ALPHARMA INC.

INDEX

ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(In thousands of dollars)
(Unaudited)

See notes to the consolidated condensed financial statements.

ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands of dollars, except per share data)
(Unaudited)

See notes to the consolidated condensed financial statements.

ALPHARMA INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(In thousands of dollars)
(Unaudited)

See notes to the consolidated condensed financial statements.

ALPHARMA INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(In thousands, except share data)

1. General

     At September 30, 2003, the Company has stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No employee compensation cost is reflected in net income for stock options, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. Compensation cost for restricted stock is recorded based on the market value on the date of grant. The fair value of restricted stock is charged to unearned compensation in Stockholders' Equity and amortized to expense over the requisite vesting periods. The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of FASB Statement No. 123, as amended by FAS 148, "Accounting for Stock-Based Compensation", to stock-based emp loyee compensation.

     The Company estimated the fair value, as of the date of grant, of options outstanding in the plan using the Black-Scholes option pricing model with the following assumptions:

     The risk-free interest rates for 2003 and 2002 were based upon U.S. Treasury instrument rates with maturity approximating the expected term. The weighted average interest rate for the three months ended September 30, 2003 and 2002 amounted to 3.1% and 3.4%, respectively. The weighted average interest rate for the nine months ended September 30, 2003 and 2002 amounted to 2.9% and 4.1%, respectively. There were no options granted during the three months ended September 30, 2003 or 2002. The weighted average fair value of options granted during the nine months ended September 30, 2003 and 2002 with exercise prices equal to fair market value on the date of grant was $8.79 and $7.91, respectively.

       The Company's EBITDA, as defined, is affected most directly by changes in operating income. Operating income in 2003 has been negatively affected by remediation activities in two of U.S. Human Pharmaceutical's plants. Significant remediation costs have been incurred as a result of the Company's response to Form 483's issued by the FDA for the Company's Baltimore and Elizabeth plants. In addition, the remediation plans have resulted in lower production and significant rationalization of the liquids product line at the Baltimore plant and no new product introductions during 2003 to date, from either plant.

      Year-to-date 2003 remediation costs amount to $28,100, of which $16,100 relates to external consultants (see Footnote 10 for further details). The current estimated remediation cost for full year 2003 is $36,000 of which approximately half, $18,000, relates to external consultants, with the other half the result of increased internal resources. The additional internal staffing levels are necessary to support the Company's commitment to FDA compliance and are expected to continue beyond the remediation period. External consulting costs declined sequentially in the first, second and third quarters of 2003 and are expected to further decline in the fourth quarter of 2003 and continue at the fourth quarter rate or lower into 2004.

      It is the Company's expectation that it will substantially complete remediation in Elizabeth in 2003 and in Baltimore in 2004; subject to reviews by the FDA. The Company is preparing for possible FDA re-inspections of both facilities. The current FDA status at the company's Elizabeth site permits solid dose new product approvals; subject to normal product pre-approval inspections.

      Currently, the Company's most restrictive debt covenant is total debt to EBITDA ("Total Leverage Ratio"). This covenant tightens from a required maximum ratio of 4.50 to 1.00 at September 30, 2003 to a required maximum ratio of 3.75 to 1.00 at December 31, 2003, and a required maximum ratio of 3.50 to 1.00 at December 31, 2004. Based upon the Company's current forecast of 2003 Operating Income, EBITDA and cash flow, it expects to remain in compliance with all its debt covenants at December 31, 2003, with approximately $10,000 - $17,000 of EBITDA flexibility on its tightest covenant, the Total Leverage Ratio.

• Continued aggressive asset management, including both working capital reduction programs and controls over capital expenditures, to generate free cash flow to enable the Company to continue to repay outstanding debt. Capital expenditures were $35,552 for the nine months ended September 30, 2003 compared to $62,672 for the nine months ended September 30, 2002.

• Continue to reduce operating costs. In October 2003, the Company completed a review of its liquid dose business cost structure and reduced personnel, primarily manufacturing, by approximately 15%. In the fourth quarter of 2003, the Company will record a pre-tax charge of approximately $1,300 related to this action. This charge will be partially offset by savings in the quarter. The Company expects this workforce reduction to generate annual cost savings of approximately $6,000. The Company is evaluating other actions to reduce its cost base in 2004 and beyond.

• Continue to sell certain assets. In 2003, the Company has sold its French generics business and an Animal Health facility. The Company recently engaged investment bankers to explore the possible sale of certain other assets.

• Reduce subordinated convertible debt by issuing common stock. At September 30, 2003, the Company has $179,983 of convertible Subordinated Notes outstanding that can be retired by the exchange of common stock with approximately the same fair value. In 2001 and 2002, the Company retired $144,100 of convertible debt by issuing approximately 8.2 million shares of Class A Common stock.

• Obtaining amendments to the bank covenants to allow for certain of the actions noted above and to provide additional flexibility in the timing and application of the financial ratio tests. In October 2001, the Company borrowed $622,000 from the bank group and at September 30, 2003 the amount outstanding is $428,233 (a reduction of $193,767). In past periods, the bank group has agreed to amendments and a waiver to allow for specified asset sales, permit exclusions of restructuring and refinancing charges from EBITDA and the minimum net worth definitions, and to permit the issuance of the $220,000 Senior Notes by changing the definition of the Senior Leverage Ratio to the Senior Secured Leverage Ratio. While these past actions are not an assurance of future actions, the Company believes that its performance in the reduction of the loan and its previous experience in working with the bank group would assist it in obtaining future amendments, if necessary.

      While the Company cannot assure its success in executing any of the above-noted actions or, where required in obtaining external party consent, it will, between the fourth quarter of 2003 and the first quarter of 2004, take the actions necessary to maintain sufficient financial flexibility with its debt covenants and remain in compliance throughout 2004.

     Included at September 30, 2003 and December 31, 2002 are raw materials totaling approximately $8,844 and $4,422, respectively, related to a product which is subject to regulatory approval and litigation (see Note 10).

     Inventories are stated at the lower of cost or market value. Effective January 1, 2003, the Company changed from the last-in first-out (LIFO) method to the first-in first-out (FIFO) method to account for certain of its United States USHP inventories. The method was changed in part to achieve a better matching of revenues and expenses. While a change from the LIFO method to the FIFO methods requires retroactive application to the financial statements, the change was not material to the consolidated financial statements of the Company for any of the periods presented as the inventory values computed under the LIFO method approximated the inventory values computed under the FIFO method. The FIFO method, or methods that approximate FIFO, are now used to determine cost for all inventories of the Company.

4.      Long-Term Debt

Long-term debt consists of the following:

      The 2001 Credit Facility has several financial covenants including a total debt to earnings before interest, taxes, depreciation and amortization ("EBITDA") ratio, senior secured debt to EBITDA ratio, fixed charge coverage ratio and an interest coverage ratio (see Note 2).

      In addition to financial covenants, the 2001 Credit Agreement has a number of non-financial covenants. These non-financial covenants include a requirement that control over the Company not be transferred from an entity controlled by E.W. Sissener, the Chairman of the Company, or his family, if as a result or at anytime after such transfer a third party holds shares representing 20% or more of the voting rights in the Company. AL Industrier ("ALI"), an entity controlled by Mr. Sissener and his family (and a holding company whose only material business is holding shares of the Company), currently controls the Company by beneficial ownership of all of the Company's Class B shares which carries the right to elect a majority of the Company's directors. - The continuation of ALI's control of the Company remains subject to the unilateral actions of ALI.

      In accordance with Financial Accounting Standard No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections", the Company has reclassified amounts recorded as extraordinary expense for the early extinguishment of debt of $727 ($443 after tax) in the first quarter of 2002 to Loss on debt extinguishments/conversions.

     In April 2003, in connection with the offering of the 8 5/8% Senior Notes, the Company amended the 2001 Credit Facility to exclude from the definition of EBITDA costs incurred in connection with the issuance of the 8 5/8% Notes, including the placement fee, to permit the 8 5/8% Notes to be an unsecured senior debt obligation of the Company and to change the senior debt to EBITDA covenant to a senior secured debt to EBITDA covenant.

      A reconciliation of weighted average shares outstanding for basic to diluted weighted average shares outstanding is as follows:

      The amount of dilution attributable to the stock options, determined by the treasury stock method, depends on the average market price of the Company's common stock for each period. Stock options are not included in the calculation of diluted EPS if the result is antidilutive. The following table summarizes stock options not included in the computation of diluted EPS.

     For all periods presented, the effects of the 05 and 06 Notes (convertible into 1,196,310 and 3,809,343 shares, respectively) were not included in the calculation of diluted EPS because the result was antidilutive.

      The numerator for the calculation of basic EPS is net income (loss) for all periods. The numerator for the calculation of diluted EPS includes an add back for interest expense and debt cost amortization, net of income tax effects, related to the 05 and 06 Notes when applicable.

      A reconciliation of net income (loss) used for basic to diluted EPS is as follows:

6.   Goodwill and Intangible Assets:

     Intangible assets consist principally of one major intangible asset class, products rights, including regulatory and/or marketing approvals by relevant government authorities. All intangible assets are subject to amortization. Annual amortization expense for the years 2003 through 2007 is currently estimated to be approximately $35,400, $33,000, $31,400, $27,900 and $27,600, respectively.

      Identifiable intangible assets are required to be tested for impairment whenever changes in events or circumstances indicate that its carrying amount may not be recoverable. In Germany, in 2003 there was a legislative proposal under consideration, which if adopted, would have removed certain products from eligibility for government patient reimbursement, including one product important to the Company's German operations, Pentalong. In July, 2003 this proposal was withdrawn. - - If any proposed legislation is ultimately approved that removes Pentalong from eligibility for reimbursement, the Company will be required to re-evaluate the carrying value of intangible assets totaling approximately $17,000. The Company cannot predict whether any such legislation will be introduced or approved.

     Intangible assets and accumulated amortization are summarized as follows:

     The changes in the carrying amount of goodwill attributable to the Company's reportable segments for the quarter ended September 30, 2003, are as follows:

     In connection with the sale of its French subsidiary (see Note 15-), the Company allocated goodwill totaling $2,360 to discontinued operations on the Consolidated Statement of Operations.

     As required in the fourth quarter of 2002, the Company performed the required annual test for impairment. The assessment was made in conjunction with the budgeting and long-range planning by each segment. This assessment will be conducted as required in the fourth quarter of 2003.

7.      Reorganization, Refocus and other Actions

     The following table presents cash activity in the severance, and closure and exit costs related accruals:

      The Company expects to settle the majority of these liabilities over the next eighteen months.

8.      Supplemental Data

9.      Reporting Comprehensive Income

      SFAS 130, "Reporting Comprehensive Income" requires foreign currency translation adjustments and certain other items to be included in other comprehensive income (loss). Total comprehensive income (loss) amounted to approximately $60,265 and $(4,319) for the three months ended September 30, 2003 and 2002, respectively and $56,829 and $32,242 for the six months ended September 30, 2003 and 2002, respectively.

      The components of accumulated other comprehensive income (loss) for the Company include:

10.      Contingent Liabilities and Litigation

     A class action lawsuit was filed in the United States District Court for the District of New Jersey on June 8, 2001. This class action has been brought on behalf of all persons who acquired the Company's securities between April 28, 1999 and October 30, 2000. The Company is named as a defendant along with two of its board members, one of whom is an officer, and two of its former officers. The class action complaint alleges that, among other things, the plaintiffs were damaged when they acquired the Company's securities because, as a result of (1) alleged irregularities in the Company's Animal Health business in Brazil, (2) allegedly improper revenue recognition practices and (3) the October 2000 revision of its financial results for 1999 and 2000, the Company's previously issued financial statements were materially false and misleading, thereby artificially inflating the price of the Company's securities. The complaint alleges violations of Sections 10(b), 20(a ) and Rule 10b-5 of the Securities and Exchange Act of 1934. The plaintiffs seek damages in unspecified amounts. The Company moved to dismiss the complaint on legal grounds and the District Court granted its motion with prejudice as to all defendants. The plaintiffs filed a motion for reconsideration with the District Court and the District Court affirmed its earlier dismissal. The plaintiffs have appealed the Court's decision to the Third Circuit Court of Appeals. The Company is awaiting a decision on this appeal. Additionally, the Company has filed a claim on its own behalf and on behalf of each of the named individual defendants under its directors' and officers' insurance policies and believes that insurance coverage exists to the extent of the policy limits for the costs incurred in defending the claims and any adverse judgment or settlement, subject to the terms, conditions and exclusions of the relevant insurance policy. Based upon the facts as presently known, the Company does not believe that it is likely that the class action will result in liability which will be material to the Company's financial position. However, it is not possible for the Company to conclude definitively that resolution of the lawsuit will not be material to the Company's financial position or its results of operations or cash flows in the quarter or year in which it occurs.

     In response to the Company's submission to the FDA of its ANDAs filed under paragraph IV for gabapentin capsules and tablets, the Company was sued on June 11, 1998 with respect to capsules and on December 12, 1999 with respect to tablets, by Warner-Lambert Company, which is now owned by Pfizer Inc., in the U.S. District Court for the District of New Jersey for alleged patent infringement under two U.S. patents. The ANDAs submitted seek FDA approval to market the Company's gabapentin capsules and tablets prior to the expiration of Pfizer's patents. In the Company's ANDAs, the Company certified to Pfizer and the FDA that its proposed generic gabapentin capsules and tablets will not infringe the patents and that the patents are believed to be invalid or unenforceable. In June 2003, the New Jersey District Court granted summary judgment of non-infringement for these two patents. The decisions on these patents have not yet been appealed. During the lawsuits regarding gabapentin tablets and capsules, Pfizer received a third patent covering a gabapentin formulation with low chloride levels. After learning of this patent, the Company certified to the FDA under paragraph IV that the Company's proposed gabapentin capsule and tablet, as disclosed in its previously filed ANDAs, do not infringe this patent and this patent is invalid or unenforceable. In June 2000, Pfizer sued the Company in the District Court for the District of New Jersey for patent infringement under this patent. The Company submitted to the court a motion for summary judgment that neither the capsule nor tablet product infringes this patent. The Company has also filed several summary judgment motions for invalidity of this third patent. These motions are under consideration by the Court and have not yet been ruled on. Discovery has closed and a pre-trial conference was held on April 24, 2003. No trial date has been set.

     Until the Company markets its gabapentin capsules pursuant to the FDA authorization it received in September 2003 or until the Company receives FDA authorization and markets gabapentin tablets, the Company would, in the event of an adverse decision, at most, only be liable to Pfizer for its legal costs and not any monetary damages. To date, the Company has not marketed these pharmaceuticals. - There is the possibility that as a result of the Pfizer litigation, the Company could be prevented from marketing the Company's gabapentin capsules or tablets until Pfizer's chloride patent expires.

     In anticipation of the launch of gabapentin, the Company entered into a supply agreement with Plantex USA, Inc (a subsidiary of Teva Pharmaceutical Industries, Inc.), the manufacturer of the active pharmaceutical ingredient (the "API") gabapentin, under which the Company has acquired API inventory. The terms of the Company's agreement with the API supplier will require the payment to the supplier of a portion of the Company's net sales of finished dose gabapentin product during any period of exclusivity ("Net Sales Split"). To date, the Company has acquired and placed orders for substantial amounts of API inventory under the terms of the supply agreement. The Company expects to continue ordering additional amounts of API inventory during the fourth quarter of 2003 and during 2004. All of these payments reduce the Net Sales Split on a dollar for dollar basis. The Company cannot predict the outcome of the gabapentin litigation; however, in the event of an unfavorable outco me, or other factors preventing the Company from selling the finished product, the Company will reassess the net realizable value of the API inventory, and may incur a charge to write-down API inventory on hand to its net realizable value and record any required payments under the supply agreement. The maximum charge could be approximately $46,000 based on inventory currently on hand and recently ordered.

     The Company is engaged in disputes with several suppliers, customers and distributors regarding certain obligations with respect to contracts under which the Company obtains raw materials and under which the Company supplies finished products. These disputes will most probably be resolved over more than one year. Management does not believe that the disputes in the aggregate will be material to the Company's financial position. However, they could be material to the Company's results of operations or cash flows in the period in which resolution occurs.

     In June 2002, the SEC notified the Company that it had commenced a formal investigation of the circumstances surrounding the 2000 and 2001 restatements of its financial statements. While deposition discovery is underway, the proceeding is in its early stages. The SEC has stated that the commencement of this investigation is not an indication that the SEC presently believes that a violation of any applicable laws has occurred.

      In June 2003, the Company received requests for certain information from the US House Committee on Energy and Commerce and the United Kingdom Office of Serious Fraud. The House inquiry has been addressed to over twenty pharmaceutical companies and is related to pharmaceutical reimbursement under Medicaid. The Serious Fraud Office has requested documents related to the Company's dealings with several of its competitors which the Company understands are being investigated with respect to their activities during the late 1990's. The Company has submitted responses to both requests. The response to either request could result in the Company being involved in further proceedings. The 1998 agreement between the Company and the Perrigo Company is the subject of a formal investigation by the Federal Trade Commission ("FTC"). The investigation could result in the Company being involved in further proceedings with the FTC, state Attorney Generals or private litigants. The Compa ny is cooperating with the FTC.

      On September 25, 2003 the Company's wholly owned subsidiary, Purepac Pharmaceutical Co., was named as one of thirteen defendants in a litigation brought by the Commonwealth of Massachusetts alleging improprieties in connection with the calculation and administration of Medicaid rebate data. The Company believes the claims being alleged are baseless and intends to undertake a vigorous defense in this matter. Responses from the defendants are due in January, 2004.

     On October 29, 2003 the Company was granted a temporary restraining order in a lawsuit the Company brought against the FDA seeking first-to-file status on metformin extended release 500 mg tablets. On October 28, 2003, Ivax Corporation announced that it had received first-to-file status from the FDA for this product. The Company believes it is entitled to this status and 180-day exclusivity for this product. Under the terms of the temporary restraining order, the court has ordered the FDA to delay the effective date of Ivax's final approval.

      The Company received inspection observations ("483 Reports") from the FDA at its USHP facilities in Baltimore in 2001 and Elizabeth in 2003. The 483 Reports listed alleged deviations from, primarily, current Good Manufacturing Practices ("cGMPs").

      The 2001 inspection at Baltimore resulted in an allegation by the FDA that the Company was not in compliance with a 1992 Consent Decree requiring general compliance with cGMPs. In July 2002, the FDA conducted a follow-up inspection to the 2001 inspection of the Baltimore facility and in August 2002 issued a re-inspection report. In response to the 2002 FDA report, the Company submitted a comprehensive corrective action plan to the FDA in October of 2002. The Company has begun upgrading plant procedures at the Baltimore plant in accordance with the plan and has provided written monthly updates to the FDA. The Company met with the FDA on July 31, 2003 to review its progress under the corrective action plan. The Company is preparing for possible FDA reinspection of its Baltimore facility before the end of 2003. The Company expects that it will substantially complete the corrective actions in Baltimore in 2004, subject to reviews by the FDA. As part of the corrective ac tion plan, production at the Baltimore facility was reduced from approximately ninety products in 2001 to approximately twenty products in 2003. The Company does not expect to expand the number of liquid products without the approval of the FDA. This reduction in production had an effect on earnings in 2002 and is having a continuing effect in 2003.

     Between November 2002 and January 2003, the FDA conducted a routine general inspection at the Company's Elizabeth plant. As a result of the inspection, the Company received a 483 Report from the FDA on January 15, 2003. The Company submitted a comprehensive response on February 5, 2003 and is currently taking actions to address the observations made by the FDA, in accordance with the response. The Company expects that it will substantially complete these actions in 2003, subject to reviews by the FDA. The corrective action plan contemplates continued output at 2002 levels. The Company is preparing for possible product pre-approval inspections at its Elizabeth facility before the end of 2003 in connection with several products in the Company's pipeline.

     Remediation spending for the Baltimore and Elizabeth facilities through the first nine months of 2003 was approximately $28,100, of which $16,100 related to external consultants. The remainder related to an increase in internal resources and is expected to continue beyond the remediation period in order to ensure compliance with cGMP requirements. The total cost and timing of both the Baltimore and Elizabeth corrective action plans may change based upon FDA responses and other factors.

      The Company has been advised by the FDA that the current FDA status at the Company's Elizabeth site permits solid dose new product approvals, subject to normal product pre-approval inspections. The FDA compliance status at the Company's Baltimore facility has had, and will continue to have, the effect of delaying new product approvals at this facility until the FDA is satisfied that sufficient progress has been made to achieve compliance with cGMP's with respect to the facility. Product approval delays at any one of our facilities will not necessarily have an effect on product approvals at our other facilities.

      As permitted under Delaware law, the Company has agreements whereby we indemnify our officers and directors for certain events or occurrences while the officer or director is, or was serving, at our request in such capacity. The term of the indemnification period is for the officer's or director's lifetime. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a Director and Officer insurance policy that could reimburse the Company for losses up to the limits and subject to the terms of the policy. As a result of its insurance policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company has no liabilities recorded for these agreements as of September 30, 2003.

     The Company and its subsidiaries are, from time to time, involved in other litigation arising out of the ordinary course of business. It is the view of management, after consultation with counsel, that the ultimate resolution of all other pending suits should not have a material adverse effect on the consolidated financial position or results of operations of the Company.

11.     Transactions with AL Industrier (ALI)

      A.L. Industrier A.S ("ALI") is the beneficial owner of 100% of the outstanding shares of the Company's Class B Stock. The Class B Stock represents 22.9% of the total outstanding common stock as of September 30, 2003. ALI, a Norwegian company, is able to control the Company through its ability to elect more than a majority of the Board of Directors and to cast a majority of the votes in any non-class vote of the Company's stockholders.

     In January 2003, the Company divested its Norwegian vitamin business to Nopal, a subsidiary of ALI, for approximately $3,300. The divestiture was a transaction between companies under common control and accordingly, the gain on the sale was accounted for as capital transaction net of related taxes ($2,267 net increase to Additional Paid-In Capital). As required of all related party transactions, this sale was determined to be fair to the holders Class A Common Stock by the Company's Audit and Corporate Governance Committee.

12.     Business Segment Information

      The Company's businesses are organized in four reportable segments as follows; International Generics ("IG"), Active Pharmaceutical Ingredients ("API"), U.S. Human Pharmaceuticals ("USHP"), and Animal Health ("AH"). Segment data includes immaterial intersegment revenues which are eliminated in the consolidated accounts.

     Third quarter 2003 revenues and gross profit in the International Generics segment were negatively impacted by the recording of a $5,400 pre-tax charge to increase reserves for sales allowances. This charge, which relates almost entirely to prior periods, resulted from one business unit's improper application of Company policy with respect to the accrual of sales allowances. Since the impact of not accruing for these sales allowances was immaterial to 2003 and prior years' annual and quarterly financial results, the Company recorded a charge in the third quarter of 2003 to reflect a proper estimate of reserves for sales allowances. The proper recording of sales allowances in prior periods would have impacted annual results by less than $.01 in 2001 and 2003 and approximately $.02 per diluted share in 2002. The impact on net income in all quarters in 2001, 2002 and 2003 was less than $.01 per diluted share.

14.    Income Taxes

As of September 30, 2003, the Company had net U.S. deferred tax assets of approximately $29,000, primarily made up of net operating losses. The majority of the federal net operating loss carryforwards expire in excess of 15 years.

In assessing the realizability of U.S. deferred tax assets, the Company considers quarterly whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company considered the scheduled reversal of deferred tax liabilities and certain distinct tax planning strategies in making this assessment. The net deferred tax was determined to be realizable by calculating the tax effect of the tax planning strategies, which include potential sale of assets and liabilities. Based on this assessment at September 30, 2003, the Company determined that it is more likely than not that all U.S. assets will be realized. If changes occur in the assumptions underlying the Company's tax planning strategies, in the scheduling of the reversal of the Company's deferred tax liabilities or the Company continues to generate losses in the U.S. operations, a valuation allowance may need to be recorded in the future related to these assets and the Company's operating re sults would be adversely affected during the period in which such determination was made.

15.    Discontinued Operations

     On September 30, 2003, the Company sold its French subsidiary for $5,967. The net loss for this subsidiary of $4,318 and $263 for the three months ended September 30, 2003 and 2002, respectively and $5,303 and $537 for the nine months ended September 30, 2003 and 2002, respectively is reflected in the Company's Consolidated Statement of Operations as loss from discontinued operations. Included in the 2003 results is a loss on sale of subsidiary of $3,716, including the allocation of $2,360 goodwill. , The assets and liabilities representing the carrying value of the Company's French generics business are presented separately within the asset and liability sections of the Company's Consolidated Condensed Balance Sheet.

     The following table details selected financial information for the French subsidiary included within discontinued operations.

16.     Guarantor and Financial Information

     The following financial information is presented to segregate the parent and certain of its subsidiaries which are guarantors under the Senior Unsecured Notes due 2011 from non-guarantor subsidiaries. The consolidating financial information presents the consolidating balance sheet as of September 30, 2003 and December 31, 2002, and the related statements of operations and cash flows for the nine months ended September 30, 2003 and 2002 for:

·      Alpharma Inc., the parent;
·      the guarantor subsidiaries;
·      the nonguarantor subsidiaries; and
·      the Company on a consolidated basis.

     The information includes elimination entries necessary to consolidate Alpharma Inc., the parent, with guarantor and nonguarantor subsidiaries.

     Investments in subsidiaries are accounted for by the parent using the equity method of accounting. The guarantor and nonguarantor subsidiaries are presented on a combined basis. The principal elimination entries eliminate investments in subsidiaries and intercompany balances and transactions.

     Separate financial statements for the guarantor subsidiaries and the nonguarantor subsidiaries are not presented because management believes that such financial statements would not be meaningful to investors.

ALPHARMA INC.
Consolidating Balance Sheet
As of September 30, 2003
(in thousands)

ALPHARMA INC.
Consolidating Balance Sheet
As of December 31, 2002
(in thousands)