<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-K/A

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended June 30, 2003 or

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

For the transition period from __________ to __________

                          Commission file number 1-9860

                             BARR LABORATORIES, INC.
                             -----------------------
            (Exact name of Registrant as specified in its charter)

            NEW YORK                                            22-1927534
            --------                                            ----------
(State or Other Jurisdiction of                             (I.R.S. - Employer
Incorporation or Organization)                              Identification No.)

                      2 Quaker Road Pomona, New York 10970
                      ------------------------------------
                    (Address of principal executive offices)

                                  845-362-1100
                                  ------------
                         (Registrant's telephone number)

Securities registered pursuant to Section 12(b) of      Name of each exchange on
                  the Act:                                  which registered:
              Title of each class
          Common Stock, Par Value $0.01                  New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

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

Yes [X]    No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X]    No [ ]

The aggregate market value of the voting stock of the Registrant held by
non-affiliates was approximately $3,649,208,247 as of June 30, 2003 (assuming
solely for purposes of this calculation that all Directors and Officers of the
Registrant are "affiliates").

Number of shares of Common Stock, Par Value $.01, outstanding as of June 30,
2003: 66,785,798

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's 2003 Proxy Statement are incorporated by reference
in Part III of the Form 10-K, as amended by this form 10-K/A.



<PAGE>
                                EXPLANATORY NOTE

     This Amendment No. 1 on Form 10-K/A (this "Amendment") is being filed to
amend the Registrant's Annual Report on Form 10-K for the year ended June 30,
2003, as filed on August 26, 2003 (the "Original Report on Form 10-K"). The
purpose of this Amendment is to correct Note 16 to the Company's consolidated
financial statements and to correct a printer's error in Note 1, subsection (e)
to the financial statements. In particular, the following errors were included
in Note 16 of the Original Report on Form 10-K:

          * options granted under employee stock option plans in fiscal 2003
            were understated by 2,247;

          * employee stock options exercisable at June 30, 2003 were understated
            by 40,000; and

          * options outstanding under non-employee director stock option plans
            at June 30, 2003 were overstated by 42,265.

     These errors affected certain other numbers contained in the tables
reflecting option activity in Note 16 under the employee and non-employee
director plans, including the weighted average exercise price of employee stock
options exercisable at June 30, 2003.

     In addition, subsection (e) of Note 1 has been amended to provide that the
estimated useful lives of leasehold improvements are "2-10" years, rather than
"2-1" years as included in the Original Report on Form 10-K.

     Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, this
Amendment contains the complete text of "Item 8. Financial Statements and
Supplementary Data," as amended.

     This Amendment does not reflect events occurring after the filing of the
Original Report on Form 10-K, and does not modify or update the disclosures
therein in any way other than as required to reflect the corrections to Notes 1
and 16 described above.



                                       2
<PAGE>
                                    PART II

ITEM 8. Financial Statements and Supplementary Data

        INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE


<TABLE>
<CAPTION>
                                                                                                          Page
                                                                                                          ----
<S>                                                                                                       <C>
Independent Auditors' Report                                                                              F-2

Report of Independent Auditors                                                                            F-3

Consolidated Balance Sheets as of June 30, 2003 and 2002                                                  F-4

Consolidated Statements of Operations for the years ended June 30, 2003, 2002
   and 2001                                                                                               F-5

Consolidated Statements of Shareholders' Equity for the years ended June 30, 2003,
   2002 and 2001                                                                                          F-6

Consolidated Statements of Cash Flows for the years ended June 30, 2003, 2002
   and 2001                                                                                               F-8

Notes to Consolidated Financial Statements                                                                F-9

Schedule II - Valuation and Qualifying Accounts for the years
   ended June 30, 2003, 2002 and 2001                                                                     S-1
</TABLE>

                                      F-1
<PAGE>

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
   Barr Laboratories, Inc.:

We have audited the accompanying consolidated balance sheets of Barr
Laboratories, Inc. and subsidiaries (the "Company") as of June 30, 2003 and
2002, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended June 30,
2003. Our audits also included the financial statement schedule listed at Item
15. These financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on the financial statements and financial statement schedule based on
our audits. The consolidated financial statements give retroactive effect to the
merger of the Company and Duramed Pharmaceuticals, Inc. ("Duramed"), which has
been accounted for as a pooling of interests as described in Note 3 to the
consolidated financial statements. We did not audit the financial statements of
Duramed for the six-month period ended June 30, 2001 or the year ended December
31, 2000, which statements reflect total assets of $136,587,000 and $81,966,000
as of June 30, 2001 and December 31, 2000, respectively, and total revenues of
$59,831,000 and $83,465,000 for the respective periods then ended. The financial
statements of Duramed for such periods were audited by other auditors whose
report has been furnished to us, and our opinion, insofar as it relates to the
amounts included for Duramed for such periods, is based solely on the report of
such other auditors. The financial statements of Duramed were combined with the
financial statements of the Company as described in Note 1. Certain accounts of
Duramed were reclassified to conform to the presentation method used by the
Company and restated to give effect to pooling of interest adjustments of
Duramed's tax valuation allowance in accordance with the provisions of SFAS No.
109, Accounting for Income Taxes.

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

In our opinion, based on our audits and the report of the other auditors, such
consolidated financial statements present fairly, in all material respects, the
financial position of Barr Laboratories, Inc. and subsidiaries at June 30, 2003
and 2002, and the results of their operations and their cash flows for each of
the three years in the period ended June 30, 2003, in conformity with accounting
principles generally accepted in the United States of America. Also, in our
opinion, based on our audits and the report of other auditors, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

We also audited the adjustments described in Note 3 that were applied to restate
the June 30, 2001 and December 31, 2000 financial statements of Duramed. In our
opinion, such adjustments are appropriate and have been properly applied.

/s/ Deloitte & Touche LLP

Stamford, Connecticut
August 6, 2003

                                      F-2

<PAGE>

Report of Independent Auditors

The Board of Directors
Duramed Pharmaceuticals, Inc.

We have audited the consolidated balance sheets of Duramed Pharmaceuticals, Inc.
as of June 30, 2001 and December 31, 2000, and the related consolidated
statements of operations, stockholders' equity (capital deficiency) and cash
flows for the six months ended June 30, 2001 and for the year ended December 31,
2000 (not presented separately herein). These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Duramed
Pharmaceuticals, Inc. at June 30, 2001 and December 31, 2000, and the
consolidated results of its operations and its cash flows for the six months
ended June 30, 2001 and for the year ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.

/s/ Ernst & Young LLP

Cincinnati, Ohio
November 30, 2001

                                      F-3

<PAGE>

BARR LABORATORIES, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                   JUNE 30,         JUNE 30,
                                                                                                     2003            2002
                                                                                                 -----------      -----------
<S>                                                                                              <C>              <C>
                                                ASSETS
Current assets:
  Cash and cash equivalents                                                                      $   367,142      $   331,257
  Marketable securities                                                                               29,400                -
  Accounts receivable, net (including receivables from related parties of $2,398 in 2003 and
    $829 in 2002)                                                                                    221,652          103,168
  Other receivables                                                                                   31,136           23,230
  Inventories, net                                                                                   163,926          151,133
  Deferred income taxes                                                                               27,375           18,208
  Prepaid expenses and other current assets                                                            6,873            7,852
                                                                                                 -----------      -----------
    Total current assets                                                                             847,504          634,848

Property, plant and equipment, net                                                                   223,516          165,522
Deferred income taxes                                                                                  5,589           21,270
Marketable securities                                                                                 15,055           15,502
Other intangible assets                                                                               45,949           28,200
Goodwill                                                                                              14,118           13,941
Other assets                                                                                          29,206            9,271
                                                                                                 -----------      -----------
    Total assets                                                                                 $ 1,180,937      $   888,554
                                                                                                 ===========      ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                                               $   188,852      $   110,879
  Accrued liabilities (including accrued liabilities to related parties of $648 in
    2003 and $634 in 2002)                                                                            66,109           51,438
  Current portion of long-term debt                                                                    7,029            3,642
  Current portion of capital lease obligations                                                         1,481            1,695
  Income taxes payable                                                                                11,316            9,801
                                                                                                 -----------      -----------
    Total current liabilities                                                                        274,787          177,455

Long-term debt                                                                                        30,629           37,657
Long-term portion of capital lease obligations                                                         3,398            4,977
Other liabilities                                                                                      4,128            1,933

Commitments & Contingencies (Note 21)

Shareholders' equity:
  Preferred stock, $1 par value per share; authorized 2,000,000 shares; none issued                        -                -
  Common stock $.01 par value per share; authorized 100,000,000;
    issued 67,066,196 and 43,792,170 in 2003 and 2002, respectively                                      671              438
  Additional paid-in capital                                                                         326,001          291,637
  Retained earnings                                                                                  542,210          375,066
  Accumulated other comprehensive (loss) income                                                         (179)              99
                                                                                                 -----------      -----------
                                                                                                     868,703          667,240
  Treasury stock at cost: 280,398 and 186,932 in 2003 and 2002, respectively                            (708)            (708)
                                                                                                 -----------      -----------
    Total shareholders' equity                                                                       867,995          666,532
                                                                                                 -----------      -----------
    Total liabilities and shareholders' equity                                                   $ 1,180,937      $   888,554
                                                                                                 ===========      ===========
</TABLE>

        SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-4

<PAGE>

BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED JUNE 30, 2003, 2002 AND 2001
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                      2003            2002           2001
                                                                                   ----------      ----------     ----------
<S>                                                                                <C>             <C>            <C>
Revenues:
  Product sales (including sales to related parties of $12,727, $16,472 and
    $8,279 in 2003, 2002 and 2001, respectively)                                   $  894,888      $1,171,358     $  576,656
  Development and other revenue                                                         7,976          17,626         16,495
                                                                                   ----------      ----------     ----------
Total revenues                                                                        902,864       1,188,984        593,151

Costs and expenses:
  Cost of sales (including amounts paid to related parties of $5,023, $180,013
    and $2,644 in 2003, 2002 and 2001, respectively)                                  424,099         676,323        391,109
  Selling, general and administrative                                                 160,978         111,886         76,821
  Research and development                                                             91,207          75,697         57,617
  Merger-related costs                                                                      -          31,449              -
                                                                                   ----------      ----------     ----------

Earnings from operations                                                              226,580         293,629         67,604

Proceeds from patent challenge settlement                                              31,396          31,958         28,313
Interest income                                                                         6,341           7,824          9,423
Interest expense                                                                        1,474           3,530          7,195
Other (expense) income, net                                                              (128)          7,656          3,648
                                                                                   ----------      ----------     ----------

Earnings before income taxes                                                          262,715         337,537        101,793

Income tax expense                                                                     95,149         125,318         38,714
                                                                                   ----------      ----------     ----------

Net earnings                                                                          167,566         212,219         63,079

Preferred stock dividends                                                                   -             457            338
Deemed dividend on convertible preferred stock                                              -           1,493            175
                                                                                   ----------      ----------     ----------

Net earnings applicable to common shareholders                                     $  167,566      $  210,269     $   62,566
                                                                                   ==========      ==========     ==========

Earnings per common share - basic                                                  $     2.54      $     3.25     $     0.99
                                                                                   ==========      ==========     ==========

Earnings per common share - diluted                                                $     2.43      $     3.09     $     0.94
                                                                                   ==========      ==========     ==========

Weighted average shares                                                                66,083          64,665         62,960
                                                                                   ==========      ==========     ==========

Weighted average shares - diluted                                                      69,061          68,135         66,860
                                                                                   ==========      ==========     ==========
</TABLE>

        SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-5

<PAGE>

BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED JUNE 30, 2003, 2002 AND 2001
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                     Additional
                                                         Additional     paid        Warrant
                                        Common stock       paid      in capital-  subscription  Retained
                                      Shares     Amount  in capital   warrants     receivable   earnings
                                     -------------------------------------------------------------------
<S>                                  <C>         <C>     <C>         <C>          <C>           <C>
BALANCE, JULY 1, 2000                41,360,835  $  413  $  210,531  $    16,418  $     (1,835) $ 97,268
Comprehensive income:
  Net earnings                                                                                    63,079
  Unrealized gain on marketable
    securities, net of
    tax of $226
  Reclassification adjustment

Total comprehensive income
Tax benefit of stock incentive plans                         11,614
Issuance of stock in connection
  with benefit plans                     14,231       -         346
Conversion of Series F
  Preferred Stock, net                  331,503       4       4,914
Issuance of warrants in connection
  with Series G Preferred Stock                                 765
Preferred stock valuation adjustment                          1,335
Issuance of common stock
  for exercised stock options
  and employees' stock
  purchase plans                        626,955       7      10,272
Dividend on Preferred Stock                                    (513)
Proceeds applied to
  warrant receivable                                                                     1,835
                                     -------------------------------------------------------------------
BALANCE, JUNE 30, 2001               42,333,524     424     239,264       16,418             -   160,347
Comprehensive income:
  Net earnings                                                                                   212,219
  Unrealized loss on marketable
    securities, net of
    tax of $168

Total comprehensive income
Pooling adjustments                     125,590      (1)      1,219                                2,551
Tax benefit of stock incentive plans                          5,611
Issuance of stock in connection
  with benefit plans                      2,349       -         177
Issuance of common stock
  for exercised stock options
  and employees' stock
  purchase plans                        797,380       8      19,882
Issuance of common stock for
  exercised warrants                     21,565       2         762
Conversion of preferred stock           512,387       5       8,841
Deemed dividend on convertible
  preferred stock                                               (80)
Dividend on convertible preferred
  stock                                                        (457)
Cash in lieu of fractional shares          (625)                                                     (51)
Common stock acquired for treasury                                -
                                     -------------------------------------------------------------------
BALANCE, JUNE 30, 2002               43,792,170     438     275,219       16,418             -   375,066
</TABLE>

<TABLE>
<CAPTION>
                                      Accumulated
                                         other                           Total
                                     comprehensive  Treasury stock   shareholders'
                                     income/(loss)  Shares   Amount     equity
                                     ---------------------------------------------
<S>                                  <C>            <C>      <C>     <C>
BALANCE, JULY 1, 2000                $       1,916  176,932  $  (13) $     324,698
Comprehensive income:
  Net earnings                                                              63,079
  Unrealized gain on marketable
    securities, net of
    tax of $226                                305                             305
  Reclassification adjustment               (1,884)                         (1,884)
                                                                     -------------
Total comprehensive income                                                  61,500
Tax benefit of stock incentive plans                                        11,614
Issuance of stock in connection
  with benefit plans                                                           346
Conversion of Series F
  Preferred Stock, net                                                       4,918
Issuance of warrants in connection
  with Series G Preferred Stock                                                765
Preferred stock valuation adjustment                                         1,335
Issuance of common stock
  for exercised stock options
  and employees' stock
  purchase plans                                                            10,279
Dividend on Preferred Stock                                                  (513)
Proceeds applied to
  warrant receivable                                                         1,835
                                     ---------------------------------------------
BALANCE, JUNE 30, 2001                         337  176,932     (13)       416,777
Comprehensive income:
  Net earnings                                                             212,219
  Unrealized loss on marketable
    securities, net of
    tax of $168                               (238)                           (238)
                                                                     -------------
Total comprehensive income                                                 211,981
Pooling adjustments                                                          3,769
Tax benefit of stock incentive plans                                         5,611
Issuance of stock in connection
  with benefit plans                                                           177
Issuance of common stock
  for exercised stock options
  and employees' stock
  purchase plans                                                            19,890
Issuance of common stock for
  exercised warrants                                                           764
Conversion of preferred stock                                                8,846
Deemed dividend on convertible
  preferred stock                                                              (80)
Dividend on convertible preferred
  stock                                                                       (457)
Cash in lieu of fractional shares                                              (51)
Common stock acquired for treasury                   10,000    (695)          (695)
                                     ---------------------------------------------
BALANCE, JUNE 30, 2002                          99  186,932    (708)       666,532
</TABLE>

                                      F-6


<PAGE>

BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONT.)
FOR THE YEARS ENDED JUNE 30, 2003, 2002 AND 2001
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                     Additional
                                                         Additional     paid        Warrant
                                        Common stock       paid      in capital-  subscription  Retained
                                      Shares     Amount  in capital   warrants     receivable   earnings
                                     -------------------------------------------------------------------
<S>                                  <C>         <C>     <C>         <C>          <C>           <C>
BALANCE, JUNE 30, 2002               43,792,170     438     275,219       16,418             -   375,066
Comprehensive income:
  Net earnings                                                                                   167,566
  Unrealized loss on marketable
     securities, net of
     tax of $170

Total comprehensive income
Tax benefit of stock incentive plans                         10,912
Issuance of common stock
  for exercised stock options
  and employees' stock
  purchase plans                      1,020,032      10      23,453
Issuance of common stock for
  exercised warrants                     83,940       1          (1)
Stock split (3-for-2)                22,170,054     222                                             (422)
                                     -------------------------------------------------------------------
BALANCE, JUNE 30, 2003               67,066,196  $  671  $  309,583  $    16,418  $          -  $542,210
                                     ===================================================================
</TABLE>

<TABLE>
<CAPTION>
                                      Accumulated
                                         other                           Total
                                     comprehensive  Treasury stock   shareholders'
                                     income/(loss)  Shares   Amount     equity
                                     ---------------------------------------------
<S>                                  <C>            <C>      <C>     <C>
BALANCE, JUNE 30, 2002                          99  186,932    (708)       666,532
Comprehensive income:
  Net earnings                                                             167,566
  Unrealized loss on marketable
     securities, net of
     tax of $170                              (278)                           (278)
                                                                     -------------
Total comprehensive income                                                 167,288
Tax benefit of stock incentive plans                                        10,912
Issuance of common stock
  for exercised stock options
  and employees' stock
  purchase plans                                                            23,463
Issuance of common stock for
  exercised warrants                                                             -
Stock split (3-for-2)                                93,466                   (200)
                                     ---------------------------------------------
BALANCE, JUNE 30, 2003               $        (179) 280,398 $  (708) $     867,995
                                     =============================================
</TABLE>

         SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

                                      F-7

<PAGE>

BARR LABORATORIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2003, 2002 AND 2001
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                                                            2003           2002           2001
                                                                                          ---------      ---------      ---------
<S>                                                                                       <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net earnings                                                                            $ 167,566      $ 212,219      $  63,079
  Adjustments to reconcile net earnings to net cash provided by operating activities:
    Depreciation and amortization                                                            22,713         15,290         14,324
    Deferred income tax expense (benefit)                                                     6,684          6,389         (4,159)
    Write-off of intangible asset                                                             1,330              -              -
    Write-off of deferred financing fees associated with early extinguishment of debt             -            247              -
    Loss on sale of assets                                                                      176              -            303
    Gain on sale of marketable securities                                                         -              -         (6,671)
    Write-off of investments                                                                    250              -          2,750
    Other                                                                                       (64)           260            151

  Tax benefit of stock incentive plans                                                       10,912          5,611         11,614
  Write-off of in-process research and development associated with acquisitions               3,946          1,000              -

   Changes in assets and liabilities:
    (Increase) decrease in:
      Accounts receivable and other receivables, net                                       (126,390)        (5,155)       (24,389)
      Inventories, net                                                                      (12,793)        (8,304)       (29,916)
      Prepaid expenses                                                                          923           (844)            39
      Other assets                                                                          (11,279)          (179)           508
    Increase (decrease) in:
      Accounts payable, accrued liabilities and other liabilities                            94,839          8,766         13,642
      Income taxes payable                                                                    1,515           (475)         6,226
                                                                                          ---------      ---------      ---------
    Net cash provided by operating activities                                               160,328        234,825         47,501
                                                                                          ---------      ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchases of property, plant and equipment                                                (80,617)       (47,205)       (19,323)
  Proceeds from sale of property, plant and equipment                                         2,997            395             27
  Loans to Natural Biologics                                                                 (9,166)        (4,730)             -
  Acquisitions                                                                              (25,992)       (46,288)             -
  (Purchases) proceeds of marketable securities, net                                        (29,400)       (15,000)        10,839
  Other                                                                                           -           (500)             -
                                                                                          ---------      ---------      ---------
    Net cash used in investing activities                                                  (142,178)      (113,328)        (8,457)
                                                                                          ---------      ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term debt and capital leases                                    (5,528)       (12,166)       (17,405)
  Net borrowings under line of credit                                                             -        (20,316)         2,535
  Long-term borrowings                                                                            -              -         20,799
  Proceeds from issuance of preferred stock                                                       -              -          9,700
  Proceeds from issuance of common stock                                                          -              -          1,163
  Earnings under DuPont agreements applied to warrant receivable                                  -              -          1,835
  Purchase of treasury stock                                                                      -           (695)             -
  Proceeds from exercise of stock options and employee stock purchases                       23,463         20,655          9,117
  Dividends paid on preferred stock                                                               -            (11)          (371)
  Other                                                                                        (200)           (50)             -
                                                                                          ---------      ---------      ---------
    Net cash provided by (used in) financing activities                                      17,735        (12,583)        27,373
                                                                                          ---------      ---------      ---------
Increase in cash and cash equivalents                                                        35,885        108,914         66,417
Cash and cash equivalents, beginning of year                                                331,257        222,343        155,926
                                                                                          ---------      ---------      ---------
Cash and cash equivalents, end of year                                                    $ 367,142      $ 331,257      $ 222,343
                                                                                          =========      =========      =========

SUPPLEMENTAL CASH FLOW DATA:
  Cash paid during the year:
    Interest, net of portion capitalized                                                  $   1,455      $   3,510      $   6,666
                                                                                          =========      =========      =========
    Income taxes                                                                          $  76,039      $ 113,563      $  25,533
                                                                                          =========      =========      =========
  Non-cash transactions:
    Equipment under capital lease                                                         $      94      $   5,318      $   1,383
                                                                                          =========      =========      =========
    Write-off of equipment & leasehold improvements related to closed facility            $       -      $   5,307      $       -
                                                                                          =========      =========      =========
</TABLE>

        SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.

                                      F-8

<PAGE>

                             BARR LABORATORIES, INC.

                 Notes to the Consolidated Financial Statements
               (in thousands of dollars, except per share amounts)

(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (a)      Principles of Consolidation and Other Matters

                  Barr Laboratories, Inc., a New York corporation, is a
                  specialty pharmaceutical company engaged in the development,
                  manufacture, and marketing of generic and proprietary
                  pharmaceutical products primarily in the United States. The
                  consolidated financial statements include the accounts of Barr
                  Laboratories, Inc. and its wholly-owned subsidiaries (the
                  "Company" or "Barr"). The Company, when used in the context of
                  "the Company and Duramed," refers to pre-merger Barr. All
                  significant intercompany balances and transactions have been
                  eliminated in consolidation.

                  Sherman Delaware, Inc. owned approximately 16% of the
                  outstanding common stock of the Company at June 30, 2003. Dr.
                  Bernard C. Sherman is a principal stockholder of Sherman
                  Delaware, Inc. and was a Director of Barr Laboratories, Inc.
                  until October 24, 2002 (see Note 14).

                  On October 24, 2001, the Company completed a merger with
                  Duramed Pharmaceuticals, Inc. ("Duramed"), a developer,
                  manufacturer, and marketer of prescription drug products
                  focusing on women's health and the hormone therapy markets.
                  The merger qualified as a tax-free reorganization and was
                  accounted for as a pooling-of-interests for financial
                  reporting purposes. Accordingly, in accordance with accounting
                  principles generally accepted in the United States of America
                  and pursuant to Regulation S-X of the U.S. Securities and
                  Exchange Commission, all financial data of the Company
                  presented in these financial statements has been restated as
                  described below to include the historical financial data of
                  Duramed (see Note 3).

                  The Company and Duramed had different fiscal year-ends.
                  Duramed had a calendar year-end, whereas the Company's fiscal
                  year ends on June 30th. Financial information for the fiscal
                  year ended June 30, 2002 is presented as if the Company and
                  Duramed were merged on July 1, 2001. For the fiscal year ended
                  June 30, 2001, financial information for Barr's fiscal year
                  ended June 30th was combined with financial information for
                  Duramed's calendar year ended December 31st. Barr's
                  consolidated statement of operations for the fiscal year ended
                  June 30, 2001 was combined with Duramed's statement of
                  operations for the calendar year ended December 31, 2000.
                  Barr's statement of cash flows for the fiscal year ended June
                  30, 2001 was combined with Duramed's statement of cash flows
                  for the calendar year ended December 31, 2000.

                  This presentation of the combined financial information
                  described above has the effect of excluding Duramed's audited
                  results from operations for the six-month period ended June
                  30, 2001. Net revenues and net income for Duramed for the
                  six-month period ended June 30, 2001 were $59,831 and $49,038,
                  respectively. On a stand alone basis, Duramed's net income of
                  $49,038 reflects the benefit of reversing $44,755 of the
                  valuation allowance that Duramed previously established to
                  offset certain deferred tax assets. The valuation allowance
                  was reversed based on the expectation that, as a result of the
                  merger, the combined company would be able to utilize a
                  majority of these deferred tax assets (see Note 3). In
                  addition, from July 1, 2001 through October 24, 2001, the date
                  of the merger, Duramed reversed an additional $1,732 of
                  valuation allowance, bringing the total valuation allowance
                  reversals to $46,487. In accordance with SFAS 109 "Accounting
                  for Income Taxes", Duramed's net earnings of $49,038 less the
                  $46,487 reversal of valuation allowance, or $2,551, has been
                  reported as an increase to Barr's retained earnings within the
                  consolidated statements of shareholders' equity for the year
                  ended June 30, 2002. Duramed's cash flows (used in) provided
                  by operating, investing and financing activities for the
                  six-months ended June 30, 2001 were ($208), ($1,446), and
                  $1,654, respectively.

                  On June 6, 2002, the Company completed the purchase of certain
                  assets and assumption of certain liabilities of Enhance
                  Pharmaceuticals, Inc. ("Enhance"). The operating results of
                  Enhance are included in the consolidated financial statements
                  subsequent to the June 6, 2002 acquisition date.

                                      F-9

<PAGE>

                  Certain amounts in the prior year's financial statements have
                  been reclassified to conform with the current year
                  presentation.

         (b)      Credit and Market Risk

                  Financial instruments that potentially subject the Company to
                  credit risk consist principally of interest-bearing
                  investments, trade receivables and a loan receivable from
                  Natural Biologics. The Company performs ongoing credit
                  evaluations of its customers' financial condition and
                  generally does not require collateral from its customers.

         (c)      Cash and Cash Equivalents

                  Cash equivalents consist of short-term, highly liquid
                  investments including market auction debt securities with
                  maturities of three months or less and with interest rates
                  that are re-set in intervals of 7 to 49 days, which are
                  readily convertible into cash at par value, which approximates
                  cost.

                  As of June 30, 2003 and 2002, $0 and $84,834, respectively, of
                  the Company's cash was held in an interest bearing escrow
                  account. Such amounts represented the portion of the Company's
                  payable balance with AstraZeneca that the Company had decided
                  to secure in connection with its cash management policy. On
                  August 21, 2002, the Company's supply agreement with
                  AstraZeneca expired.

         (d)      Inventories

                  Inventories are stated at the lower of cost, determined on a
                  first-in, first-out (FIFO) basis, or market. The Company
                  establishes reserves for its inventory to reflect situations
                  in which the cost of the inventory is not expected to be
                  recovered. The Company regularly reviews its inventory,
                  including when product is close to expiration and is not
                  expected to be sold, when product has reached its expiration
                  date, or when product is not expected to be saleable based on
                  the Company's quality assurance and control standards. The
                  reserve for these products is equal to all or a portion of the
                  cost of the inventory based on the specific facts and
                  circumstances. In evaluating whether inventory is stated at
                  the lower of cost or market, management considers such factors
                  as the amount of inventory on hand, estimated time required to
                  sell such inventory, remaining shelf life and current and
                  expected market conditions, including levels of competition.
                  The Company monitors inventory levels, expiry dates and market
                  conditions on a regular basis. The Company records provisions
                  for inventory reserves as part of cost of sales.

         (e)      Property, Plant and Equipment

                  Property, plant and equipment is recorded at cost.
                  Depreciation is recorded on a straight-line basis over the
                  estimated useful lives of the related assets. Amortization of
                  capital lease assets is included in depreciation expense.
                  Leasehold improvements are amortized on a straight-line basis
                  over the shorter of their useful lives or the terms of the
                  respective leases.

                  The estimated useful lives of the major classification of
                  depreciable assets are:

                         <TABLE>
                         <CAPTION>
                                                                        Years
                                                                        -----
                         <S>                                            <C>
                         Buildings                                      30-45
                         Building improvements                             10
                         Machinery and equipment                         3-10
                         Leasehold improvements                          2-10
                         </TABLE>

                  Maintenance and repairs are charged to operations as incurred;
                  renewals and betterments are capitalized.

         (f)      Goodwill and Other Intangible Assets

                  In connection with acquisitions, the Company determines the
                  amounts assigned to goodwill and intangibles based on purchase
                  price allocations. These allocations, including an assessment
                  of the estimated useful lives of intangible assets, have been
                  performed by qualified independent appraisers using generally
                  accepted valuation methodologies. The valuation of intangible
                  assets is generally based on the estimated future cash flows
                  related to

                                      F-10

<PAGE>

                  those assets, while the value assigned to goodwill is the
                  residual of the purchase price over the fair value of all
                  identifiable assets acquired and liabilities assumed. Useful
                  lives are determined based on the expected future period of
                  benefit of the asset, which considers various characteristics
                  of the asset, including historical cash flows. As required by
                  Statement of Financial Accounting Standards ("SFAS") No. 142,
                  "Goodwill and Other Intangible Assets," the Company reviews
                  goodwill for impairment annually, or more frequently if
                  impairment indicators arise.

         (g)      Stock-Based Compensation

                  The Company has three stock-based employee compensation plans,
                  two stock-based non-employee director compensation plans and
                  an employee stock purchase plan, which are described more
                  fully in Note 16. The Company accounts for these plans under
                  the intrinsic value method described in Accounting Principles
                  Board Opinion No. 25 "Accounting for Stock Issued to
                  Employees," and related Interpretations. Under the intrinsic
                  value method, no stock-based employee compensation cost is
                  reflected in net income. The following table illustrates the
                  effect on net income and earnings per share if the Company had
                  applied the fair value recognition provisions of SFAS No. 123,
                  Accounting for Stock-Based Compensation, to stock-based
                  employee compensation.

<TABLE>
<CAPTION>
                                               FOR THE YEAR ENDED JUNE 30,
                                           2003           2002           2001
                                        ----------    ------------    ----------
<S>                                     <C>           <C>             <C>
NET INCOME, AS REPORTED                 $  167,566    $    210,269    $   62,566
  Add: Stock-based employee
    compensation expense included
    in reported net income, net of
    related tax effects                          -             387           174
  Deduct: Total stock-based
    employee compensation expense
    determined under fair value
    based method for all awards,
    net of related tax effects               6,577          17,572         5,895
                                        ----------    ------------    ----------
PRO FORMA NET INCOME                    $  160,989    $    193,084    $   56,845
                                        ==========    ============    ==========

EARNINGS PER SHARE:

  Basic - as reported                   $     2.54    $       3.25    $     0.99
                                        ==========    ============    ==========

  Basic - pro forma                     $     2.44    $       2.99    $     0.90
                                        ==========    ============    ==========

  Diluted - as reported                 $     2.43    $       3.09    $     0.94
                                        ==========    ============    ==========

  Diluted - pro forma                   $     2.33    $       2.83    $     0.85
                                        ==========    ============    ==========
</TABLE>

                  The pro forma results for fiscal 2002 reflect the accelerated
                  vesting of options as a result of the merger with Duramed as
                  described in Note 3.

                  For all plans, the fair value of each option grant was
                  estimated at the date of grant using the Black-Scholes Option
                  Pricing Model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
                                                  YEAR ENDED JUNE 30,
                                          2003           2002           2001
                                       ----------    ------------    ----------
<S>                                    <C>           <C>             <C>
Average expected term (years)                   4               3             3
Risk-free interest rate                      2.29%           3.62%         5.25%
Dividend yield                                  0%              0%            0%
Volatility                                  53.73%          46.96%        51.30%
Fair value of options granted
 at market                             $    15.77    $      17.11    $    13.66
</TABLE>

                                      F-11


<PAGE>

                  The weighted-average fair value of the options granted in
                  fiscal 2001, which were below the current market price on the
                  date of grant, was $28.01 per share.

         (h)      Research and Development

                  Research and development costs, which consist principally of
                  product development costs, are charged to operations as
                  incurred.

         (i)      Shipping and Handling Costs

                  Shipping and handling costs, which approximated $1,591, $1,533
                  and $678 in fiscal 2003, 2002 and 2001, respectively, were
                  included in selling, general and administrative expenses.

         (j)      Stock Split

                  On February 18, 2003, the Company's Board of Directors
                  declared a 3-for-2 stock split effected in the form of a 50%
                  stock dividend. Approximately 22.2 million additional shares
                  of common stock were distributed on March 17, 2003 to
                  shareholders of record at the close of business on February
                  28, 2003. All applicable prior year share and per share
                  amounts have been adjusted for the stock split.

         (k)      Earnings Per Share

                  As discussed above, on October 24, 2001, the Company completed
                  a merger with Duramed where the Company issued approximately
                  11.25 million shares of its common stock for all the
                  outstanding common stock of Duramed and exchanged all options
                  and warrants to purchase Duramed stock for options and
                  warrants to purchase approximately 1.8 million shares of the
                  Company's common stock.

                  All applicable prior year share and per share amounts have
                  been adjusted for the merger.

                  The following is a reconciliation of the numerators and
                  denominators used to calculate earnings per common share
                  ("EPS") as presented in the Consolidated Statements of
                  Operations:

<TABLE>
<CAPTION>
(in thousands except
per share amounts)                            2003           2002           2001
                                        ----------    ------------    ----------
<S>                                     <C>           <C>             <C>
Net earnings                            $  167,566    $    212,219    $   63,079
Dividends on preferred stock                     -             457           338
Deemed dividend on convertible
  preferred stock                                -           1,493           175
                                        ----------    ------------    ----------
Numerator for basic and diluted
  earnings per share
  available for common
  shareholders                          $  167,566    $    210,269    $   62,566
                                        ==========    ============    ==========
Earnings per common share - basic           66,083          64,665        62,960

Earnings available for common
  shareholders                          $     2.54    $       3.25    $     0.99
                                        ==========    ============    ==========

Earnings per common share - diluted:
Weighted average shares                     66,083          64,665        62,960

Effect of dilutive options                   2,978           3,470         3,900
                                        ----------    ------------    ----------
Weighted average shares- diluted
  (denominator)                             69,061          68,135        66,860

Earnings available for common
  shareholders                          $     2.43    $       3.09    $     0.94
                                        ==========    ============    ==========
</TABLE>

<TABLE>
<CAPTION>
(in whole share amounts)                     2003           2002           2001
                                       ----------    ------------    ----------
<S>                                    <C>           <C>             <C>
Not included in the calculation
  of diluted earnings
  per share because their impact
    is antidilutive:
    Stock options outstanding            1,265,874      1,132,788       266,464
    Warrants                                     -              -        22,284
    Preferred if converted                       -        759,486       759,486
</TABLE>

                                      F-12


<PAGE>

         (l)      Deferred Financing Fees

                  All debt issuance costs are being amortized on a straight-line
                  basis over the life of the related debt, which matures in
                  2004, 2007 and 2010. Warrant issuance costs are being
                  amortized on a straight-line basis over the terms of the
                  related warrants. The total unamortized amounts of $310 and
                  $454 at June 30, 2003 and 2002, respectively, are included in
                  other assets in the Consolidated Balance Sheets.

         (m)      Fair Value of Financial Instruments

                  Cash, Accounts Receivable, Other Receivables and Accounts
                  Payable - The carrying amounts of these items are a reasonable
                  estimate of their fair value.

                  Marketable Securities - Marketable securities are recorded at
                  their fair value (see Note 8).

                  Other Assets - Investments that do not have a readily
                  determinable market value are recorded at cost, as it is a
                  reasonable estimate of fair value or current realizable value.

                  Long-Term Debt - The fair value at June 30, 2003 and 2002 is
                  estimated at $40,000 and $43,000, respectively (see Note 12
                  for carrying value). Estimates were determined by discounting
                  the future cash flows using rates currently available to the
                  Company.

                  The fair value estimates presented herein are based on
                  pertinent information available to management as of June 30,
                  2003. Although management is not aware of any factors that
                  would significantly affect the estimated fair value amounts,
                  such amounts have not been comprehensively revalued for
                  purposes of these financial statements since that date, and
                  current estimates of fair value may differ significantly from
                  the amounts presented herein.

         (n)      Use of Estimates in the Preparation of Financial Statements

                  The preparation of financial statements in conformity with
                  accounting principles generally accepted in the United States
                  of America requires management to make estimates and use
                  assumptions that affect the reported amounts of assets and
                  liabilities and disclosure of contingent liabilities at the
                  date of the financial statements and the reported amounts of
                  revenues and expenses during the reporting period. Actual
                  results could differ from those estimates.

                  The most significant estimates made by management include
                  those made in the areas of sales returns and allowances,
                  including shelf stock adjustments; inventory reserves;
                  deferred taxes; litigation; self-insurance reserves; and the
                  assessment of the recoverability of goodwill and other
                  intangible assets.

                  Management periodically evaluates estimates used in the
                  preparation of the consolidated financial statements for
                  continued reasonableness. Appropriate adjustments, if any, to
                  the estimates used are made prospectively based on such
                  periodic evaluations.

         (o)      Self-Insurance Reserve

                  The Company is primarily self-insured for potential product
                  liability claims on products sold on or after September 30,
                  2002. The Company records a self-insurance reserve for each
                  reported claim on a case-by-case basis, plus an allowance for
                  the estimated future cost of incurred but not reported
                  ("IBNR") claims. In assessing the amounts to record for each
                  reported claim, with the assistance of its counsel and
                  insurance consultants, the Company considers the nature and
                  amount of the claim, its prior experience with similar claims,
                  and whether the amount expected to be paid on a claim is both
                  probable and reasonably estimable. In determining the
                  allowance for the estimated future cost of both reported and
                  IBNR claims as of June 30, 2003, the Company utilized
                  projections of its outstanding estimated losses as determined
                  by an independent actuary. As of June 30, 2003, the Company
                  had recorded self-insurance reserves and related expenses of
                  $1,333 in accrued liabilities and selling, general and
                  administrative expenses. The costs of the ultimate disposition
                  of both existing and IBNR claims may differ from this reserve
                  amount.

                                      F-13


<PAGE>

         (p)      Litigation

                  The Company is subject to litigation in the ordinary course of
                  business and also to certain other contingencies (see Note
                  21). Legal fees and other expenses related to litigation and
                  contingencies are recorded as incurred. Additionally, the
                  Company, in consultation with its counsel, assesses the need
                  to record a liability for litigation and contingencies on a
                  case-by-case basis. Accruals are recorded when the Company
                  determines that a loss related to a matter is both probable
                  and reasonably estimable.

         (q)      Income Taxes

                  Income taxes are accounted for under SFAS No. 109, "Accounting
                  for Income Taxes." Under this method, deferred tax assets and
                  liabilities are recognized for the differences between the
                  financial statement and tax basis of assets and liabilities
                  using enacted tax rates in effect for the years in which the
                  differences are expected to reverse. A valuation allowance is
                  provided for the portion of deferred tax assets that are
                  "more-likely-than-not" to be unrealized. Deferred tax assets
                  and liabilities are measured using enacted tax rates and laws.

         (r)      Revenue Recognition

                  Product sales

                  The Company recognizes product sales revenue when title and
                  risk of loss have transferred to the customer, when estimated
                  provisions for product returns, rebates, chargebacks and other
                  sales allowances are reasonably determinable, and when
                  collectibility is reasonably assured. Accruals for these
                  provisions are presented in the consolidated financial
                  statements as reductions to revenues. Accounts receivable are
                  presented net of allowances relating to the above provisions
                  of $136,059 and $93,789 at June 30, 2003 and 2002,
                  respectively.

                  Development and other revenue

                  The Company recognizes revenues under research and development
                  agreements as it performs the related research and
                  development. Amounts Barr receives under these agreements are
                  not refundable. For the year ended June 30, 2001, development
                  and other revenue included $562 related to transition revenues
                  under the ViaSpan Agreement (see Note 4).

         (s)      Advertising and Promotion Costs

                  Costs associated with advertising and promotion expenses are
                  expensed in the period in which the advertising is first used
                  and these costs are included in selling, general and
                  administrative expenses. Advertising and promotion expenses
                  totaled approximately $21,377, $4,678, and $2,749 for the
                  years ending June 30, 2003, 2002 and 2001, respectively.

         (t)      Sales Returns and Allowances

                  At the time of sale, the Company records estimates for various
                  costs, which reduce product sales. These costs include
                  estimates for product returns, rebates, chargebacks and other
                  sales allowances. In addition, the Company may record
                  allowances for shelf-stock adjustments when the conditions are
                  appropriate. Estimates for sales allowances such as product
                  returns, rebates and chargebacks are based on a variety of
                  factors including actual return experience of that product or
                  similar products, rebate arrangements for each product, and
                  estimated sales by our wholesale customers to other third
                  parties who have contracts with Barr. Actual experience
                  associated with any of these items may be different than the
                  Company's estimates. Barr regularly reviews the factors that
                  influence its estimates and, if necessary, makes adjustments
                  when it believes that actual product returns, credits and
                  other allowances may differ from established reserves.

                  The Company often issues credits to customers for inventory
                  remaining on their shelves following a decrease in the market
                  price of a generic pharmaceutical product. These credits,
                  commonly referred to in the pharmaceutical industry as
                  "shelf-stock adjustments," can then be used by customers to
                  offset future amounts owing to the Company under invoices for
                  future product deliveries. The shelf-stock adjustment is
                  intended to

                                      F-14

<PAGE>

                  reduce a customer's inventory cost to better reflect current
                  market prices and is often used by the Company to maintain its
                  long-term customer relationships. The determination to grant a
                  shelf-stock credit to a customer following a price decrease is
                  usually at the Company's discretion rather than contractually
                  required. Allowances for shelf-stock adjustments are recorded
                  at the time Barr sells products it believes will be subject to
                  a price decrease or when market conditions indicate that a
                  shelf-stock adjustment is necessary to facilitate the
                  sell-through of its product. When determining whether to
                  record a shelf-stock adjustment and the amount of any such
                  adjustment, the Company analyzes several variables including
                  the estimated launch dates of a competing product, the
                  estimated decline in market price and estimated levels of
                  inventory held by the customer at the time of the decrease in
                  market price. As a result, a shelf-stock reserve depends on a
                  product's unique facts and circumstances. Barr regularly
                  monitors these and other factors for its significant products
                  and evaluates its reserves and estimates as additional
                  information becomes available.

         (u)      Segment Reporting

                  The Company operates in one segment - the development,
                  manufacture and marketing of pharmaceutical products. The
                  Company's chief operating decision-maker reviews operating
                  results on a consolidated company basis.

                  The Company's manufacturing plants are located in New Jersey,
                  New York, Ohio and Virginia and its products are sold
                  primarily in the United States to wholesale and retail
                  distributors. In fiscal 2003, four customers accounted for
                  at least 10% of product sales with 21%, 17%, 13% and 10%,
                  respectively. In fiscal 2002, three customers accounted for
                  at least 10% of product sales with 18%, 13% and 12% of sales.
                  In fiscal 2001, a single customer accounted for approximately
                  14% of product sales.

         (v)      Asset Impairment

                  The Company reviews the carrying value of its long-term assets
                  for impairment whenever events and circumstances indicate that
                  the carrying value of an asset may not be recoverable from the
                  estimated future cash flows expected to result from its use
                  and eventual disposition. In cases where undiscounted expected
                  future cash flows are less than the carrying value, an
                  impairment loss is recognized equal to an amount by which the
                  carrying value exceeds the fair value of assets.

         (w)      New Accounting Pronouncements

                  Goodwill and Other Intangible Assets

                  In June 2001, the FASB issued SFAS No. 142, "Goodwill and
                  Other Intangible Assets" ("SFAS 142"). SFAS 142 supercedes APB
                  opinion No. 17, "Intangible Assets." Under SFAS 142, goodwill
                  and indefinite lived intangible assets are no longer amortized
                  but are reviewed for impairment annually, or more frequently
                  if impairment indicators arise. The provisions of SFAS 142 are
                  effective for fiscal years beginning after December 15, 2001.

                  The Company adopted SFAS 142 on July 1, 2002. SFAS 142
                  requires goodwill to be tested for impairment annually using a
                  two-step process to determine the amount of impairment, if
                  any, which is then written-off. The first step is to identify
                  potential impairment, which is measured as of the beginning of
                  the fiscal year. To accomplish this, the Company identified
                  its reporting units and determined the carrying value of each
                  reporting unit by assigning the assets and liabilities,
                  including the existing goodwill and intangible assets, to
                  those reporting units. Under the first step of the process
                  required by SFAS 142, to the extent a reporting unit's
                  carrying amount exceeds its fair value, the reporting unit's
                  goodwill may be impaired. During the second quarter of fiscal
                  2003, the Company completed the first step of this process and
                  determined there was no indication of goodwill impairment.

                  Accounting for Asset Retirement Obligations

                  In June 2001, the FASB issued SFAS No. 143, "Accounting for
                  Asset Retirement Obligations" ("SFAS 143"). This statement
                  addresses financial accounting and reporting for obligations
                  associated with the retirement of tangible long-lived assets
                  and the associated asset retirement costs. It applies to legal
                  obligations associated

                                      F-15


<PAGE>

                  with the retirement of long-lived assets that result from the
                  acquisition, construction, development and/or the normal
                  operation of a long-lived asset, except for certain
                  obligations of lessees. The standard requires entities to
                  record the fair value of a liability for an asset retirement
                  obligation in the period incurred with a corresponding
                  increase in the carrying amount of the related long-lived
                  asset. Over time, the liability is accreted to its present
                  value each period, and the capitalized cost is depreciated
                  over the useful life of the related asset. Upon settlement of
                  the liability, an entity either settles the obligation for its
                  recorded amount or incurs a gain or loss upon settlement. This
                  statement is effective for financial statements issued for
                  fiscal years beginning after June 15, 2002. The Company
                  adopted SFAS 143 effective as of July 1, 2002. The adoption of
                  SFAS 143 did not have a material impact on the Company's
                  consolidated financial statements.

                  Accounting for Impairment or Disposal of Long-Lived Assets

                  In August 2001, the FASB issued SFAS No. 144, "Accounting for
                  the Impairment or Disposal of Long-Lived Assets" ("SFAS 144").
                  This statement addresses financial accounting and reporting
                  for the impairment of long-lived assets. This statement
                  supercedes SFAS No. 121, "Accounting for the Impairment of
                  Long-Lived Assets and for Long-Lived Assets to be Disposed
                  Of," and the accounting and reporting provisions of APB
                  Opinion No. 30, "Reporting the Results of Operations -
                  Reporting the Effects of Disposal of a Segment of a Business,
                  and Extraordinary, Unusual and Infrequently Occurring Events
                  and Transactions." This statement also amends ARB No. 51,
                  "Consolidated Financial Statements," to eliminate the
                  exception to consolidation for a subsidiary for which control
                  is likely to be temporary. This statement requires that one
                  accounting model be used for long-lived assets to be disposed
                  of by sale, whether previously held and used or newly
                  acquired. This statement also broadens the presentation of
                  discontinued operations to include more disposal transactions.
                  This statement is effective for financial statements issued
                  for fiscal years beginning after June 15, 2002. The Company
                  adopted SFAS 144 effective as of July 1, 2002. The adoption of
                  SFAS 144 did not have a material impact on the Company's
                  consolidated financial statements,

                  Rescission of FASB Statements No. 4, 44, and 64, Amendment of
                  FASB Statement No. 13, and Technical Corrections

                  In April 2002, the FASB issued SFAS No. 145, "Rescission of
                  FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
                  No. 13, and Technical Corrections" ("SFAS 145"). SFAS 145
                  rescinds SFAS 4, "Reporting Gains and Losses from
                  Extinguishment of Debt," and an amendment of that Statement,
                  SFAS 64, "Extinguishments of Debt Made to Satisfy Sinking-Fund
                  Requirements." SFAS 145 also rescinds SFAS 44, "Accounting for
                  Intangible Assets of Motor Carriers." SFAS 145 amends SFAS 13,
                  "Accounting for Leases," to eliminate an inconsistency between
                  the required accounting for sale-leaseback transactions and
                  the required accounting for certain lease modifications that
                  have economic effects that are similar to sale-leaseback
                  transactions. SFAS 145 also amends other existing
                  authoritative pronouncements to make various technical
                  corrections, clarify meanings, or describe their applicability
                  under changed conditions. This statement is effective for
                  financial statements issued for fiscal years beginning after
                  May 15, 2002. Upon adoption of SFAS 145 in July 2002, the
                  Company reclassified the $160 loss on early extinguishment of
                  debt that was reported as an extraordinary item, net of $87 in
                  tax, for the year ended June 30, 2002 to selling, general and
                  administrative expenses and income tax expense.

                  Accounting for Costs Associated with Exit or Disposal
                  Activities

                  In June 2002, the FASB issued SFAS No. 146, "Accounting for
                  Costs Associated with Exit or Disposal Activities" ("SFAS
                  146"). SFAS 146 addresses financial accounting and reporting
                  for costs associated with exit or disposal activities and
                  nullifies EITF Issue No. 94-3, "Liability Recognition for
                  Certain Employee Termination Benefits and Other Costs to Exit
                  an Activity (Including Certain Costs Incurred in a
                  Restructuring)." SFAS 146 requires recognition of a liability
                  for a cost associated with an exit or disposal activity when
                  the liability is incurred, as opposed to when the entity
                  commits to an exit plan under EITF 94-3. This statement is
                  effective for exit or disposal activities initiated after
                  December 31, 2002. The Company adopted SFAS 146 effective
                  January 1, 2003 and has considered it in actions involving
                  exit or disposal costs initiated after that date. The adoption
                  of SFAS 146 did not have a material impact on the Company's
                  consolidated financial statements.

                                      F-16

<PAGE>

                  Accounting for Stock-Based Compensation - Transition and
                  Disclosure, An Amendment of FASB Statement No. 123

                  In December 2002, the FASB issued SFAS No. 148, "Accounting
                  for Stock-Based Compensation - Transition and Disclosure, An
                  Amendment of FASB Statement No. 123" ("SFAS 148"). This
                  statement provides alternative methods of transition for a
                  voluntary change to the fair value based method of accounting
                  for stock-based employee compensation. In addition, SFAS 148
                  amends the disclosure requirements of Statement No. 123 to
                  require more prominent disclosures, in both interim and annual
                  financial statements, about the method of accounting for
                  stock-based employee compensation and the effect the method
                  used has on reported results. The provisions of SFAS 148 are
                  effective for fiscal years ending after December 15, 2002 and
                  the interim disclosure provisions are effective for financial
                  reports containing financial statements for interim periods
                  beginning after December 15, 2002. The Company will continue
                  to account for stock-based compensation using the intrinsic
                  value method and has adopted the disclosure requirements
                  prescribed by SFAS 148 as of March 31, 2003. The additional
                  required disclosures have been provided in Note 1 to the
                  consolidated financial statements.

                  Amendment of Statement 133 on Derivative Instruments and
                  Hedging Activities

                  In April 2003, the FASB issued SFAS No. 149, "Amendment of
                  Statement 133 on Derivative Instruments and Hedging
                  Activities" ("SFAS 149"), which is generally effective for
                  contracts entered into or modified after June 30, 2003 and for
                  hedging relationships designated after June 30, 2003. SFAS 149
                  clarifies under what circumstances a contract with an initial
                  net investment meets the characteristic of a derivative as
                  discussed in SFAS No. 133, clarifies when a derivative
                  contains a financing component, amends the definition of an
                  "underlying" to conform it to the language used in FASB
                  Interpretation No. 45, "Guarantor Accounting and Disclosure
                  Requirements for Guarantees, Including Indirect Guarantees of
                  Indebtedness of Others," and amends certain other existing
                  pronouncements. The Company currently has no involvement with
                  derivative financial instruments, and therefore it does not
                  anticipate that the adoption of SFAS 149 will have a material
                  impact on its consolidated financial statements.

                  Accounting for Certain Financial Instruments with
                  Characteristics of both Liabilities and Equity

                  In May 2003, the FASB issued SFAS No. 150, "Accounting for
                  Certain Financial Instruments with Characteristics of both
                  Liabilities and Equity" ("SFAS 150"). SFAS 150 modifies the
                  accounting for certain financial instruments that, under
                  previous guidance, issuers could account for as equity. SFAS
                  150 requires that those instruments be classified as
                  liabilities in statements of financial position and affects an
                  issuer's accounting for (1) mandatorily redeemable shares,
                  which the issuing company is obligated to buy back in exchange
                  for cash or other assets, (2) instruments, other than
                  outstanding shares, that do or may require the issuer to buy
                  back some of its shares in exchange for cash or other assets,
                  or (3) obligations that can be settled with shares, the
                  monetary value of which is fixed, tied solely or predominantly
                  to a variable such as a market index, or varies inversely with
                  the value of the issuer's shares. In addition to its
                  requirements for the classification and measurement of
                  financial instruments within its scope, SFAS 150 also requires
                  disclosures about alternative ways of settling those
                  instruments and the capital structure of entities, all of
                  whose shares are mandatorily redeemable. SFAS 150 is effective
                  for financial instruments entered into or modified after May
                  31, 2003, and otherwise is effective at the beginning of the
                  first interim period beginning after June 15, 2003. The
                  Company does not believe that the adoption of SFAS 150 will
                  have a material impact on its consolidated financial
                  statements.

                  Guarantor's Accounting and Disclosure Requirements for
                  Guarantees, Including Indirect Guarantees of Indebtedness of
                  Others

                  In November 2002, the FASB issued Interpretation 45,
                  "Guarantor's Accounting and Disclosure Requirements for
                  Guarantees, Including Indirect Guarantees of Indebtedness of
                  Others, Interpretation of FASB Statement Nos. 5, 57 and 107
                  and Rescission of FIN 34" ("FIN 45"). FIN 45 clarifies the
                  requirements of SFAS No. 5, "Accounting for Contingencies,"
                  relating to the guarantor's accounting for, and disclosure of,
                  the issuance of certain types of guarantees. FIN 45 requires,
                  that upon issuance of a guarantee, the entity must recognize a
                  liability for the fair value of the obligation it assumes
                  under the guarantee. The disclosure provisions of FIN 45

                                      F-17

<PAGE>

                  are effective for financial statements of interim or annual
                  periods that end after December 15, 2002, while the initial
                  recognition and measurement provisions are effective on a
                  prospective basis for guarantees that are issued or modified
                  after December 31, 2002. The Company adopted the disclosure
                  and initial recognition and measurement provisions of FIN 45
                  effective for the period ended December 31, 2002 and as of
                  March 31, 2003, respectively. The adoption of FIN 45 has not
                  had a material effect on the Company's consolidated financial
                  statements.

                  Consolidation of Variable Interest Entities

                  In January 2003, the FASB issued Interpretation 46,
                  "Consolidation of Variable Interest Entities - An
                  Interpretation of ARB No. 51" ("FIN 46"). In general, a
                  variable interest entity is a corporation, partnership, trust,
                  or any other legal structure used for business purposes that
                  either (a) does not have equity investors with voting rights
                  or (b) has equity investors that do not provide sufficient
                  financial resources for the entity to support its activities.
                  FIN 46 requires a variable interest entity to be consolidated
                  by a company (known as the "primary beneficiary") if that
                  company is subject to a majority of the risk of loss from the
                  variable interest entity's activities or entitled to receive a
                  majority of the entity's residual returns or both. The
                  consolidation requirements of FIN 46 apply immediately to
                  variable interest entities created after January 31, 2003. The
                  consolidation requirements apply to variable interest entities
                  that existed as of January 31, 2003 in the first fiscal year
                  or interim period beginning after June 15, 2003. FIN 46 also
                  requires certain disclosures by all holders of a significant
                  variable interest in a variable interest entity that are not
                  the primary beneficiary. The Company does not have any
                  material investments in variable interest entities, and
                  therefore, the adoption of FIN 46 had no impact on its
                  consolidated financial statements.

(2)      ACQUISITIONS

         Purchase of Products from Wyeth

         On June 9, 2003, the Company acquired from Wyeth the rights to four
         products and a sublicense on a product currently being developed by
         Wyeth for initial cash consideration of $25,992 and an agreement for
         future royalty payments based on future sales of the products. The
         Company also entered into an interim supply agreement with Wyeth in
         relation to these products that will terminate as to certain portions
         of the agreement on various dates over the next two fiscal years. Of
         the total $25,992 purchase price, $22,046 was allocated to the marketed
         products and $3,946 was allocated to the in-process research and
         development project (see Note 9). No value was assigned to the supply
         agreement for the acquired products because the product purchase prices
         under the agreement approximate the price the Company would expect to
         pay third party contract manufacturers. The products will be amortized
         over a weighted-average useful life of 8.75 years.

         The $3,946 was written off as research and development expenses upon
         acquisition because technological feasibility, through FDA or
         comparable regulatory body approval, had not been established and the
         projects had no alternative future use.

         Acquisition of Enhance Pharmaceuticals, Inc.

         On June 6, 2002, the Company acquired certain assets from and assumed
         certain liabilities of Enhance Pharmaceuticals, Inc. The acquisition
         was accounted for under the purchase method of accounting. The total
         purchase price, including acquisition costs of $1,071, was $46,288.

         The fair values of assets acquired and liabilities assumed on June 6,
         2002 were:

                                      F-18

<PAGE>

<TABLE>
         <S>                                                         <C>
         Current assets                                              $    1,252
         Property and equipment                                           2,012
         Intangible assets                                               28,200
         Goodwill                                                        13,941
         In-process research and development                              1,000
                                                                     ----------

         Total assets acquired                                       $   46,405
                                                                     ----------

         Current liabilities                                                 89
         Capital lease obligations                                           28
                                                                     ----------

         Total liabilities assumed                                          117
                                                                     ----------

         Purchase price                                              $   46,288
                                                                     ==========

         Total cash paid                                             $   45,217
         Accrued acquisition costs                                        1,071
                                                                     ----------
                                                                     $   46,288
                                                                     ==========
</TABLE>

         Intangible assets included $1,400 of patents and $26,800 in product
         license agreements that are each subject to amortization over an
         estimated useful life of ten years (see Note 9). The fair value of net
         assets acquired was $32,464, resulting in goodwill of $13,941. The
         Company acquired Enhance to further its expansion into the female
         healthcare market. Certain of the factors contributing to the purchase
         price that resulted in goodwill were Enhance's proprietary vaginal ring
         drug delivery platform and its uses. The entire balance of goodwill is
         deductible for tax purposes. The operating results of Enhance are
         included in the consolidated financial statements subsequent to the
         June 6, 2002 acquisition date.

         Acquired in-process research and development projects in the amount of
         $1,000 were written off as research and development expenses upon
         acquisition because technological feasibility, through FDA or
         comparable regulatory body approval, had not been established and the
         projects had no alternative future use.

(3)      MERGER WITH DURAMED PHARMACEUTICALS, INC.

         On June 29, 2001, the Company announced the signing of a definitive
         merger agreement with Duramed, a developer, manufacturer, and marketer
         of prescription drug products focusing on women's health and the
         hormone therapy markets. The merger was approved by the shareholders of
         Duramed and Barr, respectively, and on October 24, 2001, a wholly-owned
         subsidiary of Barr merged with and into Duramed, with Duramed surviving
         as a wholly-owned subsidiary of the Company. The merger was treated as
         a tax-free reorganization and was accounted for as a
         pooling-of-interests for financial reporting purposes.

         Under the terms of the merger agreement, Duramed common shareholders
         received a fixed exchange ratio of 0.3843 shares of Barr common stock
         for each share of Duramed common stock. Duramed preferred stock
         shareholders received 7.5948 shares of Barr common stock for each share
         of Duramed preferred stock. Based on these terms, Barr issued
         approximately 11.25 million shares of its common stock for all the
         outstanding common and preferred stock of Duramed and exchanged all
         options and warrants to purchase Duramed stock for options and warrants
         to purchase approximately 1.8 million shares of the Company's common
         stock.

         The Company and Duramed had certain differences in the classification
         of expenses in their historical statements of operations and certain
         differences in the classification of assets and liabilities in their
         historical balance sheets. Reclassifications have been made to conform
         the combined companies' statement of operations and balance sheet
         classifications. In addition, the historical Duramed balance sheets
         included approximately $50,000 in deferred tax assets, which had been
         fully offset by a valuation allowance. On a combined basis, Barr
         expects to utilize a majority of these deferred tax assets. Therefore,
         in accordance with SFAS No. 109, "Accounting for Income Taxes," the
         Company has restated Duramed's historical balance sheets to recognize
         the deferred tax asset that is more-likely-than-not expected to be
         utilized.

                                      F-19

<PAGE>

         The combined amounts presented in the accompanying financial statements
         are based on the basis of presentation described in Note 1 and are
         summarized below:

<TABLE>
<CAPTION>
                                                              Twelve Months Ended
                                                                  June 30, 2001
                                                                  -------------
<S>                                                               <C>
       Total revenues:
         Barr                                                     $     509,686
         Duramed                                                         83,465
                                                                  -------------
         Combined                                                 $     593,151
                                                                  =============
       Net earnings:
         Barr                                                     $      62,487
         Duramed                                                            164
         Adjustments to reverse valuation
           allowance on deferred tax assets                                 (85)
                                                                  -------------
       Combined                                                   $      62,566
                                                                  =============
</TABLE>

<TABLE>
<CAPTION>
                                                                  As of June 30,
                                                                      2001
                                                                  -------------
       <S>                                                        <C>
       Shareholders' equity:
         Barr                                                     $     365,642
         Duramed                                                          6,380
         Cumulative effect of adjustments to
           reverse valuation allowance on
           deferred tax assets                                           44,755
                                                                  -------------
         Combined                                                 $     416,777
                                                                  =============
</TABLE>

(4)      STRATEGIC ALLIANCE WITH DUPONT PHARMACEUTICALS COMPANY

         On March 20, 2000, the Company signed definitive agreements to
         establish a strategic relationship with DuPont Pharmaceuticals Company
         ("DuPont") to develop, market and promote several proprietary products
         and to terminate all litigation between the two companies. The Company
         was unable to assess whether the individual terms of each of the
         agreements would have been different had each of the agreements been
         negotiated separately with other third parties not involved in
         litigation.

         DuPont has since been acquired by Bristol-Myers Squibb Company ("BMS").
         In April 2002, the Company and BMS agreed to restructure and terminate
         both the proprietary product development funding agreement and the
         Trexall Marketing Agreement that were entered into between Barr and
         DuPont in March 2000.

         Under the terms of the March 2000 proprietary product development
         funding agreement ("Product Development Agreement"), DuPont agreed to
         invest up to $45,000 to support the ongoing development of Barr's
         CyPat(TM) prostate cancer therapy and SEASONALE(R) and DP3 oral
         contraceptive proprietary products in exchange for co-marketing rights
         and royalties. Barr and BMS agreed to terminate this agreement and to
         cap BMS's funding obligations at $40,000. In return, BMS agreed to
         forego its royalty interest and other rights regarding the marketing of
         these three products. In connection with the Product Development
         Agreement, the Company earned $0, $15,343 and $12,008 for the years
         ended June 30, 2003, 2002 and 2001, respectively.

         Barr and BMS also agreed to terminate the Trexall Marketing Agreement,
         under which DuPont had agreed to promote, market and sell Barr's
         Trexall(TM) product in exchange for a royalty. As a result of the
         termination, Barr has assumed BMS' responsibilities to coordinate the
         promotion and sales activities for Trexall and BMS will forego its
         royalty interest in the product. BMS agreed to fulfill its existing
         obligation to fund the Trexall sales force costs during fiscal 2003 and
         2004 and paid Barr $600 to cover BMS' other obligations during the term
         of the contract. For the year ended June 30, 2001, the Company earned
         $5,000 related to this agreement.

                                      F-20

<PAGE>

         In March 2000, Barr received from DuPont the right to market and
         distribute ViaSpan(R), an organ transplant preservation agent, in the
         United States and Canada, through patent expiry in March 2006. During a
         transition period that ended July 31, 2000, DuPont remained the
         distributor of ViaSpan but paid a fee to Barr based on a defined
         formula calculated on DuPont's actual sales of ViaSpan during this
         transition period. For the year ended June 30, 2001, the Company earned
         $562 during this transition period.

(5)      PROCEEDS FROM PATENT CHALLENGE SETTLEMENT

         In January 1997, Bayer AG, Bayer Corporation (collectively, "Bayer")
         and the Company agreed to settle the then pending litigation regarding
         Bayer's patent protecting ciprofloxacin hydrochloride. Under the
         settlement agreement, the Company withdrew its patent challenge by
         amending its ANDA from a paragraph IV certification (claiming
         invalidity) to a paragraph III certification (seeking approval upon
         patent expiry) and acknowledged the validity and enforceability of the
         ciprofloxacin patent. As consideration for this settlement, the Company
         received a non-refundable payment of $24,550 in January 1997, which it
         recorded as proceeds from patent challenge settlement. Concurrent with
         the Settlement Agreement, the Company also signed a contingent,
         non-exclusive Supply Agreement ("Supply Agreement") with Bayer that
         ends at patent expiry in December 2003.

         Under the terms of the Supply Agreement, until June 9, 2003, Bayer, at
         its sole option could either (i) allow Barr and Aventis, the
         contractual successor to Barr's joint venture partner in the Cipro
         patent challenge case, to purchase, at a predetermined discount to
         Bayer's then selling price, quantities of ciprofloxacin for resale
         under market conditions or (ii) make quarterly cash payments as defined
         in the Agreement. Bayer elected to make payments rather than supply the
         Company with ciprofloxacin. Barr recognized the amounts due under the
         Supply Agreement as such amounts were realized based on the outcome of
         Bayer's election. The amounts realized are reported as proceeds from
         patent challenge settlement.

         On June 9, 2003, the Company began distributing ciprofloxacin tablets.
         The Company shares one-half of its profits from the sale of
         ciprofloxacin, as defined, with Aventis.


(6)      INVENTORIES, NET

<TABLE>
<CAPTION>
                                                                 June 30,
                                                         -----------------------
                                                            2003         2002
                                                         ----------    ---------
         <S>                                             <C>           <C>
         Raw materials and supplies                      $   60,075    $  43,952
         Work-in-process                                     18,561       12,897
         Finished goods                                      85,290       94,284
                                                         ----------    ---------
                                                         $  163,926    $ 151,133
                                                         ==========    =========
</TABLE>

         Inventories are presented net of reserves of $13,201 and $10,236 at
         June 30, 2003 and 2002, respectively. The Company's distributed version
         of Ciprofloxacin, purchased as a finished product from Bayer, accounted
         for approximately $48,300 of finished goods inventory as of June 30,
         2003. As a result of the expiration of the Company's supply agreement
         with AstraZeneca on August 21, 2002, the June 30, 2003 finished goods
         balance includes only Tamoxifen inventory manufactured by the Company.
         The June 30, 2002 finished goods balance included approximately $69,655
         of Tamoxifen purchased from AstraZeneca.


                                      F-21

<PAGE>
(7)      PROPERTY, PLANT AND EQUIPMENT, NET

<TABLE>
<CAPTION>
                                                              June 30,
                                                      -----------------------
                                                         2003          2002
                                                      ----------    ---------
              <S>                                     <C>           <C>
              Land                                    $    5,819    $   4,870
              Buildings and improvements                 105,946       89,521
              Machinery and equipment                    144,676      123,908
              Leasehold improvements                       2,759        2,449
              Automobiles and trucks                         200          200
              Construction in progress                    64,430       31,993
                                                      ----------    ---------
                                                         323,830      252,941
              Less: accumulated
                depreciation & amortization              100,314       87,419
                                                      ----------    ---------
                                                      $  223,516    $ 165,522
                                                      ==========    =========
</TABLE>

         For the years ended June 30, 2003, 2002 and 2001, $1,761, $1,072 and
         $278 of interest was capitalized, respectively. The Company recorded
         depreciation expense of $19,547, $15,010 and $13,631 for the years
         ended June 30, 2003, 2002 and 2001, respectively.

(8)      MARKETABLE SECURITIES

         The Company's investments in marketable securities are classified as
         "available for sale" and, accordingly, are recorded at current market
         value with offsetting adjustments to shareholders' equity, net of
         income taxes.

         The amortized cost and estimated market values of marketable securities
         at June 30, 2003 and 2002 are as follows:

<TABLE>
<CAPTION>
                                                            GROSS        GROSS
                                              AMORTIZED   UNREALIZED   UNREALIZED    MARKET
           JUNE 30, 2003                        COST        GAINS       (LOSSES)     VALUE
         ------------------                   ---------   ----------   ----------   --------
         <S>                                  <C>         <C>          <C>          <C>
         Debt securities                      $  44,400   $        -   $        -   $ 44,400
         Equity securities                          343            -         (288)        55
                                              ---------   ----------   ----------   --------
           Total securities                   $  44,743   $        -   $     (288)  $ 44,455
                                              =========   ==========   ==========   ========
</TABLE>

<TABLE>
<CAPTION>
                                                            GROSS        GROSS
                                              AMORTIZED   UNREALIZED   UNREALIZED    MARKET
           JUNE 30, 2002                        COST        GAINS       (LOSSES)     VALUE
         ------------------                   ---------   ----------   ----------   --------
         <S>                                  <C>         <C>          <C>          <C>
         Debt securities                      $  15,000   $        -   $        -   $ 15,000
         Equity securities                          343          159            -        502
                                              ---------   ----------   ----------   --------
         Total securities                     $  15,343   $      159   $        -   $ 15,502
                                              =========   ==========   ==========   ========
</TABLE>

         The Company received proceeds of $12,873, which included a gain of
         $6,671 on the sale of marketable securities in the year ended June 30,
         2001. The cost of investments sold is determined by the specific
         identification method.

         Debt Securities

         The Company has invested $44,400 in market auction debt securities,
         which are readily convertible into cash at par value, which
         approximates cost. The par value of each of the securities held is
         equal to the market value, and the securities mature on various dates
         between July 21, 2003 and July 13, 2004.


                                      F-22


<PAGE>

         Equity Securities

         In April 1999, the Company sold its rights to several pharmaceutical
         products to Halsey Drug Company in exchange for warrants exercisable
         for 500,000 shares of Halsey's common stock at $1.06 per share. The
         warrants expire in April 2004. In connection with this sale, the
         Company recorded an investment in warrants and realized a gain of $343.
         The Company has valued the warrants at their fair value using the
         Black-Scholes option-pricing model using the following assumptions for
         June 30, 2003 and 2002, respectively: dividend yield of 0%; expected
         volatility of 69.47% and 103.3%; risk-free interest rate of 5.78%; and
         expected life of 0.75 and 1.75 years.

(9)      OTHER INTANGIBLE ASSETS

         Intangible assets, excluding goodwill, which are comprised primarily of
         product licenses and product rights and related intangibles, consist of
         the following:

<TABLE>
<CAPTION>
                                                                 June 30,
                                                         -----------------------
                                                            2003         2002
                                                         ----------    ---------
               <S>                                       <C>           <C>
               Patents                                   $        -    $   1,400
               Product licenses                              26,800       26,800
               Product rights and related intangibles        22,046            -
                                                         ----------    ---------
                                                             48,846       28,200

               Less: accumulated amortization                (2,897)           -
                                                         ----------    ---------
                 Intangible assets, net                  $   45,949    $  28,200
                                                         ==========    =========
</TABLE>

         In December 2002, the Company's management decided to suspend
         development of a product for which $1,400 in patents had been recorded.
         As a result, on December 31, 2002, the Company wrote off the remaining
         $1,330 of patents, net of accumulated amortization. This amount has
         been included in selling, general and administrative expense.

         Estimated amortization expense on product licenses and product rights
         and related intangibles is as follows:

<TABLE>
<CAPTION>
                                           Year Ending
                                            June 30,
                                           -----------
                                           <S>                           <C>
                                             2004                        $ 5,278
                                             2005                          5,278
                                             2006                          5,278
                                             2007                          5,278
                                             2008                          5,278
</TABLE>

         The Company's product licenses and product rights and related
         intangibles have weighted average useful lives of approximately 10.0
         and 8.75 years, respectively.

(10)     GOODWILL

         Goodwill of $14,118 and $13,941 at June 30, 2003 and 2002,
         respectively, was attributable to the Company's acquisition of certain
         assets and assumption of certain liabilities of Enhance
         Pharmaceuticals, Inc. in June 2002. The increase in goodwill from June
         30, 2002 is attributable to acquisition-related professional fees for
         which estimates at June 30, 2002 differed from actual amounts.

(11)     ACCRUED LIABILITIES

         Included in accrued liabilities as of June 30, 2003 and 2002 is
         approximately $33,335 and $23,175, respectively, related to amounts due
         under various profit sharing agreements.

                                      F-23

<PAGE>

(12)     LONG-TERM DEBT

         A summary of long-term debt is as follows:

<TABLE>
<CAPTION>
                                                                 June 30,
                                                         -----------------------
                                                            2003         2002
                                                         ----------    ---------
            <S>                                          <C>           <C>
            Senior Unsecured Notes (a)                   $   22,858    $  24,285
            Provident Bank mortgage notes (b)                14,800       16,400
            Equipment Financing (c)                               -          614
                                                         ----------    ---------
                                                             37,658       41,299

            Less: Current Installments of Long-Term Debt      7,029        3,642
                                                         ----------    ---------
            Total Long-Term Debt                         $   30,629    $  37,657
                                                         ==========    =========
</TABLE>

         (a)      The Senior Unsecured Notes include a $20,000, 7.01% Note due
                  November 18, 2007 and $2,858 of 6.61% Notes due November 18,
                  2004. Annual principal payments under the Notes total $5,429
                  in fiscal 2004 and 2005, and $4,000 in 2006 through 2008.

                  The Senior Unsecured Notes contain certain covenants
                  including, among others, a restriction on dividend payments in
                  excess of $10 million plus 75% of consolidated net earnings
                  subsequent to June 30, 1997. The Company was in compliance
                  with all covenants under the senior unsecured notes as of June
                  30, 2003.

         (b)      In March 2000 Duramed refinanced existing notes payable with a
                  $12,000 note and an $8,000 note payable to Provident Bank.
                  Provident holds a first mortgage on the Company's Cincinnati,
                  Ohio manufacturing facility. Both notes are guaranteed by
                  Solvay America, the parent of Solvay Pharmaceuticals.

                  The $12,000 note bears interest at the prime rate (4.25% at
                  June 30, 2003) and requires monthly payments of $100 plus
                  interest for a ten-year period that commenced on April 1,
                  2000. The $8,000 note bears interest at the prime rate and
                  requires monthly payments of $33 plus interest that commenced
                  on April 1, 2000. Principal payments for the $8,000 note are
                  based upon a twenty-year amortization with a balloon payment
                  due on March 1, 2010 of $4,000.

         (c)      In April 1996, the Company signed a Loan and Security
                  Agreement with BankAmerica Leasing and Capital Group that
                  provided the Company up to $18,750 in financing for equipment
                  to be purchased through October 1997. Notes entered into under
                  this agreement required no principal payment for the first two
                  quarters; interest payable quarterly thereafter at a rate
                  equal to the London Interbank Offer Rate (LIBOR) plus 125
                  basis points; and had a term of 72 months. LIBOR was 1.86% at
                  June 30, 2002. During December 2002, the Company repaid all
                  amounts outstanding under this loan.

         The Company has a $40,000 revolving credit facility that expires on
         February 27, 2005. As of June 30, 2003, there was $29,312 available to
         the Company under this facility due to the issuance of a $10,688 letter
         of credit in support of the Company's product liability self-insurance
         program (see Note 21). The Company pays a fee on the committed portion
         of the credit facility equal to 1.00% of the outstanding balance. A fee
         of 0.25% is paid on the remainder.

         Principal maturities of existing long-term debt for the next five years
         and thereafter are as follows:

<TABLE>
<CAPTION>
                                         Year Ending
                                          June 30,
                                          --------
                                         <S>                             <C>
                                            2004                         $ 7,029
                                            2005                           7,029
                                            2006                           5,600
                                            2007                           5,600
                                            2008                           5,600
                                         Thereafter                        6,800
</TABLE>

                                      F-24

<PAGE>

(13)     MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

         The following discussion is related to preferred stock issued by
         Duramed prior to the merger with Barr.

         Series G

         On May 12, 2000, the Company completed a private placement of $10,000
         of Series G Convertible preferred stock with an institutional investor.
         The preferred shares were immediately convertible into shares of the
         Company's common stock at a fixed price of $3.37 per share. The
         preferred stock paid a dividend of 5% annually, payable quarterly in
         arrears, on all unconverted preferred stock. The investor also received
         warrants which were valued at $765 to purchase 192,157 shares of common
         stock at a price of $14.31 per share, exercisable at any time before
         May 12, 2005. In conjunction with the Company's issuance of the Series
         G Convertible Preferred Stock, it recorded an adjustment of
         approximately $1,300 to properly reflect deemed dividends beyond the
         stated 5% dividend rate and a beneficial conversion feature as required
         by EITF 98-5 and 00-27. This adjustment, which reduced the carrying
         amount of the Series G Convertible Preferred Stock and increased
         additional paid-in capital, was being amortized through May 12, 2004
         and reflected as additional deemed dividends. On September 24 and 28,
         2001, the preferred shares were converted to 303,795 and 455,691
         shares, respectively, of common stock pursuant to the original terms of
         the preferred stock. At the election of the holder of the preferred
         stock, the dividend for the quarter ended September 30, 2001 of $120
         was satisfied by the issuance of 9,094 shares of common stock. The
         Company recorded both the dividend and the fair market valuation of
         $337 associated with the shares issued to satisfy the dividend as
         adjustments to additional paid in capital. Additionally, the Company
         wrote-off the remaining unamortized deemed dividend valuation
         adjustment of $913 and the unamortized Series G warrant valuation of
         $500 as adjustments to additional paid in capital.

(14)     RELATED-PARTY TRANSACTIONS

         Dr. Bernard C. Sherman

         During the years ended June 30, 2003, 2002 and 2001, the Company
         purchased $3,583, $3,332 and $2,644, respectively, of bulk
         pharmaceutical material from companies affiliated with Dr. Bernard C.
         Sherman, the Company's largest shareholder and a director until October
         24, 2002. In addition, during the years ended June 30, 2003, 2002 and
         2001, the Company sold $12,727, $16,472, and $8,279, respectively, of
         its pharmaceutical products and bulk pharmaceutical materials to
         companies owned by Dr. Sherman. As of June 30, 2003 and 2002, the
         Company's accounts receivable included $2,398 and $829, respectively,
         due from such companies.

         During fiscal 1996, the Company also entered into an agreement with a
         company owned by Dr. Sherman to share litigation and related costs in
         connection with its Fluoxetine patent challenge. For the years ended
         June 30, 2003, 2002 and 2001, the Company recorded $585, $919 and
         $2,867, respectively, in connection with such agreement as a reduction
         to operating expenses. For the years ended June 30, 2003, 2002, and
         2001, the Company recorded $1,440, $176,681, and $0, respectively, as
         cost of sales related to this agreement.

         As of June 30, 2003 and 2002, the Company's accounts payable included
         $648 and $634, respectively, related to transactions with these
         entities.

         The Company also incurred $55 and $1,290 in expenses in the years ended
         June 30, 2002 and 2001, respectively, which were reimbursed by Dr.
         Sherman, related to a secondary stock offering, completed in May 2001,
         for the sale of 5.25 million shares of the Company's common stock,
         beneficially owned by Dr. Sherman.

         Edwin A. Cohen

         In accordance with the provisions of a consulting agreement, which
         expired on June 30, 2002, the Company's founder and former Vice
         Chairman, Edwin A. Cohen, earned $200 in each of the years ended June
         30, 2002 and 2001.

         Harold M. Chefitz

         Harold M. Chefitz, a member of the Company's Board of Directors, serves
         as the Chairman of GliaMed, Inc., in which the Company has made an
         investment of $500 which is accounted for at cost and included in other
         assets at June 30, 2003 and 2002.

                                      F-25

<PAGE>

         William T. McKee

         In connection with the Company's investment in GliaMed, Inc., William
         T. McKee, the Company's Chief Financial Officer, became a member of
         GilaMed's Board of Directors.

(15)     INCOME TAXES

         A summary of the components of income tax expense is as follows:

<TABLE>
<CAPTION>
                                                     Year Ended June 30,
                                              ---------------------------------
                                                2003        2002        2001
                                              ---------   ---------   ---------
               <S>                            <C>         <C>         <C>
               Current:
                 Federal                      $  77,615   $ 103,528   $  37,218
                 State                           10,911      12,719       5,655
                                              ---------   ---------   ---------
                                                 88,526     116,247      42,873
                                              ---------   ---------   ---------

               Deferred:
                 Federal                          9,010       8,981      (3,603)
                 State                           (2,387)         90        (556)
                                              ---------   ---------   ---------
                                                  6,623       9,071      (4,159)
                                              ---------   ---------   ---------
               Total                          $  95,149   $ 125,318   $  38,714
                                              =========   =========   =========
</TABLE>

         The provision for income taxes differs from amounts computed by
         applying the statutory federal income tax rate to earnings before
         income taxes due to the following:

<TABLE>
<CAPTION>
                                                     Year Ended June 30,
                                              ---------------------------------
                                                2003        2002        2001
                                              ---------   ---------   ---------
   <S>                                        <C>         <C>         <C>
   Federal income taxes at statutory rate     $  91,950   $ 118,225   $  35,628
   State income taxes,
     net of federal income tax effect             8,207       8,326       3,314
   Tax credits                                   (1,000)          -           -
   Other, net                                    (4,008)     (1,233)       (228)
                                              ---------   ---------   ---------
                                              $  95,149   $ 125,318   $  38,714
                                              =========   =========   =========
</TABLE>

                                      F-26

<PAGE>

         The temporary differences that give rise to deferred tax assets and
         liabilities as of June 30, 2003 and 2002 are as follows:

         <TABLE>
         <CAPTION>
                                                           2003         2002
                                                        ----------    ---------
         <S>                                            <C>           <C>
         Deferred tax assets:
           Net operating loss                           $   16,205    $  26,599
           Receivable reserves                              24,514       17,282
           Inventory                                         2,680        2,895
           Goodwill amortization                             2,131        2,736
           Warrants issued                                   6,536        6,350
           Tax credit carryforward                           4,008        4,159
           Capital loss carryforward                         3,084        2,997
           Amortization of intangibles                       3,076          303
           Investments                                         109            -
           Other                                             3,866        2,346
                                                        ----------    ---------
         Total deferred tax assets                          66,209       65,667

         Deferred tax liabilities:
           Plant and equipment                             (14,631)      (9,328)
           Proceeds from supply agreement                  (10,225)      (7,243)
           Investments                                           -         (133)
           Other                                            (2,242)      (1,030)
                                                        ----------    ---------
         Total deferred tax liabilities                    (27,098)     (17,734)
         Less valuation allowance                           (6,147)      (8,455)
                                                        ----------    ---------
         Net deferred tax asset                         $   32,964    $  39,478
                                                        ==========    =========
         </TABLE>

         At June 30, 2003 and 2002, as a result of the merger with Duramed, the
         Company had cumulative regular net operating loss carryforwards of
         approximately $38,800 and $66,900, respectively, for federal and state
         income tax purposes, which will expire in the years 2011 to 2015. There
         is an annual limitation on the utilization of the net operating loss
         carryforward, which is calculated under Internal Revenue Code Section
         382.

         The tax credit carryforward is primarily comprised of credits related
         to research and development activities that expire in the years 2004 to
         2021.

         The Company has established a valuation allowance to reduce the
         deferred tax asset recorded for certain tax credits, capital loss
         carryforwards, and certain net operating loss carryforwards. A
         valuation allowance is recorded because based on available evidence, it
         is more-likely-than-not that a deferred tax asset will not be realized.
         The valuation allowance reduces the deferred tax asset to the Company's
         best estimate of the net deferred tax asset that, more-likely-than-not,
         will be realized. The valuation allowance will be reduced when and if
         the Company determines that the deferred income tax assets are likely
         to be realized. Accordingly, during the year ended June 30, 2003, the
         Company reduced the valuation allowance by a net of $2,308, due to the
         expiration of certain tax credits and after determining that it was
         more-likely-than-not that a deferred tax asset related to certain net
         operating losses would be realized.

(16)     SHAREHOLDERS' EQUITY

         Employee Stock Option Plans

         The Company has three employee stock option plans, the Barr
         Laboratories, Inc. 2002 Stock and Incentive Award Plan (the "2002
         Option Plan"), the Barr Laboratories, Inc. 1993 Stock Incentive Plan
         (the "1993 Option Plan") and the Barr Laboratories, Inc. 1986 Option
         Plan, which were approved by the shareholders and which authorize the
         granting of options to officers and employees to purchase the Company's
         common stock. On February 20, 2003, all shares available for grant in
         the 1993 Option Plan were transferred to the 2002 Option Plan and all
         subsequent grants have been made under the 2002 Option Plan. Effective
         June 30, 1996, options were no longer granted under the 1986 Option
         Plan. For fiscal 2003, 2002 and 2001, there were no options that
         expired under this plan.

                                      F-27

<PAGE>

         All options granted prior to June 30, 1996 under the 1993 Option Plan
         and 1986 Option Plan, become exercisable between one and two years from
         the date of grant and expire ten years after the date of grant except
         in cases of death or termination of employment as defined in each Plan.
         All options outstanding on October 24, 2001 became fully vested upon
         completion of the Duramed merger. Options granted after October 24,
         2001 are exercisable between one and five years from the date of grant.
         Through fiscal 2000, no option had been granted under either the 1993
         Option Plan or the 1986 Option Plan at a price below the current market
         price of the Company's common stock on the date of grant. In fiscal
         2001, options for 45,000 shares were granted to a key executive as part
         of her employment agreement at various prices below the current market
         price on the date of grant. The total value of the discount associated
         with this grant was $896 and was being amortized over the five-year
         vesting period of the options. In fiscal 2001, the amortization of the
         discount totaled $281. In fiscal 2002, these options fully vested as
         the result of the Duramed merger and the remaining discount of $615 was
         expensed. Options granted after February 20, 2003 become exercisable
         between one and three years from the date of grant and expire ten years
         after the date of grant except in cases of death or termination of
         employment.

         In addition, the Company has options outstanding under the terms of
         various former Duramed plans. These include the 1986 Stock Option Plan
         (the "Duramed 1986 Plan"), the 1988 Stock Option Plan (the "1988
         Plan"), the 1997 Stock Option Plan (the "1997 Plan"), and the 2000
         Stock Option Plan (the "2000 Plan"). All outstanding options under the
         Duramed plans, with the exception of options held by certain senior
         executives of Duramed, vested as of October 24, 2001, the effective
         date of the merger, as provided by the Plan. Such options were assumed
         by Barr under the same terms and conditions as were applicable under
         the Duramed stock option plans under which the options were granted.
         The number of options and related exercise prices have been adjusted to
         a Barr equivalent number of options and exercise price pursuant to the
         merger. Subsequent to October 24, 2001, additional options are no
         longer granted under these Duramed plans.

         A summary of the activity for the three fiscal years ended June 30,
         2003, adjusted for the March 2003 3-for-2 stock split is as follows:

<TABLE>
<CAPTION>
                                                                 WEIGHTED-AVERAGE
                                              NO. OF SHARES       EXERCISE PRICE
                                              -------------      ----------------
<S>                                           <C>                <C>
Outstanding at July 1, 2000                     4,707,456           $    11.85

Granted                                         1,241,698                32.55
Canceled                                         (124,637)               20.75
Exercised                                        (760,782)                9.27
                                              -----------
Outstanding at June 30, 2001                    5,063,735                17.09

Granted                                         1,005,013                52.89
Adjustment for pooling                            (47,577)               21.97
Canceled                                          (83,834)               38.51
Exercised                                      (1,011,755)               14.58
                                              -----------
Outstanding at June 30, 2002                    4,925,582                24.64

Granted                                         1,406,222                40.11
Canceled                                         (138,698)               41.88
Exercised                                        (903,028)               18.85
                                              -----------
Outstanding at June 30, 2003                    5,290,078           $    29.26
                                              ===========

Available for Grant (13,378,125 authorized)     4,944,098

Exercisable at June 30, 2001                    2,761,049           $    10.49
Exercisable at June 30, 2002                    4,506,530           $    24.02
Exercisable at June 30, 2003                    3,705,318           $    25.19
</TABLE>

                                      F-28

<PAGE>

         Available for grant and authorized amounts are for the 2002 Option Plan
         only, because as of June 30, 2003 options are no longer granted under
         any of the other option plans discussed above.

         Non-Employee Directors' Stock Option Plans

         During fiscal year 1994, the shareholders approved the Barr
         Laboratories, Inc. 1993 Stock Option Plan for Non-Employee Directors
         (the "1993 Directors' Plan"). All options granted under the 1993
         Directors' Plan have ten-year terms and are exercisable at an option
         exercise price equal to the market price of the common stock on the
         date of grant. Each option is exercisable on the date of the first
         annual shareholders' meeting immediately following the date of grant of
         the option, provided there has been no interruption of the optionee's
         service on the Board before that date.

         On October 24, 2002, the shareholders approved the Barr Laboratories,
         Inc. 2002 Stock Option Plan for Non-Employee Directors (the "2002
         Directors' Plan"). This plan, among other things, enhances the
         Company's ability to attract and retain experienced directors. On
         February 20, 2003, all shares available for grant under the 1993
         Directors' Plan were transferred to the 2002 Directors' Plan. As of
         June 30, 2003, no options had been granted under the 2002 Directors'
         Plan.

         Duramed had a Stock Option Plan for Non-employee Directors (the "1991
         Duramed Directors' Plan") under which each new non-employee director
         was granted, at the close of business on the date he or she first
         became a director, options to purchase 3,843 shares of common stock.
         Annually, each then serving non-employee director, other than a new
         director, was also automatically granted options to purchase 1,921
         shares of common stock at a price equal to the closing market price on
         the date of grant. Options granted under the 1991 Duramed Directors'
         Plan expire 10 years after the date of grant. Subsequent to October 24,
         2001, options will no longer be granted under this plan.

       <TABLE>
       <CAPTION>
                                                                          WEIGHTED-AVERAGE
                                                       NO. OF SHARES       EXERCISE PRICE
                                                       -------------      ----------------
       <S>                                             <C>                <C>
       Outstanding at July 1, 2000                        628,810             $  11.69

       Granted                                             90,279                39.48
       Cancelled                                           (3,843)               21.67
       Exercised                                          (88,313)               11.92
                                                         --------
       Outstanding at June 30, 2001                       626,933                15.61

       Granted                                            135,000                49.95
       Adjustment for pooling                              15,372                24.61
       Cancelled                                           (9,222)               22.35
       Exercised                                          (33,372)               12.26
                                                         --------
       Outstanding at June 30, 2002                       734,711                22.15

       Granted                                             67,500                40.14
       Canceled                                           (39,513)               49.31
       Exercised                                         (309,374)               14.63
                                                         --------
       Outstanding at June 30, 2003                       453,324             $  27.60
                                                         ========

       Available for grant (1,865,625 authorized)         713,063

       Exercisable at June 30, 2001                       540,496             $  11.67
       Exercisable at June 30, 2002                       599,710             $  15.89
       Exercisable at June 30, 2003                       385,809             $  25.41
       </TABLE>

         Available for grant and authorized amounts are for the 2002 Directors'
         Plan and the 1993 Directors' Plan only, because as of June 30, 2003,
         options are no longer granted under the 1991 Duramed Directors' Plan.

                                      F-29

<PAGE>

         Employee Stock Purchase Plan

         During fiscal 1994, the shareholders ratified the adoption by the Board
         of Directors of the 1993 Employee Stock Purchase Plan (the "Purchase
         Plan") to offer employees an inducement to acquire an ownership
         interest in the Company. The Purchase Plan permits eligible employees
         to purchase, through regular payroll deductions, an aggregate of
         1,012,500 shares of common stock at approximately 85% of the fair
         market value of such shares. Under the Purchase Plan, 77,136, 44,476
         and 75,442 shares of common stock were purchased during the years ended
         June 30, 2003, 2002 and 2001, respectively.

         Warrants

         Warrants issued by Duramed prior to the merger with Barr

         On September 13, 1996, in connection with the acquisition of the assets
         of Hallmark Pharmaceuticals, Inc., the Company issued warrants to
         purchase 153,720 shares of the Company's common stock at an exercise
         price of $65.05 per share. These warrants were repriced on September
         12, 1997 to $26.02 per share. The warrants had a term of five years and
         were fully vested as of March 25, 1999. During calendar year 2000,
         based on an antidilutive clause in the purchase contract, the exercise
         price was adjusted to $22.86 and the number of warrants to purchase
         shares of the Company's common stock was adjusted to 174,763. As of
         June 30, 2002, these warrants were no longer outstanding.

         On June 5, 1997, in connection with the issuance of Series E preferred
         stock, the Company granted warrants to purchase 7,686 shares of the
         Company's common stock at an exercise price of $11.22 per share. The
         warrants vested immediately and, unless exercised, expired on June 5,
         2000.

         On February 4, 1998, in conjunction with the issuance of Series F
         preferred stock, the Company granted warrants to purchase 211,374
         shares of the Company's common stock. Of the total amount, warrants for
         192,159 shares were issued to investors of the Series F preferred stock
         at an exercise price of $14.93 per share. These warrants vested on
         October 2, 1998 and were exercised on September 19, 2002 in a cashless
         exercise that resulted in the issuance of 125,910 shares of the
         Company's common stock. The remaining 19,215 warrants were granted at
         an exercise price of $13.58 per share. The warrants vested immediately
         and expired on February 4, 2001. As of June 30, 2003, of the remaining
         warrants, 16,718 were exercised and 2,497 had expired.

         During 1999, in conjunction with an amendment to a financing agreement,
         the Company granted to a bank warrants to purchase 42,273 shares of the
         Company's common stock at an exercise price of $33.28. These warrants
         vested immediately and expire four years from the date of grant. In
         December 1999, the financing agreement was amended to reset the
         exercise price of 50% of the warrants to $23.43 per share. During 2000,
         based on an antidilutive clause in the agreement, the number of
         warrants was adjusted to 44,227. The price of 22,284 warrants was
         adjusted to $31.57 and the remaining 21,945 warrants were repriced to
         $22.55. In November 2001 and January 2002 a total of 38,196 of the
         warrants were exercised. As of June 30, 2003, warrants for 6,031 shares
         were outstanding with an expiration of July 2009.

         On May 12, 2000, in combination with the issuance of Series G preferred
         stock, the Company granted warrants to purchase 192,157 common shares
         at a price of $14.31 per share. The warrants vested immediately and
         expire on May 12, 2005. As of June 30, 2003, all of these warrants
         remained outstanding.

         DuPont Warrants

         In March 2000, the Company issued warrants granting DuPont the right to
         purchase 1,125,000 shares of Barr's common stock at $20.89 per share,
         and 1,125,000 shares at $25.33 per share, respectively. Each warrant
         was immediately exercisable and expires in March 2004. As of June 30,
         2003, DuPont has sold its rights to all the warrants to third parties
         and none of the warrants have been exercised.

                                      F-30

<PAGE>

         The following table summarizes information about stock options and
         warrants outstanding at June 30, 2003:

         <TABLE>
         <CAPTION>
                                     Options and Warrants Outstanding                Options and Warrants Exercisable
                          ------------------------------------------------------    ----------------------------------
                                                 Weighted
           Range of            Number             Average            Weighted          Number             Weighted
           Exercise         Outstanding          Remaining            Average          Exercisable         Average
            Prices        at June 30, 2003    Contractual Life    Exercise Price    at June 30, 2003    Exercise Price
         -------------    ----------------    ----------------    --------------    ----------------    --------------
         <S>              <C>                 <C>                 <C>               <C>                 <C>
         $  4.07-$5.06          616,533            1.82               $ 4.54             616,533            $ 4.54
         $ 7.67-$10.08          343,233            3.44               $ 8.52             340,391            $ 8.51
         $11.55-$18.70        1,844,334            5.28               $15.11           1,719,008            $15.68
         $20.17-$31.90        2,317,120            0.87               $23.12           2,316,352            $23.12
         $34.15-$40.27        1,955,775            8.49               $38.98             613,279            $37.06
         $41.95-$57.37        1,114,595            8.20               $51.61             933,752            $52.58
                             ----------                                               ----------
                              8,191,590                                                6,539,315
                             ==========                                               ==========
         </TABLE>

(17)     SAVINGS AND RETIREMENT PLANS

         The Company has a savings and retirement plan (the "401(k) Plan") which
         is intended to qualify under Section 401(k) of the Internal Revenue
         Code. Employees are eligible to participate in the 401(k) Plan in the
         first month following the month of hire. Participating employees may
         contribute up to a maximum of 60% of their earnings before or after
         taxes, limited to a maximum of $12,000 for pre-tax contributions. The
         Company is required, pursuant to the terms of its collective bargaining
         agreement, to contribute to each union employee's account an amount
         equal to the 2% minimum contribution made by such employee, which
         becomes fully-vested at the time of the Company's contribution. The
         Company may, at its discretion, make cash contributions equal to a
         percentage of the amount contributed by an employee to the 401(k) Plan
         up to a maximum of 10% of such employee's compensation. Participants
         are always fully vested with respect to their own contributions and any
         profits arising therefrom. Participants become fully vested in the
         Company's contributions and related earnings after five full years of
         employment.

         Duramed had a defined contribution plan, the "Duramed Pharmaceuticals,
         Inc. 401(k) / Profit Sharing Plan" ("Duramed Plan" or "Plan") available
         to all employees. The Plan provided for Duramed to match 50% of
         employee contributions to a maximum of 3% of each employee's
         compensation. Prior to October 2001, Duramed's matching contribution
         was made with Duramed's common stock, as permitted by the Plan. The
         Plan also had a profit sharing provision at the discretion of Duramed's
         board of directors. Duramed did not make a profit sharing contribution
         to the Plan. All full-time employees were eligible to participate in
         the deferred compensation and company matching provisions of the Plan.
         Employees were immediately vested with respect to the company matching
         provisions of the Plan.

         On January 1, 2002, the Duramed Plan was merged with the Barr 401(k)
         Plan and the participants of the Duramed Plan became eligible for
         participation in the Barr 401(k) Plan. The Company's contributions to
         the 401(k) Plans were $5,549, $4,790 and $3,304 for the years ended
         June 30, 2003, 2002 and 2001, respectively.

         In fiscal 2000, the Board of Directors approved a non-qualified plan
         ("Excess Plan") that enables certain executives to defer up to 10% of
         their compensation in excess of the qualified plan. The Company may, at
         its discretion, contribute a percentage of the amount contributed by
         the individuals covered under this Excess Plan to a maximum of 10% of
         such individual's compensation. In fiscal years 2003, 2002 and 2001,
         the Company chose to make contributions at the 10% rate to this plan.
         As of June 30, 2003 and 2002, the Company had an asset and matching
         liability for the Excess Plan of $2,282 and $1,394, respectively.

         The Company has an unfunded pension plan covering two non-employee
         directors of Duramed who were elected prior to 1998 and who had served
         on Duramed's Board for at least five years. At the time of the merger
         with Barr, two Duramed directors were eligible to receive benefits. The
         plan provides an annual benefit, payable monthly over each director's
         life, from the time a participating director ceased to be a member of
         the Board, equal to 85% and 60%, respectively, of the director's most
         recent annual Board fee, as adjusted annually to reflect changes in the
         Consumer Price Index. As of June 30, 2003 and 2002, the Company has
         recorded $487 and $490, respectively, as a long-term liability
         representing the

                                      F-31

<PAGE>

         present value of the estimated future benefit obligation to the
         eligible directors. The right of a director to receive benefits under
         the plan is forfeited if the director engages in any activity
         determined by the Board to be contrary to the best interests of the
         Company.

(18)     OTHER (EXPENSE) INCOME, NET

         A summary of other (expense) income, net is as follows:

         <TABLE>
         <CAPTION>
                                                           Year Ended June 30,
                                                    ---------------------------------
                                                      2003        2002        2001
                                                    ---------   ---------   ---------
         <S>                                        <C>         <C>         <C>
         Net loss on sale of assets                 $       -   $       -   $    (302)
         Net gain on sale of securities                     -           -       6,671
         Litigation settlement                              -       2,000           -
         Bristol-Myers Squibb termination payments          -       5,600           -
         Write-off of investment                         (214)          -      (2,450)
         Other                                             86          56        (271)
                                                    ---------   ---------   ---------
         Other (expense) income, net                $    (128)  $   7,656   $   3,648
                                                    =========   =========   =========
         </TABLE>

         For the year ended June 30, 2001, the net gain on sale of securities
         consists primarily of the gain realized on the sale of the investment
         in Galen Holdings plc, formerly Warner Chilcott plc.

(19)     MERGER-RELATED COSTS

         As a result of the Duramed merger, the Company incurred pre-tax
         merger-related expenses for the year ended June 30, 2002 of
         approximately $31,449, which is included in the consolidated statements
         of operations as merger-related costs. Such expenses included
         approximately $13,000 in direct transaction costs such as investment
         banking, legal and accounting costs, as well as approximately $7,000 in
         costs associated with facility and product rationalization and $11,000
         in severance costs. Portions of these expenses were not tax deductible.
         The severance costs included approximately $7,000 intended to satisfy
         the change in control payments under certain previously existing
         employment contracts along with the expected cost associated with
         terminating approximately 120 former Duramed employees primarily
         representing certain manufacturing and general and administrative
         functions.

         As of June 30, 2002, all of the direct transaction costs and
         involuntary termination benefits had been paid and charged against the
         liability leaving a remaining liability of approximately $1,600, of
         which $700 related to severance and change in control payments and $900
         related to facility costs. As of June 30, 2003, the remaining liability
         balance of approximately $700 relates to facility costs.

(20)     COMMON STOCK REPURCHASE

         On September 17, 2001, the Securities and Exchange Commission ("SEC")
         issued an Emergency Order permitting companies to initiate common stock
         repurchase programs without impacting pooling-of-interests accounting.
         As a result, the Company's board of directors authorized the Company to
         spend up to $100,000 for such a common stock repurchase program. Such
         authorization was limited to the time periods established by the SEC.
         On October 12, 2001, the SEC's order expired and the Company's
         repurchase program ended. During the period the Company repurchased
         15,000 shares of its common stock at a total cost of approximately
         $695.

                                      F-32

<PAGE>

(21)     COMMITMENTS AND CONTINGENCIES

         Leases

         The Company is party to various leases which relate to the rental of
         office facilities and equipment. The Company believes it will be able
         to extend such leases, if necessary. Rent expense charged to operations
         was $1,875, $1,444 and $2,043 in fiscal 2003, 2002 and 2001,
         respectively. The table below shows the future minimum rental payments,
         exclusive of taxes, insurance and other costs under noncancellable
         long-term lease commitments at June 30, 2003. Such payments total
         $25,507 for operating leases. The net present value of such payments on
         capital leases was $4,878 after deducting executory costs and imputed
         interest of $196 and $1,043, respectively.

<TABLE>
<CAPTION>
                                               Year Ending June 30,
                          2004     2005    2006     2007    2008    Thereafter
                       --------------------------------------------------------
<S>                       <C>      <C>     <C>      <C>      <C>     <C>
Operating leases          $1,634   $2,632  $2,064   $2,038   $2,120  $15,019

Capital leases             2,104    1,815   1,517      681        -        -
                       --------------------------------------------------------
Minimum lease payments     3,738    4,447   3,581    2,719    2,120   15,019
                       --------------------------------------------------------
</TABLE>

         Business Development Venture

         In fiscal 2002, the Company entered into a Loan and Security Agreement
         (the "Loan Agreement") with Natural Biologics, the raw material
         supplier for the Company's generic equine-based conjugated estrogens
         product for which the Company filed an ANDA with the FDA in June 2003.
         The Company believes that the raw material is pharmaceutically
         equivalent to raw material used to produce Wyeth's Premarin(R). Natural
         Biologics is a defendant in litigation brought by Wyeth alleging that
         Natural Biologics misappropriated certain Wyeth trade secrets with
         respect to the preparation of this raw material. This case was tried in
         November 2002, and a decision may be rendered by the trial court at any
         time. An unfavorable decision for Natural Biologics could materially
         and adversely affect Natural Biologics' ability to repay the loans the
         Company has made to it. If that were to be the case, the Company may be
         required to write-off all or a portion of the loans made to Natural
         Biologics. As of June 30, 2003 and 2002, the Company had loaned Natural
         Biologics approximately $14,408 and $4,746, respectively, under this
         agreement, including accrued interest, and has included such amount in
         other assets on the consolidated balance sheets.

         Under the terms of the Loan Agreement, absent the occurrence of a
         material adverse event (including an unfavorable court decision in the
         Wyeth matter), the Company could loan Natural Biologics up to $35,000
         over a three-year period, including $8,300 and $2,800 during fiscal
         2004 and 2005, respectively. The Loan Agreement also provides for a
         loan of $10,000 based upon the successful outcome of pending legal
         proceedings between Wyeth and Natural Biologics, as discussed above.
         The loans mature on June 3, 2007, are collateralized by a security
         interest in inventory and certain other assets of Natural Biologics and
         bear interest at the applicable federal rate as defined by the Loan
         Agreement (3.03% at June 30, 2003).

         In fiscal 2002, the Company also entered into a Development,
         Manufacturing and Distribution Agreement with Natural Biologics which
         could obligate the Company to make milestone payments totaling an
         additional $35,000 to Natural Biologics based on achieving certain
         legal and product approval milestones, including the approval of a
         generic product.

         Employment Agreements

         The Company has entered into employment agreements with certain key
         employees. These agreements terminate at various dates through 2006.

                                      F-33


<PAGE>

         Product Liability Insurance

         On September 30, 2002, the Company entered into a finite risk insurance
         arrangement (the "Arrangement") with a third party insurer due to the
         significant increase in the cost of traditional product liability
         insurance. The Company believes that the Arrangement is an effective
         way to insure against a portion of potential product liability claims.
         In exchange for $15,000 in product liability coverage over a five-year
         term, the Arrangement provides for the Company to pay approximately
         $14,250 in four equal annual installments of $3,563, with the first
         annual payment having been made in October 2002. Included in the
         initial payment is an insurer's margin of approximately $1,000, which
         is being amortized over the five-year term. At any six-month interval,
         the Company may, at its option, cancel the Arrangement. In addition, at
         the earlier of termination or expiry, the Company is eligible for a
         return of all amounts paid to the insurer, less the insurer's margin
         and amounts for any incurred claims. The Company is recording the
         payments, net of the insurer's margin, as deposits included in other
         assets.

         The Company is self-insured for potential product liability claims
         between $15,000 and $25,000. The Company has purchased additional
         coverage from an insurance carrier that will offer coverage for claims
         between $25,000 and $50,000, subject to a $10,000 limitation on some of
         the Company's products and an exclusion on others.

         Simultaneously with entering into the Arrangement, the Company
         exercised the extended reporting period under its previous insurance
         policy that provides $10,000 of product liability coverage of unlimited
         duration for product liability claims on products sold from September
         10, 1987 to September 30, 2002. Additionally, in connection with its
         merger with Duramed, the Company purchased a supplemental extended
         reporting policy under Duramed's prior insurance policy that provides
         $10,000 of product liability coverage for an unlimited duration for
         product liability claims on products sold by Duramed between October 1,
         1985 and October 24, 2001, and for product liability claims.

         The Company has never been held liable for, or agreed to pay, a
         significant product liability claim. However, the Company is from time
         to time a defendant in several product liability actions. If the
         Company incurs defense costs and liabilities in excess of the Company's
         self-insurance reserve that are not otherwise covered by insurance, it
         could have a material adverse effect on the Company's consolidated
         financial statements.

         Indemnity Provisions

         From time-to-time, in the normal course of business, we agree to
         indemnify our suppliers and customers concerning product liability
         and other matters.

         Litigation Settlement

         On October 22, 1999, the Company reached a settlement agreement with
         Schein Pharmaceutical, Inc. (now part of Watson Pharmaceuticals, Inc.)
         relating to a 1992 agreement regarding the pursuit of a generic
         conjugated estrogens product. Under the terms of the settlement, Schein
         gave up any claim to rights in Cenestin in exchange for a payment of
         $15,000, which was paid to Schein in 1999. An additional $15,000
         payment is required under the terms of the settlement if Cenestin
         achieves total profits (product sales less product-specific cost of
         goods sold, sales and marketing and other relevant expenses) of greater
         than $100,000 over any five year or less period prior to October 22,
         2014.

         Class Action Lawsuits

         Ciprofloxacin (Cipro(R))

         To date the Company has been named as co-defendants with Bayer
         corporation, The Rugby Group, Inc. and others in approximately 38 class
         action complaints filed in state and federal courts by direct and
         indirect purchasers of Ciprofloxacin (Cipro(R)) from 1997 to the
         present. The complaints allege that the 1997 Bayer-Barr patent
         litigation settlement agreement was anti-competitive and violated
         federal antitrust laws and/or state antitrust and consumer protection
         laws. A prior investigation of this agreement by the Texas Attorney
         General's Office on behalf of a group of state Attorneys General was
         closed without further action in December 2001.

         The lawsuits include nine consolidated in California state court, one
         in Kansas state court, one in Wisconsin state court, one in Florida
         state court, and two in New York state court, with the remainder of the
         actions pending in the United States District Court for the Eastern
         District of New York for coordinated or consolidated pre-trial
         proceedings (the "MDL Case"). Fact discovery in the MDL case is
         currently scheduled to close on November 7, 2003, after which the
         parties will proceed with expert discovery, followed by anticipated
         summary judgment briefing. The direct purchaser and indirect purchaser
         plaintiffs also have filed motions for class certification in the MDL
         case, but briefing is not complete

                                      F-34


<PAGE>

         and the Court has indicated that it will defer ruling on the motions at
         the present time. The state court actions remain in a relatively
         preliminary stage generally, tracked to follow the MDL Case, although
         defendants have filed dispositive motions and plaintiffs have moved for
         class certification in certain of the cases.

         On May 20, 2003, the District Court entered an order in the MDL Case
         holding that the Barr-Bayer settlement did not constitute a per se
         violation of the antitrust laws and restricting the scope of the legal
         theories the plaintiffs could pursue in the case.

         The Company believes that our agreement with Bayer Corporation reflects
         a valid settlement to a patent suit and cannot form the basis of an
         antitrust claim. Although it is not possible to forecast the outcome of
         this matter, the Company intends to vigorously defend itself. We
         anticipate that this matter may take several years to resolve, but an
         adverse judgment could have a material adverse impact on the Company's
         consolidated financial statements.

         Tamoxifen

         To date approximately 31 consumer or third party payor class action
         complaints have been filed in state and federal courts against Zeneca,
         Inc., AstraZeneca Pharmaceuticals LP and the Company alleging, among
         other things, that the 1993 settlement of patent litigation between
         Zeneca and the Company violated the antitrust laws, insulated Zeneca
         and the Company from generic competition and enabled Zeneca and the
         Company to charge artificially inflated prices for Tamoxifen citrate. A
         prior investigation of this agreement by the U.S. Department of Justice
         was closed without further action.

         The Judicial Panel on Multidistrict Litigation has transferred these
         cases to the United States District Court for the Eastern District of
         New York for pretrial proceedings. On May 13, 2003, the District Court
         entered an order dismissing the cases for failure to state a viable
         antitrust claim. Plaintiffs have filed a notice of appeal.

         The Company believes that its agreement with Zeneca reflects a valid
         settlement to a patent suit and cannot form the basis of an antitrust
         claim. Although it is not possible to forecast the outcome of this
         matter, the Company intends to vigorously defend itself. It is
         anticipated that this matter may take several years to resolve, but an
         adverse judgment could have a material adverse impact on the Company's
         consolidated financial statements.

         Invamed/Apothecon Lawsuit

         In February 1998 and May 1999, Invamed, Inc. and Apothecon, Inc.,
         respectively, both of which have since been acquired by Geneva
         Pharmaceuticals, Inc., which is a subsidiary of Novartis AG, named the
         Company and several others as defendants in lawsuits filed in the
         United States District Court for the Southern District of New York,
         charging that the Company unlawfully blocked access to the raw material
         source for Warfarin Sodium. The two actions have been consolidated. On
         May 10, 2002, the District Court granted summary judgment in the
         Company's favor on all antitrust claims in the case, but found that the
         plaintiffs could proceed to trial on their allegations that the Company
         interfered with an alleged raw material supply contract between Invamed
         and Barr's raw material supplier. Invamed and Apothecon have appealed
         the District Court's decision to the United States Court of Appeals for
         the Second Circuit. Trial on the merits has been stayed pending the
         outcome of the appeal.

         The Company believes that these suits are without merit and intends to
         vigorously defend its position, but an adverse judgment could have a
         material impact on the Company's consolidated financial statements.

         Desogestrel/Ethinyl Estradiol Suit

         In May 2000, the Company filed an Abbreviated New Drug Application
         ("ANDA") seeking approval from the FDA to market the tablet combination
         of desogestrel/ethinyl estradiol tablets and ethinyl estradiol tablets,
         the generic equivalent of Organon Inc.'s Mircette(R) oral contraceptive
         regimen. The Company notified Bio-Technology General Corp. ("BTG"), the
         owner of the patent for the Mircette product, pursuant to the
         provisions of the Hatch-Waxman Act and BTG filed a patent infringement
         action in the United States District Court for the District of New
         Jersey seeking to prevent Barr from marketing the tablet combination.
         In December 2001, the United States District Court for the District of
         New Jersey granted summary judgment in favor or Duramed, finding that
         Barr's product did not infringe the patent at issue in the case. BTG
         appealed the District Court's decision. In April 2002, the Company
         launched its Kariva(R) product, the generic version of Mircette. In
         April 2003, the U.S. Court of Appeals for the Federal Circuit reversed
         the District Court's decision granting summary judgment in Duramed's
         favor and remanded the case to the District Court for further

                                      F-35


<PAGE>

         proceedings.

         In July, 2003, BTG (now Savient) filed an amended complaint adding
         Organon (Ireland) Ltd. and Organon USA as plaintiffs and adding the
         Company as a defendant. The amended complaint seeks damages and
         enhanced damages based upon willful infringement. The Company believes
         that it has not infringed BTG's patent and continues to manufacture and
         market Kariva. If BTG and Organon are successful, the Company could be
         liable for damages for patent infringement, which could have a material
         adverse effect on our consolidated financial statements.

         Termination of Solvay Co-Marketing Relationship

         On March 31, 2002, Barr's Duramed subsidiary gave notice of its
         intention to terminate, as of June 30, 2002, the relationship between
         Barr and Solvay Pharmaceuticals, Inc. which covered the joint promotion
         of Barr's Cenestin tablets and Solvay's Prometrium(R) capsules. Solvay
         has disputed Duramed's right to terminate the relationship and claims
         it is entitled to substantial damages and has notified Barr that it has
         demanded arbitration of this matter. Discovery is underway and the
         arbitration hearing is currently scheduled to begin in January 2004.
         The Company believes its actions are well founded but if the Company is
         incorrect, an adverse decision in the matter could have a material
         adverse impact on the Company's consolidated financial statements.

         Lemelson

         In November, 2001, the Lemelson Medical, Education & Research
         Foundation filed an action in the United States District Court for the
         District of Arizona alleging patent infringement against many
         defendants, including the Company, involving "machine vision" or
         "computer image analysis." In March, 2002, the court stayed the
         proceedings, pending the resolution of another suit that involves the
         same patents, but does not involve the Company.

         Nortrel 7/7/7 Product Recall

         On July 9, 2003, the Company initiated a recall of three lots of its
         Nortrel 7/7/7 oral contraceptive product after receiving two customer
         complaints that the tablets that had been dispensed to them were
         misconfigured. The Company has since received reports of pregnancies
         from approximately 16 women who claim to have taken the product. The
         Company is in the process of investigating whether these women have
         taken affected product and whether their pregnancies are related to use
         of affected product. The Company anticipates that one or more of these
         women will commence formal legal actions against it. The Company does
         not have sufficient information at this time to evaluate the likelihood
         of success in these matters. However, an unfavorable outcome in one or
         more of these matters could have a material adverse effect on the
         Company's consolidated financial statements.

         PPA Litigation

         The Company is a defendant in three personal injury product liability
         lawsuits involving phenylproanolamine ("PPA"). All three cases are in
         their initial stages. The Company believes it has strong defenses to
         all three cases and intends to vigorously defend against them. However,
         an unfavorable outcome could have a material adverse effect on the
         Company's consolidated financial statements.

         MPA Litigation

         The Company has been named as a defendant in at least ten personal
         injury product liability cases brought against the Company and other
         manufacturers by plaintiffs claiming that they suffered injuries
         resulting from the use of medroxyprogesterone acetate ("MPA") in
         conjunction with Premarin or other hormone therapy products. These
         cases are in a preliminary stage and the Company does not know whether
         any of these individuals took an MPA product manufactured by the
         Company. We intend to vigorously defend against these cases. However,
         an unfavorable outcome could have a material adverse effect on our
         consolidated financial statements.

         Medical Reimbursement Cases

         We have learned that we have been named as a defendant in separate
         actions brought by the County of Suffolk, New York and Westchester
         County, New York against numerous pharmaceutical manufacturers. The
         action seeks to recover damages and other relief for alleged
         overcharges for prescription medications paid for by Medicaid. We
         believe that we have not engaged in any improper conduct and intend to
         vigorously defend against the cases. However, an unfavorable outcome
         could have a material adverse effect on our consolidated financial
         statements.

         Other Litigation

         As of June 30, 2003, the Company was involved with other lawsuits
         incidental to its business, including patent infringement actions and
         personal injury claims. Management of the Company, based on the advice
         of legal counsel, believes that the ultimate disposition of such other
         lawsuits will not have a material adverse effect on the Company's
         consolidated financial statements.

                                      F-36


<PAGE>

         Administrative Matters

         On June 30, 1999, the Company received a civil investigative demand
         ("CID") and a subpoena from the FTC seeking documents and data relating
         to the January 1997 agreements resolving the patent litigation
         involving ciprofloxacin hydrochloride. The CID was limited to a request
         for information and did not allege any wrongdoing. The FTC is
         investigating whether Barr, through the settlement and supply
         agreements, has engaged in activities in violation of the antitrust
         laws. Barr continues to cooperate with the FTC in this investigation.

         On August 17, 2001, the Oregon Attorney General's Office, as liaison on
         behalf of a group of state Attorneys General, served the Company with a
         CID relating to its investigation of our settlement of the Tamoxifen
         patent challenge with AstraZeneca. The investigative demand requests
         the production of certain information and documents that may assist the
         Attorney General in its investigation. The Company is reviewing the
         demand and intends to fully cooperate with the Attorney General's
         office in its investigation.

         The Company believes that the patent challenge settlements being
         investigated represent a pro-consumer and pro-competitive outcome to
         the patent challenge cases. An investigation of the tamoxifen
         settlement by the U.S. Department of Justice and an investigation of
         the ciprofloxacin settlement by the Texas Attorney General's Office on
         behalf of other state Attorneys General already have been
         satisfactorily resolved without further action and we expect these
         investigations to be satisfactorily resolved, as well. However,
         consideration of these matters could take considerable time, and any
         adverse judgment could have a material adverse impact on our
         consolidated financial statements.

         In May 2001, the Company received a subpoena, issued by the
         Commonwealth of Massachusetts Office of the Attorney General, for the
         production of documents related to pricing and Medicaid reimbursement
         of select products in Massachusetts. Barr is one of a number of
         pharmaceutical companies that have received such subpoenas. Barr is
         cooperating with the inquiry and believes that all of its product
         agreements and pricing decisions have been lawful and proper.

                                      F-37


<PAGE>

(22)     QUARTERLY DATA (UNAUDITED)

A summary of the quarterly results of operations is as follows:

<TABLE>
<CAPTION>
                                                                  THREE MONTH PERIOD ENDED
                                                    ----------------------------------------------------
                                                     SEPT. 30       DEC. 31      MAR. 31       JUNE 30
                                                    ----------------------------------------------------
<S>                                                 <C>           <C>           <C>           <C>
FISCAL YEAR 2003:
Total revenues                                      $  220,428    $  209,035    $  171,923    $  301,478
Cost of sales                                          110,919        94,872        55,182       163,126

Net earnings applicable to common shareholders          41,857        42,747        45,874        37,088

Earnings per common share - diluted (1) (3)         $     0.61    $     0.63    $     0.66    $     0.53
                                                    ==========    ==========    ==========    ==========

PRICE RANGE OF COMMON STOCK (2) (3)
High                                                $    48.07    $    45.15    $    58.15    $    66.52
Low                                                      32.93         36.84         43.39         51.40
</TABLE>

<TABLE>
<CAPTION>
                                                     SEPT. 30       DEC. 31      MAR. 31       JUNE 30
                                                    ----------------------------------------------------
<S>                                                 <C>           <C>           <C>           <C>
FISCAL YEAR 2002:
Total revenues                                      $  352,103    $  366,090    $  261,411    $  209,380

Cost of sales                                          203,834       227,064       139,142       106,283
Net earnings applicable to common shareholders          70,205        42,091        53,107        44,866

Earnings per common share - diluted (1) (3)         $     1.04    $     0.61    $     0.78    $     0.66
                                                    ==========    ==========    ==========    ==========

PRICE RANGE OF COMMON STOCK (2) (3)
High                                                $    60.40    $    60.00    $    53.33    $    48.23
Low                                                      41.33         39.50         41.43         38.87
</TABLE>

(1)  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 two most recent fiscal years, the Company did not
     pay any cash dividends.

(2)  The Company's common stock is listed and traded on the New York Stock
     Exchange under the symbol "BRL". At June 30, 2003, there were approximately
     1,569 shareholders of record of common stock. The Company believes that a
     significant number of beneficial owners hold their shares in street name.

(3)  Adjusted for the March 17, 2003 3-for-2 stock split effected in the form of
     a 50% stock dividend (See Note 1).

                                      F-38

<PAGE>

SCHEDULE II
BARR LABORATORIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 2003, 2002 AND 2001
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                             BALANCE AT    ADDITIONS,    RECOVERY
                                             BEGINNING     COSTS AND      AGAINST      DEDUCTIONS,     POOLING      BALANCE AT
                                              OF YEAR       EXPENSE      WRITE-OFFS    WRITE-OFFS     ADJUSTMENT    END OF YEAR
                                             ----------------------------------------------------------------------------------
<S>                                          <C>           <C>           <C>           <C>            <C>           <C>
Allowance for doubtful accounts:
  Year ended June 30, 2001                   $      337    $       80    $       18    $       234    $        -    $       201
  Year ended June 30, 2002                          201            80             -              -             -            281
  Year ended June 30, 2003                          281            60             -             52             -            289

Reserve for returns and allowances:
  Year ended June 30, 2001                        4,754        14,466             -          9,996             -          9,224
  Year ended June 30, 2002                        9,224        76,935             -         57,136           (44)        28,979
  Year ended June 30, 2003                       28,979        48,623             -         24,926             -         52,676

Inventory reserves:
  Year ended June 30, 2001                       14,018         7,691             -          9,270             -         12,439
  Year ended June 30, 2002                       12,439        12,847             -         15,364           314         10,236
  Year ended June 30, 2003                       10,236        10,280             -          7,315             -         13,201
</TABLE>

                                      S-1
<PAGE>
                                 EXHIBIT INDEX


Exhibit
Number                        Description
-------                       -----------

23.1     Consent of Deloitte & Touche LLP

23.2     Consent of Ernst & Young LLP

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 2002

31.2     Certification of William T. McKee to Exchange Act Rule 13a-14(a) and
         15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act
         of 2002

32.0     Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
         to Section 906 of the Sarbanes-Oxley Act of 2002


                                   SIGNATURE

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized, dated as of August 29,
2003.

                                                 BARR LABORATORIES, INC.

                                                 By: /s/ Bruce L. Downey
                                                     -------------------------
                                                     Bruce L. Downey
                                                     Chairman of the Board and
                                                       Chief Executive Officer