PRODUCT SALES Net sales – pharmaceutical only $1,672.7 $ – $1,672.7 $1,357.2 $ –  $1,357.2 Non - pharmaceutical sales (primarily contract sales) 82.7 – 82.7 27.8 – 27.8 Total 1,755.4 – 1,755.4 1,385.0 – 1,385.0 Cost of sales – pharmaceutical only 242.5 – 242.5 191.4 (3.7) (f) 187.7 Cost of sales – non - pharmaceutical 77.8 – 77.8 30.3 – 30.3 Product gross margin 1,435.1 – 1,435.1 1,163.3 3.7 1,167.0 Research services margin 1.5 – 1.5 3.7 – 3.7 Selling, general and administrative 693.6 – 693.6 629.5 (39.2) (g) 590.3 Research and development 763.5 (458.0) ( a ) 305.5 233.1 (4.7) (h) 228.4 Technology fees from related party – – – – – – Legal settlement – – – 118.7 (118.7) (i) – Restructuring charge (reversal) and asset write - offs, net (0.4) 0.4 (b) – 62.4 (62.4) (b) — Operating income (loss) (20.1) 457.6 437.5 123.3 228.7 352.0 Interest income 13.0 – 13.0 15.8 – 15.8 Interest expense (15.6) – (15.6) (17.4) – (17.4) Gain (loss) on investments, net – – – (30.2) 30.2 (j) – Unrealized gain (loss) on derivative instruments, net (0.3) 0.3 (c) – (1.7) 1.7 (c) – Contribution to The Allergan Foundation – – – – – – Other, net (6.5) 0.9 (d) (5.6) – 1.0 (k) 1.0 (9.4) 1.2 (8.2) (33.5) 32.9 (0.6) Earnings (loss) from continuing operations before income taxes and minority interest (29.5) 458.8 429.3 89.8 261.6 351.4 Provision for income taxes 22.2 101.1 (e) 123.3 25.1 73.3 (e) 98.4 Minority Interest 0.8 – 0.8 0.7 – 0.7 Earnings (loss) from continuing operations $ (52.5) $ 357.7 $ 305.2 $ 64.0 $ 188.3 $ 252.3 Basic earnings (loss) per share from continuing operations ($0.40) $2.74 $2.34 $0.49 $1.46 $1.95 Diluted earnings (loss) per share from continuing operations ($0.40) $2.71 $2.31 $0.49 $1.43 $1.92 Total net sales $1,755.4 $ (45.9) (v) $1,709.5 $1,385.0 $ 6.5 (v) $1,391.5 In millions, except per share amounts Year Ended December 31, 2003 Year Ended December 31, 2002 Non-GAAP  Non-GAAP  GAAP Adjustments Adjusted GAAP Adjustments Adjusted “GAAP” refers to financial information presented in accordance with generally accepted accounting principles in the United States. In this Annual Report, Allergan included historical non-GAAP financial measures, as defined in Regulation G promulgated by the Securities and Exchange Commission, with respect to the year ended December 31, 2003, as well as the corresponding periods for 2002 through 1999. Allergan believes that its pres- entation of historical non-GAAP financial measures provides useful supplementary information to investors. The presentation of historical non-GAAP financial measures is not meant to be considered in isolation from or as a substitute for results prepared in accordance with accounting principles generally accepted in the United States. In this Annual Report, Allergan reported the non-GAAP financial measure “adjusted earnings” and related “adjusted diluted earnings per share.” Allergan uses adjusted earnings to enhance the investor’s overall understanding of the financial performance and prospects for the future of Allergan’s core business  activities. Specifically, Allergan believes that a report of adjusted earnings provides consistency in its  financial reporting and facilitates the comparison of results of core business operations between its  current, past and future periods. Adjusted earnings is one of the primary indicators management uses  for planning and forecasting in future periods. Allergan also uses adjusted earnings for evaluating  management performance for compensation purposes. In this Annual Report, Allergan also reported sales performance using the non-GAAP financial measure of constant currency sales. Constant currency sales represent current period reported sales adjusted for the translation effect of changes in average foreign exchange rates between the current period and the corresponding period in the prior year. Allergan calculates the currency effect by comparing adjusted current period reported amounts, calculated using the monthly average foreign exchange rates for the corresponding period in the prior year, to the actual current period reported amounts. Management refers to growth rates at constant currency so that sales results can be viewed without the impact of changing