##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2005
 or
 o
    
    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 Pharmaceuticals, Inc.
 (Exact name of Registrant as specified in its charter)
 Delaware
    
    42-1612474(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S.  Employer
Identification No.)400 Chestnut Ridge Road
Woodcliff Lake, New Jersey(Address of principal executive offices)
    
    07677-7668(Zip Code)
 201-930-3300
(Registrants telephone number)
 Securities registered pursuant to Section 12(b) of the Act:
 Title of each class
    
    Name of each exchange on which registered:Common Stock, Par Value $0.01
    
    New York Stock Exchange
 Securities registered pursuant to Section 12(g) of the Act:
 R £
 R
 R £
 £ R




---



BARR PHARMACEUTICALS, INC.
 INDEX TO ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 2005
 PagePART IItem 1: Business
    
    3Item 2: Properties
    
    28Item 3: Legal Proceedings
    
    29Item 4: Submission of Matters to a Vote of Security Holders
    
    31PART IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    32Item 6: Selected Financial Data
    
    33Item 7: Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    34Item 7A:Quantitative and Qualitative Disclosures About Market Risk
    
    54Item 8: Financial Statements and Supplementary Data
    
    54Item 9: Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
    
    54Item 9A:Controls and Procedures
    
    54Item 9B:Other Information
    
    55PART IIIItem 10:Directors and Executive Officers of the Registrant
    
    56Item 11:Executive Compensation
    
    56Item 12:Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
    
    56Item 13:Certain Relationships and Related Transactions
    
    56Item 14:Principal Accountant Fees and Services
    
    56PART IVItem 15:Exhibits and Financial Statement Schedules
    
    57SIGNATURES
    
    60EX-21.0: SUBSIDIARIES OF THE COMPANYEX-23.1: CONSENT OF DELOITTE & TOUCHE LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.0: CERTIFICATION
  2




---



##### Table of Contents



PART I
 
 Item 1. Business
 Safe Harbor Statement
 Forward-Looking Statements
  Overview
   ® ® ®
   Business Strategies
  
    
    developing and marketing selected generic pharmaceuticals;
    
    developing and marketing proprietary pharmaceuticals; and
    
    pursuing development and marketing of generic biopharmaceuticals.
 3




---



##### Table of Contents



Developing and Marketing Selected Generic Pharmaceuticals
  
    
    those with complex formulation or development characteristics;
    
    those requiring specialized manufacturing capabilities;
    
    those where sourcing the raw material may be difficult; and
    
    those that must overcome unusual regulatory or legal challenges, including patent challenges.
    ® ® ® ®
  4




---



##### Table of Contents



Developing and Marketing Proprietary Pharmaceuticals
 ®
    Pursuing Development and Marketing of Generic Biopharmaceuticals
  Investment in Research and Development
  5




---



##### Table of Contents



Business Development
  Significant Developments in Fiscal 2005
 Agreements with Kos Pharmaceuticals, Inc.
 ®
 ® ® ® ®
   Oral Contraceptive Portfolio
  Generic:  ®  ®
 6




---



##### Table of Contents



Proprietary: ®
 Stock Repurchase Program
  $175 Million Revolving Credit Facility
  ERP System
  Business Development Activities
  Product Development Acquisitions/Licenses:
 License for Cephalons ACTIQ ®
 ® ®
 Acquired Rights to Prefest ®
 ® ® ® ®
 7




---



##### Table of Contents



Acquired Rights to Nordette ®
 ® ® ®
 Development/Marketing Agreements:
 Agreement with PLIVA on G-CSF
 ®
 Generic Pharmaceuticals
  Research and Development
  
    
    filed 9 ANDAs;
    
    received FDA approvals for 11 generic products;
    
    received tentative FDA approvals for an additional five generic products that
are related to patent challenge activities; and
    
    launched seven new generic products.
   8




---



##### Table of Contents



Products We Currently Market
  Barr Label
    
    Brand Equivalent
    
    Therapeutic CategoryApri®
    
    Desogen®
    
    Female Healthcare(Desogestrel and Ethinyl Estradiol)
    
    Ortho-Cept®Aviane®
    
    Alesse®
    
    Female Healthcare(Levonorgestrel and Ethinyl Estradiol)Claravis
    
    Accutane®
    
    Dermatology(Isotrentinoin)Amphetamine Salts Combination
    
    Adderall®
    
    PsychotherapeuticsDextroamphetamine Sulfate
    
    Dexedrine® Spansule®
    
    PsychotherapeuticsExtended Release CapsulesDidanosine Delayed-Release Capsules
    
    Videx® EC
    
    AntiviralKariva®
    
    Mircette®
    
    Female Healthcare(Desogestrel and Ethinyl Estradiol)Lessina®
    
    Levlite®
    
    Female Healthcare(Levonorgestrel and Ethinyl Estradiol)Methotrexate
    
    Rheumatrex®
    
    RheumatologyMetformin HCl Extended Release Tablets
    
    Glucophage® XL
    
    DiabetesMirtazapine Orally Disintegrating Tablets
    
    Remeron® Soltabs®
    
    PsychotherapeuticsNortrel® 7/7/7
    
    Ortho-Novum® 7/7/7
    
    Female Healthcare(Norethindrone and Ethinyl Estradiol)Sprintec®
    
    Ortho-Cyclen®
    
    Female Healthcare(Norgestimate and Ethinyl Estradiol)Tri-Sprintec®
    
    Ortho Tri-Cyclen®
    
    Female Healthcare(Norgestimate and Ethinyl Estradiol)Warfarin Sodium
    
    Coumadin®
    
    Cardiovascular
 9




---



##### Table of Contents



Oral Contraceptives
   Didanosine Delayed-Release Capsules. ®
 Warfarin Sodium
 Claravis  Isotretinoin Capsules). ®
 10




---



##### Table of Contents



Pending Patent Challenges
    Sales
    
    
    TherapeuticIn $ Millions*
    
    
    CategoryAllegra® & Allegra® D Products
    
    $
    1,874
    
    
    Antihistamines(Fexofenadine Hydrochloride and
Fexofenadine Hydrochloride &
Pseudoephedrine Hydrochloride)Evista®
    
    $
    717
    
    
    Female Healthcare(Raloxifene Hydrochloride)Adderall XR®
    
    $
    873
    
    
    ADHD(Amphetamine Salts Combination)Provigil®
    
    $
    496
    
    
    Narcolepsy(Modafinil)Ortho Tri-Cyclen® Lo
    
    $
    284
    
    
    Oral Contraceptive(Norgestimate/Ethinyl Estradiol)ZYPREXA® Zydis®
    
    $
    241
    
    
    Psychotherapeutic(Olanzipine)ACTIQ®
    
    $
    406
    
    
    Oncology(Fentanyl Citrate)Yasmin®
    
    $
    372
    
    
    Oral Contraceptive(Drospirenone & Ethinyl Estradiol)Razadyne®
    
    $
    245
    
    
    Alzheimers(Galantamine Hydrobromde)Total
    
    $
    5,508
 
 *
    
    Source:IMS Health last twelve months sales ended June 30, 2005 11




---



##### Table of Contents



®
 ®
 Sales and Marketing
  Customers
   12




---



##### Table of Contents



2005
    
    2004
    
    2003McKesson Drug Company
    
    23%
    
    24%
    
    21%Cardinal Health
    
    17%
    
    14%
    
    17%Amerisource Bergen
    
    11%
    
    *
    
    13%Walgreens
    
    *
    
    13%
    
    11%
 
 *
    
    Denotes less than 10% in the period indicated. Proprietary Pharmaceuticals
  Research and Development
  
    
    patent-protected proprietary products in late stages of development;
    
    existing chemical compounds where the development of new forms (liquid vs. tablets,
different dosages or other drug delivery systems, such as our proprietary, novel vaginal
ring delivery system) offer therapeutic or marketing advantages; and
    
    new chemical entities in selected therapeutic categories, including some that are
marketed in other countries but not currently sold in the United States.
    
    
    a supplemental NDA (sNDA) for Over-the-Counter (OTC) status for the Plan
B® emergency contraceptive;
    
    a NDA for Bijuva Synthetic Conjugated Estrogens Vaginal Cream;
 13




---



##### Table of Contents




    
    a NDA for SEASONIQUE (levonorgestrel/ethinyl estradiol tablets 0.15 mg/0.03
mg and ethinyl estradiol tablets 0.01 mg) extended-cycle oral contraceptive; and
    
    a NDA for SEASONALE® Lo (levonorgestrel/ethinyl estradiol tablets 0.10
mg/0.02 mg and ethinyl estradiol tablets) extended-cycle oral contraceptive.
  Products We Currently Market
  
    
    Aygestin® (Norethindrone Acetate) for amenorrhea
    
    Cenestin® (Synthetic Conjugated Estrogens, A) hormone therapy
    
    Diamox® Sequels® (Acetazolamide) for glaucoma
    
    Loestrin®/Loestrin® Fe (Norethindrone Acetate and Ethinyl Estradiol) oral contraceptives
    
    Nordette® (Levonorgestrel and Ethinyl Estradiol) oral contraceptive
    
    Plan B® (Levonorgestrel) emergency oral contraceptive
    
    Prefest® (Etradiol/Nogestimate) hormone therapy
    
    Revia® (Naltrexone Hydrochloride) for alcohol dependence
    
    SEASONALE® (Levonorgestrel and Ethinyl Estradiol) extended-cycle oral contraceptive
    
    Trexall (Methotrexate) for rheumatoid arthritis
    
    ViaSpan® (Cold Storage Solution) transplant preservation agent
    
    Zebeta® (Bisprolol Fumarate) for hypertension
    
    Ziac® (Bisoprolol Fumarate and Hydrochlorothiazide) for hypertension
 SEASONALE ®
   14




---



##### Table of Contents



Cenestin ®
 ®
 Plan B ® Emergency Contraceptive.
 ® st
 15




---



##### Table of Contents



® ® ® ® ® ® ® ® ® ®
 Products in Development
  Female Healthcare
 Oral Contraception:
 SEASONIQUE  .    
 SEASONALE ® Lo. ® ® ® ® ®
 Hormone Therapy/Estrogen Therapy:
 Enjuvia  ynthetic Conjugated Estrogen, B 
 Bijuva  (Synthetic Conjugated Estrogens, A) Cream.    
 16




---



##### Table of Contents



Transvaginal Ring (TVR) Products
  Urology
 Oxybutynin TVR.
 CyPat 
 Vaccines
 Adenovirus Vaccines
 Sales And Marketing
  Womens Healthcare Sales Force
 ® ® ®
 Specialty Products Sales Force
  ® ® ® ® ®
 17




---



##### Table of Contents



Customers
  2005
    
    2004
    
    2003McKesson Drug Company
    
    25%
    
    21%
    
    15%Cardinal Health
    
    18%
    
    20%
    
    19%AmeriSource Bergen
    
    10%
    
    15%
    
    11%
 Generic Biopharmaceuticals
       18




---



##### Table of Contents



Significant Product Sales; Geography
  2005
    
    2004
    
    2003Oral contraceptives (generic and proprietary)
    
    54%
    
    34%
    
    31%Ciprofloxacin
    
    *
    
    30%
    
    12%Tamoxifen
    
    *
    
    *
    
    14%
 
 *
    
    Denotes less than 10% in the period indicated.  Raw Materials & Manufacturing Suppliers
 ®
  Patents and Proprietary Rights
   Government Regulation
  19




---



##### Table of Contents



Abbreviated New Drug Application Process
    
    
    withholding from the company new drug approvals as well as approvals for supplemental
changes to existing applications;
    
    preventing the company from receiving the necessary export licenses to export its
products; and
    
    classifying the company as an unacceptable supplier and thereby disqualifying the
company from selling products to federal agencies.
    20




---



##### Table of Contents



Patent Challenges
     Patent Challenge Process
   21




---



##### Table of Contents



Mova Pharmaceutical Corp. v.
Shalala Mylan Pharmaceuticals v.
Shalala
  
    
    Only one 30-month stay allowed per drug.
    
    Product-by-product exclusivity.
    
    Shared 180-day exclusivity in limited circumstances.
    
    Counterclaim for an Orange Book delisting allowed.
    
    180-day exclusivity cannot be triggered by a district court decision.
  Our Patent Challenge History
  22




---



##### Table of Contents




    
    Niacin.Niacin is the generic equivalent of Kos Pharmaceuticals, Inc.s
Niaspan® product. In April 2005, we entered into Co-Promotion, Licensing and
Manufacturing, and Settlement and License Agreements relating to the resolution of the
patent litigation involving Kos Niaspan® products. Under the terms of the
agreements, we: (1) co-promote the current Niaspan®and Advicor®
products (the Kos Products) to obstetricians, gynecologists and other practitioners with
a focus on womens healthcare in the United States using our 43-person Duramed specialty
sales force; (2) serve as a stand-by, alternate supply source for the Kos Products, and in
exchange have received an upfront fee and will continue to receive quarterly fees
thereafter; and (3) are able to launch generic versions of the Kos Products on September
20, 2013, about four years before the last of the applicable Kos patents is set to expire.
    
    Mirtazapine orally disintegrating tablets.Mirtazapine is the generic equivalent of
Organon, Inc.s Remeron® Soltabs®. After the litigation against us
was dismissed, we launched our Mirtazapine product in December 2003 and enjoyed 180 days of
generic exclusivity.
    
    Ortho Tri-Cyclen®. Ortho Tri-Cyclen is a regimen of oral contraceptives that
includes three different tablet combinations of norgestimate and ethinyl estradiol. In
August 2003 we settled pending litigation regarding Ortho-McNeil Pharmaceutical, Inc.s
patents protecting Ortho Tri-Cyclen. Under the terms of the settlement, we launched our
generic version of Ortho Tri-Cyclen on December 29, 2003, approximately three months prior
to the expiration of pediatric exclusivity.
    
    Fluoxetine.We invalidated the patent on Eli Lillys Prozac®, which enabled
us to launch our generic Fluoxetine product nearly three years earlier than would otherwise
have been possible and recorded sales of approximately $365 million in fiscal 2002 during
the 180-day period granted to us under the Hatch-Waxman Act.
    
    Ciprofloxacin. Ciprofloxacin is the generic name for Bayers antibiotic
Cipro®. In 1997, we entered into an agreement with Bayer to settle our patent
challenge litigation under which we distributed a brand alternative Ciprofloxacin product
from June 9, 2003 until June 9, 2004. We recorded sales of approximately $111 million in
fiscal 2003 and $385 million in fiscal 2004.
    
    Tamoxifen Citrate. Tamoxifen Citrate is the generic name for AstraZenecas
Nolvadex®. In 1993, as a result of a settlement of a patent challenge against
AstraZeneca, we entered into a non-exclusive supply and distribution agreement. Under the
terms of the Tamoxifen agreement, we distributed a Tamoxifen Citrate product that we
purchased directly from AstraZeneca. The Tamoxifen agreement expired in August 2002.
  
    
    Trazodone Hydrochloride.Trazodone Hydrochloride is the generic name for Bristol-Myers
Squibbs Desyrel®. We had sought to bring our generic version of Desyrel to
market but were unsuccessful in invalidating the patent. We launched our product in April
1999, following the expiration of the patent.
 New Drug Application Process
  23




---



##### Table of Contents




    
    In Phase I, which frequently begins with the initial introduction of the compound into
healthy human subjects prior to introduction into patients, the product is tested for
safety, adverse effects, dosage, tolerance absorption, metabolism, excretion and other
elements of clinical pharmacology.
    
    Phase II typically involves studies in a small sample of the intended patient population
to assess the efficacy of the compound for a specific indication, to determine dose
tolerance and the optimal dose range, and to gather additional information relating to
safety and potential adverse effects.
    
    Phase III trials are undertaken to further evaluate clinical safety and efficacy in an
expanded patient population at typically dispersed study sites, in order to determine the
overall risk-benefit ratio of the compound and to provide an adequate basis for product
labeling.
     Drug Enforcement Agency
  24




---



##### Table of Contents



Medicaid
   Medicare
 ® 
 Seasonality
  Backlog
  Employees
  Competition
  
    
    the generic divisions and subsidiaries of brand pharmaceutical companies, including
Sandoz US, a subsidiary of Novartis AG;
    
    large independent domestic and international generic manufacturers including Mylan
Laboratories, Watson Pharmaceuticals, Inc., Teva Pharmaceuticals and distributors with
large product lines where there is competition with some of our products;
 25




---



##### Table of Contents




    
    brand pharmaceutical companies whose therapies compete with our generic and proprietary
products, including Johnson & Johnson, Wyeth, Bristol-Myers Squibb and Eli Lilly &
Company.
  
    
    filing new patents on drugs whose original patent protection is about to expire;
    
    developing patented second-generation products such as controlled-release products or
other product improvements;
    
    increasing marketing initiatives;
    
    launching authorized generic versions of their branded products; and
    
    commencing litigation.
    
    
    focus our proprietary and generic product development in areas of historical strength or
competitive advantage;
    
    target generic products for development that have unique characteristics, including:
difficulty in sourcing raw materials; difficulty in formulation or establishing
bioequivalence; and manufacturing that requires unique facilities, processes or expertise;
    
    develop innovative, cost-effective proprietary products that serve unmet medical needs; and
    
    make significant investments in plant and equipment to improve our efficiency.
  26




---



##### Table of Contents



Insurance
    Environmental
  Government Relations Activities
  27




---



##### Table of Contents



Item 2. Properties
  SquareLocation
    
    Footage
    
    Status
    
    DescriptionNEW JERSEYWoodcliff Lake
    
    
    90,000
    
    
    Leased
    
    Administrative OfficesUpper Saddle River
    
    
    20,000
    
    
    Leased
    
    Administrative OfficesNorthvale
    
    
    27,500
    
    
    Owned
    
    ManufacturingPlainsboro
    
    
    27,000
    
    
    Leased
    
    Research and Development, AdministrationNEW YORKPomona 1
    
    
    41,000
    
    
    Owned
    
    Research and Development, Laboratories, ManufacturingPomona 2
    
    
    133,000
    
    
    Owned
    
    Laboratories, Administrative Offices, Manufacturing, WarehouseBlauvelt
    
    
    8,500
    
    
    Leased
    
    WarehouseOHIOCincinnati
    
    
    290,000
    
    
    Owned
    
    Manufacturing, Laboratories, PackagingPENNSYLVANIABala Cynwyd
    
    
    39,000
    
    
    Leased
    
    Proprietary Research, Administrative OfficesVIRGINIAForest
    
    
    375,000
    
    
    Owned
    
    Administrative Offices, Manufacturing,
Warehouse, Packaging,
Distribution, Laboratories,
Adenovirus Manufacturing FacilityWASHINGTON D.C.
    
    
    2,700
    
    
    Leased
    
    Government Affairs & Administrative Offices
  28




---



##### Table of Contents



Item 3. Legal Proceedings
 Patent Challenge Litigation
 Desogestrel/Ethinyl Estradiol (Mircette ® )
 ® ®
     29




---



##### Table of Contents



Class Action Lawsuits
 Ciprofloxacin
 Ò
     Tamoxifen
    30




---



##### Table of Contents



Hormone Therapy Litigation
   Medicaid Reimbursement Cases
    Other
  
 Item 4. Submission of Matters to a Vote of Security Holders
  31




---



##### Table of Contents



PART II
 
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
  High
    
    
    LowFiscal year ended June 30, 2005:First quarter
    
    $
    42.80
    
    
    $
    32.01Second quarter
    
    
    46.90
    
    
    
    35.07Third quarter
    
    
    50.45
    
    
    
    43.71Fourth quarter
    
    
    54.29
    
    
    
    47.00Fiscal year ended June 30, 2004:First quarter
    
    $
    50.33
    
    
    $
    38.83Second quarter
    
    
    56.91
    
    
    
    45.17Third quarter
    
    
    53.99
    
    
    
    45.70Fourth quarter
    
    
    49.25
    
    
    
    32.89
     32




---



##### Table of Contents



Item 6. Selected Financial Data
  Year Ended June 30,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001 (1)(in thousands, except per share data)Statements of Operations DataTotal revenues
    
    $
    1,047,399
    
    
    $
    1,309,088
    
    
    $
    902,864
    
    
    $
    1,188,984
    
    
    $
    593,151Earnings before income taxes
    
    
    329,876
    
    
    
    194,440
    
    
    
    262,715
    
    
    
    337,537
    
    
    
    101,793Income tax expense
    
    
    114,888
    
    
    
    71,337
    
    
    
    95,149
    
    
    
    125,318
    
    
    
    38,714Net earnings applicable to common shareholders
    
    
    214,988
    
    
    
    123,103
    
    
    
    167,566
    
    
    
    210,269
    
    
    
    62,566Earnings per common share  basic
    
    
    2.08
    
    
    
    1.21
    
    
    
    1.69
    (4)
    
    
    2.17
    (4)(5)
    
    
    0.66
    (4)(5)Earnings per common share  diluted
    
    
    2.03
    
    
    
    1.15
    
    
    
    1.62
    (4)
    
    
    2.06
    (4)(5)
    
    
    0.63
    (4)(5)Balance Sheet DataWorking capital
    
    $
    780,386
    
    
    $
    670,601
    
    
    $
    582,183
    
    
    $
    457,393
    
    
    $
    313,101Total assets
    
    
    1,482,846
    
    
    
    1,333,269
    
    
    
    1,180,937
    
    
    
    888,554
    
    
    
    666,516Long-term debt (2)
    
    
    15,493
    
    
    
    32,355
    
    
    
    34,027
    
    
    
    42,634
    
    
    
    65,563Shareholders equity (3)
    
    
    1,233,970
    
    
    
    1,042,046
    
    
    
    867,995
    
    
    
    666,532
    
    
    
    416,777
 
 (1)
    
    Financial data presented for the fiscal year ended June 30, 2001 has been restated to include
the historical financial data of Duramed, which Barr acquired in October 2001.(2)
    
    Includes capital leases and excludes current installments.(3)
    
    The Company has not paid a cash dividend in any of the above years.(4)
    
    Amounts have been adjusted for the March 16, 2004 3-for-2 stock split effected in the form of
a 50% stock dividend (See Note 1 to the consolidated financial statements).(5)
    
    Amounts have been adjusted for the March 17, 2003 3-for-2 stock split effected in the form of
a 50% stock dividend (See Note 1 to the consolidated financial statements). 33




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Executive Overview
  Generic Products
  ®
  Proprietary Products
  34




---



##### Table of Contents



Ò
 Competition
     Comparison of the fiscal years ended June 30, 2005 and June 30, 2004
  Change2005
    
    
    2004
    
    
    $
    
    
    %Generic products:Distributed alternative brands(1)
    
    $
    
    
    
    $
    385.3
    
    
    
    (385.3
    )
    
    
    -100
    %Oral contraceptives
    
    
    396.6
    
    
    
    403.9
    
    
    
    (7.3
    )
    
    
    -2
    %Other generic(2)
    
    
    354.8
    
    
    
    361.4
    
    
    
    (6.6
    )
    
    
    -2
    %Total generic products
    
    
    751.4
    
    
    
    1,150.6
    
    
    
    (399.2
    )
    
    
    -35
    %Proprietary products
    
    
    278.8
    
    
    
    146.1
    
    
    
    132.7
    
    
    
    91
    %Total product sales
    
    
    1,030.2
    
    
    
    1,296.7
    
    
    
    (266.5
    )
    
    
    -21
    %Alliance, development and other revenue
    
    
    17.2
    
    
    
    12.4
    
    
    
    4.8
    
    
    
    39
    %Total revenues
    
    $
    1,047.4
    
    
    $
    1,309.1
    
    
    $
    (261.7
    )
    
    
    -20
    %
 
 (1)
    
    Reflects sales of Ciprofloxacin sold during Bayers pediatric exclusivity period
which ended on June 9, 2004.(2)
    
    Includes sales of Ciprofloxacin after June 9, 2004. 35




---



##### Table of Contents



Revenues  Product Sales
  Generic Products
 Distributed Alternative Brands (Ciprofloxacin)
 â
 Oral Contraceptives
   Generic
Products  Other
  36




---



##### Table of Contents



Proprietary Products
    Cost of Sales
    Change2005
    
    
    2004
    
    
    $
    
    
    %Generic products
    
    $
    264.8
    
    
    $
    604.6
    
    
    $
    (339.8
    )
    
    
    -56
    %Gross margin
    
    
    65
    %
    
    
    47
    %Proprietary products
    
    $
    39.3
    
    
    $
    28.1
    
    
    $
    11.2
    
    
    
    40
    %Gross margin
    
    
    86
    %
    
    
    81
    %Total cost of sales
    
    $
    304.1
    
    
    $
    632.7
    
    
    $
    (328.6
    )
    
    
    -52
    %Gross margin
    
    
    70
    %
    
    
    51
    %
  37




---



##### Table of Contents



Selling, General and Administrative Expense
  Change2005
    
    
    2004
    
    
    $
    
    
    %Selling, general and administrative
    
    $
    298.9
    
    
    $
    314.5
    
    
    $
    (15.6
    )
    
    
    -5
    %Charges included in general and administrative
    
    $
    63.2
    
    
    $
    96.6
    
    
    $
    (33.4
    )
    
    
    -35
    %
   Fiscal 2004:
 (1)
    
    A $16 million valuation allowance we established in September 2003 for our loans to
Natural Biologics, LLC, the raw material supplier for our generic equine-based conjugated
estrogens product, as the result of an unfavorable court decision rendered in September
2003;(2)
    
    The February 2004 write-off of $4.2 million associated with the acquisition of certain
emergency contraception assets from Gynetics, Inc;(3)
    
    An arbitration panels decision in June 2004 to award Solvay Pharmaceuticals, Inc. $68
million in damages on a claim that we improperly terminated an agreement with Solvay; and(4)
    
    An $8.5 million charge in June 2004 related to costs associated with our settlement of
the Estrostep and Femhrt patent challenge litigation against Galen.
 Fiscal 2005:
   38




---



##### Table of Contents



Research and Development
  Change2005
    
    
    2004
    
    
    $
    
    
    %Research and development
    
    $
    128.4
    
    
    $
    169.0
    
    
    $
    (40.6
    )
    
    
    -24
    %Charges included in research and development
    
    $
    
    
    
    $
    68.2
    
    
    $
    (68.2
    )
    
    
    -100
    %
   Income Taxes
  Change2005
    
    
    2004
    
    
    $
    
    
    %Income tax expense
    
    $
    114.9
    
    
    $
    71.3
    
    
    $
    43.6
    
    
    
    61
    %Effective tax rate
    
    
    34.8
    %
    
    
    36.7
    %
 39




---



##### Table of Contents



Comparison of the fiscal years ended June 30, 2004 and June 30, 2003
  Change2004
    
    
    2003
    
    
    $
    
    
    %Generic products:Distributed alternative brands:(1)Ciprofloxacin
    
    $
    385.3
    
    
    $
    111.4
    
    
    
    273.9
    
    
    
    246
    %Tamoxifen (2)
    
    
    
    
    
    
    112.5
    
    
    
    (112.5
    )
    
    
    -100
    %Oral contraceptives
    
    
    403.9
    
    
    
    274.4
    
    
    
    129.5
    
    
    
    47
    %Other generic (3)
    
    
    361.4
    
    
    
    338.9
    
    
    
    22.5
    
    
    
    7
    %Total generic products
    
    
    1,150.6
    
    
    
    837.2
    
    
    
    313.4
    
    
    
    37
    %Proprietary products
    
    
    146.1
    
    
    
    57.7
    
    
    
    88.4
    
    
    
    153
    %Total product sales
    
    
    1,296.7
    
    
    
    894.9
    
    
    
    401.8
    
    
    
    45
    %Alliance, development and other revenue
    
    
    12.4
    
    
    
    8.0
    
    
    
    4.4
    
    
    
    55
    %Total revenues
    
    $
    1,309.1
    
    
    $
    902.9
    
    
    $
    406.2
    
    
    
    45
    %
 
 (1)
    
    Distributed alternative brands are distributed by us under terms of agreements entered
into as part of patent challenge settlements. Therefore, for reporting purposes, they are
classified as Generic products.(2)
    
    Refects sales of Tamoxifen acquired from innovator.(3)
    
    Includes sales of Tamoxifen manufactured by Barr. Revenues  Product Sales
  Generic Products
 Ciprofloxacin
 â
 40




---



##### Table of Contents



Tamoxifen
  Oral Contraceptives
   Generic
Products  Other
 Ò
 Proprietary Products
    41




---



##### Table of Contents



Cost of Sales
  Change2004
    
    
    2003
    
    
    $
    
    
    %Generic products
    
    $
    604.6
    
    
    $
    415.0
    
    
    $
    189.6
    
    
    
    46
    %Gross margin
    
    
    47
    %
    
    
    50
    %Proprietary products
    
    $
    28.1
    
    
    $
    9.1
    
    
    $
    19.0
    
    
    
    209
    %Gross margin
    
    
    81
    %
    
    
    84
    %Total cost of sales
    
    $
    632.7
    
    
    $
    424.1
    
    
    $
    208.6
    
    
    
    49
    %Gross margin
    
    
    51
    %
    
    
    53
    %
    Selling, General and Administrative Expense
  Change2004
    
    2003
    
    $
    
    %Selling general and administrative
    
    $
    314.5
    
    
    $
    161.0
    
    
    $
    153.5
    
    
    
    95
    %Charges included in general and administrative
    
    $
    96.6
    
    
    $
    20.0
    
    
    $
    76.6
    
    
    
    383
    %
   42




---



##### Table of Contents



Research and Development
  Change2004
    
    2003
    
    $
    
    %Research and development
    
    $
    169.0
    
    
    $
    91.2
    
    
    $
    77.8
    
    
    
    85
    %Charges included in research and development
    
    $
    68.2
    
    
    $
    3.9
    
    
    $
    64.3
    
    
    
    1649
    %
   Income Taxes
  Change2004
    
    2003
    
    $
    
    %Income tax expense
    
    $
    71.3
    
    
    $
    95.1
    
    
    $
    (23.8
    )
    
    -25%Effective tax rate
    
    
    36.7
    %
    
    
    36.2
    %
  43




---



##### Table of Contents



Liquidity and Capital Resources
 Overview
  Change2005
    
    
    2004
    
    
    $
    
    
    %Cash & cash equivalents, short term marketable securities
    
    $
    643.3
    
    
    $
    452.2
    
    
    $
    191.1
    
    
    
    42
    %Working capital
    
    
    780.4
    
    
    
    670.6
    
    
    
    109.8
    
    
    
    16
    %Cash flow from operations
    
    
    363.0
    
    
    
    258.1
    
    
    
    104.9
    
    
    
    41
    %Ratio of current assets to current liabilities
    
    
    4.7 : 1
    
    
    
    4.2 : 1
 Operating Activities
    Investment in Marketable Securities
  44




---



##### Table of Contents



Working Capital
  Change2005
    
    
    2004
    
    
    $
    
    
    %Cash, cash equivalents and marketable securities
    
    $
    643.3
    
    
    $
    452.2
    
    
    $
    191.1
    
    
    42
    %Accounts receivable
    
    
    152.6
    
    
    
    153.9
    
    
    
    (1.3
    )
    
    -1
    %Inventories
    
    
    137.6
    
    
    
    150.3
    
    
    
    (12.7
    )
    
    -8
    %Prepaid & other current assets
    
    
    59.9
    
    
    
    121.8
    
    
    
    (61.9
    )
    
    -51
    %Total current assets
    
    
    993.4
    
    
    
    878.2
    
    
    
    115.2
    
    
    13
    %Accounts payable & accrued liabilities
    
    
    194.2
    
    
    
    179.1
    
    
    
    15.1
    
    
    8
    %Income taxes payable
    
    
    13.4
    
    
    
    20.1
    
    
    
    (6.7
    )
    
    -33
    %Current portion of long-term debt & capital leases
    
    
    5.4
    
    
    
    8.4
    
    
    
    (3.0
    )
    
    -36
    %Total current liabilities
    
    
    213.0
    
    
    
    207.6
    
    
    
    5.4
    
    
    3
    %Working capital
    
    $
    780.4
    
    
    $
    670.6
    
    
    $
    109.8
    
    
    16
    %
   Investing Activities
  Capital Expenditures
  45




---



##### Table of Contents



Strategic Transactions
  Financing Activities
  Share Repurchase Program
  Debt Repayments and Credit Availability
    Proceeds from Equity Transactions
  46




---



##### Table of Contents



Sufficiency of Cash Resources
  Contractual Obligations
  Payments due by periodLess than 1
    
    
    
    
    
    
    4 to 5($ in millions)
    
    Total
    
    
    Year
    
    
    1 to 3 Years
    
    
    Years
    
    
    ThereafterLong-term debt
    
    $
    18.5
    
    
    $
    4.0
    
    
    $
    14.5
    
    
    $
    
    
    
    $
    Capital leases
    
    
    2.9
    
    
    
    1.7
    
    
    
    1.2
    
    
    
    
    
    
    
    Operating leases
    
    
    33.8
    
    
    
    4.4
    
    
    
    10.6
    
    
    
    3.2
    
    
    
    15.6Purchase
obligations(1)
    
    
    85.2
    
    
    
    84.4
    
    
    
    0.8
    
    
    
    
    
    
    
    Venture Funds commitment
    
    
    15.6
    
    
    
    15.6
    
    
    
    
    
    
    
    
    
    
    
    Annual interest on fixed rate debt
    
    
    1.8
    
    
    
    0.7
    
    
    
    1.1
    
    
    
    
    
    
    
    Other long-term liabilities
    
    
    21.0
    
    
    
    21.0
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    178.8
    
    
    $
    131.8
    
    
    $
    28.2
    
    
    $
    3.2
    
    
    $
    15.6
 
 (1)
    
    Purchase obligations consist mainly of commitments for raw materials used in our
manufacturing and research and development operations.  Critical Accounting Policies
  47




---



##### Table of Contents



Revenue Recognition and Provisions for Estimated Reductions to Gross Revenues
    
    
    returns and allowances (including shelf-stock adjustments)
    
    chargebacks
    
    rebates
    
    Medicaid rebates
    
    prompt payment discounts and other allowances
  Current provision
    
    
    Current provision
    
    
    Actual returnsrelated to sales
    
    
    related to sales
    
    
    or creditsBeginning
    
    
    made in the
    
    
    made in
    
    
    in the
    
    
    Endingbalance
    
    

current period
    
    

prior
periods
    
    

current
period
    
    

balanceFiscal year ended June 30, 2005Accounts receivable reserves:Returns and allowances
    
    $
    57.5
    
    
    $
    64.8
    
    
    $
    1.0
    
    
    $
    (70.6
    )
    
    $
    52.7Chargebacks
    
    
    38.8
    
    
    
    267.6
    
    
    
    6.0
    
    
    
    (267.5
    )
    
    
    44.9Rebates
    
    
    39.4
    
    
    
    200.6
    
    
    
    
    
    
    
    (194.7
    )
    
    
    45.3Cash discounts
    
    
    6.2
    
    
    
    32.0
    
    
    
    
    
    
    
    (31.1
    )
    
    
    7.1Total
    
    $
    141.9
    
    
    $
    565.0
    
    
    $
    7.0
    
    
    $
    (563.9
    )
    
    $
    150.0Accrued liabilities:Medicaid rebates
    
    $
    11.4
    
    
    $
    17.2
    
    
    $
    3.0
    
    
    $
    (21.5
    )
    
    $
    10.1Fiscal year ended June 30, 2004Accounts receivable reserves:Returns and allowances
    
    $
    52.9
    
    
    $
    70.1
    
    
    $
    
    
    
    $
    (65.5
    )
    
    $
    57.5Chargebacks
    
    
    30.0
    
    
    
    189.8
    
    
    
    
    
    
    
    (181.0
    )
    
    
    38.8Rebates
    
    
    45.6
    
    
    
    172.5
    
    
    
    
    
    
    
    (178.7
    )
    
    
    39.4Cash discounts
    
    
    7.6
    
    
    
    35.2
    
    
    
    
    
    
    
    (36.6
    )
    
    
    6.2Total
    
    $
    136.1
    
    
    $
    467.6
    
    
    $
    
    
    
    $
    (461.8
    )
    
    $
    141.9Accrued liabilities:Medicaid rebates
    
    $
    9.5
    
    
    $
    26.0
    
    
    $
    
    
    
    $
    (24.1
    )
    
    $
    11.4
 48




---



##### Table of Contents



Returns and allowances
 
    
    the shelf life or expiration date of each product;
    
    historical levels of expired product returns; and
    
    the estimated date of return.
  
    
    the estimated launch date of a competing product, which we determine based on market
intelligence;
    
    the estimated decline in the market price of our product, which we determine based on
historical experience and input from customers; and,
    
    the estimated levels of inventory held by our customers at the time of the anticipated
decrease in market price, which we determine based upon historical experience and customer
input.
 Chargebacks
 
    
    the average historical chargeback credits; and
    
    an estimate of the inventory held by our wholesalers, based on internal analysis of a
wholesalers historical purchases and contract sales.
 Rebates
 
    
    direct rebates;
    
    indirect rebates;
    
    managed care rebates; and
    
    Medicaid rebates.
   49




---



##### Table of Contents



Prompt
Pay Discounts
 Alliance Revenue 
 Inventory Reserves
     Income Taxes
  50




---



##### Table of Contents



Contingencies
   Acquisitions
    Recent Accounting Pronouncements
  51




---



##### Table of Contents



Environmental Matters
  Effects of Inflation; Seasonality
  52




---



##### Table of Contents



Forward-Looking Statements
  
    
    the difficulty in predicting the timing and outcome of legal proceedings, including
patent-related matters such as patent challenge settlements and patent infringement cases;
    
    the difficulty of predicting the timing of FDA approvals;
    
    court and FDA decisions on exclusivity periods;
    
    the ability of competitors to extend exclusivity periods for their products;
    
    our ability to complete product development activities in the timeframes and for the costs we expect;
    
    market and customer acceptance and demand for our pharmaceutical products;
    
    our dependence on revenues from significant customers;
    
    reimbursement policies of third party payors;
    
    our dependence on revenues from significant products;
    
    the use of estimates in the preparation of our financial statements;
    
    the impact of competitive products and pricing on products, including the launch of
authorized generics;
    
    the ability to launch new products in the timeframes we expect;
    
    the availability of raw materials;
    
    the availability of any product we purchase and sell as a distributor;
    
    the regulatory environment;
    
    our exposure to product liability and other lawsuits and contingencies;
    
    the cost of insurance and the availability of product liability insurance coverage;
    
    our timely and successful completion of strategic initiatives, including integrating
companies and products we acquire and implementing our new enterprise resource planning
system;
    
    fluctuations in operating results, including the effects on such results from spending
for research and development, sales and marketing activities and patent challenge
activities; and
    
    other risks detailed from time-to-time in our filings with the Securities and Exchange
Commission.
  53




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
  
 Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
   Internal Control Over Financial Reporting
  54




---



##### Table of Contents



Changes in Internal Controls
  
 Item 9B. Other Information
  55




---



##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  Code of Business Conduct and Ethics
  
 Item 11. Executive Compensation
  
 Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accounting Fees and Services
  56




---



##### Table of Contents



PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 (a)
    
    Financial Statement Schedules:See the Index on page F-1 below.(b)
    
    Exhibits
 2.1
    
    Agreement and Plan of Merger, dated as of December 31, 2003 between Barr
Pharmaceuticals, Inc., a Delaware corporation, and Barr Laboratories,
Inc., a New York corporation (1)2.2
    
    Asset Purchase Agreement dated November 20, 2003 between Endeavor
Pharmaceuticals, Inc. and Barr Laboratories, Inc. (2)2.3
    
    Agreement and Plan of Merger, dated February 6, 2004, among Duramed
Pharmaceuticals, Inc., WCC Merger Sub, Inc. and Womens Capital
Corporation (3)3.1
    
    Amended and Restated Certificate of Incorporation of the Registrant (1)3.2
    
    Restated By-Laws of the Registrant (1)4.1
    
    The Registrant agrees to furnish to the Securities and Exchange
Commission, upon request, a copy of any instrument defining the rights of
the holders of its long-term debt wherein the total amount of securities
authorized thereunder does not exceed 10% of the total assets of the
Registrant and its subsidiaries on a consolidated basis.4.2
    
    Note Purchase Agreement dated November 18, 1997 relating to $10 million of
Series A Senior Notes due November, 2004 and $20 million of Series B
Senior Notes due November, 2007 (4)10.1
    
    Lease, dated February 6, 2003, between Mack-Cali Properties Co. No. 11
L.P. and Barr Laboratories, Inc. (5)10.2
    
    Amended and Restated Employment Agreement with Bruce L. Downey, dated as
of October 24, 2002 (6)10.3
    
    1993 Stock Incentive Plan (7)10.4
    
    Non-Qualified Deferred Compensation Plan (2)10.5
    
    1993 Employee Stock Purchase Plan (8)10.6
    
    1993 Stock Option Plan for Non-Employee Directors (9)10.7
    
    2002 Stock and Incentive Award Plan (10)10.8
    
    2002 Stock Option Plan for Non-Employee Directors (10)10.9
    
    Supply Agreement for Ciprofloxacin Hydrochloride dated January 8, 1997 (11)10.10
    
    Proprietary Drug Development and Marketing Agreement, dated March 20,
2000, between Barr Laboratories, Inc. and DuPont Pharmaceuticals Company
(12)10.11
    
    Description of Excess Savings and Retirement Plan (13)10.12
    
    Amended and Restated Employment Agreement with Paul M. Bisaro, dated as of
October 24, 2002 (6)10.13
    
    Amended and Restated Employment Agreement with Carole S. Ben-Maimon, dated
as of October 24, 2002 (6)10.14
    
    Amended and Restated Employment Agreement with Timothy P. Catlett, dated
as of February 19, 2003 (14)
 57




---



##### Table of Contents



10.15
    
    Amended and Restated Employment Agreement with William T. McKee, dated as
of February 19, 2003 (5)10.16
    
    Amended and Restated Employment Agreement with Fredrick J. Killion, dated
as of February 19, 2003 (5)10.17
    
    Amended and Restated Employment Agreement with Salah U. Ahmed, dated as of
February 19, 2003 (14)10.18
    
    Amended and Restated Employment Agreement with Christine A. Mundkur, dated
as of February 19, 2003 (14)10.19
    
    Amended and Restated Employment Agreement with Catherine F. Higgins, dated
as of February 19, 2003 (14)10.20
    
    Employment Agreement with Michael J. Bogda, dated as of May 15, 2003 (14)10.21
    
    Duramed 1988 Stock Option Plan (15)10.22
    
    Duramed 1991 Stock Option Plan for Nonemployee Directors (16)10.23
    
    Duramed 1997 Stock Option Plan (17)10.24
    
    Duramed 2000 Stock Option Plan (18)10.25
    
    Duramed 1999 Nonemployee Director Stock Plan (19)21.0
    
    Subsidiaries of the Company23.1
    
    Consent of Deloitte & Touche LLP31.1
    
    Certification of Bruce L. Downey pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200231.2
    
    Certification of William T. McKee pursuant to Exchange Act Rules 13a-14(a)
and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 200232.0
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 
 (1)
    
    Previously filed with the Securities and Exchange Commission on January 6, 2004 as an
Exhibit to the Registrants Current Report on Form 8-K and incorporated herein by
reference.(2)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended December 31, 2003 and
incorporated herein by reference.(3)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 and
incorporated herein by reference.(4)
    
    Previously filed with the Securities and Exchange Commission as Exhibit 4-3 to the
Registrants Quarterly Report on Form 10-Q for the quarter ended December 31, 1997 and
incorporated herein by reference.(5)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 and
incorporated herein by reference.(6)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 and
incorporated herein by reference. 58




---



##### Table of Contents



(7)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Registration Statement on Form S-8 Nos. 33-73696 and 333-17349 and
incorporated herein by reference.(8)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Registration Statement on Form S-8 No. 33-73700 and incorporated herein by
reference.(9)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Registration Statement on Form S-8 Nos. 33-73698 and 333-17351 incorporated
herein by reference.(10)
    
    Previously filed with the Securities and Exchange Commission as an Appendix to the
Registrants Proxy Statement relating to the 2002 Annual Meeting of Stockholders and
incorporated herein by reference.(11)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 and
incorporated herein by reference.(12)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 and
incorporated herein by reference.(13)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Annual Report on Form 10-K for the year ended June 30, 2000 and incorporated
herein by reference.(14)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Registrants Annual Report on Form 10-K for the year ended June 30, 2003 and incorporated
herein by reference.(15)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 1993 Annual Meeting of
Stockholders and incorporated herein by reference.(16)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 1998 Annual Meeting of
Stockholders and incorporated herein by reference.(17)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 1997 Annual Meeting of
Stockholders and incorporated herein by reference.(18)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Proxy Statement relating to the 2000 Annual Meeting of
Stockholders and incorporated herein by reference.(19)
    
    Previously filed with the Securities and Exchange Commission as an Exhibit to the
Duramed Pharmaceuticals, Inc. Annual Report on Form 10-K for the year ended December 31,
1998 and incorporated herein by reference. 59




---



##### Table of Contents



SIGNATURES
  BARR PHARMACEUTICALS, INC.By:
    
    /s/     Bruce L. DowneyBruce L. DowneyChairman of the Board andChief Executive Officer
  Signature
    
    Title
    
    Date/s/ Bruce L. Downey

Bruce L. Downey
    
    Chairman of the Board and Chief
Executive Officer 
(Principal Executive Officer)
    
    September 12, 2005/s/ William T. McKee

William T. McKee
    
    Vice President, Chief 
Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
    
    September 12, 2005/s/
Carole S.Ben-Maimon
Carole S. Ben-Maimon
    
    Director
    
    September 12, 2005/s/ Paul M. Bisaro
Paul M. Bisaro
    
    Director
    
    September 12, 2005/s/ Harold N. Chefitz
Harold N. Chefitz
    
    Director
    
    September 12, 2005/s/ Richard R.
Frankovic
Richard R. Frankovic
    
    Director
    
    September 12, 2005/s/ James S. Gilmore
III
James S. Gilmore III
    
    Director
    
    September 12, 2005/s/ Jack M. Kay
Jack M. Kay
    
    Director
    
    September 12, 2005/s/ Peter R. Seaver
Peter R. Seaver
    
    Director
    
    September 12, 2005/s/ George P. Stephan
George P. Stephan
    
    Director
    
    September 12, 2005
 60




---



##### Table of Contents



PART II
 Item 8. Financial Statements and Supplementary Data
 INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 PageManagements Report on Internal Control Over Financial Reporting
    
    F-2Report of Independent Registered Public Accounting Firm
    
    F-3Consolidated Balance Sheets as of June 30, 2005 and 2004
    
    F-5Consolidated Statements of Operations for the years ended June 30, 2005, 2004 and 2003
    
    F-6Consolidated Statements of Shareholders Equity for the years ended June 30, 2005, 2004 and 2003
    
    F-7Consolidated Statements of Cash Flows for the years ended June 30, 2005, 2004 and 2003
    
    F-8Notes to The Consolidated Financial Statements
    
    F-9Schedule II  Valuation and Qualifying Accounts for the years ended June 30, 2005, 2004 and 2003
    
    S-1




---



##### Table of Contents



MANAGEMENTS REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
   Internal Control-Integrated
Framework
   F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
  Internal
ControlIntegrated Framework
     F-3




---



##### Table of Contents



Internal ControlIntegrated Framework Internal ControlIntegrated Framework .
 /s/ DELOITTE & TOUCHE LLP
 
 F-4




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 Year Ended June 30,(in thousands, except share and per share data)
    
    2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    115,793
    
    
    $
    28,508Marketable securities
    
    
    527,462
    
    
    
    423,746Accounts receivable, net
    
    
    152,599
    
    
    
    153,890Other receivables
    
    
    21,411
    
    
    
    60,848Inventories, net
    
    
    137,638
    
    
    
    150,252Deferred income taxes
    
    
    30,224
    
    
    
    46,077Prepaid expenses and other current assets
    
    
    8,229
    
    
    
    14,925Total current assets
    
    
    993,356
    
    
    
    878,246Property, plant and equipment, net
    
    
    249,485
    
    
    
    236,831Deferred income taxes
    
    
    60,504
    
    
    
    35,016Marketable securities
    
    
    53,793
    
    
    
    89,143Other intangible assets
    
    
    98,343
    
    
    
    64,897Goodwill
    
    
    17,998
    
    
    
    18,211Other assets
    
    
    9,367
    
    
    
    10,925Total assets
    
    $
    1,482,846
    
    
    $
    1,333,269Liabilities and Shareholders EquityCurrent liabilities:Accounts payable
    
    $
    49,743
    
    
    $
    61,089Accrued liabilities
    
    
    144,428
    
    
    
    117,970Current portion of long-term debt and capital lease obligations
    
    
    5,446
    
    
    
    8,447Income taxes payable
    
    
    13,353
    
    
    
    20,139Total current liabilities
    
    
    212,970
    
    
    
    207,645Long-term debt and capital lease obligations
    
    
    15,493
    
    
    
    32,355Other liabilities
    
    
    20,413
    
    
    
    51,223Commitments & Contingencies (Note 17)Shareholders equity:Preferred stock $1 par value per share; authorized 2,000,000; none issued
    
    
    
    
    
    
    Common stock $.01 par value per share; authorized 200,000,000;
issued 106,340,470 and 104,916,103 in 2005 and 2004, respectively
    
    
    1,063
    
    
    
    1,049Additional paid-in capital
    
    
    454,489
    
    
    
    377,024Retained earnings
    
    
    879,669
    
    
    
    664,681Accumulated other comprehensive loss
    
    
    (561
    )
    
    
    1,334,660
    
    
    
    1,042,754Treasury
stock at cost: 2,972,997 and 420,597 shares in 2005 and 2004, respectively
    
    
    (100,690
    )
    
    
    (708
    )Total shareholders equity
    
    
    1,233,970
    
    
    
    1,042,046Total liabilities and shareholders equity
    
    $
    1,482,846
    
    
    $
    1,333,269
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-5




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Year Ended June 30,(in thousands, except per share data)
    
    2005
    
    
    2004
    
    
    2003Revenues:Product sales
    
    $
    1,030,174
    
    
    $
    1,296,709
    
    
    $
    894,888Alliance, development and other revenue
    
    
    17,225
    
    
    
    12,379
    
    
    
    7,976Total revenues
    
    
    1,047,399
    
    
    
    1,309,088
    
    
    
    902,864Costs and expenses:Cost of sales
    
    
    304,080
    
    
    
    632,745
    
    
    
    424,099Selling, general and administrative
    
    
    298,908
    
    
    
    314,500
    
    
    
    160,978Research and development
    
    
    128,384
    
    
    
    168,995
    
    
    
    91,207Earnings from operations
    
    
    316,027
    
    
    
    192,848
    
    
    
    226,580Proceeds from patent challenge settlement
    
    
    
    
    
    
    
    
    
    
    31,396Interest income
    
    
    11,449
    
    
    
    5,768
    
    
    
    6,341Interest expense
    
    
    1,463
    
    
    
    2,643
    
    
    
    1,474Other income (expense)
    
    
    3,863
    
    
    
    (1,533
    )
    
    
    (128
    )Earnings before income taxes
    
    
    329,876
    
    
    
    194,440
    
    
    
    262,715Income tax expense
    
    
    114,888
    
    
    
    71,337
    
    
    
    95,149Net earnings
    
    $
    214,988
    
    
    $
    123,103
    
    
    $
    167,566Earnings per common share  basic
    
    $
    2.08
    
    
    $
    1.21
    
    
    $
    1.69Earnings per common share  diluted
    
    $
    2.03
    
    
    $
    1.15
    
    
    $
    1.62Weighted average shares
    
    
    103,180
    
    
    
    101,823
    
    
    
    99,125Weighted average shares  diluted
    
    
    106,052
    
    
    
    106,661
    
    
    
    103,592
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-6




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
  (in thousands, except shares)Additional
    
    
    
    
    
    
    AccumulatedAdditional
    
    
    Paid
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid
    
    
    in Capital -
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury Stock
    
    
    ShareholdersShares
    
    
    Amount
    
    
    in Capital
    
    
    Warrants
    
    
    Earnings
    
    
    Income / (Loss)
    
    
    Shares
    
    
    Amount
    
    
    EquityBalance, July 1, 2002
    
    
    43,792,170
    
    
    $
    438
    
    
    $
    275,219
    
    
    $
    16,418
    
    
    $
    375,066
    
    
    $
    99
    
    
    
    186,932
    
    $
    
    (708
    )
    
    $
    666,532Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,566
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,566Unrealized loss on marketable
securities, net of tax of $170
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278
    )
    
    
    
    
    
    
    
    
    
    
    (278
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    167,288Tax benefit of stock incentive plans
    
    
    
    
    
    
    
    
    
    
    10,912
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,912Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    1,020,032
    
    
    
    10
    
    
    
    23,453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,463Issuance of common stock for
exercised warrants
    
    
    83,940
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock split (3-for-2)
    
    
    22,170,054
    
    
    
    222
    
    
    
    
    
    
    
    
    
    
    
    (422
    )
    
    
    
    
    
    
    93,466
    
    
    
    
    
    
    
    (200
    )Balance, June 30, 2003
    
    
    67,066,196
    
    
    
    671
    
    
    
    309,583
    
    
    
    16,418
    
    
    
    542,210
    
    
    
    (179
    )
    
    
    280,398
    
    
    
    (708
    )
    
    
    867,995Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,103
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,103Reclassification adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    179
    
    
    
    
    
    
    
    
    
    
    
    179Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123,282Tax benefit of stock incentive plans
and warrants
    
    
    
    
    
    
    
    
    
    
    25,262
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,262Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    1,456,808
    
    
    
    14
    
    
    
    25,784
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,798Issuance of common stock for
exercised warrants
    
    
    2,340,610
    
    
    
    23
    
    
    
    16,395
    
    
    
    (16,418
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0Stock split (3-for-2)
    
    
    34,052,489
    
    
    
    341
    
    
    
    
    
    
    
    
    
    
    
    (632
    )
    
    
    
    
    
    
    140,199
    
    
    
    
    
    
    
    (291
    )Balance, June 30, 2004
    
    
    104,916,103
    
    
    
    1,049
    
    
    
    377,024
    
    
    
    
    
    
    
    664,681
    
    
    
    
    
    
    
    420,597
    
    
    
    (708
    )
    
    
    1,042,046Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,988Unrealized loss on marketable
securities, net of tax of $320
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (561
    )
    
    
    
    
    
    
    
    
    
    
    (561
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214,427Tax benefit of stock incentive plans
and warrants
    
    
    
    
    
    
    
    
    
    
    56,212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,212Issuance of common stock for
exercised stock options and
employees stock purchase plans
    
    
    1,136,141
    
    
    
    11
    
    
    
    18,506
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,517Issuance of common stock for
exercised warrants
    
    
    288,226
    
    
    
    3
    
    
    
    2,747
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,750Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,552,400
    
    
    
    (99,982
    )
    
    
    (99,982
    )Balance, June 30, 2005
    
    
    106,340,470
    
    
    $
    1,063
    
    
    $
    454,489
    
    
    $
    
    
    
    $
    879,669
    
    
    $
    (561
    )
    
    
    2,972,997
    
    
    $
    (100,690
    )
    
    $
    1,233,970
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 F-7




---



##### Table of Contents



BARR PHARMACEUTICALS, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended June 30,(in thousands)
    
    2005
    
    
    2004
    
    
    2003CASH FLOWS FROM OPERATING ACTIVITIES:Net earnings
    
    $
    214,988
    
    
    $
    123,103
    
    
    $
    167,566Adjustments to reconcile net earnings to net cash provided by operating activities:Depreciation and amortization
    
    
    40,820
    
    
    
    32,059
    
    
    
    22,713Deferred
income tax expense (benefit)
    
    
    7,100
    
    
    
    (44,330
    )
    
    
    6,684Write-off of intangible asset
    
    
    
    
    
    
    22,333
    
    
    
    1,330Provision for losses on loans to Natural Biologics
    
    
    1,050
    
    
    
    16,079
    
    
    
    Other
    
    
    2,480
    
    
    
    17,699
    
    
    
    362Tax benefit of stock incentive plans and warrants
    
    
    39,846
    
    
    
    25,262
    
    
    
    10,912Write-off of in-process research and development associated with acquisitions
    
    
    
    
    
    
    45,900
    
    
    
    3,946Changes in assets and liabilities:(Increase) decrease in:Accounts receivable and other receivables, net
    
    
    40,728
    
    
    
    38,081
    
    
    
    (126,390
    )Inventories, net
    
    
    12,614
    
    
    
    13,771
    
    
    
    (12,793
    )Prepaid expenses
    
    
    6,396
    
    
    
    (8,052
    )
    
    
    923Other assets
    
    
    6,668
    
    
    
    (201
    )
    
    
    (10,391
    )Increase (decrease) in:Accounts payable, accrued liabilities and other
liabilities
    
    
    (2,881
    )
    
    
    (32,428
    )
    
    
    93,951Income taxes payable
    
    
    (6,774
    )
    
    
    8,823
    
    
    
    1,515Net cash provided by operating activities
    
    
    363,035
    
    
    
    258,099
    
    
    
    160,328CASH FLOWS FROM INVESTING ACTIVITIES:Purchases of property, plant and equipment
    
    
    (55,157
    )
    
    
    (46,907
    )
    
    
    (80,617
    )Acquisitions, net of cash acquired
    
    
    (46,500
    )
    
    
    (90,563
    )
    
    
    (25,992
    )Purchases of marketable securities
    
    
    (1,220,869
    )
    
    
    (1,126,043
    )
    
    
    (492,675
    )Sales of marketable securities
    
    
    1,152,485
    
    
    
    1,001,130
    
    
    
    349,190Other
    
    
    (6,990
    )
    
    
    (4,935
    )
    
    
    (6,169
    )Net cash used in investing activities
    
    
    (177,031
    )
    
    
    (267,318
    )
    
    
    (256,263
    )CASH FLOWS FROM FINANCING ACTIVITIES:Principal payments on long-term debt and capital leases
    
    
    (20,004
    )
    
    
    (8,522
    )
    
    
    (5,528
    )Principal payment on note assumed in acquisition
    
    
    
    
    
    
    (6,500
    )
    
    
    Purchase of treasury stock
    
    
    (99,982
    )
    
    
    
    
    
    
    Proceeds from exercise of stock options, employee stock purchases and warrants
    
    
    21,267
    
    
    
    25,798
    
    
    
    23,463Other
    
    
    
    
    
    
    (291
    )
    
    
    (200
    )Net cash (used in) provided by financing activities
    
    
    (98,719
    )
    
    
    10,485
    
    
    
    17,735Increase (decrease) in cash and cash equivalents
    
    
    87,285
    
    
    
    1,266
    
    
    
    (78,200
    )Cash and cash equivalents at beginning of period
    
    
    28,508
    
    
    
    27,242
    
    
    
    105,442Cash and cash equivalents at end of period
    
    $
    115,793
    
    
    $
    28,508
    
    
    $
    27,242SUPPLEMENTAL CASH FLOW DATA:Cash paid during the period:Interest, net of portion capitalized
    
    $
    1,458
    
    
    $
    2,658
    
    
    $
    1,455Income taxes
    
    $
    74,711
    
    
    $
    80,733
    
    
    $
    76,039
 SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FIANANCIAL STATEMENTS
 F-8




---



##### Table of Contents



(1) Summary of Significant Accounting Policies
 (a) Principles of Consolidation and Other Matters
     (b) Use of Estimates in the Preparation of Financial Statements
  (c) Revenue Recognition
   F-9




---



##### Table of Contents



(d) Sales Returns and Allowances
  (e) Inventories
  (f) Income Taxes
  (g) Contingencies
  (h) Acquisitions
  F-10




---



##### Table of Contents



(i) Credit and Market Risk
  (j) Cash and Cash Equivalents
  (k) Property, Plant and Equipment
  (l) Stock-Based Compensation
  F-11




---



##### Table of Contents



Years Ended June 30,(in thousands, expect per share data)
    
    2005
    
    
    2004
    
    
    2003NET EARNINGS, AS REPORTED
    
    $
    214,988
    
    
    $
    123,103
    
    
    $
    167,566Add: Stock-based employee compensation
expense included in reported net income,
net of related tax effects
    
    
    
    
    
    
    
    
    
    
    Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects
    
    
    20,178
    
    
    
    13,747
    
    
    
    6,047PRO FORMA NET EARNINGS
    
    $
    194,810
    
    
    $
    109,356
    
    
    $
    161,519EARNINGS PER SHARE:Basic  as reported
    
    $
    2.08
    
    
    $
    1.21
    
    
    $
    1.69Basic  pro forma
    
    $
    1.89
    
    
    $
    1.07
    
    
    $
    1.63Diluted  as reported
    
    $
    2.03
    
    
    $
    1.15
    
    
    $
    1.62Diluted  pro forma
    
    $
    1.84
    
    
    $
    1.03
    
    
    $
    1.56
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Average expected term (years)
    
    
    3.3
    
    
    
    3.5
    
    
    
    3.7Risk-free interest rate
    
    
    2.40
    %
    
    
    2.20
    %
    
    
    2.31
    %Dividend yield
    
    
    0
    %
    
    
    0
    %
    
    
    0
    %Volatility
    
    
    48.22
    %
    
    
    54.15
    %
    
    
    53.73
    %Fair value of each option granted at
market
    
    $
    12.90
    
    
    $
    17.79
    
    
    $
    11.19
 (m) Research and Development
  (n) Advertising and Promotion Costs
  F-12




---



##### Table of Contents



(o) Earnings Per Share
  (In thousands, except per share data)
    
    2005
    
    
    2004
    
    
    2003Numerator
for basic and diluted earnings per share 
Net earnings
    
    $
    214,988
    
    
    $
    123,103
    
    
    $
    167,566Earnings per common share  basic:Numerator: Net earnings
    
    $
    214,988
    
    
    $
    123,103
    
    
    $
    167,566Denominator: Weighted average shares
    
    
    103,180
    
    
    
    101,823
    
    
    
    99,125Earnings per common share  basic
    
    $
    2.08
    
    
    $
    1.21
    
    
    $
    1.69Earnings per common share  diluted:Numerator: Net earnings
    
    $
    214,988
    
    
    $
    123,103
    
    
    $
    167,566Denominator: Weighted average shares  diluted
    
    
    106,052
    
    
    
    106,661
    
    
    
    103,592Earnings per common share  diluted
    
    $
    2.03
    
    
    $
    1.15
    
    
    $
    1.62Calculation of weighted average
common shares  dilutedWeighted average shares
    
    
    103,180
    
    
    
    101,823
    
    
    
    99,125Effect of dilutive options and warrants
    
    
    2,872
    
    
    
    4,838
    
    
    
    4,467Weighted average shares  diluted
    
    
    106,052
    
    
    
    106,661
    
    
    
    103,592Not included in the calculation of diluted earnings
per
share becausetheir impact is antidilutive:Stock options outstanding
    
    
    84
    
    
    
    57
    
    
    
    1,899
 (p) Fair Value of Financial Instruments
      (q) Asset Impairment
 F-13




---



##### Table of Contents



(r) New Accounting Pronouncements
       F-14




---



##### Table of Contents



(2) Acquisitions
 Acquisition of a Urinary Incontinence Product
  Acquisition of Products from Wyeth
  Acquisition of Endeavor Pharmaceuticals, Inc .
    Acquisition of Womens Capital Corporation
 ®
 F-15




---



##### Table of Contents



Current assets
    
    $
    885Deferred tax assets
    
    
    3,201Intangible assets
    
    
    2,200Goodwill
    
    
    4,610In-process research and development
    
    
    10,300Total assets acquired
    
    
    21,196Current liabilities
    
    
    1,423Debt
    
    
    7,500Total liabilities assumed
    
    
    8,923Net assets acquired
    
    $
    12,273Cash paid, net of cash acquired
    
    $
    5,773Note issued to WCC stockholders
    
    
    6,500Purchase price
    
    $
    12,273
   Acquisition of Certain Assets from Gynétics, Inc.
 ®
 Acquisition of Products from Galen (Chemicals) Limited
 ® ®
 Acquisition of Product from Eastern Virginia Medical School
  F-16




---



##### Table of Contents



Acquisition of Products from King Pharmaceuticals, Inc.
  (3) Proceeds From Patent Challenge
   (4) Other Receivables
  (5) Inventories, net
  June 30,2005
    
    
    2004Raw materials and supplies
    
    $
    79,120
    
    
    $
    86,238Work-in-process
    
    
    16,405
    
    
    
    17,449Finished goods
    
    
    42,113
    
    
    
    46,565$
    137,638
    
    
    $
    150,252
 F-17




---



##### Table of Contents



(6) Property, plant and equipment, net
  June 30,2005
    
    
    2004Land
    
    $
    7,461
    
    
    $
    7,299Buildings and improvements
    
    
    135,737
    
    
    
    135,636Machinery and equipment
    
    
    189,906
    
    
    
    175,007Leasehold improvements
    
    
    8,414
    
    
    
    5,989Construction in progress
    
    
    37,584
    
    
    
    19,547379,102
    
    
    
    343,478Less: accumulated depreciation and amortization
    
    
    129,617
    
    
    
    106,647$
    249,485
    
    
    $
    236,831
  (7) Marketable Securities
   Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    MarketCost
    
    
    Gains
    
    
    (Losses)
    
    
    ValueJune 30, 2005Debt securities
    
    $
    576,687
    
    
    $
    
    
    
    $
    (881
    )
    
    $
    575,806Equity securities
    
    
    5,449
    
    
    
    
    
    
    
    
    
    
    
    5,449$
    582,136
    
    
    $
    
    
    
    $
    (881
    )
    
    $
    581,255June 30, 2004Debt securities
    
    $
    509,213
    
    
    $
    
    
    
    $
    
    
    
    $
    509,213Equity securities
    
    
    3,676
    
    
    
    
    
    
    
    
    
    
    
    3,676$
    512,889
    
    
    $
    
    
    
    $
    
    
    
    $
    512,889
    F-18




---



##### Table of Contents



(8) Goodwill and Other Intangible Assets
  June 30,2005
    
    
    2004Goodwill
    
    $
    17,998
    
    
    $
    18,211Product licenses
    
    $
    45,600
    
    
    $
    45,350Product rights and related intangibles
    
    
    70,796
    
    
    
    24,246116,396
    
    
    
    69,596Less: accumulated amortization
    
    
    (18,053
    )
    
    
    (4,699
    )Intangible assets, net
    
    $
    98,343
    
    
    $
    64,897
     Year Ending June 30,2006
    
    $
    12,7602007
    
    
    12,2262008
    
    
    11,7452009
    
    
    11,2282010
    
    
    9,889
  (9) Other Liabilities
  F-19




---



##### Table of Contents



(10) Solvay Arbitration Award
 ®
 (11) Long-term Debt
  June 30,2005
    
    
    2004Senior Unsecured Notes (a)
    
    $
    12,000
    
    
    $
    17,429Mortgage notes (b)
    
    
    
    
    
    
    13,200Note Due to WCC Shareholders (c)
    
    
    6,500
    
    
    
    6,50018,500
    
    
    
    37,129Less: Current installments of long-term debt
    
    
    (4,000
    )
    
    
    (7,029
    )Total long-term debt
    
    $
    14,500
    
    
    $
    30,100
 
 (a)
    
    The Senior Unsecured Note consists of a $12,000, 7.01% Note due November 18, 2007. Annual
principal payments under the Note amount to $4,000 in each of fiscal years 2006, 2007 and
2008.The Senior Unsecured Note contains certain covenants including, among others, a restriction on
dividend payments in excess of $10,000 plus 75% of consolidated net earnings subsequent to June
30, 1997.(b)
    
    In February 2005, the Company made a $12,200 payment in complete satisfaction of its mortgage
note.(c)
    
    In February 2004, the Company acquired all of the outstanding shares of WCC. In connection
with that acquisition, a four-year $6,500 promissory note was issued to WCC. The note bears
interest at 2%. The entire principal amount and all accrued interest is payable on February
25, 2008 (see Note 2).   Years Ending June 30,2006
    
    $
    4,0002007
    
    
    4,0002008
    
    
    10,5002009
    
    
    2010
    
    
    
 F-20




---



##### Table of Contents



(12) Related-party Transactions
 Dr. Bernard C. Sherman and Jacob M. Kay
    Years Ended June 30,2005
    
    
    2004
    
    
    2003Purchases from the Sherman Cos.
    
    $
    5,575
    
    
    $
    2,808
    
    
    $
    3,583Sales to the Sherman Cos.
    
    $
    10,149
    
    
    $
    9,486
    
    
    $
    12,727Recovery of shared litigation costs
included in operating expenses
    
    $
    77
    
    
    $
    1,004
    
    
    $
    585Profit split charged to cost of goods
    
    $
    1,027
    
    
    $
    3,680
    
    
    $
    1,440Royalty revenue
    
    $
    216
    
    
    $
    295
    
    
    $
    
 (13) Income Taxes
  Years Ended June 30,2005
    
    
    2004
    
    
    2003Current:Federal
    
    $
    101,355
    
    
    $
    101,477
    
    
    $
    77,615State
    
    
    6,482
    
    
    
    18,097
    
    
    
    10,911$
    107,837
    
    
    $
    119,574
    
    
    $
    88,526Deferred:Federal
    
    $
    4,441
    
    
    $
    (41,348
    )
    
    $
    9,010State
    
    
    2,610
    
    
    
    (6,889
    )
    
    
    (2,387
    )7,051
    
    
    
    (48,237
    )
    
    
    6,623Total
    
    $
    114,888
    
    
    $
    71,337
    
    
    $
    95,149
 F-21




---



##### Table of Contents



Years Ended June 30,2005
    
    
    2004
    
    
    2003Federal income taxes at statutory rate
    
    $
    115,457
    
    
    $
    68,054
    
    
    $
    91,950State income taxes, net of federal
income tax effect
    
    
    9,092
    
    
    
    6,687
    
    
    
    8,207Tax credits
    
    
    (6,900
    )
    
    
    (5,900
    )
    
    
    (1,000
    )Write-off of in-process research and
development
    
    
    
    
    
    
    3,605
    
    
    
    Other, net
    
    
    (2,761
    )
    
    
    (1,109
    )
    
    
    (4,008
    )$
    114,888
    
    
    $
    71,337
    
    
    $
    95,149
  Years Ended June 30,2005
    
    
    2004Deferred tax assets:Net operating loss
    
    $
    3,677
    
    
    $
    5,113Receivable reserves
    
    
    17,833
    
    
    
    29,888Inventory
    
    
    2,865
    
    
    
    2,707Warrants issued
    
    
    16,366
    *
    
    
    Capital loss carryforward
    
    
    2,864
    
    
    
    3,122Amortization of intangibles/goodwill
    
    
    60,467
    
    
    
    28,673Deferred revenue
    
    
    7,239
    
    
    
    7,400Natural Biologics loan
    
    
    
    
    
    
    6,673Tax credit carryforward
    
    
    
    
    
    
    15Investments
    
    
    320
    *
    
    
    Solvay litigation
    
    
    4,003
    
    
    
    20,226Other
    
    
    7,108
    
    
    
    6,043Total deferred tax assets
    
    
    122,742
    
    
    
    109,860Deferred tax liabilities:Plant and equipment
    
    
    (24,905
    )
    
    
    (19,889
    )Other
    
    
    (3,452
    )
    
    
    (4,196
    )Total deferred tax liabilities
    
    
    (28,357
    )
    
    
    (24,085
    )Less valuation allowance
    
    
    (3,657
    )
    
    
    (4,682
    )Net deferred tax asset
    
    $
    90,728
    
    
    $
    81,093
 
 *
    
    changes reflected directly in equity    F-22




---



##### Table of Contents



(14)
    
    Shareholders Equity(Shares and Per Share amounts expressed in whole numbers)
 Employee Stock Option Plans
    F-23




---



##### Table of Contents



Weighted-AverageNo. of Shares
    
    
    Exercise PriceOutstanding at July 1, 2002
    
    
    7,388,259
    
    
    $
    16.43Granted
    
    
    2,109,333
    
    
    
    26.74Canceled
    
    
    (208,047
    )
    
    
    27.92Exercised
    
    
    (1,354,542
    )
    
    
    12.57Outstanding at June 30, 2003
    
    
    7,935,003
    
    
    
    19.51Granted
    
    
    1,779,545
    
    
    
    43.01Canceled
    
    
    (148,026
    )
    
    
    28.74Exercised
    
    
    (1,699,190
    )
    
    
    11.82Outstanding at June 30, 2004
    
    
    7,867,332
    
    
    
    26.26Granted
    
    
    1,419,300
    
    
    
    35.41Canceled
    
    
    (103,965
    )
    
    
    37.60Exercised
    
    
    (961,609
    )
    
    
    15.46Outstanding at June 30, 2005
    
    
    8,221,058
    
    
    $
    28.96Available for grant (20,067,188
authorized)
    
    
    4,469,292Exercisable at June 30, 2003
    
    
    5,557,977
    
    
    $
    16.79Exercisable at June 30, 2004
    
    
    4,839,386
    
    
    $
    20.02Exercisable at June 30, 2005
    
    
    5,236,178
    
    
    $
    24.57
  Non-Employee Directors Stock Option Plans
   F-24




---



##### Table of Contents



Weighted-AverageNo. of Shares
    
    
    Exercise PriceOutstanding at July 1, 2002
    
    
    1,102,044
    
    
    $
    14.77Granted
    
    
    101,250
    
    
    
    26.76Canceled
    
    
    (59,270
    )
    
    
    32.87Exercised
    
    
    (464,061
    )
    
    
    9.75Outstanding at June 30, 2003
    
    
    679,963
    
    
    
    18.40Granted
    
    
    118,125
    
    
    
    49.02Canceled
    
    
    
    
    
    
    Exercised
    
    
    (154,499
    )
    
    
    17.75Outstanding at June 30, 2004
    
    
    643,589
    
    
    
    22.97Granted
    
    
    45,000
    
    
    
    37.87Canceled
    
    
    
    
    
    
    Exercised
    
    
    (58,568
    )
    
    
    5.28Outstanding at June 30, 2005
    
    
    630,021
    
    
    $
    25.68Available for Grant (2,798,438
authorized)
    
    
    906,469Exercisable at June 30, 2003
    
    
    578,714
    
    
    $
    16.94Exercisable at June 30, 2004
    
    
    576,089
    
    
    $
    19.92Exercisable at June 30, 2005
    
    
    585,021
    
    
    $
    24.74
  Employee Stock Purchase Plan
  Warrants
   F-25




---



##### Table of Contents



Options and Warrants Outstanding
    
    
    Options and Warrants ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageOutstanding
    
    
    Contractual
    
    
    Exercise
    
    
    Exercisable
    
    
    ExerciseRange of Exercise Prices
    
    at June 30, 2005
    
    
    Life
    
    
    Price
    
    
    at June 30, 2005
    
    
    Price$3.06 - $24.57
    
    
    2,593,015
    
    
    
    3.48
    
    
    $
    13.39
    
    
    
    2,593,015
    
    
    $
    13.39$25.26 - $33.70
    
    
    2,232,002
    
    
    
    6.89
    
    
    $
    27.79
    
    
    
    1,681,269
    
    
    $
    28.05$33.91 - $37.87
    
    
    2,253,615
    
    
    
    7.90
    
    
    $
    35.57
    
    
    
    907,265
    
    
    $
    36.26$37.91 - $51.61
    
    
    1,781,493
    
    
    
    8.15
    
    
    $
    43.50
    
    
    
    648,696
    
    
    $
    43.978,860,125
    
    
    
    6.40
    
    
    $
    28.72
    
    
    
    5,830,245
    
    
    $
    24.58
 (15) Savings and Retirement
     F-26




---



##### Table of Contents



(16) Other Income (Expense), Net
  Year Ended June 30,2005
    
    
    2004
    
    
    2003Proceeds from insurance settlement
    
    $
    4,600
    
    
    $
    
    
    
    $
    Loss on limited partnerships
    
    
    (796
    )
    
    
    (1,346
    )
    
    
    Other
    
    
    59
    
    
    
    (187
    )
    
    
    (128
    )Total other income (expense), net
    
    $
    3,863
    
    
    $
    (1,533
    )
    
    $
    (128
    )
 (17) Commitments and Contingencies
 Leases
  Years Ended June 30,2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    ThereafterOperating leases
    
    $
    4,359
    
    
    $
    3,981
    
    
    $
    3,379
    
    
    $
    3,281
    
    
    $
    3,189
    
    
    $
    15,586Capital leases
    
    
    1,692
    
    
    
    856
    
    
    
    204
    
    
    
    95
    
    
    
    32
    
    
    
    Minimum lease
payments
    
    $
    6,051
    
    
    $
    4,837
    
    
    $
    3,583
    
    
    $
    3,376
    
    
    $
    3,221
    
    
    $
    15,586
 Investment in Venture Funds
  Employment Agreements
  F-27




---



##### Table of Contents



Product Liability Insurance
     Indemnity Provisions
    F-28




---



##### Table of Contents



Litigation Settlement
  Litigation Matters
    Patent Matters
 Desogestrel/Ethinyl Estradiol Suit
   F-29




---



##### Table of Contents



Desmopressin Acetate Suit
   Product Liability Matters
 Hormone Therapy Litigation
  F-30




---



##### Table of Contents



Anti-trust Matters
 Invamed, Inc./Apothecon, Inc
    Ciprofloxacin (Cipro Ò ) Antitrust Class Actions
 Ò
   F-31




---



##### Table of Contents



Tamoxifen Antitrust Class Actions
   Medicaid Reimbursement Cases
    F-32




---



##### Table of Contents



Other Litigation
  (18) Segment Reporting
  Generic Pharmaceuticals
   Proprietary Pharmaceuticals
    Product
    
    2005
    
    
    % of sales
    
    
    2004
    
    
    % of sales
    
    
    2003
    
    
    % of salesProduct Sales:Proprietary
    
    $
    278,786
    
    
    
    27
    %
    
    $
    146,087
    
    
    
    11
    %
    
    $
    57,662
    
    
    
    6
    %Generic
    
    
    751,388
    
    
    
    73
    %
    
    
    1,150,622
    
    
    
    89
    %
    
    
    837,226
    
    
    
    94
    %Total product sales
    
    $
    1,030,174
    
    
    
    100
    %
    
    $
    1,296,709
    
    
    
    100
    %
    
    $
    894,888
    
    
    
    100
    %Gross profit:
    
    
    
    
    
    Margin %
    
    
    
    
    
    Margin %
    
    
    
    
    
    Margin %Proprietary
    
    $
    239,516
    
    
    
    86
    %
    
    $
    117,994
    
    
    
    81
    %
    
    $
    48,536
    
    
    
    84
    %Generic
    
    
    486,578
    
    
    
    65
    %
    
    
    545,970
    
    
    
    47
    %
    
    
    422,253
    
    
    
    50
    %Total gross profit
    
    $
    726,094
    
    
    
    70
    %
    
    $
    663,964
    
    
    
    51
    %
    
    $
    470,789
    
    
    
    53
    %
 F-33




---



##### Table of Contents



(19) Quarterly Data (Unaudited)
  Three Month Period EndedSept. 30
    
    
    Dec. 31
    
    
    Mar. 31
    
    
    Jun. 30FISCAL YEAR 2005:Total revenues
    
    $
    244,508
    
    
    $
    257,369
    
    
    $
    265,007
    
    
    $
    280,515Cost of sales
    
    
    69,638
    
    
    
    78,059
    
    
    
    77,653
    
    
    
    78,730Net earnings
    
    
    52,135
    
    
    
    59,387
    
    
    
    61,345
    
    
    
    42,121Earnings per common share  diluted (1)
    
    $
    0.49
    
    
    $
    0.56
    
    
    $
    0.58
    
    
    $
    0.40PRICE
RANGE OF COMMON STOCKHigh
    
    $
    42.80
    
    
    $
    46.90
    
    
    $
    50.45
    
    
    $
    54.29Low
    
    $
    32.01
    
    
    $
    35.07
    
    
    $
    43.71
    
    
    $
    47.00FISCAL YEAR 2004:Total revenues
    
    $
    310,711
    
    
    $
    374,124
    
    
    $
    321,085
    
    
    $
    303,168Cost of sales
    
    
    160,901
    
    
    
    207,722
    
    
    
    145,288
    
    
    
    118,834Net earnings
    
    
    38,535
    
    
    
    35,069
    
    
    
    35,139
    
    
    
    14,360Earnings per common share  diluted
(1) (2)
    
    $
    0.37
    
    
    $
    0.33
    
    
    $
    0.33
    
    
    $
    0.13PRICE
RANGE OF COMMON STOCK (2)High
    
    $
    50.33
    
    
    $
    56.91
    
    
    $
    53.99
    
    
    $
    49.25Low
    
    $
    38.83
    
    
    $
    45.17
    
    
    $
    45.70
    
    
    $
    32.89
 
 (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 three most
recent fiscal years, the Company did not pay any cash dividends.(2)
    
    Adjusted for the March 16, 2004 3-for-2 stock split effected in the form of a 50% stock
dividend (See Note 1). F-34




---



##### Table of Contents



SCHEDULE II
 BARR PHARMACEUTICALS, INC.
 VALUATION AND QUALIFYING ACCOUNTS
Years Ended June 30, 2005, 2004 and 2003
 Balance at
    
    Additions,Beginning
    
    Costs and
    
    Deductions,
    
    Balance at(In thousands)
    
    of Year
    
    Expenses
    
    Write-offs
    
    End of YearReserve for returns and
allowances:Year Ended June 30, 2003
    
    $
    29,260
    
    
    $
    48,683
    
    
    $
    (24,978
    )
    
    $
    52,965Year Ended June 30, 2004
    
    
    52,965
    
    
    
    64,446
    
    
    
    (59,909
    )
    
    
    57,502Year Ended June 30, 2005
    
    
    57,502
    
    
    
    84,033
    
    
    
    (88,816
    )
    
    
    52,719Inventory reserves:Year Ended June 30, 2003
    
    $
    10,236
    
    
    $
    10,280
    
    
    $
    (7,315
    )
    
    $
    13,201Year Ended June 30, 2004
    
    
    13,201
    
    
    
    17,058
    
    
    
    (6,349
    )
    
    
    23,910Year Ended June 30, 2005
    
    
    23,910
    
    
    
    2,787
    
    
    
    (13,282
    )
    
    
    13,415
 S-1