    $
    44.60Three months ended December 31, 2006
    
    
    53.89
    
    
    
    47.52Fiscal year ended June 30, 2006:First quarter
    
    $
    55.08
    
    
    $
    45.00Second quarter
    
    
    63.60
    
    
    
    53.53Third quarter
    
    
    70.25
    
    
    
    60.83Fourth quarter
    
    
    64.51
    
    
    
    47.24
   (b) Recent Sales of Unregistered Securities
  44




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##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
 th st
 Six monthsYear Ended
    
    
    
    
    
    
    ended(in thousands, except per share data)
    
    December 31,
    
    
    Transition
    
    
    December 31,Statements of Operations Data
    
    2007
    
    
    Period
    
    
    2005Total revenues
    
    $
    2,500,582
    
    
    $
    904,764
    
    
    $
    635,956Earnings
(loss) before income taxes and
minority interest
    
    
    207,835
    
    
    
    (302,359
    )
    
    
    279,634Income tax expense
    
    
    64,546
    
    
    
    34,630
    
    
    
    101,507Net earnings (loss)
    
    
    128,350
    
    
    
    (338,155
    )
    
    
    178,127Earnings (loss) per common share  basic
    
    
    1.20
    
    
    
    (3.18
    )
    
    
    1.71Earnings (loss) per common share  diluted
    
    
    1.18
    
    
    
    (3.18
    )
    
    
    1.66
 As of
    
    
    As ofDecember 31,
    
    
    December 31,Balance Sheet Data
    
    2007
    
    
    2006Working capital
    
    $
    970,854
    
    
    $
    876,106Total assets
    
    
    4,761,627
    
    
    
    4,961,862Long-term debt (1)
    
    
    1,781,692
    
    
    
    1,935,477Shareholders equity (3)
    
    
    1,866,321
    
    
    
    1,465,228
 (in thousands, except per share data)
    
    Fiscal Year Ended June 30,Statements of Operations Data
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Total revenues
    
    $
    1,314,465
    
    
    $
    1,047,399
    
    
    $
    1,309,088
    
    
    $
    902,864Earnings
(loss) before income taxes and
minority interest
    
    
    522,948
    
    
    
    329,876
    
    
    
    194,440
    
    
    
    262,715Income tax expense
    
    
    186,471
    
    
    
    114,888
    
    
    
    71,337
    
    
    
    95,149Net earnings (loss)
    
    
    336,477
    
    
    
    214,988
    
    
    
    123,103
    
    
    
    167,566Earnings (loss) per common share  basic
    
    
    3.20
    
    
    
    2.08
    
    
    
    1.21
    
    
    
    1.69
    (2)Earnings (loss) per common share  diluted
    
    
    3.12
    
    
    
    2.03
    
    
    
    1.15
    
    
    
    1.62
    (2)
 As of June 30,Balance Sheet Data
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Working capital
    
    $
    921,663
    
    
    $
    780,386
    
    
    $
    670,601
    
    
    $
    582,183Total assets
    
    
    1,921,419
    
    
    
    1,490,306
    
    
    
    1,333,269
    
    
    
    1,180,937Long-term debt (1)
    
    
    7,431
    
    
    
    15,493
    
    
    
    32,355
    
    
    
    34,027Shareholders equity (3)
    
    
    1,690,956
    
    
    
    1,233,970
    
    
    
    1,042,046
    
    
    
    867,995
 (1)
    
    Includes capital leases and excludes current installments.(2)
    
    Amounts have been adjusted for the March 16, 2004 3-for-2 stock split effected
in the form of a 50% stock dividend.(3)
    
    The Company has not paid a cash dividend in any of the above years.
 45




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##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Change in Fiscal Year
  
    
    2007  January 1, 2007 through December 31, 2007
    
    2006  January 1, 2006 through December 31, 2006
    
    Transition Period  July 1, 2006 through December 31, 2006
    
    comparable 2005 six months  July 1, 2005 through December 31, 2005
    
    fiscal 2006  July 1, 2005 through June 30, 2006
    
    fiscal 2005  July 1, 2004 through June 30, 2005
    
    PLIVA Stub Period  October 25, 2006 through December 31, 2006
   Executive Overview
    PLIVA Acquisition
  46




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##### Table of Contents



Generic Products
     Proprietary Products
 ® ® ® ® ® ®
 47




---



##### Table of Contents



Foreign currency exchange rate fluctuations
  Discontinued Operations
  48




---



##### Table of Contents



Comparison of the Year ended December 31, 2007 and December 31, 2006
  Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Generic products:Oral contraceptives
    
    $
    459.1
    
    
    $
    444.0
    
    
    $
    15.1
    
    
    
    3
    %Other generics
    
    
    1,436.7
    
    
    
    608.9
    
    
    
    827.8
    
    
    
    136
    %Total generic products
    
    
    1,895.8
    
    
    
    1,052.9
    
    
    
    842.9
    
    
    
    80
    %Proprietary products
    
    
    438.3
    
    
    
    391.4
    
    
    
    46.9
    
    
    
    12
    %Total product sales
    
    
    2,334.1
    
    
    
    1,444.3
    
    
    
    889.8
    
    
    
    62
    %Alliance and development revenue
    
    
    121.9
    
    
    
    131.3
    
    
    
    (9.4
    )
    
    
    -7
    %Other revenue
    
    
    44.6
    
    
    
    7.5
    
    
    
    37.1
    
    
    
    495
    %Total revenues
    
    $
    2,500.6
    
    
    $
    1,583.1
    
    
    $
    917.5
    
    
    
    58
    %
 Product Sales
 Generic Products
    Proprietary Products
  49




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Alliance and Development Revenue
  Teva
  Kos
  Shire
  Adenovirus Vaccine
  50




---



##### Table of Contents



Other Revenue
  Cost of Sales
  Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Generic products
    
    $
    1,008.8
    
    
    $
    448.8
    
    
    $
    560.0
    
    
    
    125
    %Gross margin
    
    
    47
    %
    
    
    57
    %Proprietary products
    
    $
    138.2
    
    
    $
    114.3
    
    
    $
    23.9
    
    
    
    21
    %Gross margin
    
    
    68
    %
    
    
    71
    %Other revenue
    
    $
    24.1
    
    
    $
    12.0
    
    
    $
    12.1
    
    
    
    100
    %Gross margin
    
    
    46
    %
    
    
    -60
    %Total cost of sales
    
    $
    1,171.1
    
    
    $
    575.1
    
    
    $
    596.0
    
    
    
    104
    %Gross margin
    
    
    51
    %
    
    
    60
    %
  
    
    our manufacturing and packaging costs for products we manufacture;
    
    amortization expense (as discussed below);
    
    profit-sharing or royalty payments we make to third parties, including raw material
suppliers;
    
    the cost of products we purchase from third parties;
    
    lower of cost or market adjustments to our inventories; and
    
    stock-based compensation expense relating to employees within certain departments
that we allocate to cost of sales.
  Generics:
 51




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Proprietary:


Selling, General and Administrative Expense




Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Selling, general and administrative
    
    $
    763.8
    
    
    $
    441.5
    
    
    $
    322.3
    
    
    
    73
    %Charge included in general and administrative
    
    $
    15.3
    
    
    $
    22.5
    
    
    $
    (7.2
    )
    
    
    -32
    %




Research and Development




Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Research and development
    
    $
    248.4
    
    
    $
    180.9
    
    
    $
    67.5
    
    
    
    37
    %Write-off of acquired in-process research and
development
    
    $
    4.6
    
    
    $
    380.7
    
    
    $
    (376.1
    )
    
    
    -99
    %


52




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##### Table of Contents







Interest Income




Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Interest income
    
    $
    33.4
    
    
    $
    25.7
    
    
    $
    7.7
    
    
    
    30%
  Interest Expense
  Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Interest expense
    
    $
    158.9
    
    
    $
    34.6
    
    
    $
    124.3
    
    
    
    N/M
  Other Income (Expense)
  Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Other income (expense)
    
    $
    20.7
    
    
    
    ($55.2
    )
    
    $
    75.9
    
    
    
    138%
  53




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Income Taxes
  Year Ended December 31,Change2007
    
    
    2006
    
    
    $
    
    
    %Income tax expense
    
    $
    64.6
    
    
    $
    119.6
    
    
    $
    (55.0
    )
    
    
    -46%Effective tax rate
    
    
    31.1
    %
    
    
    -202.5
    %
   54




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Comparison of the six months ended December 31, 2006 and December 31, 2005
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Generic products:Oral contraceptives
    
    $
    235.8
    
    
    $
    191.2
    
    
    $
    44.6
    
    
    
    23%Other generic
    
    
    394.6
    
    
    
    225.1
    
    
    
    169.5
    
    
    
    75%Total generic products
    
    
    630.4
    
    
    
    416.3
    
    
    
    214.1
    
    
    
    51%Proprietary products
    
    
    200.9
    
    
    
    140.4
    
    
    
    60.5
    
    
    
    43%Total product sales
    
    
    831.3
    
    
    
    556.7
    
    
    
    274.6
    
    
    
    49%Alliance and development revenue
    
    
    65.9
    
    
    
    79.3
    
    
    
    (13.4
    )
    
    
    -17%Other revenue
    
    
    7.5
    
    
    
    
    
    
    
    7.5
    
    
    
    100%Total revenues
    
    $
    904.7
    
    
    $
    636.0
    
    
    $
    268.7
    
    
    
    42%
 Product Sales
 Generic Products
    Proprietary Products
  55




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Alliance and Development Revenue
  Other Revenue
  Cost of Sales
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Generic products
    
    $
    306.6
    
    
    $
    138.3
    
    
    $
    168.3
    
    
    122%Gross margin
    
    
    51
    %
    
    
    67
    %Proprietary products
    
    $
    56.2
    
    
    $
    33.8
    
    
    $
    22.4
    
    
    66%Gross margin
    
    
    72
    %
    
    
    76
    %Other
    
    $
    6.5
    
    
    $
    
    
    
    $
    6.5
    
    
    100%Gross margin
    
    
    13
    %
    
    
    0
    %Total cost of sales
    
    $
    369.3
    
    
    $
    172.1
    
    
    $
    197.2
    
    
    115%Gross margin
    
    
    56
    %
    
    
    69
    %
  
    
    our manufacturing and packaging costs for products we manufacture;
 56




---



##### Table of Contents




    
    amortization expense (as discussed further below);
    
    the write-off of the step-up in inventory arising from acquisitions, including
PLIVA;
    
    profit-sharing or royalty payments we make to third parties, including raw material
suppliers;
    
    the cost of products we purchase from third parties;
    
    lower of cost or market adjustments to our inventories; and
    
    stock-based compensation expense relating to employees within certain departments
that we allocate to cost of sales.
     Selling, General and Administrative Expense
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Selling, general and administrative
    
    $
    259.0
    
    
    $
    126.4
    
    
    $
    132.6
    
    
    
    105%
  57




---



##### Table of Contents




    
    PLIVAs selling, general and administrative expenses for the PLIVA Stub Period of
approximately $88.2 million, including the sales force costs associated with approximately
1,400 incremental global sales representatives and other general and administrative
expenses associated our worldwide operations;
    
    professional fees of $6.8 million associated with the integration activities; and
    
    incremental legal and audit fees of $3.1 million related to the acquisition.
   Research and Development
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Research and development
    
    $
    106.8
    
    
    $
    66.0
    
    
    $
    40.8
    
    
    62%Write-off of acquired IPR&D
    
    $
    380.7
    
    
    $
    
    
    
    $
    380.7
    
    
    n/a
   Interest Income
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Interest income
    
    $
    15.7
    
    
    $
    8.9
    
    
    $
    6.8
    
    
    76%
 58




---



##### Table of Contents



Interest Expense
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Interest expense
    
    $
    34.1
    
    
    $
    0.3
    
    
    $
    33.8
    
    
    
    11267
    %
  Other (Expense) Income
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Other (expense) income
    
    
    ($73.0
    )
    
    
    ($0.6
    )
    
    
    ($72.4
    )
    
    
    12067
    %
  Income Taxes
  Six MonthsEndedTransition
    
    
    December 31,
    
    
    ChangePeriod
    
    
    2005
    
    
    $
    
    
    %Income tax expense
    
    $
    34.6
    
    
    $
    101.5
    
    
    $
    (66.9
    )
    
    -66%Effective tax rate
    
    
    -11.5
    %
    
    
    36.3
    %
 59




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60




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Comparison of the fiscal years ended June 30, 2006 and June 30, 2005
  Twelve Months Ended June 30,Change2006
    
    
    2005
    
    
    $
    
    
    %Generic products:Oral contraceptives
    
    $
    399.4
    
    
    $
    396.6
    
    
    $
    2.8
    
    
    1%Other generic
    
    
    439.4
    
    
    
    354.8
    
    
    
    84.6
    
    
    24%Total generic products
    
    
    838.8
    
    
    
    751.4
    
    
    
    87.4
    
    
    12%Proprietary products
    
    
    331.0
    
    
    
    279.3
    
    
    
    51.7
    
    
    19%Total product sales
    
    
    1,169.8
    
    
    
    1,030.7
    
    
    
    139.1
    
    
    13%Alliance and development revenue
    
    
    144.7
    
    
    
    16.7
    
    
    
    128.0
    
    
    766%Total revenues
    
    $
    1,314.5
    
    
    $
    1,047.4
    
    
    $
    267.1
    
    
    26%
 Product Sales
  Generic Products
     61




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Proprietary Products
 , )
  Alliance, Development and Other Revenue
   Cost of Sales
  Change2006
    
    
    2005
    
    
    $
    
    
    %Generic products
    
    $
    286.0
    
    
    $
    264.8
    
    
    $
    21.2
    
    
    8%Gross margin
    
    
    66
    %
    
    
    65
    %Proprietary products
    
    $
    91.9
    
    
    $
    52.6
    
    
    $
    39.3
    
    
    75%Gross margin
    
    
    72
    %
    
    
    81
    %Total cost of sales
    
    $
    377.9
    
    
    $
    317.4
    
    
    $
    60.5
    
    
    19%Gross margin
    
    
    68
    %
    
    
    69
    %
  
    
    the cost of products we purchase from third parties;
    
    our manufacturing and packaging costs for products we manufacture;
    
    profit-sharing or royalty payments we make to third parties, including raw material
suppliers;
    
    lower of cost or market inventory provisions; and
 62




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##### Table of Contents




    
    stock-based compensation expense relating to employees within certain departments
that we allocate to cost of sales.
     Selling, General and Administrative Expense
  Change2006
    
    
    2005
    
    
    $
    
    
    %Selling, general and administrative
    
    $
    308.8
    
    
    $
    285.2
    
    
    $
    23.6
    
    
    8%Charges included in general and administrative
    
    $
    14.1
    
    
    $
    63.2
    
    
    $
    (49.1
    )
    
    -78%
   Fiscal 2006:
  63




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##### Table of Contents



Fiscal 2005
  Research and Development
  Change2006
    
    
    2005
    
    
    $
    
    
    %Research and development
    
    $
    140.2
    
    
    $
    128.4
    
    
    $
    11.8
    
    
    
    9%
  Other Income (expense)
  Change2006
    
    
    2005
    
    
    $
    
    
    %Other income (expense)
    
    $
    17.2
    
    
    $
    3.9
    
    
    $
    13.3
    
    
    
    341%
   Income Taxes
  Change2006
    
    
    2005
    
    
    $
    
    
    %Income tax expense
    
    $
    186.5
    
    
    $
    114.9
    
    
    $
    71.6
    
    
    
    62%Effective tax rate
    
    
    35.7
    %
    
    
    34.8
    %
 64




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##### Table of Contents



65




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##### Table of Contents



Liquidity and Capital Resources
 Overview
   December 31,
    
    
    December 31,
    
    
    Change2007
    
    
    2006
    
    
    $
    
    
    %Cash & cash equivalents, short term
marketable securities
    
    $
    534.5
    
    
    $
    905.7
    
    
    $
    (371.2
    )
    
    
    -41%Debt/Capital lease obligations:Short-term
    
    
    298.1
    
    
    
    742.2
    
    
    
    (444.1
    )
    
    
    -60%Long-term
    
    
    1,781.7
    
    
    
    1,935.5
    
    
    
    (153.8
    )
    
    
    -8%Working capital
    
    
    970.9
    
    
    
    876.1
    
    
    
    94.8
    
    
    
    11%Cash flow from operations
    
    $
    383.2
    
    
    
    213.3
    
    
    
    169.9
    
    
    
    80%Ratio of current assets to current liabilities
    
    
    2.25 : 1
    
    
    
    1.7 : 1
 Operating Activities
  Investing Activities
    66




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##### Table of Contents



Financing Activities; Credit Facilities
   
    
    Five-Year Term Facility: We initially borrowed the entire $2.0 billion available
under this facility, which bears interest at LIBOR plus 75 basis points (5.58% at
December 31, 2007), and matures in October 2011. During 2007 we made principal
repayments of $200.0 million and had an outstanding principal balance of $1.8 billion
as of December 31, 2007.
    
    364-Day Term Facility: We initially drew down $415.7 million of the $500.0 million
available under this facility, which was set to mature on October 23, 2007. Using cash
on hand, we repaid this facility in full during 2007.
    
    Revolving Credit Facility: No amounts were drawn at December 31, 2007, as such, the
entire $300.0 million facility remains available.
   Auction Rate Credit Market
  67




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##### Table of Contents



Sufficiency of Cash Resources
  Contractual Obligations
  Payments due by periodLess than 1Total
    
    
    Year
    
    
    1 to 3 Years
    
    
    4 to 5 Years
    
    
    ThereafterLong-term debt
    
    $
    2,077.3
    
    
    $
    297.2
    
    
    $
    466.1
    
    
    $
    1,313.3
    
    
    $
    0.7Capital leases
    
    
    2.5
    
    
    
    0.9
    
    
    
    0.8
    
    
    
    0.6
    
    
    
    0.2Operating leases
    
    
    102.4
    
    
    
    17.0
    
    
    
    28.6
    
    
    
    22.5
    
    
    
    34.3Purchase obligations (1)
    
    
    122.8
    
    
    
    121.7
    
    
    
    1.1
    
    
    
    
    
    
    
    Venture fund commitments (2)
    
    
    12.5
    
    
    
    12.5
    
    
    
    
    
    
    
    
    
    
    
    Annual interest on debt
    
    
    335.8
    
    
    
    104.7
    
    
    
    174.9
    
    
    
    56.2
    
    
    
    Milestone obligations
    
    
    44.1
    
    
    
    32.8
    
    
    
    11.3
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    22.2
    
    
    
    9.3
    
    
    
    4.9
    
    
    
    8.0
    
    
    
    Total
    
    $
    2,719.6
    
    
    $
    596.1
    
    
    $
    687.7
    
    
    $
    1,400.6
    
    
    $
    35.2
 (1)
    
    Purchase obligations consist mainly of commitments for raw materials used in our
manufacturing and research and development operations.(2)
    
    Payments related to our venture fund commitments are payable when capital calls are
made.
  68




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##### Table of Contents



Off-Balance Sheet Arrangements
  Critical Accounting Policies
  Revenue Recognition and Provisions for Estimated Reductions to Gross Product Sales
    
    
    returns and allowances (including shelf-stock adjustments)
    
    chargebacks
    
    rebates
    
    managed care rebates
    
    Medicaid rebates
    
    prompt payment discounts and other allowances
 69




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##### Table of Contents



Current
    
    
    Currentprovision
    
    
    provision
    
    
    Actualrelated to
    
    
    related to
    
    
    returns orsales
    
    
    sales
    
    
    credits inBeginning
    
    
    made in the
    
    
    made in
    
    
    the current
    
    
    Endingbalance
    
    
    current period
    
    
    prior periods
    
    
    period
    
    
    balanceYear Ended December 31, 2007Accounts receivable reserves:Returns and allowances
    
    $
    89.8
    
    
    $
    76.2
    
    
    $
    6.5
    
    
    $
    (70.1
    )
    
    $
    102.4Chargebacks
    
    
    69.7
    
    
    
    740.3
    
    
    
    (3.5
    )
    
    
    (740.8
    )
    
    
    65.7Rebates
    
    
    70.7
    
    
    
    270.9
    
    
    
    4.6
    
    
    
    (267.8
    )
    
    
    78.4Cash discounts
    
    
    12.6
    
    
    
    53.3
    
    
    
    
    
    
    
    (55.1
    )
    
    
    10.8Total
    
    $
    242.8
    
    
    $
    1,140.7
    
    
    $
    7.6
    
    
    $
    (1,133.8
    )
    
    $
    257.3Accrued liabilities:Managed care rebates
    
    $
    8.3
    
    
    $
    10.0
    
    
    $
    (0.2
    )
    
    $
    (11.7
    )
    
    $
    6.4Medicaid rebates
    
    $
    16.0
    
    
    $
    22.1
    
    
    $
    (5.0
    )
    
    $
    (20.2
    )
    
    $
    12.9Six months ended December 31, 2006Accounts receivable reserves:Returns and allowances
    
    $
    53.1
    
    
    $
    59.7
    
    
    $
    4.0
    
    
    $
    (27.0
    )
    
    $
    89.8Chargebacks
    
    
    44.3
    
    
    
    255.4
    
    
    
    (1.0
    )
    
    
    (229.0
    )
    
    
    69.7Rebates
    
    
    32.2
    
    
    
    120.7
    
    
    
    (0.2
    )
    
    
    (82.0
    )
    
    
    70.7Cash discounts
    
    
    7.7
    
    
    
    22.4
    
    
    
    
    
    
    
    (17.5
    )
    
    
    12.6Total
    
    $
    137.3
    
    
    $
    458.2
    
    
    $
    2.8
    
    
    $
    (355.5
    )
    
    $
    242.8Accrued liabilities:Managed care rebates
    
    $
    10.4
    
    
    $
    10.1
    
    
    $
    0.3
    
    
    $
    (12.5
    )
    
    $
    8.3Medicaid rebates
    
    $
    13.2
    
    
    $
    21.7
    
    
    $
    
    
    
    $
    (18.9
    )
    
    $
    16.0Fiscal year ended June 30, 2006Accounts receivable reserves:Returns and allowances
    
    $
    52.7
    
    
    $
    59.8
    
    
    $
    0.2
    
    
    $
    (59.6
    )
    
    $
    53.1Chargebacks
    
    
    44.9
    
    
    
    386.0
    
    
    
    (0.9
    )
    
    
    (385.7
    )
    
    
    44.3Rebates
    
    
    37.8
    
    
    
    164.5
    
    
    
    (3.2
    )
    
    
    (166.9
    )
    
    
    32.2Cash discounts
    
    
    7.1
    
    
    
    40.4
    
    
    
    
    
    
    
    (39.8
    )
    
    
    7.7Total
    
    $
    142.5
    
    
    $
    650.7
    
    
    $
    (3.9
    )
    
    $
    (652.0
    )
    
    $
    137.3Accrued liabilities:Managed care rebates
    
    $
    7.5
    
    
    $
    20.5
    
    
    $
    (1.0
    )
    
    $
    (16.6
    )
    
    $
    10.4Medicaid rebates
    
    $
    10.1
    
    
    $
    29.0
    
    
    $
    
    
    
    $
    (26.9
    )
    
    $
    12.2
 70




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##### Table of Contents



Returns and allowances
 
    
    the shelf life or expiration date of each product;
    
    historical levels of expired product returns; and
    
    the estimated date of return.
  
    
    the estimated launch date of a competing product, which we determine based on market
intelligence;
    
    the estimated decline in the market price of our product, which we determine based on
historical experience and input from customers; and
    
    the estimated levels of inventory held by our customers at the time of the anticipated
decrease in market price, which we determine based upon historical experience and customer
input.
 Chargebacks
 
    
    the average historical chargeback credits; and
    
    an estimate of the inventory held by our wholesalers, based on internal analysis of a
wholesalers historical purchases and contract sales.
 Rebates
 
    
    direct rebates;
    
    indirect rebates;
    
    managed care rebates; and
    
    Medicaid rebates.
   71




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##### Table of Contents



Prompt Pay Discounts
 Revenue Recognition and Provisions of Alliance and Development Revenue
  Inventories
  
  72




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##### Table of Contents



Income Taxes
     Contingencies
   Acquisitions and Amortization of Intangible Assets
    73




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##### Table of Contents



Derivative Instruments
  Accounting for Derivative Instruments and Hedging Activities
     Foreign Currency Translation and Transactions
 Foreign Currency Translation
  Foreign Currency Transactions
 74




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##### Table of Contents



Recent Accounting Pronouncements
 Fair Value Measurements,
 The Fair Value Option for
Financial Assets and Financial Liabilities,
 Accounting for Nonrefundable
Advance Payments for Goods or Services to Be Used in Future Research and Development Activities
 Business Combinations
(revised) Business Combinations.
 Noncontrolling Interests in
Consolidated Financial Statements  an amendment of Accounting Research Bulletin No. 51( ).
 Accounting for Collaborative Arrangements.
 75




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##### Table of Contents



.
 Effects of Inflation; Seasonality
  Forward-Looking Statements
  
    
    the difficulty in predicting the timing and outcome of legal proceedings, including
patent-related matters such as patent challenge settlements and patent infringement cases;
    
    the difficulty of predicting the timing of FDA approvals;
    
    court and FDA decisions on exclusivity periods;
    
    the ability of competitors to extend exclusivity periods for their products;
    
    our ability to complete product development activities in the timeframes and for the
costs we expect;
    
    market and customer acceptance and demand for our pharmaceutical products;
    
    our dependence on revenues from significant customers;
    
    reimbursement policies of third party payors;
    
    our dependence on revenues from significant products;
    
    the use of estimates in the preparation of our financial statements;
    
    the impact of competitive products and pricing on products, including the launch of
authorized generics;
    
    the ability to launch new products in the timeframes we expect;
    
    the availability of raw materials;
    
    the availability of any product we purchase and sell as a distributor;
    
    the regulatory environment;
    
    our exposure to product liability and other lawsuits and contingencies;
    
    the cost of insurance and the availability of product liability insurance coverage;
    
    our timely and successful completion of strategic initiatives, including integrating
companies and products we acquire and implementing our new enterprise resource planning
system;
    
    risks associated with doing business outside the United States, as discussed in Risk
Factors above;
    
    fluctuations in operating results, including the effects on such results from spending
for research and development, sales and marketing activities and patent challenge
activities; and
    
    other risks detailed from time-to-time in our filings with the Securities and Exchange
Commission.
  76




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##### Table of Contents



ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  Interest Rate Risk
    Foreign Exchange Rate Risk
   
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
  77




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##### Table of Contents



ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   78




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##### Table of Contents



Internal Control Over Financial Reporting
 MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Internal
Control-Integrated Framework
   79




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal
Control  Integrated Framework
    Internal Control
 Integrated Framework
  /s/ DELOITTE & TOUCHE LLP
   80




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##### Table of Contents



Changes in Internal Controls
   
 ITEM 9B. OTHER INFORMATION
  81




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##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Code of Business Conduct and Ethics
  
 ITEM 11. EXECUTIVE COMPENSATION
   
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  82




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
    2.1
    
    Agreement and Plan of Merger, dated as of December 31, 2003 between Barr
Pharmaceuticals, Inc., a Delaware corporation, and Barr Laboratories,
Inc., a New York corporation (1)2.2
    
    Asset Purchase Agreement dated November 20, 2003 between Endeavor
Pharmaceuticals, Inc. and Barr Laboratories, Inc. (2)2.3
    
    Agreement and Plan of Merger, dated February 6, 2004, among Duramed
Pharmaceuticals, Inc., WCC Merger Sub, Inc. and Womens Capital
Corporation (3)2.4
    
    Purchase Agreement dated as of October 14, 2005, by and among Duramed
Pharmaceuticals, Inc., Copper 380T, FEI Womens Health, LLC and the
individuals listed on the signature pages thereto. (21)3.1
    
    Amended and Restated Certificate of Incorporation of the Registrant (1)3.2
    
    Restated By-Laws of the Registrant (1)4.1
    
    The Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument defining the rights of
the holders of its long-term debt wherein the total amount of securities
authorized there under does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis.4.2
    
    Note Purchase Agreement dated November 18, 1997 relating to $10 million of
Series A Senior Notes due November, 2004 and $20 million of Series B
Senior Notes due November, 2007 (4)4.3
    
    Credit Agreement (five-year facilities), dated July 21, 2006, among the
Company, certain of its subsidiaries, Bank of America, N.A., as
Administrative Agent, Banc of America Securities LLC, as Lead Arranger and
Book Manager, and certain other lenders. (23)4.4
    
    Credit Agreement (364-day facility), dated July 21, 2006, among the
Company, certain of its subsidiaries, Bank of America, N.A., as
Administrative Agent, Banc of America Securities LLC, as Lead Arranger and
Book Manager, and certain other lenders. (23)10.1
    
    Lease, dated February 6, 2003, between Mack-Cali Properties Co. No. 11
L.P. and Barr Laboratories, Inc. (5)10.2
    
    Amended and Restated Employment Agreement with Bruce L. Downey, dated as
of March 13, 2006 (22)10.3
    
    1993 Stock Incentive Plan (7)10.4
    
    Amended and Restated Barr
Pharmaceuticals, Inc. Non-Qualified Deferred Compensation Plan,
dated as of February 27, 200810.5
    
    1993 Employee Stock Purchase Plan (8)10.6
    
    1993 Stock Option Plan for Non-Employee Directors (9)10.7
    
    2002 Stock and Incentive Award Plan (10)10.8
    
    2002 Stock Option Plan for Non-Employee Directors (10)10.9
    
    Supply Agreement for Ciprofloxacin Hydrochloride dated January 8, 1997 (11)
 83




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##### Table of Contents



10.10
    
    Proprietary Drug Development and Marketing Agreement, dated March 20,
2000, between Barr Laboratories, Inc. and Dupont Pharmaceuticals Company
(12)10.11
    
    Amended and Restated Barr
Pharmaceuticals, Inc. Excess Savings and Retirement Plan, dated as
of February 27, 200810.12
    
    Amended and Restated Employment Agreement with Paul M. Bisaro, dated as of
March 13, 2006 (22)10.13
    
    Amended and Restated Employment Agreement with Carole S. Ben-Maimon, dated
as of October 24, 2002 (6)10.14
    
    Amended and Restated Employment Agreement with Timothy P. Catlett, dated
as of February 19, 2003 (14)10.15
    
    Amended and Restated Employment Agreement with William T. McKee, dated as
of August 19, 2005 (6)10.16
    
    Amended and Restated Employment Agreement with Fredrick J. Killion, dated
as of August 19, 2005 (6)10.17
    
    Amended and Restated Employment Agreement with Salah U. Ahmed, dated as of
February 19, 2003 (14)10.18
    
    Amended and Restated Employment Agreement with Christine A. Mundkur, dated
as of February 19, 2003 (14)10.19
    
    Amended and Restated Employment Agreement with Catherine F. Higgins, dated
as of February 19, 2003 (14)10.20
    
    Employment Agreement with Michael J. Bogda, dated as of May 15, 2003 (14)10.21
    
    Duramed 1988 Stock Option Plan (15)10.22
    
    Duramed 1991 Stock Option Plan for Nonemployee Directors (16)10.23
    
    Duramed 1997 Stock Option Plan (17)10.24
    
    Duramed 2000 Stock Option Plan (18)10.25
    
    Duramed 1999 Nonemployee Director Stock Plan (19)10.26
    
    Employment Agreement with G. Frederick Wilkinson, dated as of January 5,
2006 (20)10.27
    
    Employment Agreement between Zeljko Covic and PLIVA d.d. dated March 21,
2007 (24)10.28
    
    Letter Agreement, dated October 5, 2006, made between Barr
Pharmaceuticals, Inc. and Carole Ben-Maimon, amending certain provisions
of her Amended and Restated Employment Agreement (6).10.29
    
    Release of Claims, dated October 5, 2006, made by Carole Ben-Maimon in
favor of Barr Pharmaceuticals, Inc. and its subsidiaries and affiliates
(6)10.30
    
    Settlement agreement, dated March 21, 2007, made between PLIVA d.d. and
Zeljko Covic (24)10.31
    
    Amendment to the March 13, 2006 Employment Agreement with Bruce L. Downey, dated December 21,
200710.32
    
    Barr Pharmaceuticals, Inc 2007
Stock and Incentive Award Plan (25)10.33
    
    Barr Pharmaceuticals, Inc 2007
Executive Officer Incentive Plan (25)21.0
    
    Subsidiaries of the Company23.1
    
    Consent of Deloitte & Touche LLP23.2
    
    Consent of KPMG Hungária Kft.
 84




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##### Table of Contents



31.1
    
    Certification of Bruce L. Downey pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200231.2
    
    Certification of William T. McKee pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200232.0
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Previously filed with the Securities and Exchange Commission on January 6, 2004 as an
Exhibit to the Registrants Current Report on Form 8-K and incorporated herein by
reference.(2)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended December 31, 2003 and
incorporated herein by reference.(3)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and
incorporated herein by reference.(4)
    
    Previously filed with the Securities and Exchange Commission as Exhibit 4-3 to the
Registrants Quarterly Report on Form 10-Q for the quarter ended December 31, 1997 and
incorporated herein by reference.(5)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and
incorporated herein by reference.(6)
    
    Previously filed with the Securities and Exchange Commission on October 10, 2006 as an
Exhibit to the Registrants Current Report on Form 8-K and incorporated herein by
reference.(7)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Registration Statement on Form S-8 Nos. 33-73696 and 333-17349 and
incorporated herein by reference.(8)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Registration Statement on Form S-8 No. 33-73700 and incorporated herein by
reference.(9)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Registration Statement on Form S-8 Nos. 33-73698 and 333-17351 incorporated
herein by reference.(10)
    
    Previously filed with the Securities and Exchange Commission as an Appendix to the
Registrants Proxy Statement relating to the 2002 Annual Meeting of Stockholders and
incorporated herein by reference.(11)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference.(12)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference.(13)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Annual Report on Form 10-K for the year ended June 30, 2000 and incorporated
herein by reference.(14)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Annual Report on Form 10-K for the year ended June 30, 2003 and incorporated
herein by reference.(15)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 1993 Annual Meeting of
Stockholders and incorporated herein by reference. 85




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##### Table of Contents



(16)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 1998 Annual Meeting of
Stockholders and incorporated herein by reference.(17)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 1997 Annual Meeting of
Stockholders and incorporated herein by reference.(18)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 2000 Annual Meeting of
Stockholders and incorporated herein by reference.(19)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the Duramed
Pharmaceuticals, Inc. Annual Report on Form 10-K for the year ended December 31, 1998 and
incorporated herein by reference.(20)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 and
incorporated herein by reference.(21)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended December 31, 2005 and
incorporated herein by reference.(22)
    
    Previously filed with the Securities and Exchange Commission on March 20, 2006 as an
Exhibit to the Registrants Current Report on Form 8-K and incorporated herein by reference.(23)
    
    Previously filed with the Securities and Exchange Commission on July 26, 2006 as an
Exhibit to the Registrants Current Report on Form 8-K and incorporated herein by reference.(24)
    
    Previously filed with the Securities and Exchange Commission on May 10, 2007 as an
Exhibit to the Registrants Quarterly Report on Form 10-Q for the quarter ended March 31,
2007 and incorporated herein by reference.(25)
    
    Previously filed with the Securities and Exchange Commission
on June 29, 2007 as an Exhibit to the Registrant's Registration
Statement on Form S-8 and incorporated herein by reference. 86




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##### Table of Contents



SIGNATURES
  Date: February 29, 2008
    BARR PHARMACEUTICALS, INC.By:
    /s/ Bruce L. DowneyBruce L. DowneyChairman of the Board and Chief Executive Officer  Signature
    
    Title
    
    Date/s/ Bruce L. Downey
    
    Chairman of the Board and Chief Executive Officer
    
    February 29, 2008Bruce L. Downey
    
    (Principal
Executive Officer)/s/ William T. McKee
    
    Vice President, Chief
    
    February 29, 2008William T. McKee
    
    Financial
Officer and Treasurer(Principal Financial Officer andPrincipal Accounting Officer)/s/ Harold N. Chefitz
    
    Director
    
    February 29, 2008Harold N. Chefitz/s/ Richard R. Frankovic
    
    Director
    
    February 29, 2008Richard R. Frankovic/s/ James S. Gilmore III
    
    Director
    
    February 29, 2008James S. Gilmore III/s/ Peter R. Seaver
    
    Director
    
    February 29, 2008Peter R. Seaver/s/ George P. Stephan
    
    Director
    
    February 29, 2008George P. Stephan
 87




---



##### 



PART IV
 
 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
  
 PageReport of Independent Registered Public Accounting Firm  Deloitte & Touche LLP
    
    F-2Report of Independent Registered Public Accounting Firm  KPMG Hungária Kft
    
    F-3Consolidated Balance Sheets as of December 31, 2007 and 2006
    
    F-4Consolidated Statements of Operations for the year ended December 31, 2007,
six months ended December 31, 2006 and 2005 (unaudited), and the fiscal years
ended June 30, 2006 and 2005
    
    F-5Consolidated Statements of Shareholders Equity for the year ended December
31, 2007, six months ended December 31, 2006 and the fiscal years ended June
30, 2006 and 2005
    
    F-6Consolidated Statements of Cash Flows for the year ended December 31, 2007,
six months ended December 31, 2006 and 2005 (unaudited), and the fiscal years
ended June 30, 2006 and 2005
    
    F-7Notes to the Consolidated Financial Statements
    
    F-8Schedule II  Valuation and Qualifying Accounts for the year ended December
31, 2007, six months ended December 31, 2006 and the fiscal years ended June
30, 2006 and 2005
    
    S-1
  F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     Internal ControlIntegrated Framework
 /s/ Deloitte & Touche LLP
 
 F-2




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
       
 F-3




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 December 31,
    
    
    December 31,(in thousands, except share and per share data)
    
    2007
    
    
    2006AssetsCurrent assets:Cash and cash equivalents
    
    $
    246,492
    
    
    $
    231,975Marketable securities
    
    
    288,001
    
    
    
    673,746Accounts receivable, net
    
    
    496,636
    
    
    
    511,136Other receivables
    
    
    86,048
    
    
    
    67,462Inventories
    
    
    501,207
    
    
    
    426,270Deferred income taxes
    
    
    74,183
    
    
    
    82,597Prepaid expenses and other current assets
    
    
    57,618
    
    
    
    35,925Current assets of discontinued operations
    
    
    
    
    
    
    58,888Total current assets
    
    
    1,750,185
    
    
    
    2,087,999Property, plant and equipment, net
    
    
    1,115,904
    
    
    
    1,004,418Deferred income taxes
    
    
    39,808
    
    
    
    37,872Marketable securities
    
    
    16,542
    
    
    
    8,946Other intangible assets, net
    
    
    1,483,422
    
    
    
    1,471,493Goodwill
    
    
    285,955
    
    
    
    276,449Other assets
    
    
    69,811
    
    
    
    63,740Long-term assets of discontinued operations
    
    
    
    
    
    
    10,945Total assets
    
    $
    4,761,627
    
    
    $
    4,961,862Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    152,099
    
    
    $
    137,361Accrued liabilities
    
    
    290,094
    
    
    
    271,402Current portion of long-term debt and capital lease obligations
    
    
    298,065
    
    
    
    742,191Income taxes payable
    
    
    37,082
    
    
    
    21,359Deferred tax liabilities
    
    
    1,991
    
    
    
    8,266Current liabilities of discontinued operations
    
    
    
    
    
    
    31,314Total current liabilities
    
    
    779,331
    
    
    
    1,211,893Long-term debt and capital lease obligations
    
    
    1,781,692
    
    
    
    1,935,477Deferred tax liabilities
    
    
    193,039
    
    
    
    221,259Other liabilities
    
    
    103,090
    
    
    
    84,326Long-term liabilities of discontinued operations
    
    
    
    
    
    
    2,581Commitments & contingencies (Note 19)Minority interest
    
    
    38,154
    
    
    
    41,098Shareholders equity:Preferred stock, $1 par value per share; authorized 2,000,000; none issued
    
    
    
    
    
    
    Common stock, $.01 par value per share; authorized 200,000,000;
issued 110,783,167and 109,536,481 at December 31, 2007
and December 31, 2006
    
    
    1,108
    
    
    
    1,095Additional paid-in capital
    
    
    681,689
    
    
    
    610,232Retained earnings
    
    
    1,006,341
    
    
    
    877,991Accumulated other comprehensive income
    
    
    277,873
    
    
    
    76,600Treasury stock at cost: 2,972,997 shares
    
    
    (100,690
    )
    
    
    (100,690
    )Total shareholders equity
    
    
    1,866,321
    
    
    
    1,465,228Total liabilities, minority interest and shareholders equity
    
    $
    4,761,627
    
    
    $
    4,961,862
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-4




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended
    
    
    Six Months Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    Year Ended June 30,(in thousands, except per share data)
    
    2007
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)Revenues:Product sales
    
    $
    2,334,136
    
    
    $
    831,351
    
    
    $
    556,643
    
    
    $
    1,169,783
    
    
    $
    1,030,672Alliance and development revenue
    
    
    121,858
    
    
    
    65,882
    
    
    
    79,313
    
    
    
    144,682
    
    
    
    16,727Other revenue
    
    
    44,588
    
    
    
    7,531
    
    
    
    
    
    
    
    
    
    
    
    Total revenues
    
    
    2,500,582
    
    
    
    904,764
    
    
    
    635,956
    
    
    
    1,314,465
    
    
    
    1,047,399Costs and expenses:Cost of sales
    
    
    1,171,099
    
    
    
    369,323
    
    
    
    172,067
    
    
    
    377,902
    
    
    
    317,434Selling, general and administrative
    
    
    763,784
    
    
    
    259,030
    
    
    
    126,305
    
    
    
    308,765
    
    
    
    285,244Research and development
    
    
    248,453
    
    
    
    106,758
    
    
    
    66,006
    
    
    
    140,158
    
    
    
    128,384Write-off of acquired in-process
research and development
    
    
    4,601
    
    
    
    380,673
    
    
    
    
    
    
    
    
    
    
    
    Earnings (loss) from operations
    
    
    312,645
    
    
    
    (211,020
    )
    
    
    271,578
    
    
    
    487,640
    
    
    
    316,337Interest income
    
    
    33,359
    
    
    
    15,720
    
    
    
    8,904
    
    
    
    18,851
    
    
    
    11,449Interest expense
    
    
    158,882
    
    
    
    34,115
    
    
    
    255
    
    
    
    711
    
    
    
    1,773Other income (expense), net
    
    
    20,713
    
    
    
    (72,944
    )
    
    
    (593
    )
    
    
    17,168
    
    
    
    3,863Earnings (loss) before income taxes
and minority interest
    
    
    207,835
    
    
    
    (302,359
    )
    
    
    279,634
    
    
    
    522,948
    
    
    
    329,876Income tax expense
    
    
    64,546
    
    
    
    34,630
    
    
    
    101,507
    
    
    
    186,471
    
    
    
    114,888Minority interest (loss) gain
    
    
    (1,164
    )
    
    
    629
    
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss) from continuing
operations
    
    
    142,125
    
    
    
    (336,360
    )
    
    
    178,127
    
    
    
    336,477
    
    
    
    214,988Discontinued operationsNet loss from discontinued operations
    
    
    (13,164
    )
    
    
    (1,795
    )
    
    
    
    
    
    
    
    
    
    
    Net loss on disposal of discontinued
operations
    
    
    (611
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss from discontinued operations
    
    
    (13,775
    )
    
    
    (1,795
    )
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss)
    
    $
    128,350
    
    
    $
    (338,155
    )
    
    $
    178,127
    
    
    $
    336,477
    
    
    $
    214,988Basic:Earnings (loss) per common share 
continuing operations
    
    $
    1.33
    
    
    $
    (3.16
    )
    
    $
    1.71
    
    
    $
    3.20
    
    
    $
    2.08Loss per common share  discontinued
operations
    
    
    (0.13
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss) per common share
 basic
    
    $
    1.20
    
    
    $
    (3.18
    )
    
    $
    1.71
    
    
    $
    3.20
    
    
    $
    2.08Diluted:Earnings (loss) per common share 
continuing operations
    
    $
    1.31
    
    
    $
    (3.16
    )
    
    $
    1.66
    
    
    $
    3.12
    
    
    $
    2.03Loss per common share  discontinued
operations
    
    
    (0.13
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss) per common share
 diluted
    
    $
    1.18
    
    
    $
    (3.18
    )
    
    $
    1.66
    
    
    $
    3.12
    
    
    $
    2.03Weighted average shares  basic
    
    
    107,212
    
    
    
    106,377
    
    
    
    104,219
    
    
    
    105,129
    
    
    
    103,180Weighted average shares  diluted
    
    
    108,631
    
    
    
    106,377
    
    
    
    106,984
    
    
    
    107,798
    
    
    
    106,052
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-5




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders Equity
For the Year Ended December 31, 2007, Six Months Ended December 31, 2006, Years Ended June 30, 2006 and 2005
(in thousands, except shares)
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury Stock
    
    
    Shareholders'Shares
    
    
    Amount
    
    
    in Capital
    
    
    Earnings
    
    
    Income / (Loss)
    
    
    Shares
    
    
    Amount
    
    
    EquityBalance, June 30, 2004
    
    
    104,916,103
    
    
    $
    1,049
    
    
    $
    377,024
    
    
    $
    664,681
    
    
    $
    
    
    
    
    420,597
    
    
    $
    (708
    )
    
    $
    1,042,046Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,988Unrealized loss on marketable
securities, net of tax of $320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (561
    )
    
    
    
    
    
    
    
    
    
    
    (561
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,427Tax benefit of stock incentive plans
and warrants
    
    
    
    
    
    
    
    
    
    
    56,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,212Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    1,136,141
    
    
    
    11
    
    
    
    18,506
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,517Issuance of common stock for
exercised warrants
    
    
    288,226
    
    
    
    3
    
    
    
    2,747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,750Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,552,400
    
    
    
    (99,982
    )
    
    
    (99,982
    )Balance, June 30, 2005
    
    
    106,340,470
    
    
    $
    1,063
    
    
    $
    454,489
    
    
    $
    879,669
    
    
    $
    (561
    )
    
    
    2,972,997
    
    
    $
    (100,690
    )
    
    $
    1,233,970Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    336,477
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    336,477Unrealized gain on marketable
securities, net of tax of $106
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    184Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    336,661Tax benefit of stock incentive plans
and warrants
    
    
    
    
    
    
    
    
    
    
    29,026
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,026Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    27,092
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,092Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    2,838,738
    
    
    
    29
    
    
    
    64,178
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,207Balance, June 30, 2006
    
    
    109,179,208
    
    
    $
    1,092
    
    
    $
    574,785
    
    
    $
    1,216,146
    
    
    $
    (377
    )
    
    
    2,972,997
    
    
    $
    (100,690
    )
    
    $
    1,690,956Comprehensive income:Net earnings (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338,155
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (338,155
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76,850
    
    
    
    
    
    
    
    
    
    
    
    76,850Unrealized gain on marketable
securities, net of tax of $21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    105Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (261,200
    )Unrealized gain on pension and other
post retirement benefits, net of tax of $11
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    22Tax benefit of stock incentive plans
and warrants
    
    
    
    
    
    
    
    
    
    
    10,615
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,615Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    13,926
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,926Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    357,273
    
    
    
    3
    
    
    
    10,906
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,909Balance, December 31, 2006
    
    
    109,536,481
    
    
    $
    1,095
    
    
    $
    610,232
    
    
    $
    877,991
    
    
    $
    76,600
    
    
    
    2,972,997
    
    
    $
    (100,690
    )
    
    $
    1,465,228Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,350
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128,350Cumulative net loss on derivative financial instruments designated as
cash
flow hedges, net of tax benefit of $6,448
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,868
    )
    
    
    
    
    
    
    
    
    
    
    (10,868
    )Currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210,730
    
    
    
    
    
    
    
    
    
    
    
    210,730Unrealized gain on marketable
securities, net of tax of $108
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    744
    
    
    
    
    
    
    
    
    
    
    
    744Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    328,956Unrealized gain on pension and other
post retirement benefits, net of tax of $304
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    667
    
    
    
    
    
    
    
    
    
    
    
    667Tax benefit of stock incentive plans
and warrants
    
    
    
    
    
    
    
    
    
    
    10,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,358Stock-based compensation expense
    
    
    
    
    
    
    
    
    
    
    27,750
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,750Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    1,246,686
    
    
    
    13
    
    
    
    33,349
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,362Balance, December 31, 2007
    
    
    110,783,167
    
    
    $
    1,108
    
    
    $
    681,689
    
    
    $
    1,006,341
    
    
    $
    277,873
    
    
    
    2,972,997
    
    
    $
    (100,690
    )
    
    $
    1,866,321
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-6




---



##### Table of Contents



BARR
PHARMACEUTICALS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 Year Ended
    
    
    Six Months EndedDecember 31,
    
    
    December 31,
    
    
    Year Ended June 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings (loss)
    
    $
    128,350
    
    
    $
    (338,155
    )
    
    $
    178,127
    
    
    $
    336,477
    
    
    $
    214,988Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:Depreciation and amortization
    
    
    297,819
    
    
    
    72,536
    
    
    
    25,347
    
    
    
    61,757
    
    
    
    40,510Deferred revenue
    
    
    (6,658
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minority interest
    
    
    901
    
    
    
    (629
    )
    
    
    
    
    
    
    
    
    
    
    Stock-based compensation expense
    
    
    27,750
    
    
    
    13,926
    
    
    
    13,894
    
    
    
    27,092
    
    
    
    Excess tax benefits from stock-based compensation
    
    
    (10,358
    )
    
    
    (10,615
    )
    
    
    (24,622
    )
    
    
    (29,026
    )
    
    
    Deferred income tax (benefit) expense
    
    
    (71,438
    )
    
    
    (35,219
    )
    
    
    28,311
    
    
    
    34,739
    
    
    
    7,100Provision for losses on loans to Natural Biologics
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,050Loss (gain) on sale of divested products
    
    
    512
    
    
    
    (5,200
    )
    
    
    
    
    
    
    
    
    
    
    Loss (gain) on derivative instruments, net
    
    
    9,730
    
    
    
    75,888
    
    
    
    
    
    
    
    (10,300
    )
    
    
    Loss on sale of discontinued operations
    
    
    611
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (8,969
    )
    
    
    (2,916
    )
    
    
    (647
    )
    
    
    (8,768
    )
    
    
    2,480Tax benefit of stock incentive plans and warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    39,846Write-off of in-process research and development associated with acquisitions
    
    
    4,601
    
    
    
    380,673
    
    
    
    
    
    
    
    
    
    
    
    Changes in assets and liabilities:(Increase) decrease in:Accounts receivable and other receivables, net
    
    
    47,228
    
    
    
    (12,500
    )
    
    
    (66,024
    )
    
    
    (85,652
    )
    
    
    36,678Inventories
    
    
    (32,162
    )
    
    
    40,354
    
    
    
    14,825
    
    
    
    24,598
    
    
    
    12,614Prepaid expenses
    
    
    (16,321
    )
    
    
    (6,648
    )
    
    
    (4,513
    )
    
    
    (2,929
    )
    
    
    6,396Other assets
    
    
    3,165
    
    
    
    8,004
    
    
    
    29
    
    
    
    (2,318
    )
    
    
    6,978Increase (decrease) in:Accounts payable, accrued liabilities and other liabilities
    
    
    (37,449
    )
    
    
    17,824
    
    
    
    (71,240
    )
    
    
    (43,340
    )
    
    
    1,169Income taxes payable
    
    
    45,875
    
    
    
    16,023
    
    
    
    11,269
    
    
    
    25,009
    
    
    
    (6,774
    )Net cash provided by operating activities
    
    
    383,187
    
    
    
    213,346
    
    
    
    104,756
    
    
    
    327,339
    
    
    
    363,035CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property, plant and equipment
    
    
    (123,358
    )
    
    
    (33,667
    )
    
    
    (36,045
    )
    
    
    (61,000
    )
    
    
    (55,225
    )Proceeds from sales of property, plant and equipment
    
    
    2,846
    
    
    
    11,245
    
    
    
    1
    
    
    
    3
    
    
    
    68Proceeds from sale of discontinued operations
    
    
    34,096
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisitions, net of cash acquired
    
    
    (89,780
    )
    
    
    (2,301,630
    )
    
    
    (378,128
    )
    
    
    (378,430
    )
    
    
    (46,500
    )Purchases of derivative instruments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,900
    )
    
    
    Settlement of derivative instruments
    
    
    (7,414
    )
    
    
    (12,576
    )
    
    
    
    
    
    
    
    
    
    
    Purchases of marketable securities
    
    
    (2,086,699
    )
    
    
    (2,159,934
    )
    
    
    (960,438
    )
    
    
    (2,120,480
    )
    
    
    (1,220,869
    )Sales of marketable securities
    
    
    2,470,903
    
    
    
    2,082,007
    
    
    
    1,124,641
    
    
    
    2,108,979
    
    
    
    1,152,485Investment in debt securities
    
    
    (2,000
    )
    
    
    (3,000
    )
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (318
    )
    
    
    338
    
    
    
    (3,018
    )
    
    
    (6,647
    )
    
    
    (6,990
    )Net cash provided by (used in) investing activities
    
    
    198,276
    
    
    
    (2,417,217
    )
    
    
    (252,987
    )
    
    
    (506,475
    )
    
    
    (177,031
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on long-term debt and capital leases
    
    
    (724,181
    )
    
    
    (30,027
    )
    
    
    (4,733
    )
    
    
    (5,468
    )
    
    
    (20,004
    )Proceeds from long-term debt
    
    
    100,115
    
    
    
    2,440,703
    
    
    
    
    
    
    
    
    
    
    
    Payment of deferred financing fees
    
    
    
    
    
    
    (23,580
    )
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (99,982
    )Excess tax benefits from stock based compensation
    
    
    10,358
    
    
    
    10,615
    
    
    
    24,622
    
    
    
    29,026
    
    
    
    Proceeds from exercise of stock options, employee stock purchases and warrants
    
    
    36,126
    
    
    
    14,306
    
    
    
    42,559
    
    
    
    64,207
    
    
    
    21,267Other
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash (used in) provided by financing activities
    
    
    (577,532
    )
    
    
    2,412,017
    
    
    
    62,448
    
    
    
    87,765
    
    
    
    (98,719
    )Effect of exchange-rate changes on cash and cash equivalents
    
    
    10,586
    
    
    
    (593
    )
    
    
    
    
    
    
    
    
    
    
    Increase (decrease) in cash and cash equivalents
    
    
    14,517
    
    
    
    207,553
    
    
    
    (85,783
    )
    
    
    (91,371
    )
    
    
    87,285Cash and cash equivalents at beginning of period
    
    
    231,975
    
    
    
    24,422
    
    
    
    115,793
    
    
    
    115,793
    
    
    
    28,508Cash and cash equivalents at end of period
    
    $
    246,492
    
    
    $
    231,975
    
    
    $
    30,010
    
    
    $
    24,422
    
    
    $
    115,793SUPPLEMENTAL CASH FLOW DATA:Cash paid during the period:Interest, net of portion capitalized
    
    $
    179,526
    
    
    $
    6,245
    
    
    $
    97
    
    
    $
    351
    
    
    $
    1,458Income taxes
    
    $
    88,583
    
    
    $
    52,807
    
    
    $
    75,180
    
    
    $
    126,723
    
    
    $
    74,711
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-7




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##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except for share and per share amounts)
 (1) Summary of Significant Accounting Policies
 (a) Principles of Consolidation and Other Matters
      (b) Use of Estimates in the Preparation of Financial Statements
  (c) Foreign
Currency Translation and Transactions
 Foreign
currency translation
   F-8




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##### Table of Contents



Foreign currency transactions
  (d) Revenue Recognition
   ® ®
  (e) Sales Returns and Allowances
  (f) Stock-Based Compensation
 Share-Based Payment
 F-9




---



##### Table of Contents



Accounting for Stock Issued to Employees Accounting for Stock-based Compensation
 (g) Research and Development
  (h) Advertising and Promotion Costs
  (i) Income Taxes
   F-10




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##### Table of Contents



(j) Earnings Per Share
  Year Ended
    
    
    Six Months Ended
    
    
    Fiscal Year EndedDecember 31,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005(table in thousands, except per share data)
    
    
    
    
    
    (unaudited)Numerator for basic and diluted earnings (loss) per share
Net earnings (loss) from continuing operations
    
    $
    142,125
    
    
    $
    (336,360
    )
    
    $
    178,127
    
    
    $
    336,477
    
    
    $
    214,988Net loss from discontinued operations
    
    
    (13,775
    )
    
    
    (1,795
    )
    
    
    
    
    
    
    
    
    
    
    Net earnings (loss)
    
    $
    128,350
    
    
    $
    (338,155
    )
    
    $
    178,127
    
    
    $
    336,477
    
    
    $
    214,988Denominator: Weighted average shares  basic
    
    
    107,212
    
    
    
    106,377
    
    
    
    104,219
    
    
    
    105,129
    
    
    
    103,180Earnings (loss) per common share  continuing operations
    
    $
    1.33
    
    
    $
    (3.16
    )
    
    $
    1.71
    
    
    $
    3.20
    
    
    $
    2.08Loss per common share  discontinued operations
    
    
    (0.13
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    
    
    
    
    Earnings (loss) per common share  basic
    
    $
    1.20
    
    
    $
    (3.18
    )
    
    $
    1.71
    
    
    $
    3.20
    
    
    $
    2.08Denominator: Weighted average shares  diluted
    
    
    108,631
    
    
    
    106,377
    
    
    
    106,984
    
    
    
    107,798
    
    
    
    106,052Earnings (loss) per common share  continuing operations
    
    $
    1.31
    
    
    $
    (3.16
    )
    
    $
    1.66
    
    
    $
    3.12
    
    
    $
    2.03Loss per common share  discontinued operations
    
    
    (0.13
    )
    
    
    (0.02
    )
    
    
    
    
    
    
    
    
    
    
    Earnings (loss) per common share  diluted
    
    $
    1.18
    
    
    $
    (3.18
    )
    
    $
    1.66
    
    
    $
    3.12
    
    
    $
    2.03Calculation of weighted average common shares  dilutedWeighted average shares  basic
    
    
    107,212
    
    
    
    106,377
    
    
    
    104,219
    
    
    
    105,129
    
    
    
    103,180Effect of dilutive options
    
    
    1,419
    
    
    
    
    
    
    
    2,765
    
    
    
    2,669
    
    
    
    2,872Weighted average shares  diluted
    
    
    108,631
    
    
    
    106,377
    
    
    
    106,984
    
    
    
    107,798
    
    
    
    106,052Not included in the calculation of diluted earnings
per-share because their impact is antidilutive:Stock options outstanding
    
    
    384
    
    
    
    1,833
    
    
    
    23
    
    
    
    66
    
    
    
    84
 F-11




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##### Table of Contents





(k) Cash and Cash Equivalents




(l) Investments in Marketable Securities, Debt and Equity Method Investments


Investments in Marketable Securities and Debt




Venture Funds and Other Investments






(m) Inventories




(n) Credit and Market Risk




(o) Fair Value of Financial Instruments


F-12




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##### Table of Contents











(p) Derivative Instruments




Accounting for Derivative Instruments and Hedging
Activities








(q) Property, Plant and Equipment




(r) Acquisitions and Related Amortization Expense




F-13



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##### Table of Contents



(s) Asset Impairment
   (t) Contingencies
 Accounting for Contingencies
 (u) Pensions and Other Post Employment Benefits
   (v) Restructuring
  F-14




---



##### Table of Contents



(w) New Accounting Pronouncements
 Fair Value Measurements,
 The Fair Value Option for
Financial Assets and Financial Liabilities,
 Accounting for Nonrefundable Advance Payments for Goods or Services to Be Used in Future Research
and Development Activities
 Business Combinations
(revised) Business Combinations.
 Noncontrolling Interests in
Consolidated Financial Statements  an amendment of Accounting Research Bulletin No. 51 ( ).
 Accounting for
Collaborative Arrangements.
 F-15




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##### Table of Contents



(2) Acquisitions and Business Combinations
 Year Ended December 31, 2007
 O.R.C.A. pharm GmbH
 Business Combinations,
 Inventory
    
    $
    3,442Products acquired
    
    
    29,327Goodwill
    
    
    9,034Other assets
    
    
    5,880Liabilities
    
    
    (4,103
    )Total
    
    $
    43,580
  Products Acquired from Hospira, Inc.
   Six Months Ended December 31, 2006
 PLIVA d.d.
  F-16




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##### Table of Contents



%Period
    
    Shares
    
    
    Cost
    
    
    AcquiredShares tendered October 24, 2006
    
    
    17,056,977
    
    
    $
    2,377,773
    
    
    
    96.4
    %Shares purchased October 25 to December 31, 2006
    
    
    149,953
    
    
    
    21,937
    
    
    
    0.6
    %Transaction costs
    
    
    
    
    
    
    29,700
    
    
    
    0.0
    %Total as of December 31, 2006
    
    
    17,206,930
    
    
    
    2,429,410
    
    
    
    97.0
    %Shares purchased January 1, 2007 to December 31, 2007
    
    
    240,856
    
    
    
    36,372
    
    
    
    1.1
    %Transaction costs
    
    
    
    
    
    
    664
    
    
    
    0.0
    %Total as of December 31, 2007
    
    
    17,447,786
    
    
    $
    2,466,446
    
    
    
    98.1
    %
 Business Combinations,
  AdjustedAssetsand LiabilitiesAssumedCurrent assets (excluding cash and inventories)
    
    $
    350,919Inventories (1)
    
    
    351,438Property, plant & equipment (2)
    
    
    752,397Identifiable intangible assets (3)
    
    
    999,921Other non-current assets, including deferred tax assets
    
    
    121,088In-process research & development (4)
    
    
    385,077Goodwill (5)
    
    
    200,229Total assets acquired
    
    
    3,161,069Current liabilities, excluding restructuring
    
    
    (346,732
    )Restructuring costs (6)
    
    
    (27,619
    )Deferred tax liabilities
    
    
    (285,964
    )Other
non-current liabilities, including long-term debt (7)
    
    
    (189,241
    )Total liabilities assumed
    
    
    (849,556
    )Total minority interest
    
    
    (38,818
    )Net assets acquired
    
    $
    2,272,695Plus: cash acquired
    
    
    193,751Total Purchase price
    
    $
    2,466,446
  
    
    Raw materials  valued at current replacement cost.
 F-17




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##### Table of Contents




    
    Work in progress  valued at the expected selling price of the inventory less the
cost to complete, cost of disposal and reasonable profit on the selling effort of the
acquiring entity.
    
    Finished & merchandised goods  valued at expected selling price less the cost of
disposal and a reasonable profit for the selling effort.
   Weighted-averageamortization period(Years)Trade names
    
    $
    75,600
    
    
    IndefiniteExisting products and product rights
    
    
    797,644
    
    
    10Land usuage rights
    
    
    88,053
    
    
    99Other intangible assets
    
    
    38,624
    
    
    6Total identifiable intangible assets
    
    $
    999,921
       Shire PLC Product Acquisition and Development Agreement
 ® ®
  F-18




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##### Table of Contents



Fiscal 2006 Acquisitions
 FEI Womens Health, LLC
 ®
 Business Combinations,
  Current assets (excluding cash)
    
    $
    30,876Property and equipment
    
    
    1,955Intangible
asset  ParaGard T 380A IUC
    
    
    256,000Goodwill
    
    
    29,921Other assets
    
    
    4,677Total assets acquired
    
    $
    323,429Current liabilities
    
    
    10,780Other liabilities
    
    
    22,919Total liabilities assumed
    
    
    33,699Net assets acquired
    
    $
    289,730
  Goodwill and Other Intangible Assets
 F-19




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##### Table of Contents



Products from Organon Ltd., Organon USA Inc. and Savient Pharmaceuticals, Inc.
 ® Accounting for Contingencies
 ®
 (3) Discontinued Operations
       F-20




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##### Table of Contents



Year Ended
    
    
    TransitionDecember 31, 2007
    
    
    PeriodItaly
    
    
    Spain
    
    
    Veterina
    
    
    Total
    
    
    Italy
    
    
    Spain
    
    
    Veterina
    
    
    TotalRevenuesGenerics
    
    $
    8,302
    
    
    $
    24,232
    
    
    $
    
    
    
    $
    32,534
    
    
    $
    2,803
    
    
    $
    3,370
    
    
    $
    
    
    
    $
    6,173Other
    
    
    
    
    
    
    
    
    
    
    24,519
    
    
    
    24,519
    
    
    
    
    
    
    
    
    
    
    
    5,466
    
    
    
    5,466Total net revenues
of discontinued
operations
    
    $
    8,302
    
    
    $
    24,232
    
    
    $
    24,519
    
    
    $
    57,053
    
    
    $
    2,803
    
    
    $
    3,370
    
    
    $
    5,466
    
    
    $
    11,639Gain (loss) before
income taxes and
minority interest
    
    $
    (1,428
    )
    
    $
    (8,239
    )
    
    $
    (3,512
    )
    
    $
    (13,179
    )
    
    $
    (2,012
    )
    
    $
    (396
    )
    
    $
    488
    
    
    $
    (1,920
    )Gain (loss) on sale
of discontinued
operations
    
    
    (36
    )
    
    
    (2,365
    )
    
    
    1,790
    
    
    
    (611
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax benefit
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    125
    
    
    
    125Gain (loss) from
discontinued
operations- net of
tax
    
    $
    (1,464
    )
    
    $
    (10,604
    )
    
    $
    (1,707
    )
    
    $
    (13,775
    )
    
    $
    (2,012
    )
    
    $
    (396
    )
    
    $
    613
    
    
    $
    (1,795
    )
  December 31,2006Marketable securities
    
    $
    16Accounts receivable, net
    
    
    21,929Other receivables, net
    
    
    10,756Inventories
    
    
    26,141Prepaid expenses and other current assets
    
    
    46Current assets of discontinued operations
    
    
    58,888Property, plant and equipment, net
    
    
    5,781Deferred income taxes
    
    
    2,378Other intangible assets, net
    
    
    2,677Other assets
    
    
    109Long-term assets of discontinued operations
    
    
    10,945Assets of discontinued operations
    
    $
    69,833Accounts payable
    
    $
    18,761Accrued liabilities
    
    
    12,299Current portion of long-term debt and capital lease obligations
    
    
    254Current liabilities of discontinued operations
    
    
    31,314Long-term debt and capital lease obligations
    
    
    1,738Deferred tax liabilities
    
    
    636Other liabilities
    
    
    207Long-term liabilities of discontinued operations
    
    
    2,581Liabilities of discontinued operations
    
    $
    33,895
 F-21




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##### Table of Contents



(4) Derivative Instruments
 Interest Rate Risk
      NotionalPrincipal Amount
    
    Start Date
    
    Maturity Date
    
    Receive Variable Rate
    
    Pay Fixed Rate$175,000
    
    Mar-30-07
    
    Jun-30-08
    
    90 day LIBOR
    
    5.253 %$125,000
    
    Jun-30-07
    
    Jun-30-10
    
    90 day LIBOR
    
    5.4735 %$100,000
    
    Jun-30-07
    
    Jun-30-10
    
    90 day LIBOR
    
    5.3225 %$100,000
    
    Sept-30-07
    
    Sept-30-10
    
    90 day LIBOR
    
    4.985 %$100,000
    
    Sept-30-07
    
    Sept-30-09
    
    90 day LIBOR
    
    4.92875 %$100,000
    
    Sept-30-07
    
    Mar-31-09
    
    90 day LIBOR
    
    4.755 %$100,000
    
    Sept-30-07
    
    Sept-30-09
    
    90 day LIBOR
    
    4.83 %
 Foreign Exchange Risk
    F-22




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##### Table of Contents



December 31, 2007
    
    
    December 31, 2006Assets
    
    
    Liabilities
    
    
    Assets
    
    
    LiabilitiesInterest rate swap
    
    $
    
    
    
    $
    (17,316
    )
    
    $
    1,267
    
    
    $
    (443
    )Forward rate agreements
    
    
    
    
    
    
    (39
    )
    
    
    997
    
    
    
    (163
    )Foreign exchange forward contracts
    
    
    
    
    
    
    (193
    )
    
    
    383
    
    
    
    (106
    )Total
    
    $
    
    
    
    $
    (17,548
    )
    
    $
    2,647
    
    
    $
    (712
    )
 (5) Accounts Receivable, net
  December 31,
    
    
    December 31,2007
    
    
    2006Trade accounts receivable
    
    $
    741,092
    
    
    $
    738,824Other trade receivables
    
    
    12,808
    
    
    
    15,080Subtotal
    
    
    753,900
    
    
    
    753,904Less: allowances
    
    
    257,264
    
    
    
    242,768Accounts receivable, net
    
    $
    496,636
    
    
    $
    511,136
 (6) Inventories
  December 31,
    
    
    December 31,2007
    
    
    2006Raw materials and supplies
    
    $
    187,220
    
    
    $
    160,384Work-in-process
    
    
    77,098
    
    
    
    67,798Finished goods
    
    
    236,889
    
    
    
    198,088Total inventories
    
    $
    501,207
    
    
    $
    426,270
 (7) Property, plant and equipment, net
  December 31,
    
    
    December 31,2007
    
    
    2006Land
    
    $
    107,216
    
    
    $
    56,543Buildings and improvements
    
    
    597,051
    
    
    
    526,034Machinery and equipment
    
    
    621,788
    
    
    
    532,553Leasehold improvements
    
    
    14,174
    
    
    
    12,726Construction in progress
    
    
    100,765
    
    
    
    73,2331,440,994
    
    
    
    1,201,089Less: accumulated depreciation and amortization
    
    
    325,090
    
    
    
    196,671Total plant, property and equipment, net
    
    $
    1,115,904
    
    
    $
    1,004,418
 F-23




---



##### Table of Contents



(8) Investments in Marketable Securities, Debt and Equity Method Investments
 Investments in Marketable Securities and Debt
 Trading Securities
  Available-for-Sale Securities
       F-24




---



##### Table of Contents



Available for SaleGross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketDecember 31, 2007
    
    Cost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueDebt securities
    
    $
    287,766
    
    
    $
    120
    
    
    $
    (423
    )
    
    $
    287,463Equity securities
    
    
    12,424
    
    
    
    1,086
    
    
    
    (282
    )
    
    
    13,228$
    300,190
    
    
    $
    1,206
    
    
    $
    (705
    )
    
    $
    300,691December 31, 2006Debt securities
    
    $
    668,239
    
    
    $
    
    
    
    $
    (534
    )
    
    $
    667,705Equity securities
    
    
    10,914
    
    
    
    68
    
    
    
    
    
    
    
    10,982$
    679,153
    
    
    $
    68
    
    
    $
    (534
    )
    
    $
    678,687
 Held-to-Maturity Securities
    MaturitiesLess than one year
    
    $
    143One to two years
    
    
    15Two to five years
    
    
    20Total
    
    $
    178
 Equity Method Investments
 Medika d.d.
   F-25




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##### Table of Contents



Venture Funds
   (9) Goodwill and Other Intangible Assets
  Generic
    
    
    ProprietaryPharmaceuticals
    
    
    Pharmaceuticals
    
    
    TotalGoodwill balance at June 30, 2006
    
    $
    
    
    
    $
    47,920
    
    
    $
    47,920Acquisition of PLIVA d.d.
    
    
    223,379
    
    
    
    
    
    
    
    223,379Currency translation effect
    
    
    5,150
    
    
    
    
    
    
    
    5,150Goodwill balance at December 31, 2006
    
    $
    228,529
    
    
    $
    47,920
    
    
    $
    276,449Additional acquisition of PLIVA shares
    
    
    8,663
    
    
    
    
    
    
    
    8,663PLIVA goodwill adjustments
    
    
    (32,452
    )
    
    
    
    
    
    
    (32,452
    )Currency translation effect
    
    
    25,042
    
    
    
    
    
    
    
    25,042Goodwill on acquisition of ORCA
    
    
    3,660
    
    
    
    
    
    
    
    3,660ORCA goodwill adjustments
    
    
    4,593
    
    
    
    
    
    
    
    4,593Goodwill balance at December 31, 2007
    
    $
    238,035
    
    
    $
    47,920
    
    
    $
    285,955
  Current assets (excluding cash)
    
    $
    (6,686
    )Property, plant & equipment
    
    
    (41,157
    )Other non-current assets
    
    
    1,326Current liabilities (1)
    
    
    9,387Deferred tax liabilities
    
    
    (3,712
    )Other liabilities
    
    
    8,390Total PLIVA goodwill adjustments
    
    $
    (32,452
    )
 
 (1)
    
    The initial PLIVA opening balance sheet reflected an accrued liability of $1,500 relating
to a potential obligation owing by PLIVA to certain former employees in connection with their
allegations of invention rights relating to the process for manufacturing Azithromycin. Upon a
Croatian courts entry of a judgment in favor of the former employees in June 2007, the Company
allocated an additional $12,500 as an accrued liability relating to this matter. PLIVA is appealing
the decision, and believes it has strong grounds for full or partial reversal on appeal. PLIVAs
obligation to pay any amount to the former employees will not arise unless and until the decision
in favor of the former employees is affirmed on appeal.  F-26




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##### Table of Contents



December 31,
    
    
    December 31,2007
    
    
    2006Gross
    
    
    
    
    
    
    Net
    
    
    Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    Carrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amount
    
    
    Amortization
    
    
    AmountFinite-lived intangible assets:Product licenses
    
    $
    45,350
    
    
    $
    20,554
    
    
    $
    24,796
    
    
    $
    45,350
    
    
    $
    15,624
    
    
    $
    29,726Product rights
    
    
    1,456,348
    
    
    
    218,133
    
    
    
    1,238,215
    
    
    
    1,301,940
    
    
    
    64,788
    
    
    
    1,237,152Land use rights
    
    
    105,652
    
    
    
    1,103
    
    
    
    104,549
    
    
    
    88,053
    
    
    
    166
    
    
    
    87,887Other
    
    
    42,875
    
    
    
    16,411
    
    
    
    26,464
    
    
    
    38,624
    
    
    
    95
    
    
    
    38,529Total amortized finite-lived intangible assets
    
    
    1,650,225
    
    
    
    256,201
    
    
    
    1,394,024
    
    
    
    1,473,967
    
    
    
    80,673
    
    
    
    1,393,294Indefinite-lived intangible assets  tradenames:
    
    
    89,398
    
    
    
    
    
    
    
    89,398
    
    
    
    78,199
    
    
    
    
    
    
    
    78,199Total identifiable intangible assets
    
    $
    1,739,623
    
    
    $
    256,201
    
    
    $
    1,483,422
    
    
    $
    1,552,166
    
    
    $
    80,673
    
    
    $
    1,471,493
        Years Ending December 31,2008
    
    $
    165,6982009
    
    $
    148,7342010
    
    $
    141,4182011
    
    $
    132,4742012
    
    $
    124,425
  F-27




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##### Table of Contents



December 31, 2007WeightedGross
    
    
    
    
    
    
    Net
    
    
    AverageCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AmortizationAmount
    
    
    Amortization
    
    
    Amount
    
    
    PeriodTherapeutic CategoryContraception
    
    $
    383,427
    
    
    $
    70,594
    
    
    $
    312,833
    
    
    
    18Antibiotics, antiviral & anti-infectives
    
    
    233,860
    
    
    
    34,661
    
    
    
    199,199
    
    
    
    10Cardiovascular
    
    
    228,205
    
    
    
    34,761
    
    
    
    193,444
    
    
    
    10Psychotherapeutics
    
    
    185,978
    
    
    
    25,003
    
    
    
    160,975
    
    
    
    12Other (1)
    
    
    424,878
    
    
    
    53,114
    
    
    
    371,764
    
    
    
    10Total product rights
    
    $
    1,456,348
    
    
    $
    218,133
    
    
    $
    1,238,215
 
 (1)
    
    Other includes numerous therapeutic categories, none of which exceeds 10% of the aggregate net
book value of product rights. (10) Accrued Liabilities
  December 31,
    
    
    December 31,2007
    
    
    2006Payroll, taxes & benefits
    
    $
    60,569
    
    
    $
    53,304Profit splits due to third parties
    
    
    40,550
    
    
    
    23,505Legal contingencies
    
    
    30,256
    
    
    
    Restructuring
    
    
    23,007
    
    
    
    24,600Taxes
    
    
    13,486
    
    
    
    21,971Medicaid obligations
    
    
    12,938
    
    
    
    16,069Managed care rebates
    
    
    6,482
    
    
    
    8,288Interest
    
    
    4,377
    
    
    
    29,979Cash settled share based compensation
    
    
    
    
    
    
    14,679Derivatives  Interest swaps
    
    
    17,316
    
    
    
    Other
    
    
    81,113
    
    
    
    79,007Total accrued liabilities
    
    $
    290,094
    
    
    $
    271,402
 F-28




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##### Table of Contents



(11) Debt
  December 31,
    
    
    December 31,2007
    
    
    2006Credit facilities (a)
    
    $
    1,800,000
    
    
    $
    2,415,703Note due to WCC shareholders (b)
    
    
    6,500
    
    
    
    6,500Obligation under capital leases (c)
    
    
    2,488
    
    
    
    2,819Fixed rate bonds (d)
    
    
    112,902
    
    
    
    101,780Dual-currency syndicated credit facility (e)
    
    
    24,035
    
    
    
    86,287Euro commercial paper program (f)
    
    
    78,217
    
    
    
    26,334Dual-currency term loan facility (g)
    
    
    25,000
    
    
    
    25,000Multi-currency revolving credit facility (h)
    
    
    28,760
    
    
    
    13,167Other
    
    
    1,855
    
    
    
    792,079,757
    
    
    
    2,677,669Less: current installments of debt and capital
lease obligations
    
    
    298,065
    
    
    
    742,192Total long-term debt
    
    $
    1,781,692
    
    
    $
    1,935,477
 
 (a)
    
    In connection with the closing of the PLIVA acquisition, on October 24, 2006, the Company
entered into unsecured senior credit facilities (the Credit Facilities) and drew $2,000,000 under
a five-year term facility and $415,703 under a 364-day term facility, both of which bear interest
at variable rates of LIBOR plus 75 basis points (5.58% at December 31, 2007). The Company is
obligated to repay the outstanding principal amount of the five-year term facility in 18
consecutive quarterly installments of $50,000, with the first payment having been made on March 30,
2007, with the balance of $1,100,000 due at maturity in October 2011. The five-year term facility
had an outstanding principal balance of $1,800,000 at December 31, 2007. The 364-day term facility
was repaid it in full during 2007. The Credit Facilities include customary covenants, including
financial covenants limiting the total indebtedness of the Company on a consolidated basis.(b)
    
    In February 2004, the Company acquired all of the outstanding shares of Womens Capital
Corporation (WCC). In connection with that acquisition, the Company issued a four-year, $6,500
promissory note to WCCs
former shareholders. The note bears a fixed interest rate of 2%. The entire principal amount and
all accrued interest was due and paid in full on February 25, 2008.(c)
    
    The Company has certain capital lease obligations for machinery, equipment and buildings in the
United States and the Czech Republic.  (d)
    
    In May 2004, PLIVA issued Euro denominated fixed rate bonds with a face value of EUR 75,000
($110,197). The bonds mature in 2011 and bear interest at 5.75%, payable semiannually. At the time
of the PLIVA acquisition, the aggregate fair value of the bonds was EUR 77,478 ($113,838). The
premium over face value of EUR 2,478 ($3,641) is being amortized over the remaining life of the
bonds. The amortization for the year ended December 31, 2007 was EUR 538 ($790). The facility
includes customary covenants.(e)
    
    On October 28, 2004, PLIVA entered into a dual-currency syndicated term loan facility pursuant
to which the lenders agreed to provide the borrowers up to $250,000, available to be drawn in
either US dollars or Euros. The facility has a five-year term and bears interest at a variable rate
based on LIBOR or Euribor plus 70 basis points. At December 31, 2007, there was $19,760 outstanding
with an effective interest rate of 5.6000% and EUR 2,910 ($4,275) outstanding with an effective
interest rate of 5.2900%. The facility includes customary covenants. F-29




---



##### Table of Contents



(f)
    
    In December 1998, PLIVA initiated, and in June 2003 updated, a commercial paper program that
provides for an aggregate amount of Euro denominated financing not to exceed EUR 250,000 ($367,323)
and bears interest at a variable interest rate. As of December 31, 2007, there was EUR 54,666
($78,217) outstanding at an effective interest rate of 6.2650%.(g)
    
    September 9, 2006, PLIVA entered into a dual currency term loan facility pursuant to which the
lender agreed to provide the borrowers up to $25,000, available to be drawn in either US dollars or
Euros at a variable rate based on LIBOR or Euribor plus a negotiated margin. On September 7, 2007,
the facility was amended and extended for an additional two-year term. At December 31, 2007, there
was $25,000 outstanding with an effective interest rate of 6.15063%. The facility includes
customary covenants.(h)
    
    In June 2005, PLIVA entered into a EUR 30,000 multi-currency revolving credit facility
($44,079). The facility was maturing on December 31, 2007 and on December 14, 2007 was amended and
extended for an additional two-year term. It bears interest at a variable rate based on LIBOR,
Euribor or another relevant reference rate plus a negotiated margin. At December 31, 2007, there
was EUR 20,000 ($28,760) outstanding with an effective interest rate of 5.739%. The facility
includes customary covenants.  Twelve Months Ending December 31,
    
    Total2009
    
    $
    266,5052010
    
    
    200,4842011
    
    
    1,310,6732012
    
    
    4512013
    
    
    414Thereafter
    
    
    460Total principal maturities and amounts due on
long term debt and capital obligations
    
    $
    1,778,987Premium on fixed rate bond (see (d) above)
    
    
    2,705Total long term debt and capital lease obligations
    
    $
    1,781,692
 (12) Accumulated Other Comprehensive Income
   F-30




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##### Table of Contents



December 31,
    
    
    December 31,2007
    
    
    2006Beginning Balance
    
    $
    76,600
    
    
    $
    (377
    )Cumulative unrealized gain (loss) on marketable securities, net of tax
benefit of $108
    
    
    744
    
    
    
    105Cumulative net (loss) on derivative financial instruments designated as
cash flow hedges, net of tax benefit of $6,448
    
    
    (10,868
    )
    
    
    Cumulative net unrealized gain on pension and other post employment
benefits, net of tax of $304
    
    
    667
    
    
    
    22Cumulative net unrealized gain on currency translation adjustments
    
    
    210,730
    
    
    
    76,850Net unrecognized gain (loss)
    
    
    201,273
    
    
    
    76,977Accumulated other comprehensive income
    
    $
    277,873
    
    
    $
    76,600
 (13) Related-party Transactions
 Dr. Bernard C. Sherman and Jack M. Kay
      F-31




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##### Table of Contents



Six-MonthsYear Ended
    
    
    
    
    
    
    EndedDecember 31,
    
    
    Transition
    
    
    December 31,
    
    
    Year Ended June 30,2007
    
    
    Period
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)Purchases from the Sherman Companies
    
    $
    5,732
    
    
    $
    3,916
    
    
    $
    1,634
    
    
    $
    4,931
    
    
    $
    5,575Sales to the Sherman Companies
    
    $
    20,912
    
    
    $
    6,915
    
    
    $
    6,774
    
    
    $
    15,802
    
    
    $
    10,149Recovery of shared litigation costs included
in operating expenses
    
    $
    665
    
    
    $
    
    
    
    $
    
    
    
    $
    13
    
    
    $
    77Profit split (income) expense charged to
cost of goods
    
    $
    (1,239
    )
    
    $
    (283
    )
    
    $
    (333
    )
    
    $
    (586
    )
    
    $
    1,027Alliance revenue
    
    $
    666
    
    
    $
    238
    
    
    $
    349
    
    
    $
    557
    
    
    $
    216
   Year EndedDecember 31,
    
    
    TransitionMedika d.d.
    
    2007
    
    
    PeriodSales of goods and services:
    
    $
    44,470
    
    
    $
    6,532Year-end receivables:
    
    $
    25,899
    
    
    $
    27,079Purchases of goods and services:
    
    $
    15
    
    
    $
    5Year-end liabilities:
    
    $
    
    
    
    $
    1
 (14) Income Taxes
  Year End
    
    
    
    
    
    
    Six-Months EndedDecember 31,
    
    
    Transition
    
    
    December 31,
    
    
    Year Ended June 30,2007
    
    
    Period
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)Current:Federal
    
    $
    107,792
    
    
    $
    63,000
    
    
    $
    64,859
    
    
    $
    135,362
    
    
    $
    101,355State
    
    
    10,990
    
    
    
    7,090
    
    
    
    9,609
    
    
    
    16,370
    
    
    
    6,482Foreign
    
    
    17,202
    
    
    
    (241
    )
    
    
    
    
    
    
    
    
    
    
    $
    135,984
    
    
    $
    69,849
    
    
    $
    74,468
    
    
    $
    151,732
    
    
    $
    107,837Deferred:Federal
    
    $
    (9,863
    )
    
    $
    (17,226
    )
    
    $
    24,389
    
    
    $
    30,780
    
    
    $
    4,441State
    
    
    1,173
    
    
    
    (1,531
    )
    
    
    2,650
    
    
    
    3,959
    
    
    
    2,610Foreign
    
    
    (62,748
    )
    
    
    (16,462
    )
    
    
    
    
    
    
    
    
    
    
    (71,438
    )
    
    
    (35,219
    )
    
    
    27,039
    
    
    
    34,739
    
    
    
    7,051Total
    
    $
    64,546
    
    
    $
    34,630
    
    
    $
    101,507
    
    
    $
    186,471
    
    
    $
    114,888
 F-32




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##### Table of Contents



Year Ended
    
    
    
    
    
    
    Six-Months EndedDecember 31,
    
    
    Transition
    
    
    December 31,
    
    
    Fiscal Year Ended June 30,2007
    
    
    Period
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)Federal income taxes at statutory rate
    
    $
    72,743
    
    
    $
    (106,498
    )
    
    $
    97,872
    
    
    $
    183,032
    
    
    $
    115,457State income taxes, net of federal income tax effect
    
    
    7,922
    
    
    
    3,369
    
    
    
    7,968
    
    
    
    14,099
    
    
    
    9,092Tax credits
    
    
    (5,500
    )
    
    
    (5,500
    )
    
    
    (2,000
    )
    
    
    (2,778
    )
    
    
    (6,900
    )Foreign tax rate differential
    
    
    (3,372
    )
    
    
    139,394
    
    
    
    
    
    
    
    
    
    
    
    Domestic Manufacturers Deduction
(IRC Section 199)
    
    
    (3,840
    )
    
    
    (1,110
    )
    
    
    (1,957
    )
    
    
    (3,661
    )
    
    
    Tax-exempt income
    
    
    (7,501
    )
    
    
    (3,465
    )
    
    
    (2,954
    )
    
    
    (5,654
    )
    
    
    (3,771
    )Change in valuation allowance
    
    
    
    
    
    
    5,353
    
    
    
    
    
    
    
    
    
    
    
    Other, net
    
    
    4,094
    
    
    
    3,087
    
    
    
    2,578
    
    
    
    1,433
    
    
    
    1,010Total
    
    $
    64,546
    
    
    $
    34,630
    
    
    $
    101,507
    
    
    $
    186,471
    
    
    $
    114,888
     F-33




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##### Table of Contents



December 31,
    
    
    December 31,2007
    
    
    2006Deferred tax assets:Net operating losses
    
    $
    99,161
    
    
    $
    70,386Receivable reserves
    
    
    39,155
    
    
    
    47,189Inventory
    
    
    18,422
    
    
    
    2,420Warrants issued
    
    
    12,250
    
    
    
    13,997Deferred revenue
    
    
    24,024
    
    
    
    14,043Stock compensation
    
    
    16,747
    
    
    
    9,400Investments
    
    
    6,556
    
    
    
    184Restructuring reserve
    
    
    7,671
    
    
    
    9,408Other
    
    
    21,426
    
    
    
    25,101Total deferred tax assets
    
    
    245,412
    
    
    
    192,128Deferred tax liabilities:Plant and equipment
    
    
    (69,374
    )
    
    
    (61,784
    )Intangibles/goodwill
    
    
    (213,249
    )
    
    
    (200,002
    )Other
    
    
    (4,205
    )
    
    
    (4,444
    )Total deferred tax liabilities
    
    
    (286,828
    )
    
    
    (266,230
    )Less valuation allowance
    
    
    (39,623
    )
    
    
    (34,954
    )Net deferred tax liability
    
    $
    (81,039
    )
    
    $
    (109,056
    )
  
 Accounting for Uncertainty in Income
Taxes an interpretation of FASB Statement 109
 F-34




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##### Table of Contents



Balance at January 1, 2007
    
    $
    25,000Additions based on tax positions related to current year
    
    
    5,207Additions for tax positions of prior years
    
    
    2,452Reductions for tax positions of prior years
    
    
    (1,245
    )Settlements
    
    
    (6,254
    )Increase/(decrease) related to foreign currency
    
    
    540Balance at December 31, 2007
    
    $
    25,700
  (15) Stock-Based Compensation
     F-35




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##### Table of Contents



FiscalYear Ended(in thousands, expect per share data)
    
    June 30, 2005Net earnings, as reported
    
    $
    214,988Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects
    
    
    Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects
    
    
    20,178Pro-forma net earnings
    
    $
    194,810Earnings per share:Basic  as reported
    
    $
    2.08Basic  pro-forma
    
    $
    1.89Diluted  as reported
    
    $
    2.03Diluted  pro-forma
    
    $
    1.84
  F-36




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##### Table of Contents





Year ended
    
    
    
    
    
    
    Fiscal Years EndedDecember 31,
    
    
    Transition
    
    
    June 30,2007
    
    
    Period
    
    
    2006
    
    
    2005Average expected term (years)
    
    
    4.0
    
    
    
    5.0
    
    
    
    5.0
    
    
    
    3.3Weighted average risk-free interest rate
    
    
    4.39
    %
    
    
    5.09
    %
    
    
    3.76
    %
    
    
    2.40
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    26.40
    %
    
    
    32.12
    %
    
    
    36.85
    %
    
    
    48.22
    %Weighted average grant date fair value
    
    $
    14.49
    
    
    $
    18.17
    
    
    $
    18.57
    
    
    $
    12.90




Period
    VestedAwardsYear ended December 31, 2007
    $29,317Six-month period ended December 31, 2006
    $26,229Six-month period ended December 31, 2005 (unaudited)
    $23,922Fiscal year ended June 30, 2006
    $24,732Fiscal year ended June 30, 2005
    $22,647


Employee Stock Compensation Plans








F-37



---



##### Table of Contents



Weighted-AverageNumber of
    
    
    Weighted-
    
    
    Remaining
    
    
    AggregateOption/SARs
    
    
    Average
    
    
    Contractual
    
    
    IntrinsicAwards
    
    
    Exercise Price
    
    
    Life
    
    
    ValueOutstanding at June 30, 2005
    
    
    8,221,058
    
    
    $
    28.96Granted
    
    
    1,620,000
    
    
    
    48.04Forfeited
    
    
    (138,019
    )
    
    
    42.59Exercised
    
    
    (2,710,082
    )
    
    
    22.21Outstanding at June 30, 2006
    
    
    6,992,957
    
    
    $
    35.72
    
    
    
    6.82
    
    
    $
    87,667Granted
    
    
    1,601,500
    
    
    
    48.81Forfeited
    
    
    (152,093
    )
    
    
    43.11Exercised
    
    
    (241,761
    )
    
    
    31.44Outstanding at December 31, 2006
    
    
    8,200,603
    
    
    $
    38.27
    
    
    
    6.94
    
    
    $
    109,767Granted
    
    
    1,666,550
    
    
    
    51.53Forfeited
    
    
    (357,728
    )
    
    
    48.54Exercised
    
    
    (1,057,377
    )
    
    
    28.42Outstanding at December 31, 2007
    
    
    8,452,048
    
    
    $
    41.73
    
    
    
    6.76
    
    
    $
    100,561Available
for grant (25,567,188 authorized)
    
    
    5,813,802Exercisable as of December 31, 2007
    
    
    5,412,715
    
    
    $
    36.88
    
    
    
    5.59
    
    
    $
    89,729Non-vested as of December 31, 2007
    
    
    3,039,333
    
    
    $
    50.37
    
    
    
    
    
    
    $
    10,832Expected to vest as of December 31, 2007
    
    
    8,257,651
    
    
    $
    36.88
    
    
    
    
    
    
    $
    98,248
  Non-Employee Directors Stock Option Plans
  F-38




---



##### Table of Contents



Weighted-AverageWeighted-
    
    
    Remaining
    
    
    AggregateNumber of
    
    
    Average
    
    
    Contractual
    
    
    IntrinsicOptions
    
    
    Exercise Price
    
    
    Life
    
    
    ValueOutstanding at June 30, 2006
    
    
    630,021
    
    
    $
    25.68Granted
    
    
    60,000
    
    
    
    57.35Forfeited
    
    
    
    
    
    
    Exercised
    
    
    (37,368
    )
    
    
    12.40Outstanding at June 30, 2006
    
    
    652,653
    
    
    $
    29.35
    
    
    
    5.21
    
    
    $
    12,816Granted
    
    
    50,000
    
    
    
    48.84Forfeited
    
    
    
    
    
    
    Exercised
    
    
    (32,968
    )
    
    
    5.11Outstanding at December 31, 2006
    
    
    669,685
    
    
    $
    32.00
    
    
    
    5.33
    
    
    $
    13,410Granted
    
    
    25,000
    
    
    
    54.25Forfeited
    
    
    (10,000
    )
    
    
    57.35Exercised
    
    
    (187,498
    )
    
    
    19.49Outstanding at December 31, 2007
    
    
    497,187
    
    
    $
    37.33
    
    
    
    5.42
    
    
    $
    8,214Available for Grant (2,798,438 authorized)
    
    
    781,469Exercisable at December 31, 2007
    
    
    472,187
    
    
    $
    36.43
    
    
    
    5.21
    
    
    $
    8,214
  PLIVA Stock Based Compensation Plans
   F-39




---



##### Table of Contents



Employee Stock Purchase Plan
  Warrants
  (16) Savings and Retirement
  Defined Benefit Pension Plan and Other Post Employment Benefits
  F-40




---



##### Table of Contents



Year Ended
    
    
    TransitionDecember 31, 2007
    
    
    PeriodPost
    
    
    
    
    
    
    PostPension
    
    
    Employment
    
    
    Pension
    
    
    EmploymentChanges in benefit obligations:
    
    Benefits
    
    
    Benefits
    
    
    Benefits
    
    
    BenefitsBenefit obligations at beginning of year
    
    $
    11,101
    
    
    $
    552
    
    
    $
    
    
    
    $
    Benefit obligations assumed from PLIVA
    
    
    
    
    
    
    
    
    
    
    10,517
    
    
    
    518Service costs
    
    
    235
    
    
    
    38
    
    
    
    42
    
    
    
    6Interest cost
    
    
    518
    
    
    
    30
    
    
    
    92
    
    
    
    3Actuarial gains
    
    
    (905
    )
    
    
    72
    
    
    
    (33
    )
    
    
    Benefits paid
    
    
    (208
    )
    
    
    
    
    
    
    (49
    )
    
    
    (5
    )Exchange rate changes
    
    
    1,265
    
    
    
    122
    
    
    
    508
    
    
    
    30Deferred compensation
    
    
    75
    
    
    
    8
    
    
    
    24
    
    
    
    Benefit obligations at end of year
    
    $
    12,081
    
    
    $
    822
    
    
    $
    11,101
    
    
    $
    552Fair value of plan assets at end of year
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Funded status of the plan at end of year
    
    $
    (12,081
    )
    
    $
    (822
    )
    
    $
    (11,101
    )
    
    $
    (552
    )Amounts recognized in accumulated other
comprenhesive income (loss) consists of:Net gain
    
    $
    (1,012
    )
    
    $
    
    
    
    $
    (33
    )
    
    $
    Total amount recognized
    
    $
    (1,012
    )
    
    $
    
    
    
    $
    (33
    )
    
    $
    Plans with underfunded or non-funded
accumulated benefit obligation:Projected benefit obligation
    
    $
    12,081
    
    
    $
    822
    
    
    $
    11,101
    
    
    $
    552Accumulated benefit obligation
    
    $
    12,081
    
    
    $
    822
    
    
    $
    11,101
    
    
    $
    552
 Components of Net Periodic Benefit Expense
  F-41




---



##### Table of Contents



Year Ended
    
    
    TransitionDecember 31, 2007
    
    
    PeriodPost
    
    
    
    
    
    
    PostPension
    
    
    Employment
    
    
    Pension
    
    
    EmploymentBenefits
    
    
    Benefits
    
    
    Benefits
    
    
    BenefitsService cost
    
    $
    235
    
    
    $
    38
    
    
    $
    42
    
    
    $
    6Interest cost on benefit obligations
    
    
    518
    
    
    
    30
    
    
    
    92
    
    
    
    3Subtotal
    
    
    753
    
    
    
    68
    
    
    
    134
    
    
    
    9Deferred compensation
    
    
    75
    
    
    
    8
    
    
    
    24
    
    
    
    Total net periodic benefit cost
    
    $
    828
    
    
    $
    76
    
    
    $
    158
    
    
    $
    9
 Key Assumptions
  Year Ended
    
    TransitionDecember 31, 2007
    
    PeriodPost
    
    
    
    
    
    PostPension
    
    Employment
    
    Pension
    
    EmploymentBenefits
    
    Benefits
    
    Benefits
    
    BenefitsDiscount rate
    
    
    5.25
    %
    
    
    5.5
    %
    
    
    4.50
    %
    
    
    4.98/3.76
    %Future salary increase
    
    
    2.75
    %
    
    
    N/A
    
    
    
    2.75
    %
    
    
    N/AFuture pension increase
    
    
    2.00
    %
    
    
    N/A
    
    
    
    1.25
    %
    
    
    N/A
  Benefit Payments
  Expected Future
    
    Pension
    
    
    EmploymentBenefit Payments
    
    Benefits
    
    
    Benefits2008
    
    $
    345
    
    
    $
    1632009
    
    
    359
    
    
    
    552010
    
    
    479
    
    
    
    812011
    
    
    486
    
    
    
    432012
    
    
    494
    
    
    
    302013-17
    
    
    2,773
    
    
    
    555
  Defined Contribution Plans
  F-42




---



##### Table of Contents



F-43




---



##### Table of Contents



(17) Other Income (Expense), net
  Year Ended
    
    
    
    
    
    
    Six-Months EndedDecember 31,
    
    
    Transition
    
    
    December 31,
    
    
    Year Ended June 30,2007
    
    
    Period
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)Net foreign exchange gain
    
    $
    10,618
    
    
    $
    2,943
    
    
    $
    
    
    
    $
    
    
    
    $
    Distribution
upon insurance termination

    
    3,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain (loss) in venture funds
    
    
    1,178
    
    
    
    (384
    )
    
    
    (283
    )
    
    
    5,223
    
    
    
    (796
    )Proceeds from insurance settlement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,600Gain on treasury lock derivatives
    
    
    3,515
    
    
    
    (75,554
    )
    
    
    
    
    
    
    10,300
    
    
    
    Other income (expense)
    
    
    2,183
    
    
    
    51
    
    
    
    (310
    )
    
    
    1,645
    
    
    
    59Total other income (expense), net
    
    $
    20,713
    
    
    $
    (72,944
    )
    
    $
    (593
    )
    
    $
    17,168
    
    
    $
    3,863
  (18) Restructuring Charges
   December 31,
    
    
    
    
    
    
    
    
    
    December 31,2006
    
    Payments
    
    Additions
    
    2007Involuntary termination of
PLIVA employees
    
    $
    8,277
    
    
    $
    7,266
    
    
    $
    328
    
    
    $
    1,339Lease termination costs
    
    
    10,201
    
    
    
    177
    
    
    
    
    
    
    
    10,024$
    18,478
    
    
    $
    7,443
    
    
    $
    328
    
    
    $
    11,363
   F-44




---



##### Table of Contents



(19) Commitments and Contingencies
 Leases
  Years Ended December 31,2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    ThereafterOperating leases
    
    $
    16,994
    
    
    $
    15,094
    
    
    $
    13,579
    
    
    $
    11,830
    
    
    $
    10,651
    
    
    $
    34,352Capital leases
    
    
    910
    
    
    
    622
    
    
    
    266
    
    
    
    260
    
    
    
    267
    
    
    
    163Minimum lease payments
    
    $
    17,904
    
    
    $
    15,716
    
    
    $
    13,845
    
    
    $
    12,090
    
    
    $
    10,918
    
    
    $
    34,515
  Capital commitments
  Investment in Venture Funds
  Employment Agreements
  Product Liability Insurance
   F-45




---



##### Table of Contents



Indemnity Provisions
  ®
 Guarantors Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness to Others
 Litigation Settlement
  Litigation Matters
   F-46




---



##### Table of Contents



Patent Matters
 Fexofenadine Hydrochloride Suit
         F-47




---



##### Table of Contents



Product Liability Matters
 Hormone Therapy Litigation
   Antitrust Matters
 Ciprofloxacin (Cipro®) Antitrust Class Actions
    F-48




---



##### Table of Contents



Ovcon Antitrust Proceedings
        F-49




---



##### Table of Contents



Provigil Antitrust Proceedings
 ®
   Medicaid Reimbursement Cases
     F-50




---



##### Table of Contents



Breach of Contract Action
  Other Litigation
  Government Inquiries
     F-51




---



##### Table of Contents





(20) Segment Reporting




Generic Pharmaceuticals








Proprietary Pharmaceuticals






Other




F-52




---



##### Table of Contents



Twelve-months endedDecember 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofGeneric
    
    %
    
    Proprietary
    
    %
    
    Other
    
    %
    
    Consolidated
    
    revenueRevenues:Product sales
    
    $
    1,895,883
    
    
    
    76
    %
    
    $
    438,253
    
    
    
    17
    %
    
    $
    
    
    
    
    0
    %
    
    $
    2,334,136
    
    
    
    93
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    121,858
    
    
    
    5
    %
    
    
    121,858
    
    
    
    5
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    44,588
    
    
    
    2
    %
    
    
    44,588
    
    
    
    2
    %Total revenues
    
    $
    1,895,883
    
    
    
    76
    %
    
    $
    438,253
    
    
    
    17
    %
    
    $
    166,446
    
    
    
    7
    %
    
    $
    2,500,582
    
    
    
    100
    %
 Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    MarginGross Profit:
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %Product sales
    
    $
    887,042
    
    
    
    47
    %
    
    $
    300,135
    
    
    
    68
    %
    
    $
    
    
    
    
    
    %
    
    $
    1,187,177
    
    
    
    51
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    121,858
    
    
    
    100
    %
    
    
    121,858
    
    
    
    100
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    20,448
    
    
    
    46
    %
    
    
    20,448
    
    
    
    46
    %Total gross profit
    
    $
    887,042
    
    
    
    47
    %
    
    $
    300,135
    
    
    
    68
    %
    
    $
    142,306
    
    
    
    85
    %
    
    $
    1,329,483
    
    
    
    53
    %
 Transition Period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofDecember 31, 2006
    
    Generic
    
    %
    
    Proprietary
    
    %
    
    Other
    
    %
    
    Consolidated
    
    revenueRevenues:Product sales
    
    $
    630,408
    
    
    
    70
    %
    
    $
    200,943
    
    
    
    22
    %
    
    $
    
    
    
    
    0
    %
    
    $
    831,351
    
    
    
    92
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    65,882
    
    
    
    7
    %
    
    
    65,882
    
    
    
    7
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    7,531
    
    
    
    1
    %
    
    
    7,531
    
    
    
    1
    %Total revenues
    
    $
    630,408
    
    
    
    70
    %
    
    $
    200,943
    
    
    
    22
    %
    
    $
    73,413
    
    
    
    8
    %
    
    $
    904,764
    
    
    
    100
    %
 Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    MarginGross Profit:
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %Product sales
    
    $
    323,768
    
    
    
    51
    %
    
    $
    144,761
    
    
    
    72
    %
    
    $
    
    
    
    
    
    %
    
    $
    468,529
    
    
    
    56
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    65,882
    
    
    
    100
    %
    
    
    65,882
    
    
    
    100
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    1,030
    
    
    
    14
    %
    
    
    1,030
    
    
    
    14
    %Total gross profit
    
    $
    323,768
    
    
    
    51
    %
    
    $
    144,761
    
    
    
    72
    %
    
    $
    66,912
    
    
    
    91
    %
    
    $
    535,441
    
    
    
    59
    %
 Six-months ended
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofDecember 31, 2005 (unaudited)
    
    Generic
    
    %
    
    Proprietary
    
    %
    
    Other
    
    %
    
    Consolidated
    
    revenueRevenues:Product sales
    
    $
    416,262
    
    
    
    65
    %
    
    $
    140,381
    
    
    
    22
    %
    
    $
    
    
    
    
    
    %
    
    $
    556,643
    
    
    
    88
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    79,313
    
    
    
    12
    %
    
    
    79,313
    
    
    
    12
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %Total revenues
    
    $
    416,262
    
    
    
    65
    %
    
    $
    140,381
    
    
    
    22
    %
    
    $
    79,313
    
    
    
    12
    %
    
    $
    635,956
    
    
    
    100
    %
 Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    MarginGross Profit:
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %Product sales
    
    $
    277,966
    
    
    
    67
    %
    
    $
    106,610
    
    
    
    76
    %
    
    $
    
    
    
    
    
    %
    
    $
    384,576
    
    
    
    69
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    79,313
    
    
    
    100
    %
    
    
    79,313
    
    
    
    100
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %Total gross profit
    
    $
    277,966
    
    
    
    67
    %
    
    $
    106,610
    
    
    
    76
    %
    
    $
    79,313
    
    
    
    100
    %
    
    $
    463,889
    
    
    
    73
    %
 F-53




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##### Table of Contents



Fiscal year ended
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofJune 30, 2006
    
    Generic
    
    %
    
    Proprietary
    
    %
    
    Other
    
    %
    
    Consolidated
    
    revenueRevenues:Product sales
    
    $
    838,820
    
    
    
    64
    %
    
    $
    330,963
    
    
    
    25
    %
    
    $
    
    
    
    
    0
    %
    
    $
    1,169,783
    
    
    
    89
    %Alliance and development revenue
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    144,682
    
    
    
    11
    %
    
    
    144,682
    
    
    
    11
    %Other revenue
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %Total revenues
    
    $
    838,820
    
    
    
    64
    %
    
    $
    330,963
    
    
    
    25
    %
    
    $
    144,682
    
    
    
    11
    %
    
    $
    1,314,465
    
    
    
    100
    %
 Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    MarginGross Profit:
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %Product sales
    
    $
    552,793
    
    
    
    66
    %
    
    $
    239,088
    
    
    
    72
    %
    
    $
    
    
    
    
    
    %
    
    $
    791,881
    
    
    
    68
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    144,682
    
    
    
    100
    %
    
    
    144,682
    
    
    
    100
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %Total gross profit
    
    $
    552,793
    
    
    
    66
    %
    
    $
    239,088
    
    
    
    72
    %
    
    $
    144,682
    
    
    
    100
    %
    
    $
    936,563
    
    
    
    71
    %
 Fiscal year ended
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % ofJune 30, 2005
    
    Generic
    
    %
    
    Proprietary
    
    %
    
    Other
    
    %
    
    Consolidated
    
    revenueRevenues:Product sales
    
    $
    751,388
    
    
    
    72
    %
    
    $
    279,284
    
    
    
    27
    %
    
    $
    
    
    
    
    0
    %
    
    $
    1,030,672
    
    
    
    98
    %Alliance and development revenue
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    16,727
    
    
    
    2
    %
    
    
    16,727
    
    
    
    2
    %Other revenue
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %
    
    
    
    
    
    
    0
    %Total revenues
    
    $
    751,388
    
    
    
    72
    %
    
    $
    279,284
    
    
    
    27
    %
    
    $
    16,727
    
    
    
    2
    %
    
    $
    1,047,399
    
    
    
    100
    %
 Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    Margin
    
    
    
    
    
    MarginGross Profit:
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %
    
    
    
    
    
    %Product sales
    
    $
    486,533
    
    
    
    65
    %
    
    $
    226,705
    
    
    
    81
    %
    
    $
    
    
    
    
    
    %
    
    $
    713,238
    
    
    
    69
    %Alliance and development revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    16,727
    
    
    
    100
    %
    
    
    16,727
    
    
    
    100
    %Other revenue
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    %Total gross profit
    
    $
    486,533
    
    
    
    65
    %
    
    $
    226,705
    
    
    
    81
    %
    
    $
    16,727
    
    
    
    100
    %
    
    $
    729,965
    
    
    
    70
    %
 Geographic Information
  Product sales by geographic area
 Six-MonthsYear Ended
    
    
    
    
    
    
    Ended
    
    
    Fiscal Year EndedDecember 31,
    
    
    Transition
    
    
    December 31,
    
    
    June 30,2007
    
    
    Period
    
    
    2005
    
    
    2006
    
    
    2005(unaudited)United States
    
    $
    1,663,071
    
    
    $
    696,328
    
    
    $
    552,883
    
    
    $
    1,163,148
    
    
    $
    1,023,657ROW
    
    
    671,065
    
    
    
    135,023
    
    
    
    3,760
    
    
    
    6,635
    
    
    
    7,015Total product sales
    
    $
    2,334,136
    
    
    $
    831,351
    
    
    $
    556,643
    
    
    $
    1,169,783
    
    
    $
    1,030,672
   F-54




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##### Table of Contents



Long-Lived Assets by Geographical Location
 2007
    
    
    2006United States
    
    $
    312,118
    
    
    $
    278,529ROW
    
    
    803,786
    
    
    
    725,889Total
    
    $
    1,115,904
    
    
    $
    1,004,418
 Product sales by therapeutic category
  SixYear Ended
    
    
    
    
    
    
    Months Ended
    
    
    Fiscal Year EndedDecember 31,
    
    
    Transition
    
    
    December 31,
    
    
    June 30,2007
    
    
    Period
    
    
    2005
    
    
    2006

    2005(unaudited)Contraception
    
    $
    725,926
    
    
    $
    368,310
    
    
    $
    289,025
    
    
    $
    622,382
    
    
    $
    565,626Psychotherapeutics
    
    
    261,822
    
    
    
    63,158
    
    
    
    32,719
    
    
    
    71,930
    
    
    
    83,121Cardiovascular
    
    
    271,215
    
    
    
    76,325
    
    
    
    48,142
    
    
    
    103,350
    
    
    
    110,328Antibiotics, antiviral & anti-infectives
    
    
    241,495
    
    
    
    75,386
    
    
    
    28,379
    
    
    
    59,366
    
    
    
    44,300Other (1)
    
    
    833,678
    
    
    
    248,172
    
    
    
    158,378
    
    
    
    312,755
    
    
    
    227,297Total
    
    $
    2,334,136
    
    
    $
    831,351
    
    
    $
    556,643
    
    
    $
    1,169,783
    
    
    $
    1,030,672
 
 (1)
    
    Other includes numerous therapeutic categories, none of which individually exceeds 10% of consolidated product sales. F-55




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##### Table of Contents



(21) Quarterly Data (unaudited)
  Three Month Period EndedMar. 31
    
    
    Jun. 30 (1)
    
    
    Sept. 30
    
    
    Dec. 31 (1)Year Ended December 31, 2007:Total revenues
    
    $
    596,548
    
    
    $
    633,956
    
    
    $
    601,385
    
    
    $
    668,693Gross Profit
    
    
    295,502
    
    
    
    357,669
    
    
    
    334,054
    
    
    
    342,258Net earnings
    
    
    11,572
    
    
    
    45,345
    
    
    
    38,925
    
    
    
    32,508Earnings per
common share  basic (2)
    
    $
    0.11
    
    
    $
    0.42
    
    
    $
    0.37
    
    
    $
    0.30Earnings per
common share  diluted (2)
    
    $
    0.11
    
    
$
    0.41
    
    
    $
    0.36
    
    
    $
    0.30Price range of Common StockHigh
    
    $
    56.66
    
    
    $
    55.10
    
    
    $
    57.25
    
    
    $
    58.38Low
    
    $
    45.77
    
    
    $
    45.41
    
    
    $
    49.49
    
    
    $
    50.59
 Three Month Period EndedSept. 30
    
    
    Dec. 31Six Months Ended December 31, 2006Total revenues
    
    $
    332,370
    
    
    $
    572,394Gross Profit
    
    
    242,792
    
    
    
    292,649Net earnings (loss)
    
    
    52,761
    
    
    
    (390,916
    )Earnings (loss) per common share  basic (2)
    
    $
    0.50
    
    
    $
    (3.67
    )Earnings (loss) per common share  diluted (2)
    
    $
    0.49
    
    
    $
    (3.67
    )Price range of Common StockHigh
    
    $
    59.25
    
    
    $
    53.89Low
    
    $
    44.60
    
    
    $
    47.82
 Three Month Period EndedSept. 30
    
    
    Dec. 31
    
    
    Mar. 31
    
    
    Jun. 30Year Ended June 30, 2006Total revenues
    
    $
    310,439
    
    
    $
    325,517
    
    
    $
    326,841
    
    
    $
    351,668Gross Profit
    
    
    227,269
    
    
    
    236,621
    
    
    
    228,334
    
    
    
    244,339Net earnings
    
    
    83,243
    
    
    
    94,884
    
    
    
    76,096
    
    
    
    82,254Earnings per common share  basic (2)
    
    $
    0.80
    
    
    $
    0.91
    
    
    $
    0.72
    
    
    $
    0.77Earnings per common share  diluted (2)
    
    $
    0.78
    
    
    $
    0.88
    
    
    $
    0.70
    
    
    $
    0.76Price range of Common StockHigh
    
    $
    55.08
    
    
    $
    63.60
    
    
    $
    70.25
    
    
    $
    64.51Low
    
    $
    45.00
    
    
    $
    53.53
    
    
    $
    60.83
    
    
    $
    47.24
 
 (1)
    
    Gross margin and net income for the quarter ended December 31, 2007 include the effects of
recording immaterial cost of sales that related to the quarter ended June 30, 2007 that were
inadvertently not reflected in the reported results for that earlier period. As a result, gross
margin and net income for the quarter ended June 30, 2007 were
overstated by $12,400 and $7,400, respectively, and gross margin and net income for the quarter ended December 31, 2007 are
understated by the same respective amounts. The Companys
financial position at December 31, 2007 and its results of operations
and cash flows for the 2007 year are
unaffected by this adjustment.(2)
    
    The sum of the individual quarters may not equal the full year amounts due to the effects
of the market prices in the application of the treasury stock method. During its three most recent
fiscal years, the Company did not pay any cash dividends. F-56




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##### Table of Contents



SCHEDULE II
 BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
 VALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    Additions,Beginning
    
    Costs and
    
    Deductions,
    
    Balance at(In thousands)
    
    of Year
    
    Expenses
    
    Write-offs
    
    End of YearTotal Accounts Receivable Reserves:Year Ended December 31, 2007
    
    $
    242,768
    
    
    
    1,148,290
    
    
    
    (1,133,794
    )
    
    $
    257,264Six Months Ended December 31, 2006
    
    $
    137,297
    
    
    
    461,010
    
    
    
    (355,539
    )
    
    $
    242,768Year Ended June 30, 2006
    
    $
    142,484
    
    
    
    646,844
    
    
    
    (652,031
    )
    
    $
    137,297Year Ended June 30, 2005
    
    $
    138,465
    
    
    
    559,786
    
    
    
    (555,767
    )
    
    $
    142,484
 S-1