SECURITIES AND EXCHANGE COMMISSION

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, ThJqizxiiGY54Szz09tDnwpRhX3J6wFuqTFmkFchP7F9TN0jkewOlFxZs1p23qhr g/8a4vYv23SrXl/fW60asg== 0000010427-03-000498.txt : 20030807 0000010427-03-000498.hdr.sgml : 20030807 20030807103623 ACCESSION NUMBER: 0000010427-03-000498 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20030628 FILED AS OF DATE: 20030807 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAUSCH & LOMB INC CENTRAL INDEX KEY: 0000010427 STANDARD INDUSTRIAL CLASSIFICATION: OPHTHALMIC GOODS [3851] IRS NUMBER: 160345235 STATE OF INCORPORATION: NY FISCAL YEAR END: 1226 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04105 FILM NUMBER: 03827909 BUSINESS ADDRESS: STREET 1: BAUSCH & LOMB INCORPORATED STREET 2: ONE BAUSCH & LOMB PLACE CITY: ROCHESTER STATE: NY ZIP: 14604-2701 BUSINESS PHONE: 5853386000 MAIL ADDRESS: STREET 1: ONE BAUSCH & LOMB PLACE STREET 2: P O BOX 54 CITY: ROCHESTER STATE: NY ZIP: 14604-2701 10-Q 1 q2-03fnl.htm MAIN DOCUMENT SECURITIES AND EXCHANGE COMMISSION

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934




For the Quarter Ended		Commission File
June 28, 2003		Number: 1-4105

BAUSCH & LOMB INCORPORATED
(Exact name of registrant as specified in its charter)

New York		16-0345235
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification No.)

One Bausch & Lomb Place Rochester, NY		14604-2701
(Address of principal executive offices)		(Zip code)

Registrant's telephone number, including area code: (585) 338.6000

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

Yes	x		No

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes	x		No

The number of shares of Common stock of the registrant outstanding as of June 28, 2003 was 53,235,539, consisting of 52,729,963 shares of Common stock and 505,576 shares of Class B stock which are identical with respect to dividend and liquidation rights, and vote together as a single class for all purposes.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

The accompanying unaudited interim consolidated financial statements of Bausch & Lomb Incorporated and Consolidated Subsidiaries have been prepared by the company in accordance with the accounting policies stated in the company's 2002 Annual Report on Form 10-K and should be read in conjunction with the Notes to Financial Statements appearing therein, and are based in part on approximations. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation in accordance with accounting principles generally accepted in the United States of America have been included in these unaudited interim consolidated financial statements. Certain prior year balances have been reclassified to conform to the current year presentation.

BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME
	(Unaudited) Second Quarter Ended		(Unaudited) Six Months Ended
	---------------------------------		--------------------------------
Dollar Amounts in Millions - Except Per Share Data	June 28, 2003	June 29, 2002	June 28, 2003	June 29, 2002
------------------------------------------------------------------	---------------	---------------	-------------	---------------
Net Sales	$512.5	$458.4	$960.5	$872.6

Costs and Expenses
Cost of products sold	213.7	197.1	411.9	378.5
Selling, administrative and general	204.3	179.6	384.5	354.5
Research and development	38.3	31.3	68.1	61.4
Restructuring charges and asset write-offs	-	-	-	23.5
	---------------	---------------	-------------	---------------
	456.3	408.0	864.5	817.9
	---------------	---------------	-------------	---------------
Operating Income	56.2	50.4	96.0	54.7

Other (Income) Expense
Interest and investment income	(3.7)	(3.3)	(5.4)	(40.6)
Interest expense	13.6	12.7	28.2	25.5
Loss from foreign currency, net	1.6	0.6	3.3	0.8
	---------------	---------------	-------------	---------------
	11.5	10.0	26.1	(14.3)
	---------------	---------------	-------------	---------------

Income before Income Taxes and Minority Interest	44.7	40.4	69.9	69.0
Provision for income taxes	15.2	14.0	23.8	23.7
Minority interest in subsidiaries	1.2	4.6	1.3	14.6
	---------------	---------------	-------------	---------------

Income from Continuing Operations before Cumulative Effect of Change in Accounting Principle	28.3	21.8	44.8	30.7

Cumulative Effect of Change in Accounting Principle, Net of Taxes	- -	- -	(0.9)	- -
	---------------	---------------	-------------	---------------

Net Income	$ 28.3	$ 21.8	$ 43.9	$ 30.7
	=========	=========	=======	========

Basic Earnings Per Share:
Continuing Operations	$ 0.53	$ 0.41	$ 0.84	$ 0.57
Cumulative Effect of Change in Accounting Principle	-	-	(0.02)	-
	---------------	---------------	-------------	---------------
	$ 0.53	$ 0.41	$ 0.82	$ 0.57
	=========	=========	=======	========
Average Shares Outstanding - Basic (000s)	53,145	53,837	53,456	53,767

Diluted Earnings Per Share:
Continuing Operations	$ 0.53	$ 0.40	$ 0.84	$ 0.57
Cumulative Effect of Change in Accounting Principle	-	-	(0.02)	-
	---------------	---------------	-------------	---------------
	$ 0.53	$ 0.40	$ 0.82	$ 0.57
	=========	=========	=======	========
Average Shares Outstanding - Diluted (000s)	53,431	54,035	53,616	53,957

See Notes to Financial Statements

BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES BALANCE SHEETS
Dollar Amounts in Millions	(Unaudited) June 28, 2003	December 28, 2002
-----------------------------------------------------------------------------------------	---------------------	------------------
Assets
Cash and cash equivalents	$ 426.0	$ 465.1
Trade receivables, less allowances of $24.0 and $25.6, respectively	452.5	425.0
Inventories, net	216.4	208.5
Deferred income taxes	72.7	72.7
Other current assets	144.4	113.4
	---------------------	------------------
Total Current Assets	1,312.0	1,284.7

Property, Plant and Equipment, Net	533.9	537.5
Goodwill	684.6	636.0
Other Intangibles, Net	226.7	226.8
Other Long-Term Assets	98.1	86.5
Deferred Income Taxes	135.5	136.3
	---------------------	------------------
Total Assets	$2,990.8	$2,907.8
	============	==========

Liabilities and Shareholders' Equity
Notes payable	$ -	$ 1.4
Current portion of long-term debt	185.9	186.5
Accounts payable	95.7	78.1
Accrued compensation	100.1	93.5
Accrued liabilities	384.2	375.8
Federal, state and foreign income taxes payable	72.0	81.1
Deferred income taxes	39.3	12.6
	---------------------	------------------
Total Current Liabilities	877.2	829.0

Long-Term Debt, less current portion	649.2	656.2
Deferred Income Taxes	235.8	257.1
Other Long-Term Liabilities	138.8	128.6
Minority Interest	15.4	19.1
	---------------------	------------------
Total Liabilities	1,916.4	1,890.0
	---------------------	------------------

Common Stock, par value $0.40 per share, 200 million shares authorized, 60,198,322 shares issued in 2003 and in 2002	24.1	24.1
Class B Stock, par value $0.08 per share, 15 million shares authorized, 627,521 shares issued (729,764 shares in 2002)	- -	- -
Capital in Excess of Par Value	98.1	102.2
Common and Class B Stock in Treasury, at cost, 7,590,304 shares (6,958,790 shares in 2002)	(386.3)	(359.8)
Retained Earnings	1,328.9	1,298.9
Accumulated Other Comprehensive Income (Loss)	16.8	(38.5)
Other Shareholders' Equity	(7.2)	(9.1)
	---------------------	------------------
Total Shareholders' Equity	1,074.4	1,017.8
	---------------------	------------------
Total Liabilities and Shareholders' Equity	$ 2,990.8	$2,907.8
	============	==========

See Notes to Financial Statements

BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF CASH FLOWS
	(Unaudited) Six Months Ended
	------------------------------------------------
Dollar Amounts in Millions	June 28, 2003	June 29, 2002
--------------------------------------------------------------------------------------------------	---------------------	------------------
Cash Flows from Operating Activities
Net Income	$ 43.9	$ 30.7
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities
Depreciation	50.9	53.4
Amortization	13.1	12.3
Restructuring charges and asset write-offs	-	23.5
Gain from sale of investments available-for-sale	-	(18.1)
Loss (gain) on retirement of fixed assets	0.9	(2.8)
Changes in Assets and Liabilities
Trade receivables	(5.1)	2.5
Inventories	2.0	13.9
Deferred income taxes	0.2	(43.0)
Other current assets	(25.3)	(15.4)
Other long-term assets	(8.3)	18.2
Accounts payable and accrued liabilities	(23.1)	0.2
Income taxes payable	(10.5)	26.2
Other long-term liabilities	0.8	4.5
	--------------------	------------------
Net Cash Provided by Operating Activities	39.5	106.1
	--------------------	------------------
Cash Flows from Investing Activities
Capital expenditures	(35.0)	(42.8)
Net cash paid for acquisition of businesses and other intangibles	(6.3)	(1.0)
Sale price adjustment related to disposal of discontinued operations	-	(23.0)
Cash received from sale of investments available-for-sale	-	37.4
Other	0.1	-
	--------------------	------------------
Net Cash Used in Investing Activities	(41.2)	(29.4)
	--------------------	------------------
Cash Flows from Financing Activities
Termination of investor's interest in partnership	-	(200.0)
Repurchase of Common and Class B shares	(30.8)	(0.9)
Exercise of stock options	0.6	2.4
Net repayments of notes payable	(1.4)	(13.0)
Repayment of long-term debt	(4.8)	(30.9)
Proceeds from issuance of debt	-	75.0
Payment of dividends	(14.0)	(27.9)
	--------------------	------------------
Net Cash Used in Financing Activities	(50.4)	(195.3)
	--------------------	------------------

Effect of exchange rate changes on cash and cash equivalents	13.0	3.8
	--------------------	------------------
Net Change in Cash and Cash Equivalents	(39.1)	(114.8)

Cash and Cash Equivalents - Beginning of Period	465.1	534.4
	--------------------	------------------
Cash and Cash Equivalents - End of Period	$426.0	$419.6
	============	==========
Supplemental Cash Flow Disclosures
Cash paid for interest	$ 26.1	$ 25.5
Net cash payments for income taxes	$ 27.8	$ 11.5

See Notes to Financial Statements

BAUSCH & LOMB INCORPORATED AND CONSOLIDATED SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS

Dollar Amounts in Millions - Except Per Share Data

1. Comprehensive Income

The following table summarizes components of comprehensive income for the quarter and six months ended June 28, 2003 and June 29, 2002:

	Second Quarter Ended
	--------------------------------------------------------------------------------------------------------
				June 28, 2003							June 29, 2002
				-------------------------------------------							-------------------------------------
			Pre-tax Amount			Tax Benefit (Expense)		Net-of-tax Amount		Pre-tax Amount			Tax Benefit		Net-of-tax Amount
		--------------			--------------		---------------		--------------			-------------		---------------
Foreign currency translation adjustments		$49.9			$ -		$49.9		$35.0			$ -		$35.0
Net loss on cash flow hedges		(1.8)			0.6		(1.2)		(3.3)			1.1		(2.2)
Reclassification adjustment into net income for net loss realized on cash flow hedges		0.5			(0.2)		0.3		0.4			- -		0.4
		--------------			--------------		---------------		--------------			-------------		---------------
Other comprehensive income		$48.6			$0.4		49.0		$32.1			$1.1		33.2
		========			========				========			========
Net income							28.3							21.8
							---------------							---------------
Total comprehensive income							$77.3							$55.0
							=========							=========

	Six Months Ended
	--------------------------------------------------------------------------------------------------------
				June 28, 2003							June 29, 2002
				-------------------------------------------							-------------------------------------
			Pre-tax Amount			Tax Benefit (Expense)		Net-of-tax Amount		Pre-tax Amount			Tax Benefit		Net-of-tax Amount
		--------------			--------------		---------------		--------------			-------------		---------------
Foreign currency translation adjustments		$55.9			$ -		$55.9		$26.5			$ -		$26.5
Net loss on cash flow hedges		(2.0)			0.7		(1.3)		(3.5)			0.8		(2.7)
Reclassification adjustment into net income for net loss realized on cash flow hedges		1.1			(0.4)		0.7		1.2			- -		1.2
Unrealized holding loss on available for sale securities		- -			- -		- -		(4.5)			1.7		(2.8)
Reclassification adjustment for net gains realized in net income on available for sale securities		- -			- -		- -		(27.6)			9.5		(18.1)
		--------------			--------------		---------------		--------------			-------------		---------------
Other comprehensive income		$55.0			$ 0.3		55.3		$ (7.9)			$12.0		4.1
		========			========				========			========
Net income							43.9							30.7
							---------------							---------------
Total comprehensive income							$99.2							$34.8
							=========							=========

2. Restructuring Charges and Asset Write-offs

Profitability Improvement Program and Transfer of PureVision Manufacturing

In July 2002, the company announced plans to improve operating profitability through a comprehensive program which included plant closures and consolidations; manufacturing efficiencies and yield enhancements; procurement process enhancements; the rationalization of certain contact lens and surgical product lines; distribution initiatives; and the development of a global information technology (IT) platform. This program included the elimination of approximately 465 jobs worldwide associated with those actions. Restructuring charges and asset write-offs of $22.8 before taxes associated with these initiatives were recorded in the third quarter of 2002. The company also recorded a pre-tax amount of $3.7 during the third quarter of 2002 for severance associated with the elimination of approximately 145 jobs due to the transfer of PureVision extended wear contact lens manufacturing from the U.S. to Waterford, Ireland following a ruling against the company in a U.S. patent lawsuit. (See Note 15 - - Other Matters for discussion of current litigation relating to the PureVision contact lens product line.)
The following table summarizes the activity for the Profitability Improvement Program and the transfer of PureVision manufacturing:

	Severance and Other Related Expenses	Asset Write- offs	Total
	------------------	------------------	------------------

Net charge during 2002	$23.1	$ 3.4	$26.5
Asset write-offs during 2002	-	(3.4)	(3.4)
Cash payments during 2002	(6.0)	-	(6.0)
	------------------	------------------	------------------
Remaining reserve at December 28, 2002	17.1	-	17.1
Cash payments during 2003	(4.1)	-	(4.1)
	------------------	------------------	------------------
Remaining reserve at June 28, 2003	$13.0	$ -	$13.0
	==========	==========	==========

As of June 28, 2003, 302 jobs had been eliminated under this restructuring program with $10.1 of related costs being charged against the liability. Actions in this restructuring program are expected to be completed by the end of 2003. In addition to job eliminations, the above actions resulted in $3.4 of asset write-offs for machinery and equipment. The disposition and/or decommissioning of these assets occurred in the third quarter of 2002.
These actions are expected to yield pre-tax cost savings of approximately $54.0 in 2004 and $90.0 annually beginning in 2005.

2001 Program

In December 2001, the company's Board of Directors approved a comprehensive restructuring plan designed to reduce ongoing operating costs by eliminating approximately 800 jobs on a global basis. As of December 29, 2001, management had identified actions and notified the appropriate personnel in what it considered Phase I of the restructuring program. As a result, a pre-tax amount of $8.3 was recorded during the fourth quarter of 2001 for Phase I of the restructuring and for asset write-offs. During the first quarter of 2002, a pre-tax amount of $23.5 was recorded for Phase II of the restructuring and additional asset write-offs. Based upon the company's third quarter review of the remaining actions, $1 pre-tax was reversed during the quarter ended September 28, 2002.
At the conclusion of the program, 752 jobs had been eliminated under this restructuring program with $26.5 of related costs and $4.3 of asset write-offs being charged against the liability. All actions related to this restructuring program were completed as of December 28, 2002. This program is expected to yield pre-tax cost savings of approximately $33.0 annually beginning in the fiscal year ending December 27, 2003.

3. Business Segment Information

The company is organized on a regionally based management structure for commercial operations. The research and development and product supply functions of the company are managed on a global basis. The company's segments are comprised of the Americas region, the Europe, Middle East and Africa region (Europe), the Asia region, the Research, Development and Engineering organization and the Global Supply Chain organization.
     The company adopted the management structure described above effective as of January 1, 2001. During the first quarter of 2002, the company reevaluated the measures and management data used in decision making to ensure they continued to be properly aligned with the company's strategic objectives. As a result of the review, goodwill arising from vertically integrated acquisitions, product technology, other non-customer related intangibles and the associated amortization expense were reclassified to the Global Supply Chain segment to more accurately reflect their contribution to the company's return on net operating assets.
     Operating income is the primary measure of segment income. No items below operating income are allocated to segments. Restructuring charges and charges related to certain significant events, although related to specific segments, are also excluded from management basis results. The accounting policies used to generate segment results are the same as the company's overall accounting policies. Inter-segment sales were $119.9 and $221.7 for the quarter and six months ended June 28, 2003, respectively, and $107.0 and $218.3 for the same periods in 2002. All inter-segment sales have been eliminated upon consolidation and have been excluded from the amounts in the table below.
     The following table presents net sales and operating income by business segment and presents total company operating income for the quarters and six months ended June 28, 2003 and June 29, 2002. The restructuring reserve and asset write-offs are described in Note 2 - Restructuring Charges and Asset Write-offs.

	Second Quarter Ended
	------------------------------------------------------------------------------------
	June 28, 2003		June 29, 2002
	----------------------------------------		--------------------------------------
	Net Sales	Operating Income	Net Sales	Operating Income
	--------------	------------------	--------------	------------------

Americas	$227.3	$67.7	$209.4	$49.8
Europe	185.9	55.8	156.0	40.1
Asia	99.3	27.8	93.0	29.0
Research, Development & Engineering	- -	(50.2)	- -	(35.4)
Global Supply Chain	-	(28.9)	-	(19.7)
	--------------	------------------	--------------	------------------
	512.5	72.2	458.4	63.8
Corporate administration	-	(16.0)	-	(13.4)
	--------------	------------------	--------------	------------------
	$512.5	$56.2	$458.4	$50.4
	========	==========	========	==========

	Six Months Ended
	------------------------------------------------------------------------------------
	June 28, 2003		June 29, 2002
	----------------------------------------		--------------------------------------
	Net Sales	Operating Income	Net Sales	Operating Income
	--------------	------------------	--------------	------------------

Americas	$426.8	$121.4	$408.7	$102.2
Europe	355.7	102.5	300.8	75.3
Asia	178.0	41.4	163.1	43.1
Research, Development & Engineering	- -	(85.1)	- -	(69.6)
Global Supply Chain	-	(54.4)	-	(42.2)
	--------------	------------------	--------------	------------------
	960.5	125.8	872.6	108.8
Corporate administration	-	(29.8)	-	(30.6)
Restructuring reserve and asset write-offs	- -	- -	- -	(23.5)
	--------------	------------------	--------------	------------------
	$960.5	$ 96.0	$872.6	$ 54.7
	========	==========	========	==========

Net sales in markets outside the U.S. totaled $306.8 and $573.4 in the second quarter and six months ended June 28, 2003, respectively, compared with $270.2 and $503.8 for the same 2002 periods. Net U.S. sales totaled $205.7 and $387.1 in the second quarter and six months ended June 28, 2003, respectively, compared with $188.2 and $368.8 for the same prior-year periods. The company's operations in Japan generated over 10% of product net sales in the second quarter of 2002 totaling $46.4. No other country, or single customer, generated over 10% of total product sales during the second quarter of 2003 or during the six months ended June 28, 2003 and June 29, 2002.

4. Inventories, Net

	June 28, 2003	December 28, 2002
	-----------------------	---------------------
Raw materials and supplies	$ 49.7	$ 50.0
Work in process	20.6	21.3
Finished products	146.1	137.2
	-----------------------	---------------------
	$216.4	$208.5
	=============	============

5. Property, Plant and Equipment, Net

The following table reflects the major classes of property, plant and equipment:

	June 28, 2003	December 28, 2002
	-----------------------	---------------------
Land	$ 17.6	$ 16.4
Buildings	321.3	316.8
Machinery and equipment	919.1	879.4
Leasehold improvements¹	30.6	27.6
	-----------------------	---------------------
	1,288.6	1,240.2

Less accumulated depreciation	(754.7)	(702.7)
	-----------------------	---------------------
	$ 533.9	$ 537.5
	=============	============

^{1 Upon initial application of SFAS No. 143, Accounting for Asset Retirement Obligations, as described in Note 14 - New Accounting Guidance, the company recorded an initial liability and an increase to leasehold improvements of $1.8. Cumulative accretion and accumulated depreciation were measured from the commencement date of the leases to the date of adoption. A cumulative charge of initially applying this statement of $0.9, net of tax, was reported in the first quarter ended March 29, 2003 as a change in accounting principle in the Consolidated Statements of Income.} 6. Accounting for Goodwill and Intangibles

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142, Goodwill and Intangible Assets. SFAS No. 142 provides guidance on how to account for goodwill and intangible assets after an acquisition is complete. The most substantive change required by this statement is that goodwill will no longer be amortized; instead, it will be tested for impairment at least annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. The statement applies to existing goodwill and intangible assets, effective for fiscal years beginning after December 15, 2001. The company adopted SFAS No. 142 in the fiscal year beginning December 30, 2001.
     Upon adoption of SFAS No. 142, the company analyzed existing intangible assets that had been recognized separately from goodwill and reclassified intangibles that did not meet the separate recognition criteria as prescribed in SFAS No. 141, Business Combinations, to goodwill. As such, $146.0 of intangibles, including assembled workforce and customer relationships, were reclassified to goodwill and $10.3 of deferred tax liabilities previously associated with those intangible assets were eliminated with a corresponding reduction in goodwill. Additionally, the company reassessed the useful lives of the remaining intangibles and concluded that there were no indefinite-lived intangible assets. As described in Note 7 - Acquired Intangible Assets, the company reduced the useful lives of certain acquired trade names and has applied the change in accounting estimate prospectively. The company identified and established reporting units to be the company's business seg ments and determined that goodwill was not impaired based on a comparison of the carrying value of goodwill attributable to each of the company's reporting units to their respective fair values. Fair value was based on the average of the indications of value derived from the income and market approaches, weighted equally. The income approach measured the fair value by discounting expected cash flows by reporting unit to their present value at a rate of return that is commensurate with their inherent risk. The market approach measured the fair value by analyzing and comparing the operating performance and financial condition of public companies within the ophthalmic pharmaceutical industry and companies subject to similar market conditions adjusted for differences in profitability, financial position, products and markets.
     The company completed its annual impairment test on each of its reporting units during the fourth quarter of 2002. The carrying value of goodwill for each of the company's reporting units as of October 26, 2002 was less than their respective fair values, therefore, goodwill was not considered impaired. Fair value was determined using the same methodology employed during the initial application of SFAS No. 142.
     During September 2002, the company acquired a third-party distributor located in Spain. The $8.3 purchase price was allocated to identifiable assets, including tangible and intangible assets, and liabilities based upon their respective fair values. The excess of the purchase price over the value of the identified assets and liabilities has been recorded as goodwill and is reflected in the table below.
     During February 2003, the company acquired an additional 30% and 20% interest in its commercial and manufacturing joint ventures, respectively, located in Korea. This increased the company's interest in the commercial and manufacturing joint ventures to 80% and 100%, respectively. The purchase price of $6.2 was allocated to identifiable assets and liabilities based upon their respective fair values. The excess of the purchase price over the value of the identified assets and liabilities has been recorded as goodwill and is reflected in the table below.
     The changes in the carrying amount of goodwill for the year ended December 28, 2002 and the six months ended June 28, 2003, are as follows:

	Americas	Europe	Asia	Global Supply	RD&E	Total
	--------------	----------	--------	----------	---------	-----------
Balance as of December 29, 2001	$176.4	$231.6	$ 9.4	$ 37.1	$ -	$454.5
Intangibles reclassified to goodwill	110.1	35.5	0.2	0.2	-	146.0
Elimination of deferred tax liabilities	(0.3)	(10.0)	-	-	-	(10.3)
Reclassification to Global Supply as described in Note 3 - Business Segment Information	(283.0)	(256.0)	(2.2)	541.2	- -	- -
Acquisition of distributorship	-	6.8	-	-	-	6.8
Other (primarily currency effect)	(1.9)	12.9	0.5	27.5	-	39.0
	--------------	----------	--------	----------	---------	-----------
Balance as of December 28, 2002	1.3	20.8	7.9	606.0	-	636.0
Acquisition of additional interest in joint ventures	- -	- -	3.5	- -	- -	3.5
Other (primarily currency effect)	0.3	2.9	0.1	41.8	-	45.1
	--------------	----------	--------	----------	---------	-----------
Balance as of June 28, 2003	$ 1.6	$ 23.7	$ 11.5	$647.8	$ -	$684.6
	========	======	=====	======	=====	======

7. Acquired Intangible Assets

In connection with the company's adoption of SFAS No. 142, Goodwill and Intangible Assets, the company also reassessed the remaining useful lives of its intangible assets and determined that certain acquired trade names required a reduction in their remaining useful lives. A change in the company's strategies and business objectives indicated that a reduction in the remaining useful lives of certain trade names was appropriate. Remaining useful lives of trade names associated with the Chiron, Storz and Groupe Chauvin acquisitions were reduced from 16, 36 and 29 years to 7, 10 and 15 years, respectively. The remaining useful lives were revised by the company based upon current strategies and objectives, an assessment of product characteristics, the pace of technological advancement and trends in the market place. This change in accounting estimate was applied prospectively as of December 30, 2001 and accounted for $0.8 and $1.5 of amortization expense, net of tax, during the quarter and six months ended June 28, 2003 and June 29, 2002, respectively.
As described in Note 6 - Accounting for Goodwill and Intangibles, the company acquired a third-party distributor during September 2002. Intangible assets, consisting of customer contracts, were assigned a fair value of $0.6 and are included in the table below.
The components of intangible assets as of June 28, 2003 and December 28, 2002 are as follows:

	June 28, 2003		December 28, 2002
	---------------------------------------		---------------------------------------
	Gross Carrying Amount	Accumulated Amortization	Gross Carrying Amount	Accumulated Amortization
	--------------------	------------------	------------------	-------------------
Trade names	$ 93.6	$ 23.1	$ 89.9	$18.6
Technology and patents	84.3	59.1	83.7	55.0
Developed technology	76.9	10.9	70.5	8.2
License agreements	34.5	11.2	31.9	8.7
Intellectual property	25.9	3.8	25.9	2.7
Physician information & customer database	21.4	2.0	19.1	1.5
Customer contracts	0.7	0.5	0.6	0.1
	--------------------	------------------	------------------	-------------------
	$337.3	$110.6	$321.6	$94.8
	===========	==========	==========	===========

Amortization expense of intangibles was $6.6 and $13.1 for the quarter and six months ended June 28, 2003, respectively, and $6.3 and $12.3 for the same periods in 2002. Estimated amortization expense of intangibles presently owned by the company for each of the next five succeeding fiscal years is as follows:

Fiscal year ended

Amount

December 27, 2003

$26.2

December 25, 2004

26.2

December 31, 2005

25.8

December 30, 2006

23.2

December 29, 2007

20.5

8. Minority Interest

The minority interest in subsidiaries at December 29, 2001, primarily represented an outside partnership interest of 22% in Wilmington Partners L.P. (the Partnership). The remaining partnership interests were held by four wholly owned subsidiaries of the company. The Partnership was a separate legal entity from the company, but for financial reporting purposes, assets, liabilities and results of operations from the Partnership were included in the company's consolidated financial results. The outside investor's limited partnership interest was recorded as minority interest totaling $200.0 in the company's consolidated financial statements at December 29, 2001. During March 2002, the outside partner exercised its put right for all of its partnership interest, and the company recorded a one-time early liquidation premium of $7.0, net of taxes, in connection with the early termination of the outside partner's interest. The termination of the minority interest obligation and payment of the as sociated early liquidation premium occurred in May 2002. The payment was funded through existing cash reserves and borrowings of $75.0 against the company's existing syndicated revolving credit agreement, which was repaid by the company in July 2002. The minority interest liability at June 28, 2003 and at December 28, 2002 represents the company's outside partnership interests in non-U.S. commercial and manufacturing joint ventures, which are fully consolidated in the company's results.

9. Related Party Transaction

In April 2003 the company advanced $9.3 million to Control Delivery Systems (CDS), a strategic partner in the development of implant technology for treating retinal and other back-of-the-eye diseases; in which it has an equity interest. Such advances have been recoverable through the company's ability to apply such amounts to future obligations due under an arrangement with CDS to provide research and development activities as to certain technologies; the achievement of certain milestones such as the completion of clinical testing, NDA filings, and FDA approvals; royalty payments; or through cash repayment by CDS. In May 2003, the company and CDS announced a delay of up to three years in the regulatory filing for the DME indication for its proposed Retisert implant. The primary reason for the delay was the FDA's indication that it will require additional safety data before considering an application for approval for this indication. As a result, the company has reevaluated its role in the on-go ing development and approval process and intends to conduct and supervise directly the day-to-day development and clinical activities, after a brief transition period. The company now primarily bases the recoverability of the funds advanced on the future milestones and royalties or repayment by CDS, as they are no longer performing research and development activity on our behalf. The achievement of the milestone payments and the eventual commercialization of the product are not completely controllable by the company and are subject to the ordinary risks associated with the development and approval of any FDA controlled product. Therefore the company has recorded a $4.1 million reserve to reflect this uncertainty.

10. Commitments and Contingencies

Lines of Credit The company guarantees indebtedness of its subsidiaries under lines of credit used for working capital. Availability under such lines of credit totaled approximately $57.1 and $75.0 with total outstanding balances of $0 and $1.4 at June 28, 2003 and December 28, 2002, respectively.

Letters of Credit The company had outstanding standby letters of credit totaling approximately $29.7 and $24.7 at June 28, 2003 and December 28, 2002, respectively, to ensure payment of possible workers' compensation and other insurance claims, product liability claims and payment of an Industrial Development Revenue Bond. At June 28, 2003 and December 28, 2002, the company had recorded liabilities of approximately $14.8 and $15.2, respectively, as it relates to insurance claims. As of June 28, 2003 and December 28, 2002, the company had a balance of $8.5 in Industrial Development Revenue Bonds due in 2015.

Guarantees The company guarantees a mortgage held by a strategic research and development partner. The mortgage is secured by the property with an appraised value of $5.3. The company's guarantee has a five-year term expiring July 2007. At June 28, 2003 and December 28, 2002, the guarantee totaled approximately $4.0. This guarantee would require payment from the company in the event of default by the research partner and failure of the security to fully satisfy the then outstanding debt.
The company also guarantees a lease obligation of a customer in connection with a joint marketing alliance. The lease obligation has a term of ten years expiring November 2011. The amount guaranteed at June 28, 2003 and December 28, 2002 was approximately $10.0. In the event of default, the guarantee would require payment from the company. Sublease rights as specified under the agreement would reduce the company's exposure.
The company believes the likelihood is remote that material payments will be required under these guarantees.

Tax Indemnifications In connection with divestitures, the company has agreed to indemnify certain tax obligations arising out of tax audits or administrative or court proceedings relating to tax returns for any periods ending on or prior to the closing date of the divestiture. The company believes that any claim would not have a material impact on the company's financial position.

Environmental Indemnifications The company has certain obligations for environmental remediation and Superfund matters related to current and former company sites. The company has an ongoing program in place designed to identify and manage potential environmental liabilities through such actions as having a rotating schedule of regular assessments performed to identify and manage potential issues at company sites before they occur, audits of U.S. hazardous waste disposal site vendors to ensure contractor compliance with applicable laws, a domestic waste disposal contract which contains indemnification of the company from the vendor for disposal of all waste once it leaves company property, a regular schedule of training and prevention programs designed to keep employees in company plants aware of their responsibilities, environmental due diligence for business acquisitions and real estate transactions and ongoing tracking of significant laws and regulations affecting the company in any of the count ries where it operates. In those instances where the company may identify an environmental liability, the company manages directly all remedial investigations, negotiation of approved remediation plans with applicable governmental authorities and implementation of all approved remediation activities.
At June 28, 2003 and December 28, 2002, estimated future remediation costs of approximately $0.4 were accrued by the company, excluding estimates for legal expenses. It is reasonable to expect that the company's recorded estimates of its liabilities may change and there is no assurance that additional costs greater than the amounts accrued will not be incurred, or that changes in environmental laws or their interpretation will not require additional amounts to be spent. The company does not believe that its financial position, results of operations, and cash flows are likely to be materially affected by environmental liabilities.

Other Commitments and Contingencies The company is involved in lawsuits, claims, investigations and proceedings, including patent, trademark, commercial and environmental matters, which are being handled and defended in the ordinary course of business as described in Note 15 - Other Matters.

Product Warranties The company estimates future costs associated with expected product failure rates, material usage and service costs in the development of its warranty obligations. Warranty reserves are established based on historical experience of warranty claims and generally will be estimated as a percentage of sales over the warranty period or as a fixed dollar amount per unit sold. In the event that the actual results of these items differ from the estimates, an adjustment to the warranty obligation would be recorded. Changes in the company's product warranty liability for the year ended December 28, 2002 and the six months ended June 28, 2003 are as follows:

Balance at December 29, 2001	$ 8.1
Accruals for warranties issued	5.2
Changes in accruals related to pre-existing warranties	(1.4)
Settlements made	(6.0)
	------------------
Balance at December 28, 2002	5.9
Accruals for warranties issued	4.9
Changes in accruals related to pre-existing warranties	(0.1)
Settlements made	(3.0)
	------------------
Balance at June 28, 2003	$7.7
	==========

Deferred Service Revenue Service revenues are derived from service contracts on surgical equipment sold to customers and is recognized over the term of the contracts while costs are recognized as incurred. Changes in the company's deferred service revenue for the year ended December 28, 2002 and the six months ended June 28, 2003 are as follows:

Balance at December 29, 2001	$2.1
Accruals for service contracts	9.1
Changes in accruals related to pre-existing service contracts	(0.1)
Revenue recognized	(6.2)
	------------------
Balance at December 28, 2002	4.9
Accruals for service contracts	6.1
Changes in accruals related to pre-existing service contracts	(0.1)
Revenue recognized	(6.3)
	------------------
Balance at June 28, 2003	$4.6
	==========

11. Accounting for Derivatives and Hedging Activities

In accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, the company records all derivative instruments on the balance sheet at their respective fair values. Changes in the fair value of derivatives are recorded each period in current income or other comprehensive income, depending on their designation as a hedge of a particular exposure.
     For effective fair value hedge transactions in which the company is hedging changes in the fair value of assets, liabilities or firm commitments, changes in the fair value of the derivative instrument will generally be offset by changes in the hedged item's fair value. For fair value hedge transactions where the short-cut method is not permitted for assessing effectiveness, gains and losses arising from any ineffectiveness are recognized in the period in which they occur. The company had no outstanding fair value hedges at June 28, 2003. Interest rate swaps of $379.6, classified as fair value hedges, were outstanding at June 29, 2002.
     For cash flow hedge transactions in which the company is hedging the variability of cash flows related to a variable rate asset, liability or forecasted transaction, changes in the fair value of the derivative instrument will be reported in other comprehensive income. The gains and losses on the derivative instrument that are reported in other comprehensive income will be recognized in income in the periods in which income is impacted by the variability of the cash flows of the hedged item. Reclassifications from other comprehensive income into income were a $0.5 and $0.4 pre-tax loss for the quarters ended June 28, 2003 and June 29, 2002, respectively. Year-to-date, net pre-tax losses of $1.1 and $1.2 for the periods ended June 28, 2003 and June 29, 2002, respectively, were reclassified from other comprehensive income into income. As of June 28, 2003, an estimated $3.2 pre-tax net loss was expected to be reclassified into income over the next twelve months. During the first quarter of 2003, the company settled a $50.0 cash flow hedge which was designated to hedge the benchmark interest rate associated with ten semiannual interest payments on future forecasted borrowings. The amount associated with the settlement was recorded to other comprehensive income and will be amortized to interest expense in the period in which interest expense related to the hedged debt is recognized. Simultaneous with the hedge settlement, the company entered into a new $50.0 cash flow hedge, which was designated to hedge the benchmark interest rate associated with ten semiannual interest payments on future forecasted borrowings, which was outstanding at June 28, 2003. The $50.0 cash flow hedge was settled in July 2003 in conjunction with the company's offering of a $50.0 public offering of five-year fixed rate senior notes. The company simultaneously executed an interest rate swap agreement converting the notes to a floating rate. At June 29, 2002, classified as cash flow hedges were a $65.0 interest rate swap and a $200.0 interest rate lock which was designated to hedge the benchmark interest rate associated with ten semiannual interest payments on future forecasted borrowings. In addition, the company had $402.0 and $413.4 of outstanding foreign exchange forward contracts classified as cash flow hedges as of June 28, 2003 and June 29, 2002, respectively.
     For instruments designated as either fair value or cash flow hedges, a reduction of net interest expense of $0.2 was recognized for hedge ineffectiveness for the quarter ended March 29, 2003. Hedge ineffectiveness had no impact on income for the quarter ended June 28, 2003. For the quarter and six months ended June 29, 2002, a reduction to net interest expense of $0.2 was recognized for hedge ineffectiveness.
     Foreign exchange forward contracts have varying maturities up to, but not generally exceeding, one year with cash settlements made at maturity based upon rates agreed to at contract inception and current market rates. Designated hedging instruments for hedges of foreign currency exposures of net investments in non-U.S. subsidiaries, resulted in a net after-tax loss of $5.9 and $0.6 which were included in the cumulative translation adjustment, for the quarters ended June 28, 2003 and June 29, 2002, respectively. Year-to-date, a net after-tax loss of $7.7 and $0.4 were included in the cumulative translation adjustment for the periods ended June 28, 2003 and June 29, 2002, respectively. The company had designated foreign denominated intercompany loans and foreign currency contracts with notional amounts of $171.7 and $11.5, respectively, as hedges of net investments in non-U.S. subsidiaries as of June 28, 2003 and June 29, 2002, respectively.

12. Forward Equity Contracts

During 2001, the company's Board of Directors authorized the repurchase of up to 2,000,000 shares of the company's Common stock. The company executed an agreement with a financial institution for the future purchase of such shares through one or more forward purchase transactions. Such purchases, which may have had settlement dates as long as two years, could have been settled, at the company's election, on a physical share, net cash or net share basis. As of December 28, 2002, the company had entered into forward purchases covering 750,000 shares. During March 2003, at the expiration of the forward purchase agreement, the company paid $30.7 for the 750,000 shares, at an average price of $40.89 to settle its obligation. This repurchase of Common stock was recorded as treasury stock in the company's consolidated financial statements during the quarter ended March 29, 2003.

13. Stock Compensation Plans

The company issues stock options under several stock-based compensation plans, which typically vest ratably over three years and expire ten years from the date of grant. Vesting is contingent upon a continued employment relationship with the company. The company sponsors several stock-based compensation plans, all of which are accounted for under the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees, as amended. Accordingly, given the fixed nature of the equity instruments granted under such plans, no compensation cost has been recognized. The company's net income and earnings per share would have been reduced to the pro forma amounts shown in the periods below if compensation cost had been determined based on the fair value at the grant dates using the Black-Scholes option-pricing model in accordance with SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of SFAS No. 123 and SFAS No. 123, Accounting for Stock-Based Compen sation:

	Second Quarter Ended		Six Months Ended
	-----------------------------------		------------------------------------
	June 28, 2003	June 29, 2002	June 28, 2003	June 29, 2002
	---------------	---------------	---------------	---------------
Net income, as reported	$28.3	$21.8	$43.9	$30.7
Less: compensation cost determined under the fair value method, net of tax	2.9	3.8	5.5	7.4
	---------------	---------------	---------------	---------------
Pro forma net income	$25.4	$18.0	$38.4	$23.3
	---------------	---------------	---------------	---------------
Basic earnings per share:
As reported	$0.53	$0.41	$0.82	$0.57
Pro forma	0.48	0.34	0.72	0.43
	---------------	---------------	---------------	---------------
Diluted earnings per share:
As reported	$0.53	$0.40	$0.82	$0.57
Pro forma	0.48	0.33	0.72	0.43
	---------------	---------------	---------------	---------------

Stock Awards

The company issues restricted stock awards to officers and other key personnel. These awards have vesting periods up to five years with vesting criteria, which in 2003 and 2002 included the attainment of certain average sales and cumulative earnings per share targets, and continued employment until applicable vesting dates. Compensation expense is recorded based on applicable vesting criteria and, for those awards with performance goals, as such goals are met. During the six months ended June 28, 2003, 7,500 shares related to such awards were granted at weighted average market values of $30.77. During the same period in 2002, 331,462 shares were granted at weighted average market values of $38.54. As of June 28, 2003, 345,212 awards remain outstanding. The compensation expense relating to stock awards for the quarter and six months ended June 28, 2003 was $1.5 and $3.0, respectively, and was $1.4 and $3.0, for the same 2002 periods, respectively.

14. New Accounting Guidance

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This statement requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. It applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and/or the normal operation of a long-lived asset, except for certain obligations of lessees. This statement is effective for financial statements issued for fiscal years beginning after June 15, 2002. The company has determined that legal obligations exist for certain leases of real property that contain clauses to reinstate the premises, requiring the removal of altera tions made by the company during the lease term. The company adopted SFAS No. 143 in the first quarter of 2003 and recorded a charge of $0.9 in its Consolidated Statements of Income as a cumulative change in accounting principle, net of tax.
     In May 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections. SFAS No. 145 eliminates the requirement that gains and losses from the extinguishment of debt be aggregated and, if material, classified as an extraordinary item, net of the related income tax effect. However, an entity is not prohibited from classifying such gains and losses as extraordinary items, so long as they meet the criteria outlined in Accounting Principles Board Opinion No. 30, Reporting the Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. SFAS No. 145 also eliminates the inconsistency between the accounting for sale-leaseback transactions and certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This statement is effective for financial sta tements issued for fiscal years beginning after May 15, 2002. The company adopted SFAS No. 145 in the fiscal year beginning December 29, 2002 with no material effect on its financial position.
     In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan. Examples of costs covered by the standard include lease termination costs and certain employee severance costs that are associated with a restructuring, discontinued operation, plant closing, or other exit or disposal activity. Previous accounting guidance was provided by EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 replaces EITF Issue No. 94-3. This statement is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The company adopted SFAS No. 146, as applicable, in the fiscal year beginning December 29, 2002 with no effect on its financial position.
     In November 2002, the FASB published Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The Interpretation expands on the accounting guidance of Statements No. 5, Accounting for Contingencies, No. 57, Related Party Disclosures, and No. 107, Disclosures about Fair Value of Financial Instruments, and incorporates without change the provisions of FASB Interpretation No. 34, Capitalization of Interest Costs, which is being superseded. The Interpretation elaborates on the existing disclosure requirements for most guarantees, including loan guarantees such as standby letters of credit. It also clarifies that at the time a company issues a guarantee, the company must recognize an initial liability for the fair value, or market value, of the obligations it assumes under that guarantee and must disclose that information in its interim and annual financial sta tements. The initial recognition and initial measurement provisions apply on a prospective basis to guarantees issued or modified after December 31, 2002, regardless of the guarantor's fiscal year-end. The disclosure requirements in the Interpretation were effective for financial statements of interim or annual periods ending after December 15, 2002. The company adopted the disclosure requirements of Interpretation No. 45 in the fiscal year beginning December 30, 2001. The company adopted the recognition and measurement provisions of Interpretation No. 45, as applicable, in the fiscal year beginning December 29, 2002 with no effect on its financial position.
     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation, Transition and Disclosure, an amendment of SFAS No. 123. SFAS No. 148 provides guidance on alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation and amends the disclosure requirements of SFAS No. 123, Accounting for Stock-Based Compensation, to require more prominent and more frequent disclosures in financial statements about the effects of stock-based compensation. In addition, this statement amends Opinion No. 28, Interim Financial Reporting, to require disclosure about those effects in interim financial information. The transition guidance and annual disclosure provisions of this statement were effective for fiscal years ending after December 15, 2002. The interim disclosure provisions were effective for financial reports containing financial statements for interim periods beg inning after December 15, 2002. The company sponsors several stock-based compensation plans, as described in Note 13 - Stock Compensation Plans, all of which are accounted for under the provisions of APB Opinion No. 25, Accounting for Stock Issued to Employees.
     In January 2003, the FASB issued Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, which requires all variable interest entities to be consolidated by the primary beneficiary. The primary beneficiary is the entity that holds the majority of the beneficial interests in the variable interest entity. In addition, the Interpretation expands disclosure requirements for both variable interest entities that are consolidated as well as variable interest entities from which the entity is the holder of a significant amount of the beneficial interests, but not the majority. The disclosure requirements of this Interpretation were effective for all financial statements issued after January 31, 2003. The consolidation requirements of this Interpretation were effective for all periods beginning after June 15, 2003. The company has determined that it has engaged in research, development and commercialization arrangements with two variabl e interest entities as described in the Off-Balance Sheet Arrangements Section of Management's Discussion and Analysis of Financial Condition and Results of Operations. However, the company is not the primary beneficiary in either arrangement and has determined that the consolidation requirement of this Interpretation is not applicable.
     In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003, and hedging relationships designated after June 30, 2003, except for those provisions of SFAS No. 149 which relate to SFAS No. 133 Implementation Issues that have been effective for fiscal quarters that began prior to June 15, 2003. For these issues, the provisions that are currently in effect should continue to be applied in accordance with their respective effective dates. In addition, certain provisions of SFAS No. 149, whi ch relate to forward purchases or sales of when-issued securities or other securities that do not yet exist, should be applied to both existing contracts and new contracts entered into after June 30, 2003. The company will adopt SFAS No. 149 prospectively and it is not expected to have a material impact, if any, on its financial position.
     In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity." SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity and requires a financial instrument that is within its scope to be classified as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity under previous guidance. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise effective at the beginning of the first interim period beginning after June 15, 2003. It is to be implemented by reporting the cumulative effect of a change in an accounting principle for financial instruments created before the issuance date of this statement and still existing at the beginning of the interim period of adoption. The company does not expect the provisions of this statement to have a significant impact on its financial position.
     In May 2003, the Emerging Issues Task Force (EITF) issued Issue No. 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. EITF Issue No. 00-21 provides guidance on how to determine when an arrangement that involves multiple revenue-generating activities or deliverables should be divided into separate units of accounting for revenue recognition purposes, and if this division is required, how the arrangement consideration should be allocated among the separate units of accounting. The guidance in this Issue is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The company does not expect the provisions of this Issue to have a significant impact on its results of operations.

15. Other Matters

On April 13, 2001 a shareholder class action lawsuit was filed in the U.S. District Court for the Western District of New York. Four other similar lawsuits were filed in both the Western and Southern Districts of New York, with the company's Chief Financial Officer, Stephen C. McCluski, and former Chairman and Chief Executive Officer, William M. Carpenter, and former President, Carl E. Sassano, named as defendants. The complaints allege that the value of the company's stock was inflated artificially by alleged false and misleading statements about expected financial results. The plaintiffs seek to represent a class of shareholders who purchased company common stock between January 27, 2000 and August 24, 2000. On October 15, 2001, all lawsuits were consolidated in the U.S. District Court for the Western District of New York. On March 31, 2003, the District Court, on the company's motion, dismissed certain claims asserted against the company in the consolidated action. In addition to dismi ssing certain claims against the company, all direct claims against Mr. McCluski were dismissed and those direct claims paralleling the claims dismissed against the company were also dismissed as to Messrs. Carpenter and Sassano. The company intends to continue defending itself vigorously against these claims. The company cannot at this time estimate with any certainty the impact of the remaining claims on its financial position.
     The company and its subsidiaries are currently involved in several patent proceedings relating to silicon hydrogel contact lens technology, including its PureVision contact lens product line. Five of these proceedings were commenced by CIBA Vision Corporation (CIBA) and related entities, in each case alleging that the PureVision lens product infringes intellectual property held by them. The first of these lawsuits was filed on March 8, 1999 in the U.S. District Court for the Northern District of Georgia, followed by other lawsuits commenced in the Federal Court of Melbourne, Australia (filed on February 29, 2000), the U.S. District Court for the District of Delaware (filed on May 3, 2001), the Administrative Court of Duesseldorf, Germany (filed on September 7, 2001) and the High Court in Dublin, Ireland (filed on March 11, 2003). In the Georgia matter, discovery has closed and following the Court's July 8, 2003 order denying the company's motions for summary judgme nt, the company now anticipates that a trial date will be set for late 2003 or early 2004. In the Australia matter, the Court has set a trial date of October 6, 2003. In the Delaware matter, the trial court ruled on June 26, 2002, that the company's PureVision product infringes a patent which is owned by Wesley Jessen Corporation, a subsidiary of CIBA, and which expires April 27, 2005. The Court ordered that the company discontinue the manufacture and sale of its PureVision lens product in the United States. This decision was affirmed by the United States Court of Appeals for the Federal Circuit on February 12, 2003. The financial impact of the Delaware decision has previously been reported by the company in its quarterly reports on Form 10-Q for the quarters ended June 29, 2002 and September 28, 2002, its 2002 Annual Report and the Annual Report on Form 10-K for the annual period ended December 28, 2002. In the German matter, the court issued its ruling in March of 2003 that the company's P ureVision product infringes the Novartis patent at issue. CIBA served this non-final judgment on the company on April 29, 2003, enjoining the company from further sales of PureVision contact lenses in Germany. The company is appealing the German decision. In addition, the company continues to challenge the validity of the Novartis patent in the European Patent Office. If the European Patent Office finally determines that the patent is invalid, it will not be enforceable in Europe and the decision by the German court will be vacated. A preliminary opinion was rendered by the European Patent Office in April 2003 citing grounds for determining that, based on the record then before it, the patent would be invalid. A final decision is expected after a hearing scheduled for September 17, 2003. Other than the financial impact of the Delaware matter as previously reported, the company cannot at this time estimate with any certainty the impact on its financial position of the lawsuits filed by CIBA. The co mpany intends to defend itself vigorously against all claims asserted by CIBA.
     The company has filed two related proceedings against CIBA pertaining to CIBA's Night & Day product line. Specifically, on November 6, 2001, the company filed a patent infringement lawsuit against CIBA in the U.S. District Court for the Western District of New York relative to a patent the company holds for hydrogel materials. CIBA has filed two motions for summary judgment in this action. The Court has heard argument on one motion and has reserved decision. The second motion has been briefed by the parties, but a motion hearing date has not been established. The company commenced an additional patent infringement lawsuit against CIBA on July 22, 2003 in the U.S. District Court for the Western District of New York relative to an additional patent the company holds for hydrogel materials. The company intends to pursue vigorously its claims against CIBA in both these actions. The company cannot at this time estimate with any certainty the impact on its financial positio n of the lawsuits filed by the company against CIBA.
     The company is engaged in various lawsuits, claims, investigations and proceedings including patent, trademark, commercial and environmental matters that are in the ordinary course of business. The company cannot at this time estimate with any certainty the impact of such matters on its financial position.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Dollar Amounts in Millions - Except Per Share Data

This financial review, which should be read in conjunction with the accompanying financial statements and the company's 2002 Annual Report on Form 10-K, contains management's discussion and analysis of the company's results of operations and liquidity, and an updated 2003 outlook. References within this financial review to earnings per share refer to diluted earnings per share.
The company reported income from continuing operations before cumulative effect of change in accounting principle of $28 or $0.53 per share and $45 or $0.84 per share for the quarter and six months ended June 28, 2003, respectively, compared to $22 or $0.40 per share and $31 or $0.57 per share for the same periods in 2002. Net income for the six months ended June 28, 2003 includes a charge of $1 or $0.02 per share as a cumulative change in accounting principle related to the adoption of SFAS No. 143 on December 29, 2002 as described in Note 5 - Property, Plant and Equipment, Net. A reconciliation of net income and earnings per share to income from continuing operations and earnings per share from continuing operations is presented below:

	Second Quarter Ended
	-------------------------------------------------------
	June 28, 2003		June 29, 2002
	-------------------------		------------------------
	Amount	Per Share	Amount	Per Share
	-----------	-------------	----------	-------------
Net income	$28.3	$0.53	$21.8	$0.40
Income from continuing operations before cumulative effect of change in accounting principle	$28.3	$0.53	$21.8	$0.40
	-----------	-------------	----------	-------------
Average Shares Outstanding - Diluted (000's)		53,431		54,035
		=======		=======

	Six Months Ended
	-------------------------------------------------------
	June 28, 2003		June 29, 2002
	-------------------------		------------------------
	Amount	Per Share	Amount	Per Share
	-----------	-------------	----------	-------------
Net income	$43.9	$0.82	$30.7	$0.57
Cumulative effective of change in accounting principle, net of taxes, due to adoption of SFAS No. 143	0.9	0.02	- -	- -
	-----------	-------------	----------	-------------

Income from continuing operations before cumulative effect of change in accounting principle	$44.8	$0.84	$30.7	$0.57
	-----------	-------------	----------	-------------
Average Shares Outstanding - Diluted (000's)		53,616		53,957
		=======		=======

During the second quarter and six months ended June 28, 2003 and the second quarter ended June 29, 2002, there were no significant items impacting company results. The following paragraph summarizes significant items impacting company results for the six months ended June 29, 2002.
The company recorded restructuring charges and asset write-offs of $24 before taxes, during the first quarter of 2002, related to the second phase of the 2001 restructuring program designed to reduce ongoing operating costs. Pre-tax gains on the sale of the company's remaining equity interest in a previously divested entity of $28 were realized in the first quarter of 2002. Lastly, an outside partner exercised its put right for all of its partnership interest and the company recorded a one-time early liquidation premium, which was recorded as an after-tax minority interest charge of $7. The significant items already reflected in after-tax net income for the six months ended June 29, 2002 aggregated to contribute to a net after-tax decline of $4 or $.08 per share.

Continuing Operations

Discussion in the Continuing Operations Section of Management's Discussion and Analysis of Financial Condition and Results of Operations includes a constant-currency measure employed by the company. The company monitors its constant-currency performance for non-U.S. operations and the company as a whole. Constant-currency results are calculated by translating actual current-year and prior-year local currency revenues and expenses at the same predetermined exchange rates. The translated results are then used to determine year-over-year percentage increases or decreases, excluding the impact of currency. Management views constant-currency results as an important measure of organic business growth trends. Constant-currency results are used by management to assess non-U.S. operations' performance against yearly targets for the purpose of calculating bonus amounts for certain regional bonus-eligible employees.

Net Sales By Business Segment and Geographic Region

Total net sales for the second quarter and six months ended June 28, 2003 were $513 and $961, respectively. This represents a $54 or a 12% increase compared to the prior-year second quarter and an $88 or a 10% increase for the first six months. On a constant-currency basis, net sales increased 4% for the quarter and 3% year-to-date.
     The Americas segment's net sales for the quarter were $227, reflecting a 9% increase (8% in constant currency) compared to the prior year. Year-to-date, net sales of $427 increased 4% (5% excluding currency effects) from 2002. The segment continued to experience strong gains in pharmaceuticals net sales, which increased 31% in actual dollars and in constant currency compared to the same quarter last year. Year-to-date, sales of pharmaceuticals products increased 26% in the Americas (27% in constant currency). The gains can be primarily attributed to the company's lines of ocular vitamins, and multisource pharmaceuticals products including incremental revenues from a generic version of Alphagan (a trademark of Allergan, Inc.), which was launched late in the second quarter, as well as generic otic products. The Americas region also experienced a 9% growth in lens care products during the second quarter in both actual dollars and in constant currency (flat in actual dollars and up 1% in constant currency year-to-date). The second-quarter growth can be attributed to the timing of the company's major spring consumer marketing promotion of ReNu MultiPlus that occurred in the second quarter of 2003 whereas it had occurred in the first quarter in 2002. These increases were partially offset by quarter- and year-to-date declines in contact lens, cataract and vitreoretinal and refractive product category sales. Declines in quarter- and year-to-date contact lens sales in the Americas reflects the company's inability to sell PureVision lenses in 2003 in the U.S. (see Note 15 - Other Matters for discussion of current litigation relating to the PureVision contact lens product line). Excluding revenues from PureVision lenses, Americas contact lens sales increased more than 7% in the second quarter and year-to-date in 2003. This growth can be attributed to the company's current-generation core lens products (excluding PureVision) including inc remental SofLens Multi-Focal sales following its introduction in the fourth quarter of 2002, and its lines of rigid gas permeable lenses and lens materials. The cataract and vitreoretinal product category declined for the quarter and year-to-date attributable to lower sales of IOLs and disposable surgical products partially offset by higher sales in instruments. Refractive product sales declines were driven by lower sales of equipment and microkeratome products, partly offset by higher sales of per-procedure cards.
     Net sales in the Europe segment were $186 for the quarter, an increase of 19% (flat in constant currency) from the prior-year quarter. Year-to-date, net sales were $356, an increase of 18% but a decrease of 1% in constant currency from 2002. For the quarter- and year-to-date periods, the segment posted increases in contact lenses and cataract and vitreoretinal product categories, both in actual dollars and constant currency. The increase in lenses was driven by strong sales in current-generation core lens products including initial revenues from the introduction of SofLens Multi-Focal in the first quarter of 2003. Spain continued to make a significant contribution to overall cataract and vitreoretinal product sales growth in the second quarter as a result of the company's purchase of a distributor business in September 2002. Lens care product sales increased in actual dollars in the quarter and year-to-date, however, declined on a constant-currency basis as currency benef its were offset by declines associated with the company's decision in the second half of 2002 to exit certain non-strategic and low-margin lines of lens care products acquired as part of the Woehlk acquisition in October 2000. Excluding the impact of this decision, lens care revenues were flat in the second quarter on a constant-currency basis. Pharmaceutical product sales reflected increases in ocular vitamins, including incremental sales from the ongoing launch of PreserVision into additional markets in the Europe region, as well as incremental sales from the launch of a long-acting generic beta blocker in France, which occurred in the first quarter of 2003, coupled with favorable currency rates, were more than offset by the continuing effects from proposed pharmaceuticals pricing legislation in Germany as well as the impact from the company's decision to exit certain non-strategic product lines acquired with Groupe Chauvin in the second half of 2002. Declines in refractive equipment product sales d uring the second quarter and year-to-date were a result of continued weak procedural demand and saturation of the equipment market.
     The Asia segment's net sales totaled $99 for the quarter, an increase from the prior year of 7%. In constant currency, the increase was 2%. Year-to-date net sales totaled $178 representing a 9% increase (4% in constant currency). During the quarter, this segment was negatively impacted by the SARS outbreak in several key markets. Despite the negative influence from SARS, Asia experienced growth in the quarter and year-to-date in contact lens sales which were led primarily by increases in current-generation contact lenses, particularly SofLens66 Toric lenses, which generated strong gains in Japan and major markets that had not been significantly impacted by SARS. Second-quarter increases in lens care in Japan, primarily attributable to ReNu branded products, were partially offset by declines in the rest of Asia, primarily attributable to the SARS impact. Year-to-date, Asia's lens care net sales increased 11% and 6% in constant currency due to growth in the ReNu branded lens care products. Lower sales of IOLs and disposable surgical products led the second-quarter decline in cataract and vitreoretinal surgery product sales, which was indicative of the SARS impact on surgical procedures as a significant number of elective and non-critical surgeries were cancelled in major markets. Year-to-date growth in cataract and vitreoretinal surgery product sales is primarily attributable to higher sales of disposable products and Millennium phacoemulsification systems and modules. Revenues in the refractive product category were significantly lower mainly due to the impact of SARS in the second quarter as well as general declines in equipment sales year-to-date.
     Net sales in markets outside the U.S. totaled $307 in the second quarter of 2003, an increase of $37 or 13% for the quarter compared with the same 2002 period. Year-to-date, net sales were $573, an increase of $70 or 14% from the prior-year period. Net sales outside the U.S. for the quarter represented approximately 60% of consolidated net sales in 2003 and 59% for the comparable period in 2002. Year-to-date, net sales outside the U.S. represented approximately 60% of consolidated net sales in 2003 and 58% in 2002. On a constant-currency basis, net sales outside the U.S. were relatively flat for the quarter and increased approximately 1% year-to-date.
     Net U.S. sales totaled $206 in the second quarter of 2003, an increase of $18 or 9% from the comparable quarter period in 2002. Year-to-date, net U.S. sales totaled $387 representing an increase of $18 or 5% compared to the prior-year period. Net U.S. sales for the quarter- and year-to date represented approximately 40% of consolidated net sales in 2003 and 41% and 42% for the same 2002 periods, respectively. For the second quarter and first six months of 2003, U.S. revenues represented approximately 91% of the Americas segment revenue, compared to 90% for the same 2002 periods.
     The following table presents net sales by major product lines for the quarters and six months ended June 28, 2003 and June 29, 2002.

Second Quarter Ended

Six Months Ended

----------------------------------

----------------------------------

June 28,
2003

June 29,
2002

June 28,
2003

June 29,
2002

--------------

--------------

--------------

--------------

Product Category

Contact Lens

$149

$132

$282

$252

Lens Care

126

117

232

223

Pharmaceuticals

125

101

225

186

Cataract and Vitreoretinal

82

75

161

147

Refractive

31

33

61

65

--------------

--------------

--------------

--------------

$513

$458

$961

$873

========

========

========

========

Contact Lens Net Sales

Contact lens net sales were $149 for the second quarter of 2003, an increase of 12% as compared to the same 2002 period. Year-to-date, net sales were $282, an increase of 12% from the prior year. In constant currency, contact lens net sales increased 4% for the quarter and 3% year-to-date. All segments experienced strong growth in the company's current-generation core lens product lines such as SofLens66 Toric, SofLens One Day and SofLens59/SofLens Comfort as well as from the company's lines of rigid gas permeable lenses and lens materials. The Americas and Europe regions also gained incremental sales with the introduction of SofLens Multi-Focal. The company's current-generation core offerings now account for approximately 45% of its worldwide contact lens revenues. During the second quarter, these products grew more than 15% over 2002 on a constant-currency basis despite the lack of PureVision sales in the U.S. and the impact from SARS in Asia. Growth in the Ame ricas of current-generation core offerings and the launch of SofLens Multi-Focal in the fourth quarter of 2002 was more than offset by the absence of U.S. PureVision sales in 2003 (see Note 15 - Other Matters for discussion of current litigation relating to the PureVision contact lens product line). As a result, contact lens sales in the Americas declined 4% in actual dollars and in constant currency in the second quarter and year-to-date compared to the same 2002 periods. Excluding PureVision revenues, sales of contact lenses increased more than 7% in the Americas during the second quarter and year-to-date in 2003. Contact lens sales in Europe increased 27% for the quarter (7% in constant currency) and 28% year-to-date (8% excluding the impact of currency) over the same 2002 periods driven primarily by sales of current-generation core lens product lines and incremental sales from SofLens Multi-Focal, which was launched in the first quarter of 2003 in this region. As ia's second quarter and year-to-date growth was 15% (9% in constant currency) despite the impact of SARS and 13% (6% in constant currency), respectively. Current-generation core lens products led this growth, particularly SofLens66 Toric, which registered strong gains in Japan and major markets that had not been significantly impacted by SARS.
Lens Care Net Sales

Net sales for lens care products were $126 for the second quarter of 2003, an increase of 8% (3% in constant currency) from the same 2002 period. Year-to-date lens care net sales were $232, an increase of 4% (flat on a constant-currency basis). Second-quarter sales in the Americas region increased 9% in both actual dollars and on a constant-currency basis compared to the same period last year reflecting the timing of a major spring consumer marketing promotion of ReNu MultiPlus from the first quarter in 2002 to the second quarter in 2003, which in turn influenced the timing of sales to the company's retail customers. Year-to-date, lens care revenues in the Americas were flat and up 1% in constant currency. Lens care net sales for the Europe region increased 8% for the quarter and six months ended June 28, 2003, however, decreased 7% and 8% on a constant-currency basis, respectively, from the same 2002 periods. Favorable impacts from currency were more than offset by the absence of revenue f rom a low-margin distributor business acquired as part of the Woehlk acquisition in 2000 due to the company's decision in the second half of 2002 to exit certain non-strategic and low-margin lines of lens care products. Asia's lens care net sales for the second quarter increased 4% and remained flat on a constant-currency basis as increases in Japan, primarily attributable to ReNu branded products, were partially offset by declines in the rest of Asia reflecting the SARS impact. Year-to-date sales increased 11% over the same 2002 period (6% on a constant-currency basis) also driven by the company's ReNu branded products.

Pharmaceuticals Net Sales

Net sales for pharmaceuticals products were $125 for the second quarter, an increase of 24% from the same period last year. Excluding the impact of currency, revenues were up 14% for the quarter. Year-to-date, revenues were $225, an increase of 20% over the same period in the prior year (10% in constant currency). Gains were driven by the Americas region, where pharmaceuticals net sales were up 31% and 26% (31% and 27% excluding the impact of currency) for the quarter and year-to-date, respectively. These results reflect strong demand for multisource pharmaceuticals products and the demand for the Ocuvite line of ocular vitamin supplements (including Ocuvite PreserVision) which has been fueled by increased direct-to-consumer advertising such as national television commercials which began airing in the first quarter. The company's multisource business benefited from higher sales of generic otic products during the quarter, as well as from incremental business from the company's launch of a generic version of Alphagan (a trademark of Allergan, Inc.) in June of 2003. In Europe, pharmaceuticals net sales were up 17% in actual dollars for the quarter, however, declined 4% in constant currency. On a year-to-date basis, pharmaceuticals net sales in the Europe region increased 15% but decreased 6% in constant currency. Positive factors such as sales of ocular vitamins including the ongoing launch of PreserVision into additional markets, as well as from the launch of a long-acting version of a beta blocker in France, and favorable currency rates were more than offset by sales declines in the company's German business, which continued to be negatively impacted by market reaction to new and planned drug pricing legislation, and declines in revenues resulting from the company's 2002 decision to exit non-strategic veterinary pharmaceutical product lines acquired with Groupe Chauvin.

Cataract and Vitreoretinal Net Sales

Net sales from the company's cataract and vitreoretinal surgery products for the second quarter of 2003 were $82, an increase of 10% from the same quarter in 2002. Revenues on a year-to-date basis were $161, an increase of 10% over the same 2002 period. Excluding the impact of currency, net sales increased 2% for the quarter and year-to-date. Strong growth in the Europe region was offset by declines in the Americas and Asia regions. In the Americas, net sales declined 3% during the second quarter and the first six months of 2003 as compared to the same periods in 2002. On a constant-currency basis, net sales declined 4% both in the quarter and the first half of 2003. Higher sales of instruments were more than offset by declines in other lines of cataract and vitreoretinal surgery products, particularly a decline in the company's IOLs and disposables. IOL declines were partially offset by incremental sales from the company's second quarter launch of its SofPort system. Second quarter sales i n the Europe region increased 33% in actual dollars and 12% excluding the impact of currency. Year-to-date, net sales increased 28% and 9% in constant currency compared to the first six months of 2002. This growth was driven by higher sales of IOLs and equipment across the region. In particular, Spain continues to make a significant contribution to the overall sales growth. The company is now marketing direct in that country, which is generating favorable comparisons over prior-year periods as Spain had nearly no sales for most of 2002 as the company's main distributor in that country exited the business. In Asia, second quarter revenue decreased 2% (7% in constant currency) from the same quarter in 2002, however, increased 7% and 2% in actual dollars and in constant currency year-to-date, respectively. Declines during the second quarter of 2003 is indicative of lower sales of IOLs and disposable products partially attributable to the SARS impact as a s ignificant number of elective and non-critical surgeries in several key markets in the region were cancelled. Asia's year-to-date growth can be attributed to higher sales of disposable products and Millennium phacoemulsification systems and modules.

Refractive Net Sales

Refractive products for the second quarter of 2003 provided $31 in net sales, reflecting a 9% decrease compared to the same period in 2002. On a year-to-date basis, revenues decreased 6% to $61from the same 2002 period. Excluding the impact of currency, net sales decreased 16% and 12% for the quarter and year-to-date over the same periods in 2002, respectively. Lower sales of lasers and microkeratome products led the decline across all regions, partially offset by favorable currency rates and higher sales of laser cards and Zyoptix per-procedure cards sold for custom ablation surgery. The Asian and European regions mainly drove the declines. Sales in Asia declined 19% and 15% for the quarter and year-to-date over the same 2002 periods (21% and 17% in constant currency), respectively, where elective surgeries declined in several major markets due to the outbreak of SARS. Refractive net sales in Europe declined 8% during the quarter and 5% year-to-date. In constant currency, sales in the Euro pe region declined 23% and 19% during the quarter and year-to-date, respectively. Continued weak procedural demand and saturation of the equipment market has depressed the sales of lasers, microkeratomes and blades in that region.

Costs & Expenses and Operating Earnings

The ratio of cost of products sold to sales was 42% and 43% for the quarter and six months ended June 28, 2003, respectively, versus 43% for each of the same 2002 periods. The improvement during the second quarter of 2003, as compared to the 2002 period was primarily due to the company's cost savings generated by its profitability improvement programs, including the impact of rationalizing less profitable product lines and consolidating manufacturing operations.
     Selling, administrative and general expenses, including corporate administration, were 40% of sales during the second quarter of 2003 compared to 39% of sales for the same 2002 period. Contributing factors to the increase during the second quarter was a valuation reserve the company recorded against amounts advanced to Control Delivery Systems (CDS) under a strategic partnership arrangement (see Note 9 - Related Party Transaction) and higher selling expenses. Year-to-date, selling, administrative and general expenses were 40% of sales during the six months ended June 28, 2003 compared to 41% of sales during the same 2002 period. The decrease as a percentage of sales is a function of a higher level of sales in 2003 partially offset by an increase in selling expenses.
     Research and development expenses totaled $38 and $68 during the second quarter and six months ended June 28, 2003, respectively. This represented 8% and 7% of second quarter and year-to-date sales in 2003 compared to 7% for each of the same periods in 2002. The percentage of sales is a function of higher RD&E spending offset by the higher level of sales during the second quarter and year-to-date periods in 2003. The company will continue its commitment to research and development spending in support of its goal of consistently bringing new products to market.
     As a result of the above factors, operating earnings for the second quarter of 2003 increased $6 to $56, representing 11% of net sales for both the 2003 and 2002 second quarters. Operating earnings year-to-date increased $41 to $96, representing 10% of net sales compared to 6% for the same 2002 period. In addition to the factors described above,
the year-to-date increase in 2003 was a result of restructuring charges and asset write-offs of $24, before taxes, recorded during the first quarter of 2002 related to the second phase of a restructuring program designed to reduce ongoing operating costs.

Other Income and Expenses

Interest and investment income totaled $4 for the quarter ended June 28, 2003, an increase of $1 compared to the same period in 2002. Year-to-date 2003 interest and investment income of $5 decreased $36 from the prior year. For the quarter ended March 30, 2002 the company recorded a gain of $28 from the sale of Charles River stock and interest income of approximately $6 associated with a federal income tax refund.
     Interest expense of $14 and $28 for the quarter and six months ended June 28, 2003 increased $1 and $2, respectively, compared to the comparable periods in 2002. The increase is largely attributable to the cost of the company's $150 debt issuance during November 2002, the proceeds of which were used primarily for general corporate purposes and the refinancing of existing debt obligations, including the company's $200 minority interest obligation as described in Note 8 - Minority Interest. Expense associated with the $200 minority interest obligation was recorded as minority interest expense through May 2002.
     Foreign currency losses of $2 and $3 were recognized during the quarter and six months ended June 28, 2003, an increase of $1 and $2, respectively, compared to the same prior-year periods. These results reflect an increase in costs associated with the company's ongoing foreign currency hedging program.

Liquidity and Financial Resources

Cash Flows from Operating Activities

Cash provided by operating activities was $40 and $106 through the second quarter of 2003 and 2002, respectively. Contributing to the decrease in cash flows was a $16 increase in net cash payments for income taxes, higher outflows associated with foreign currency contracts resulting from the unprecedented strengthening of the euro and an increase in accounts receivable due primarily to the timing of payments received from customers. Days sales outstanding (DSO) were 83 days at the end of the 2003 second quarter, an increase from 81 days at the end of the comparable period in 2002 mainly due to the timing of cash collections and the impact of currency. However, there has been an improvement in the aging of receivables which is representative of the company's continuing focus on asset management.

Cash Flows from Investing Activities

Cash used in investing activities was $41 for the first six months of 2003 compared to $29 during the same 2002 period. During the first six months of 2003, capital spending of $35 and the company's first-quarter acquisition of an additional 30% and 20% interest in its Korean commercial and manufacturing joint ventures, respectively, for $6 (as described in Note 6 - Accounting for Goodwill and Intangibles) accounted for the majority of cash used in investing activities. During the same 2002 period, a cash inflow of $37 from the sale of the company's remaining equity interest in Charles River Laboratories, a previously divested entity, was more than offset by a $23 payment for a sale price adjustment related to the disposal of discontinued operations of the eyewear segment and $43 in capital spending.

Cash Flows from Financing Activities

Through the first six months of 2003, $50 was used in financing activities compared to $195 in the comparable 2002 period. Cash used in financing activities during the first half of 2003 consisted primarily of a $31 payment in the first quarter of 2003 to settle forward equity contracts as described in Note 12 - Forward Equity Contracts, $6 in repayments of debt and notes payable and $14 for dividends paid. During the first six months of 2002, cash used in financing activities resulted from a $200 payment made related to the early termination of a minority interest obligation, as described in Note 8 - Minority Interest, repayments of notes payable, long-term debt and securitized trade receivables of $13, $6 and $25, respectively, and $28 for dividends paid, offset by $75 of borrowings under the company's syndicated revolving credit agreement. During April 2002, the Board of Directors approved a reduction in the quarterly dividend as described in the Other Financial Data Sectio n of Management's Discussion and Analysis of Financial Condition and Results of Operations.

Financial Position

The company's total debt, consisting of short- and long-term borrowings, was $835 at the end of the second quarter of 2003, down $9 from year-end 2002 and less than the June 2002 amount by $24. The ratio of total debt to capital was 43.7% at the end of the second quarter of 2003 and 45.3% at the end of 2002, and 46.4% at June 2002.
     Cash and cash equivalents totaled $426 and $420 at the end of the second quarters of 2003 and 2002, respectively, and $465 at the end of 2002. The decrease in cash from year end 2002 is primarily due to a $31 payment to repurchase 750,000 shares of the company's common stock in settlement of forward equity contracts as described in Note 12 - Forward Equity Contracts.
Access to Financial Markets

The long-term debt rating as of June 28, 2003 by Standard & Poor's was at BBB-. On March 11, 2002, the company was downgraded by Moody's Investors Service as a result of its 2001 performance. The debt ratings by Moody's Investors Service, as of June 28, 2003, was Ba1 for long-term debt.
     As a result of the March 2002 downgrade, certain financial transactions became available for termination at the option of the holder. These included an outside investor's limited partnership interest which was recorded as minority interest totaling $200; financing covering the company's World Headquarters facility of $63; and securitized trade receivables of $25. During March 2002, the outside partner exercised its put right for its $200 partnership interest. The termination of the minority interest obligation and payment of the associated early liquidation premium occurred in May 2002 as described in Note 8 - Minority Interest. The payment was funded through existing cash reserves as well as the company's borrowing $75 against its then existing syndicated revolving credit agreement, which was repaid in July 2002. In addition, under their original payment terms, outstanding debt related to the securitized trade receivables was paid in March 2002, and the World Headquarter s facility was paid at maturity by the company in December 2002.
     In November 2002, the company issued $150 of five-year 6.95% fixed senior notes under a $500 Shelf Registration filed with the Securities and Exchange Commission in June 2002, of which $350 remained available for issuance as of June 28, 2003.
     In August 2003, the company issued $210 in concurrent offerings of notes and convertible notes. The first offering was a $50 public offering of five-year fixed rate senior notes with a coupon rate of 5.90%. The company simultaneously executed an interest rate swap agreement converting the notes to a floating rate. The initial effective cost of the notes, which includes both the impact of the interest rate swap and the settlement of a $50 cash flow hedge designated to hedge the benchmark interest rate in connection with the offering is 5.39%. The notes were issued under the company's Shelf Registration noted above thereby reducing the amount available for issuance to $300. The second offering was a $160 Rule 144A placement of floating-rate convertible senior notes due in 2023. The notes will accrue interest at six-month LIBOR plus 0.5% and the rate will be reset on a semiannual basis in advance. The initial interest rate will be approximately 1.64%. The notes will be convertible, under certain conditions, into shares of the company's common stock at an initial conversion price of $61.44 per share, which represents a 50% premium over the closing price of the company's common stock on July 29, 2003. Both the senior notes and convertible senior notes have been rated BBB- by Standard & Poor's and Ba1 by Moody's Investor Service. One million shares of the company's common stock were repurchased on August 4, 2003 for an average price per share of $40.96. The company will use the remaining proceeds of the offerings primarily to refinance existing debt obligations.
     At December 28, 2002, the company had a $250 syndicated revolving credit agreement expiring in January 2004. In January of 2003, the company replaced this agreement with a five-year $400 syndicated revolving credit agreement. The new facility includes covenants similar to covenants contained in the former facility, which require the company to maintain certain EBITDA to interest and debt ratios. In the event of violation of the covenants, the facility would not be available for borrowing until the covenant provisions were waived, amended or satisfied. The company does not anticipate that a violation is likely to occur. Under this agreement, a reduction of the facility to $250 became effective August 4, 2003 when the company completed the issuance of $210 of notes and convertible notes. The interest rate under the agreement is based on the company's credit rating and LIBOR, or the highest rate based on secondary certifi cates of deposit, Federal Funds or the base rate of one of the lending banks. There were no outstanding revolver borrowings as of June 28, 2003 or December 28, 2002. There were no covenant violations during the quarter and six months ended June 28, 2003 or year ended December 28, 2002. In addition, a number of subsidiary companies outside the U.S. have credit facilities to meet their liquidity requirements, under which there were no outstanding borrowings as of June 28, 2003.
     The company believes its existing credit facilities, in conjunction with the financing activities mentioned above, would provide adequate liquidity to meet obligations, fund capital expenditures and invest in potential growth opportunities.

Working Capital

Working capital was $435 and $463 at the end of the second quarter of 2003 and 2002, respectively. At year-end 2002, working capital was $456. The current ratio was 1.5 and 1.6 at the end of June 2003 and June 2002, respectively, and 1.5 at year-end 2002. The 2003 second-quarter decrease in both working capital and the current ratio from the second quarter of 2002 is primarily due to the repayment of debt and the reclassification of long-term debt as current portion of long-term debt during the third quarter of 2002. The decrease in working capital from year-end 2002 is largely attributable to a $31 payment to repurchase 750,000 shares of the company's common stock in settlement of forward equity contracts, as described in Note 12 - Forward Equity Contracts.

Other Financial Data

Dividends declared on common stock were $0.13 per share in the first and second quarters of 2003 and $0.26 and $0.13 per share in the first and second quarters of 2002, respectively. During April 2002, the Board of Directors approved a reduction in the quarterly dividend paid on shares of the company's common stock from $0.26 per share to $0.13 per share effective for the quarterly dividend payable July 1, 2002.
     The return on average shareholders' equity was 8.5% and 4.7 % for the twelve-month periods ended June 28, 2003 and June 29, 2002, respectively. The higher return on equity for the twelve-month period ended June 28, 2003 reflects higher income from operations and the lower return on equity for the twelve-month period ended June 29, 2002 reflects the inclusion of the reduction to the gain on disposal of discontinued operations of the eyewear segment recorded in the fourth quarter of 2001.

Off-balance Sheet Arrangements

The company has entered into two arrangements with Variable Interest Entities (VIEs) to engage the research, development and commercialization of certain technologies. VIEs are described in Note 14 - New Accounting Guidance (FASB Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51). The company has an equity interest of approximately 23%, valued at $0 on its balance sheet, in a strategic partnering arrangement entered into during 1999 that involves implant technology for treating retinal and other back-of-the-eye diseases. The company remits payments to the strategic partner for funding contingent upon the achievement of certain milestones such as completion of clinical testing, NDA filings and FDA approvals, and reimbursement of actual research and development activities. However, as described in Note 9 - Related Party Transaction, an anticipated delay of up to three years in U.S. regulatory filings for the Retisert< /I> drug delivery product for the diabetic macular edema indication was announced in May 2003. The company indicated that this delay would cause an assessment of the overall implications on this product for this particular indication.
     The other arrangement consists of an equity investment of $4 and $6 as of June 28, 2003 and December 28, 2002, respectively, recorded as an other long-term asset, in connection with a licensing agreement signed during 2002 to develop treatments for ocular infections. During the quarter ended June 28, 2003, the company recorded an other-than-temporary impairment charge of $2 based on negative earnings and cash flow trends of the licensor, and inconclusive efforts by the licensor to secure interim financing. The company remits payments to the licensor upon the achievement of certain milestones such as completion of IND filings, clinical testing, NDA filings and FDA approvals.
     Subject to the completion of the assessment described above, future payments to the VIEs for R&D activities and milestone achievements over the next five years are estimated to be $20, which will primarily be recorded as R&D expenses.
     The company has obligations under certain guarantees, letters of credit, indemnifications and other contracts that contingently require the company to make payments to guaranteed parties upon the occurrence of specified events. The company believes the likelihood is remote that material payments will be required under theses contingencies, and that they do not pose potential risk to the company's future liquidity, capital resources and results of operations. See Note 10 - Commitments and Contingencies for further descriptions and discussions regarding the company's obligations.

Outlook

Both the euro and the Japanese yen continued to strengthen relative to the U.S. dollar during the second quarter from the levels anticipated by the company in developing full-year guidance for 2003, generating approximately $0.02 to $0.03 in additional earnings per share. If currency rates were to remain at levels as of the end of the second quarter, sales and earnings per share would continue to benefit positively as compared to previous guidance.
     The epidemic of the SARS virus, particularly in Asia, the company's fastest-growing segment, appears to have waned and while there may be some modest lingering impact of SARS, the company does not expect the virus to have any significant longer-term financial effect on the remainder of 2003. During the second quarter of 2003, the company continued to see positive fundamental trends in its businesses, particularly contact lenses and pharmaceuticals, which the company expects will continue over the remainder of the year. As a result of these factors, coupled with positive currency benefits which are expected to remain above the levels the company had included in developing its original guidance for the year, the company has increased its 2003 guidance for revenues and earnings per share.
     Assuming that currencies maintain their recent strength against the dollar, the company now expects full-year reported revenue growth approaching ten percent as compared to 2002 for an estimated earnings per share of $2.20 for the year. The company expects the vast majority of the additional earnings to be realized in the fourth quarter, based on its projected marketing and research and development spending, and anticipates third-quarter earnings per share to be approximately $0.57.
     For the first half of the year, cash flows from operating activities were generally consistent with the company's expectations. The company is experiencing higher cash outflows associated with foreign currency hedging contracts as a result of the unprecedented strengthening of the euro. As a result, the company now expects full-year cash flow from operating activities of approximately $200 million.

Information Concerning Forward-Looking Statements Forward-looking statements include statements concerning plans, objectives, goals, projections, strategies, future events or performance, and underlying assumptions and other statements which are other than statements of historical facts. When used in this discussion, the words "anticipate", "appears", "should", "expect", "estimate", "project", "will", "are likely" and similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this report under the heading "Outlook" and elsewhere are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve predictions of future company performance, and are thus dependent on a number of factors, which may affect the company's performance. Where possible, specific factors that may impact performance materially have been identified in connection with specific forward-looking statements. Additio nal risks and uncertainties include, without limitation, general global and local economic, political and sociological conditions, and changes in such conditions, the impact of competition, seasonality and general economic conditions in the global lens and lens care, ophthalmic cataract and refractive and pharmaceutical markets where the company's businesses compete, effects of war or terrorism, changing currency exchange rates, events affecting the ability of the company to timely deliver its products to customers, including those which affect the company's carriers' ability to perform delivery services, changing trends in practitioner and consumer preferences and tastes, changes in technology, medical developments relating to the use of the company's products, legal proceedings initiated by or against the company, including those related to patents and other intellectual property held by the company, the impact of company performance on its financing costs, changes in government regulation of the company's products and operations, changes in governmental laws and regulations relating to the import and export of products, government pricing changes and initiatives with respect to healthcare products, changes in private and regulatory schemes providing for the reimbursement of patient medical expenses, changes in the company's credit ratings, or the cost of access to sources of liquidity, the company's ability to maintain positive relationships with third party financing resources, the financial well-being and commercial success of key customers, development partners, and suppliers, changes in the supply of raw materials used in the manufacture of the company's products, changes in tax rates or policies or in rates of inflation, changes in accounting principles and the application of such principles to the company, the performance by third parties upon whom the company relies for the provision of goods or services, the ability of the company to successfully execute marketing strategies, the ability of the compa ny to secure and maintain intellectual property protections, including patent rights, with respect to key technologies, the ability of the company to secure and maintain copyright protections relative to its customer-valued names, trademarks, trade names and other designations, difficulties or delays in the development, laboratory and clinical testing, regulatory approval, manufacturing, release or marketing of products, the successful completion and integration of acquisitions by the company, the successful relocation of certain manufacturing processes, the continued successful implementation of efforts in managing and reducing costs and expenses, the effect of changes within the company's organization, including the selection and development of the company's management team and such other factors as are described in greater detail in the company's filings with the Securities and Exchange Commission, including, without limitation, its 2002 Annual Report on Form 10-K and the Current Report on Form 8-K dated June 14, 2002.

Item 3.     Quantitative and Qualitative Disclosures about Market Risk

There was no significant change in the excess of the company's floating rate assets over its floating rate liabilities for the quarter and six months ended June 28, 2003. A sensitivity analysis to measure the potential impact that a change in interest rates would have on the company's net income indicates, that a one percentage point increase in interest rates, which represents a greater than 10% change, would decrease the company's net financial expense by approximately $4 on an annualized basis.
     The company has $185 of debt maturing in the third quarter. As described in the Access to Financial Markets section of Liquidity and Financial Resources, the company will refinance a majority of this debt through the August 2003 issuance of $50 fixed rate notes, swapped to a floating rate, and $160 of floating-rate convertible notes. In addition, on August 4, 2003, the company used a portion of the debt issuance proceeds to repurchase one million shares of the company's common stock. The result of those transactions was to further decrease the excess of floating rate assets over floating rate-liabilities. Also, a sensitivity analysis to measure the potential impact that a change in interest rates would have on the company's net income indicates, that a one percentage point increase in interest rates, which represents a greater than 10% change, would decrease the company's net financial expense by approximately $2 on an annualized basis.
     There has been no material change in the company assessment of its sensitivity to foreign currency exchange rate risk since its disclosure in Item 7(a) of the company's 10-K for the fiscal year ended December 28, 2002.

Item 4.     Controls and Procedures

Within the 90 days prior to the date of this Form 10-Q, the company carried out an evaluation, under the supervision and with the participation of the company's management, including the company's Chairman and Chief Executive Officer along with the company's Senior Vice President and Chief Financial Officer, of the effectiveness of the design and operation of the company's disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation, the company's Chairman and Chief Executive Officer along with the Company's Senior Vice President and Chief Financial Officer concluded that the company's disclosure controls and procedures are effective in timely alerting them to material information relating to the company (including its consolidated subsidiaries) required to be included in the company's periodic filings with the Securities and Exchange Commission. There have been no significant changes in the company's internal controls or in other factors which could sig nificantly affect internal controls subsequent to the date the company completed its evaluation.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings

In its Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the period ended March 29, 2003, the company reported on a consolidated shareholder class action lawsuit currently pending in the U.S. District Court for the Western District of New York. On March 31, 2003, the District Court, on the company's motion, dismissed certain claims asserted against the company by the plaintiffs. In addition to dismissing certain claims against the company, all direct claims against Stephen C. McCluski were dismissed and those direct claims paralleling the claims dismissed against the company were also dismissed as to Messrs. Carpenter and Sassano.
     In its Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the period ended March 29, 2003, the company reported on several pending patent proceedings relating to silicon hydrogel contact lens technology, including its PureVision contact lens product line. One of those proceedings is a lawsuit filed by CIBA Vision Corporation (CIBA) in the U.S. District Court for the Northern District of Georgia. The discovery phase has closed in this lawsuit and following the Court's July 8, 2003 order denying the company's motions for summary judgment the Company now anticipates that a trial date will be set for late 2003 or early 2004.
     Another proceeding pertaining to the company's PureVision contact lens product line as reported in the company's Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the period ended March 29, 2003 is a lawsuit filed in the Administrative Court of Duesseldorf, Germany by Novartis AG, CIBA's parent corporation. The German court issued its ruling in March of 2003 that the company's PureVision lens product infringes the Novartis patent at issue. CIBA served this non-final judgment on the company on April 29, 2003, enjoining the company from further sales of PureVision contact lenses in Germany. The company is appealing the German decision. In addition, the company continues to challenge the validity of the Novartis patent in the European Patent Office. If the European Patent Office finally determines that the patent is invalid, it will not be enforceable in Europe and the decision by the German court will be vacated. A preliminary opini on was rendered by the European Patent Office in April 2003 citing grounds for determining that based on the record then before it, the patent would be invalid. A decision is expected after a hearing scheduled for September 17, 2003.
     Finally, the company commenced an additional patent infringement lawsuit against CIBA relating to CIBA's Night & Day product line on July 22, 2003 in the U. S. District Court for the Western District of New York.

Item 4.

Submission of Matters to a Vote of Security Holders

The 2003 annual meeting of shareholders was held on April 29, 2003. The following matters were voted upon and received the votes set forth below:

1.

The individuals named below were elected to three-year terms as directors.

VOTES CAST

DIRECTOR

FOR

WITHHELD

Franklin E. Agnew

41,033,755

7,189,263

Ruth R. McMullin

46,242,135

1,980,883

Linda Johnson Rice

46,220,278

2,002,740

Barry W. Wilson

46,571,075

1,651,943

Directors continuing in office are Domenico DeSole, Jonathan S. Linen, John R. Purcell, William H. Waltrip, Kenneth L. Wolfe, and Ronald L. Zarrella.

2.

The election of PricewaterhouseCoopers, LLP as independent accountants for 2003 was ratified, with 46,133,137 shares voting for, 1,735,609 shares voting against, and 354,272 shares abstaining.

3.

The Bausch & Lomb 2003 Long Term Incentive Plan was approved, with 30,247,841 shares voting for, 11,455,447 shares voting against, and 457,540 shares abstaining.

4.

A proposal to amend the company's By-Laws and Certificate of Incorporation to authorize the annual election of the Board of Directors did not receive the requisite number of votes to effectuate the change, with 32,560,369 shares voting for, 9,134,884 shares voting against, and 470,722 shares abstaining.

Item 6.

Exhibits and Reports on Form 8-K

(a)

Item 601 Exhibits.

Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference.

(b)

Reports on Form 8-K.

On April 24, 2003, the company furnished the SEC with a current report on Form 8-K, announcing its issuance of a press release relative to its financial results for the first quarter ended March 29, 2003. In accordance with Securities and Exchange Commission Release No. 33-8216, such information, which was intended to be furnished under Item 12 of Form 8-K, "Results of Operations and Financial Condition," was instead furnished under Item 9, "Regulation FD Disclosure". No financial statements were filed with the Form 8-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BAUSCH & LOMB INCORPORATED

Date: August 7, 2003

By:   /s/ Ronald L. Zarrella

Ronald L. Zarrella
Chairman and
Chief Executive Officer

Date: August 7, 2003

By:   /s/ Stephen C. McCluski

Stephen C. McCluski
Senior Vice President and
Chief Financial Officer

EXHIBIT INDEX

S-K Item 601 No.

Document

(3)-a

Certificate of Incorporation of Bausch & Lomb Incorporated (filed as Exhibit (3)-a to the company's Annual Report on Form 10-K for the fiscal year ended December 29, 1985, File No. 1-4105, and incorporated herein by reference).

(3)-b

Certificate of Amendment of Bausch & Lomb Incorporated (filed as Exhibit (3)-b to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4105, and incorporated herein by reference).

(3)-c

Certificate of Amendment of Bausch & Lomb Incorporated (filed as Exhibit (3)-c to the company's Annual Report on Form 10-K for the fiscal year ended December 26, 1992, File No. 1-4105, and incorporated herein by reference).

(3)-d

By-Laws of Bausch & Lomb Incorporated, as amended, effective October 26, 1998 (filed as Exhibit (3)-a to the company's Form 10-Q for the quarter ended September 26, 1998, File No. 1-4105, and incorporated herein by reference).

(4)-a

See Exhibit 3(a).

(4)-b

See Exhibit 3(b).

(4)-c

See Exhibit 3(c).

(4)-d

Form of Indenture, dated as of September 1, 1991, between the company and Citibank, N.A., as Trustee, with respect to the company's Medium-Term Notes (filed as Exhibit 4-(a) to the company's Registration Statement on Form S-3, File No. 33-42858, and incorporated herein by reference).

(4)-e

Supplemental Indenture No. 1, dated May 13, 1998, between the company and Citibank, N.A. (filed as Exhibit 3.1 to the company's current report on Form 8-K, dated July 24, 1998, File No. 1-4105, and incorporated herein by reference).

(4)-f

Supplemental Indenture No. 2, dated as of July 29, 1998, between the company and Citibank N.A. (filed as Exhibit 3.2 to the company's current report on Form 8-K, dated July 24, 1998, File No. 1-4105, and incorporated herein by reference).

(4)-g

Supplemental Indenture No. 3, dated November 21, 2002, between the company and Citibank, N.A. (filed as Exhibit 4.8 to the company's current report on Form 8-K, dated November 18, 2002, File No. 1-4105, and incorporated herein by reference).

(4)-h

Supplemental Indenture No. 4, dated August 1, 2003, between the company and Citibank N.A. (filed as Exhibit 4.1 to the company's current report on Form 8-K, dated August 6, 2003, File No. 1-4105, and incorporated herein by reference).

(4)-i

Supplemental Indenture No. 5, dated August 4, 2003, between the company and Citibank N.A. (filed as Exhibit 4.2 to the company's current report on Form 8-K, dated August 6, 2003, File No. 1-4105, and incorporated herein by reference).

(10)-a

Director Deferred Compensation Plan as amended and restated on April 28, 2003 (filed herewith).

(10)-b

2003 Long Term Incentive Plan as amended and restated on July 15, 2003 (filed herewith).

(11)

Statement Regarding Computation of Per Share Earnings (filed herewith).

(31)-a

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

(31)-b

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

(32)-a

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (furnished herewith).

(32)-b

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (furnished herewith).

EX-10.A 3 e10aq203.htm DIRECTOR COMPENSATION PLAN Director Deferred Compensation Plan
Exhibit 10-a
DIRECTOR DEFERRED COMPENSATION PLAN

1.

Introduction

The Director Deferred Compensation Plan (the "Plan") provides the opportunity for Directors of Bausch & Lomb Incorporated (the "Company") to defer all or part of their cash and certain non-cash compensation for serving on the Company's Board of Directors or Committees of the Board of Directors pursuant to the terms of this Plan. This Plan is a restatement of the Company's Deferred Compensation Plan dated February 25, 1992, as amended (the "1992 Plan").

2.

Effective Date

The effective date of the Plan is January 1, 1997 (the "Effective Date"). It covers eligible compensation earned after the Effective Date as well as all monies previously deferred under the 1992 Plan.

3.

Eligibility

Any director of the company who is not an officer or employee of the Company is eligible to participate in the Plan with respect to the cash and certain non-cash compensation otherwise payable to him or her for serving on the Company's Board of Directors or Committees of the Board of Directors.

4.

Amount of Deferral

A director may elect to defer receipt of the compensation described in Section 3 hereof; provided that a minimum amount of $5,000 per year must be deferred.

5.

Time of Election of Deferral

A director's election to defer cash compensation must be made before the compensation is earned, which means that the election for any year of service commencing with the meeting of the Board of Directors immediately following the Annual Meeting of the Company's Shareholders must be made prior to that meeting. In addition, deferred stock equivalent awards will be deferred automatically pursuant to the terms of the award itself.

6.

Deferral Election

a)

To defer compensation under the Plan, a director must give written notice to the Plan Administrator. This notice must include (1) the amount or percentage of compensation to be deferred; (2) selection of investment account(s) (as described in Section 7 hereof); (3) the payment commencement date, (i.e. retirement or date certain); (4) the method of payment desired (i.e. annual, lump sum) and, if annual, the number of years of equal installment payments; and (5) the designation of payment to the director's estate or beneficiary in the event of the director's death. Deferred stock equivalent unit awards shall be deferred automatically into Common Stock unit accounts, but participants will be required to provide notice including the information under clauses 4 and 5 above. The Company will provide notice forms for deferral elections (see Exhibits I and II).

b)

If a director names someone other than his or her spouse as a beneficiary in the event of director's death, a spousal consent form must be signed by that director's spouse and returned to the Company.

c)

A deferral election (including payment commencement date and method of payout) will continue in effect as to compensation earned in future years until such time as the Company is notified in writing that (1) the director no longer wishes to defer compensation payable subsequent to such notification, or (2) an alternate payment commencement date and/or method of payout is elected for future deferrals of earnings.

d)

For all compensation deferred after the Effective Date of this Plan, a director may elect only two payment options, each consisting of a payment commencement date and a method of payment.

e)

If a director elects to receive his or her deferred compensation in installments, the installment payments will be calculated in the following manner: the director's account balance at the payment commencement date will be multiplied by a fraction, the numerator of which is 1, and the denominator of which is the number of remaining installment periods.

f)

Retirement, for purposes of the Plan shall mean the date on which the director is both (i) at least age 55 and (ii) no longer a director of the Company.

7.

Deferred Compensation Accounts

a)

Monies deferred under the Plan will be transferred to a trustee subject to a "Rabbi" Trust Agreement between the Company and a trustee designated by the Plan Administrator (the "Trust").

b)

The rate of return on deferred compensation is determined by the performance of one or more deferred compensation investment accounts selected by the director pursuant to the Plan or, in the case of deferred stock equivalent units, as mandated by the award. Deferred compensation investment accounts available under the Plan are determined by the Company's Investment Committee ("Investment Account(s)"). Information on each Investment Account currently available under the Plan may be obtained from the Plan Administrator. The Investment Committee may, from time to time, in its discretion, deem it necessary or advisable to add or delete Investment Accounts or substitute new Investment Accounts for existing Investment Accounts. In such an event, the Plan Administrator will provide directors with reasonable notice of the effective date of the change to permit directors to change their future investment elections.

c)

All investments in Investment Accounts under the Plan are hypothetical. At the time of each deferral of compensation into the Plan, a director will be credited with an imputed number of shares for the Investment Account(s) selected by the director. Thereafter, the value of a director's Investment Accounts will fluctuate in accordance with the actual performance of the Investment Accounts. Dividends on the imputed shares also will be credited to the director's Investment Accounts.

d)

Earnings/losses on Investment Accounts hypothetically invested in mutual funds or other assets for which daily pricing is available ("Daily-Priced Investments") shall be valued daily in accordance with the relevant terms and conditions of the Daily-Priced Investments. Earnings/losses on Investment Accounts hypothetically invested in investments other than Daily-Priced Investments shall be credited effective on the last business day of each month. All such earnings are net of expenses. Quarterly statements will be provided by the Plan Administrator.

e)

The deferral of compensation on a current basis will be allocated into Investment Account(s) pursuant to the deferral election determined by the director. The allocation must be in whole percentages; (i.e. 100% into one Investment Account, a 60-20-20 split among three Investment Accounts, etc.).

f)

A Participant may elect to reallocate amounts already in his/her Investment Accounts among the various Investment Accounts at such times and in accordance with such procedures as the Plan Administrator may, in its sole discretion, prescribe; except that (i) a reallocation into or out of the Bausch & Lomb Common Stock Investment Account by directors of the Company may not be made more than once in any twelve (12) month period and (ii) there may be no allocation of deferred stock equivalent units out of the Bausch & Lomb Common Stock Investment Account.

8.

Payment of Deferred Compensation

a)

A director's right to payment of deferred compensation under the Plan is a contractual obligation of the Company to the director, and his or her right to such monies shall be an unsecured claim against the general assets of the Company. However, the Company has established the Trust as an irrevocable rabbi trust for directors for the purpose of holding assets used to provide the benefits required by this Plan. The Company shall make periodic contributions to the Trust as may be required to fund amounts payable under the Plan. The Trust provides a director with assurance that deferred monies will be paid to him or her in accordance with the Plan, except in the event of the Company's bankruptcy or insolvency. Amounts previously deferred have also been transferred to the Trust for the benefit of directors. Notwithstanding the establishment of the Trust, the Company remains ultimately responsible to pay deferred compensation to each director. This obligation shall be met from the general assets of the Company if the Trust has insufficient funds to pay benefits.

b)

Payments of deferred compensation to a director shall be pursuant to the director's deferral election notice given pursuant to Section 6 hereof. Except as provided in Subsections c) and d) below, a director may not change the payment commencement date or method of payment for monies already in his or her Investment Account(s). However, a director may choose a different payment commencement date and/or method payout for future deferrals subject to Section 6 above.

c)

If, in the discretion of the Plan Administrator, a director has a need for funds due to a financial emergency beyond the control of the director, a payment may be made to the director from the funds in his or her account at a date earlier than the payment commencement date chosen by the director at the time of deferral. A distribution based upon financial hardship may not exceed the amount required to meet the immediate financial need created by the hardship less the amount reasonably available to the director from other sources. Notwithstanding the foregoing, a director may not obtain a distribution based on financial hardship as to amounts paid into the director's Bausch & Lomb Common Stock account subsequent to April 30, 1991 (including earnings credited to those amounts).

A director requesting a hardship distribution must supply the Plan Administrator with a statement indicating the nature of the need creating the financial hardship, the fact that all other available resources are insufficient to meet the need, and any other information that the Plan Administrator deems necessary to evaluate whether a financial hardship exists.

d)

A director may make an early withdrawal of monies deferred under the Plan at anytime, subject to the following penalties:
     -  forfeiture of 10% of the amount of the early withdrawal; and
     -  suspension of eligibility to make further deferral elections for a period of five years.

Notwithstanding the foregoing, a director may not obtain a distribution under this Subsection as to amounts paid into the director's Bausch & Lomb Common Stock account subsequent to April 30, 1991 (including earnings credited to those amounts).

A Participant may make a change in the form of payment from the form previously elected to any other form permitted under the Plan at any time up to 24 months prior to the date payments commence. Any change elected within 24 months of a Participant's payment commencement date shall be disregarded.

e)

In the event of a director's death before he or she has received all of the deferred payments to which he or she is entitled, payments will be made, according to the director's election pursuant to Section 6 hereof, to the director's estate or beneficiary either (a) continuing in the same manner as designated with respect to payments to the director while living or (b) in a single lump sum payment the value of which is determined as of the date immediately following the director's death and paid on the first January 15 or July 15 following such valuation date (or as soon as reasonably possible thereafter).

f)

All payments made to a director shall be subject to all taxes required to be withheld under applicable laws and regulations of any governmental authorities.

g)

If a director is terminated as a director of the Company, the first day of February next following the date of termination will be deemed to be the payment commencement date for account balances of less than $3,500 and, payment will be made to the director in a lump sum.

h)

Upon a Change of Control (as defined below) notwithstanding a director's payment commencement date with respect to any compensation deferred hereunder or method of payout with respect to any compensation deferred hereunder, all amounts in a director's deferred compensation account (including earnings credited thereto) shall be due and payable to the director in a cash lump sum within 15 days following the Change of Control; provided, however that amounts paid into the director's Bausch & Lomb Common Stock account during a Section 16 Period (including earnings credited to those amounts) shall be due and payable only upon termination of the director's status as a director following a Change in Control or, if earlier, the payment commencement date previously elected by the director. For purposes of this Plan, Change of Control shall mean:

     (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company), (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corpora tion controlled by the Company or (iv) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (i), (ii) and (iii) of subsection (c) of this Section 2 are satisfied; or

     (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

     (c) Approval by the shareholders of the Company of a reorganization, merger, binding share exchange or consolidation, in each case, unless, following such reorganization, merger, binding share exchange or consolidation, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger, binding share exchange or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, bind ing share exchange or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such reorganization, merger, binding share exchange or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger, binding share exchange or consolidation, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the boar d of directors of the corporation resulting from such reorganization, merger, binding share exchange or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger, binding share exchange or consolidation; or

     (d) Approval by the shareholders of the Company of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Ou tstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.

9.

Administration

The Treasurer of the Company, as the designee of the Committee on Management of the Board of Directors, shall be the Plan Administrator and has the authority to control and manage the operation and administration of the Plan. The Investment Committee shall be the Investment Committee of Bausch & Lomb Incorporated.

10.

Assignability

No right to receive payments under the Plan is transferable or assignable by a director except by will or by the laws of descent and distribution.

11.

Business Days

In the event any date specified falls on a Saturday, Sunday, or holiday, such date will be deemed to refer to the next business day thereafter.

12.

Amendment

The Plan may at any time or from time to time be amended, modified, or terminated by the Board of Directors or the Committee on Management of the Board of Directors of the Company. No such amendment, modification, or termination will, without the consent of the director, adversely affect the director's accruals in his or her deferred compensation account.

BAUSCH & LOMB INCORPORATED

By: /s/ David R. Nachbar ________
David R. Nachbar
Corporate Senior Vice President
Human Resources

Dated: 28 of April, 2003

DIRECTOR DEFERRED COMPENSATION PLAN

ELECTION TO DEFER CASH COMPENSATION

TO:     BAUSCH & LOMB INCORPORATED

In accordance with the provisions of the Director Deferred Compensation Plan, I hereby elect to defer future cash compensation otherwise payable to me under the Director Deferred Compensation Plan with respect to services I perform for the Company in future years in the following amount:

Amount of Deferral (minimum of $5,000 per year):

$

(dollar amount)

or



(Percentage amount)

In the event that I have chosen to defer a percentage rather than a fixed dollar amount of my cash compensation under the Director Deferred Compensation Plan, and as a result of the percentage chosen, the dollar amount to be deferred in any year is less than $5,000 (choose one):



$5,000 shall be deferred in that year notwithstanding my percentage choice.



None of my earnings shall be deferred in that year.

The percentage I have chosen shall control deferrals in any future years where the amount to be deferred, pursuant to the percentage I have chosen, exceeds $5,000.

The cash compensation deferred is to be paid to me as follows (choose one):



Single lump sum payment



Annual installments (insert number-maximum of 10)

Payment to me is to commence on (choose one):

a)

Upon my retirement, as defined in the Director Deferred Compensation Plan; or

b)






February 1
May 1
August 1
November 1

of the year            (any year subsequent to the year in which the cash compensation is to be earned).

Page 2

In order to determine the rate of return on my deferred compensation account, I choose the following investment(s) (specify percentage per investment):



Bausch & Lomb Common Stock Fund



Fidelity Magellan Fund



Fidelity Equity Income Fund



Fidelity OTC Portfolio



Fidelity US Bond Fund



Fidelity Freedom 2010 Fund



Fidelity Puritan Fund



Fidelity Freedom 2020 Fund



Fidelity Spartan Equity Index Fund



Fidelity Freedom 2030 Fund



Fidelity Contrafund



Fidelity Retirement Government Money Market Portfolio



Fidelity Diversified International Fund

*Information on specific funds currently chosen by the Plan Administrator is available upon request.

In the event of my death before I have received all of the deferred payments (choose one):



Payments shall be made to my estate in the same manner as selected above for payment to me



The value of my deferred compensation account shall be paid to my estate in a single payment following my death.

This deferral election will first be effective for the year of service commencing immediately following the 2003 Annual Meeting. I understand that this election will continue in effect as to compensation earned in future years, unless changed for those years in accordance with the Director Deferred Compensation Plan.

Received on the       day of
                                  2003
on behalf of Bausch & Lomb
Incorporated

____________________________________
Signature of Director

Dated: _______________________________

By: _________________________________

ANNUAL RETAINER STOCK PLAN

FOR NON-EMPLOYEE DIRECTORS

ELECTION TO DEFER DELIVERY OF STOCK

TO:     THE COMMITTEE ADMINISTERING THE BAUSCH & LOMB INCORPORATED ANNUAL
            RETAINER STOCK PLAN FOR NON-EMPLOYEE DIRECTORS (THE "STOCK RETAINER
            PLAN")

     In accordance with the provisions of the Stock Retainer Plan, I hereby elect to defer delivery of all of the shares of Common Stock otherwise payable to me under the Stock Retainer Plan with respect to services I perform for the Company in future years. Dividend Equivalents on the deferred shares will be delivered with the deferred shares pursuant to the Stock Retainer Plan.

     The shares of Common Stock deferred and related Dividend Equivalents are to be delivered to me as follows (choose one):



Three years after the date of the Annual Meeting with respect to which the shares of Common Stock were originally payable.



On the date upon which I cease to be a director for any reason.



In five equal annual installments commencing on the date upon which I cease to be a director for any reason.

This deferral election will first be effective for the Plan Year beginning with the 2003 Annual Meeting. I understand that this election will remain in effect for subsequent Plan Years unless changed for those years in accordance with the Stock Retainer Plan.

Received on the       day of
                                  2003
on behalf of Bausch & Lomb
Incorporated

____________________________________
Signature of Director

Dated: _______________________________

By: _________________________________

DIRECTOR DEFERRED COMPENSATION PLAN

Payment Election on Awards of Deferred Common Stock Equivalents

TO:     BAUSCH & LOMB INCORPORATED

Under the Director Deferred Compensation Plan, I hereby make the following election in regards to all deferred stock equivalent units received for service on the Board. Under the terms of the Director Deferred Compensation Plan, cash payment will commence upon retirement from the Board of Directors and when I am at least age 55.

Cash payment is to be paid to me as follows (choose one):

_________

Lump sum payment

_________

5 annual installments

_________

10 annual insstallments

This payment election will remain in effect until changed by me in writing. I understand that this election will continue in effect as to deferred stock equivalents earned in future years, unless changed for those years in accordance with the Director Deferred Compensation Plan.

Received on the       day of
                                  2003
on behalf of Bausch & Lomb
Incorporated

____________________________________
<<fullname>>

Date: _______________________________

By: _________________________________
        Jean F. Geisel, Corporate Secretary

EX-10.B 4 e10bq203.htm LONG-TERM INCENTIVE PLAN 2001 Exhibit 10-b
Approved by the Shareholders April 29, 2003
Amended and Restated July 15, 2003

BAUSCH & LOMB 2003 LONG-TERM INCENTIVE PLAN

SECTION 1.  PURPOSE.
The purposes of the Bausch & Lomb 2003 Long-Term Incentive Plan (the "Plan") are to encourage selected Employees and Non-Employee Directors of Bausch & Lomb Incorporated, a New York corporation (the "Company"), and its Affiliates to acquire a proprietary and vested interest in the growth and performance of the Company, to generate an increased incentive to contribute to the Company's future success and prosperity, thus enhancing the value of the Company for the benefit of shareholders, and to enhance the ability of the Company and its Affiliates to attract and retain individuals of exceptional managerial talent upon whom, in large measure, the sustained progress, growth and profitability of the Company depends.

SECTION 2.  DEFINITIONS.
As used in the Plan, the following terms shall have the meanings set forth below:

(a)

"Affiliate" shall mean (i) any Person that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.

(b)

"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Share, Performance Unit, dividend equivalent, Other Stock Unit Award or any other right, interest or option relating to Shares or other property granted pursuant to the provisions of the Plan.

(c)

"Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by both the Company and the Participant.

(d)

"Board" shall mean the Board of Directors of the Company.

(e)

"Cause" shall mean, unless otherwise provided by the Committee, (i) "Cause" as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Cause: (A) conviction of the Participant for committing a felony under federal law or the law of the state in which such action occurred, (B) dishonesty in the course of fulfilling the Participant's employment duties, (C) willful and deliberate failure on the part of the Participant to perform his or her employment duties in any material respect, or (D) prior to a Change in Control, such other events as shall be determined by the Committee. Prior to a Change in Control, the Committee shall, unless otherwise provided in an Individual Agreement with the Participant, have the sole discretion to determine whether "Cause" exists, and its determination shall be final.

(f)

"Change in Control" shall mean:

(i)

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (W) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company), (X) any acquisition by the Company, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation con trolled by the Company or (Z) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (A), (B) and (C) of subsection (iii) of this Section 2(f) are satisfied; or

(ii)

Individuals who, as of April 28, 2003, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to April 28, 2003 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or

(iii)

Approval by the shareholders of the Company of a reorganization, merger, binding share exchange or consolidation, in each case, unless, following such reorganization, merger, binding share exchange or consolidation, (A) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger, binding share exchange or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, binding share exchange or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no person (excluding the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such reorganization, merger, binding share exchange or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger, binding share exchange or consolidation, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of director s of the corporation resulting from such reorganization, merger, binding share exchange or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger, binding share exchange or consolidation; or

(iv)

Approval by the shareholders of the Company of (A) a complete liquidation or dissolution of the Company or (B) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (1) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company V oting Securities, as the case may be, (2) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.

(g)

"Change in Control Price" means, with respect to a Share, the highest price per such Share paid in such tender or exchange offer or corporate transaction. To the extent the consideration paid in any such transaction described above consists all or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined by the Committee.

(h)

"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.

(i)

"Committee" shall mean the Committee on Management of the Board, or any successor to such committee, composed of no fewer than three directors, each of whom is an Outside Director.

(j)

"Company" shall mean Bausch & Lomb Incorporated, a New York corporation.

(k)

"Covered Employee" shall mean a "covered employee" within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.

(l)

"Disability" shall mean, unless otherwise provided by the Committee, (i) "Disability" as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual Agreement or it does not define "Disability," total disability as determined under the Company's Long-Term Disability Plan applicable to the Participant

(m)

"Effective Date" shall have the meaning set forth in Section 16.

(n)

"Employee" shall mean any employee or prospective employee of the Company or any Affiliate, other than a Non-Employee Director. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an Employee shall be considered to have incurred a Termination of Service and to have ceased to be an Employee if his or her employer ceases to be an Affiliate, even if he or she continues to provide services to such employer.

(o)

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

(p)

"Fair Market Value" shall mean, with respect to any property, the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of Shares as of any date shall be the average of the high and low trading prices during normal business hours for the Shares as reported on the New York Stock Exchange (or on any national securities exchange on which the Shares are then listed) for that date or, if no such prices are reported for that date, the average of the high and low trading prices on the preceding date for which such prices were reported, all as reported by such source as the Committee may select.

(q)

"Good Reason" shall have the meaning ascribed to such term in a Participant's Individual Agreement, if any.

(r)

"Incentive Stock Option" shall mean an Option granted under Section 6 that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.

(s)

"Individual Agreement" means an employment, consulting or similar agreement between a Participant and the Company or one of its Subsidiaries or Affiliates, including without limitation any Change of Control Employment Agreement with a Participant.

(t)

"Non-Employee Director" shall mean a member of the Board who is not an employee of the Company, or any of its Affiliates or Subsidiaries.

(u)

"Nonstatutory Stock Option" shall mean an Option granted under Section 6 that is not intended to be an Incentive Stock Option.

(v)

''Option" shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.

(w)

"Other Stock Unit Award" shall mean any right granted to a Participant by the Committee pursuant to Section 10.

(x)

"Outside Director" means a director who qualifies as an "independent director" within the meaning of the New York Stock Exchange Listed Company Manual Section 303.01(B)(2)(a), as amended from time to time and any successor thereto, as an "outside director" within the meaning of Section 162(m) of the Code, and as a "non-employee director" within the meaning of Rule 16b-3 promulgated under the Exchange Act.

(y)

"Participant" shall mean an Employee or Non-Employee Director who is selected by the Committee to receive an Award under the Plan.

(z)

"Performance Award" shall mean any Award of Performance Shares or Performance Units pursuant to Section 9.

(aa)

"Performance Period" shall mean that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.

(bb)

"Performance Share" shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(cc)

"Performance Unit" shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.

(dd)

"Person" shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.

(ee)

"Qualified Performance-Based Award" shall mean an Award of Restricted Stock, Performance Units, Performance Shares or Other Stock Unit Awards designated as such by the Committee at the time of grant, based upon a determination that (i) the recipient is or may be a "covered employee" within the meaning of Section 162(m)(3) of the Code in the year in which the Company would expect to be able to claim a tax deduction with respect to such Restricted Stock, Performance Units or Performance Shares and (ii) the Committee wishes such Award to qualify for the Section 162(m) Exemption.

(ff)

"Restricted Stock" shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including, without limitation, any restriction on the right to vote such Share, and the right to receive any cash dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.

(gg)

"Restricted Stock Award" shall mean an award of Restricted Stock under Section 8.

(hh)

"Retirement" shall mean retirement from active employment with the Company, a Subsidiary or Affiliate as defined in the Company's retirement program, as determined by the Committee.

(ii)

"Section 162(m) Exemption" shall mean the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.

(jj)

"Shares" shall mean the shares of common stock of the Company.

(kk)

''stock Appreciation Right" shall mean any right granted to a Participant pursuant to Section 7 to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise or, if the Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before the date of exercise over (ii) the grant price of the right on the date of grant, or if granted in connection with an outstanding Option on the date of grant of the related Option, as specified by the Committee in its sole discretion. The grant price shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be, except in the case of Substitute Awards or in connection with an adjustment provided in Section 4(c). Any payment by the Company in respect of such right may be made in cash, Shares, other property, or any combination thereof, as th e Committee, in its sole discretion, shall determine.

(ll)

"Subsidiary" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.

(mm)

"Substitute Awards" shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines.

(nn)

"Termination of Service" shall mean the termination of the Participant's employment with, or performance of services for, the Company and any of its Subsidiaries or Affiliates. A Participant employed by, or performing services for, a Subsidiary or an Affiliate shall also be deemed to incur a Termination of Service if the Subsidiary or Affiliate ceases to be such a Subsidiary or an Affiliate, as the case may be, and the Participant does not immediately thereafter become an employee of, or service-provider for, the Company or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered Terminations of Service.

SECTION 3.  ADMINISTRATION.
The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to such orders or resolutions not inconsistent with the provisions of the Plan as may from time to time be adopted by the Board, to (a) select the Employees to whom Awards may from time to time be granted hereunder; (b) determine the type or types of Award to be granted to each Participant; (c) determine the number of Shares to be covered by each Award granted hereunder; (d) determine the terms and conditions, not inconsistent with the provisions of the Plan, of any Award granted hereunder; (e) determine whether, to what extent and under what circumstances Awards may be settled in cash, Shares or other property or canceled or suspended; (f) determine whether, to what extent, and under what circumstances cash, Shares, other property and other amounts payable with respect to an Award made under the Plan shall be deferred either automatically or at the election of the Participant; (g) modify, amend or adjust the terms and conditions of any Award, at any time or from time to time, including but not limited to performance goals; provided, however, that the Committee may not adjust upwards the amount payable with respect to a Qualified Performance-Based Award or waive or alter the performance goals associated therewith; (h) interpret and administer the Plan and any instrument or agreement entered into under the Plan; (i) establish such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (j) make any other determination and take any other action that the Committee deems necessary or desirable for administration of the Plan. No amendment to the terms of an Award shall have the effect of reducing the purchase price of any Option or grant price of any Stock Appreciation Right, including the cancellation of an Option or Stock Appreciation Right and replacement with another Award with a lower purchase or grant price. Notwithstanding the foregoing or anything else to the contrary in the Plan, any action or determination by the Committee specifically affecting or relating to an Award to a Non-Employee Director shall be approved and ratified by the Board and Awards to Non-Employee Directors shall be subject to the limitations set forth in Section 14 hereof.

The Committee may act only by a majority of its members then in office. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange, the Committee may (i) allocate all or any portion of its responsibilities and powers to any one or more of its members and (ii) delegate all or any part of its responsibilities and powers to any officer of the Company selected by it, provided that no such delegation may be made that would cause Awards or other transactions under the Plan to cease to be exempt from Section 16(b) of the Exchange Act or cause an Award designated as a Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption. Any such allocation or delegation may be revoked by the Committee at any time.

Any determination made by the Committee with respect to any Award shall be made in the sole discretion of the Committee at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company, any Participant, any shareholder and any Employee.

Any authority granted to the Committee may also be exercised by the full Board, except to the extent that the grant or exercise of such authority would cause any Award or transaction to become subject to (or lose an exemption under) the short-swing profit recovery provisions of Section 16(b) of the Exchange Act or cause an Award designated as a Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.

SECTION 4.  SHARES SUBJECT TO THE PLAN.

(a)

Subject to adjustment as provided in Section 4(c), a total of 6,000,000 Shares shall be authorized for issuance under the Plan, of which no more than 1,800,000 Shares may be issued pursuant to Awards other than Options and Stock Appreciation Rights. If any Shares subject to an Award or to an award under the Company's 1990 Stock Incentive Plan or 2001 Stock Incentive Plan for Non-Officers (the "Pre-Existing Plans") are forfeited or if any Award or award under the Pre-Existing Plans based on Shares is settled for cash, or expires or otherwise is terminated without issuance of such Shares, the Shares subject to such Award shall, to the extent of such cash settlement, forfeiture or termination, again be available for Awards under the Plan. In the event that any Option or other Award granted hereunder is exercised through the tendering of Shares (either actually or by attestation) or in the event that withholding tax liabilities arising from such Option or other Award are satisfied by th e tendering of Shares or by the withholding of Shares by the Company, only the number of Shares issued net of the Shares tendered or withheld shall be counted for purposes of determining the maximum number of Shares available for issuance under the Plan. In the event that any option or award granted under the Pre-Existing Plans is exercised through the tendering of Shares or in the event that withholding tax liabilities arising from such options or awards are satisfied by the tendering of Shares or the withholding of Shares by the Company, the Shares so tendered or withheld shall again be available

for Awards under the Plan. Shares reacquired by the Company on the open market using the cash proceeds received by the Company from the exercise of Options granted under the Plan or options granted under the Pre-Existing Plans that are exercised after the effective date of the Plan shall be available for Awards under the Plan; provided, that the number of Shares available shall not exceed the amount of (A) such cash proceeds divided by (B) the Fair Market Value of the Shares on the date of exercise of the applicable Options. In addition, Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year.

(b)

Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.

(c)

In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or in the event of any extraordinary dividend or other similar event, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee, in its sole discretion, deems equitable or appropriate, including, without limitation, such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan, in the aggregate or to any one Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Options, Stock Appreciation Rights or other Awards granted under the Plan, and in the number, class and kind of securities subject to Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other aw ards denominated in the shares of, another company or the payment of cash) as the Committee may determine to be appropriate in its sole discretion; provided, however, that the number of Shares subject to any Award shall always be a whole number.

SECTION 5.  ELIGIBILITY.
Any Employee or Non-Employee Director shall be eligible to be selected as a Participant; provided, however, that Incentive Stock Options shall not be awarded to Non-Employee Directors and Awards to Non-Employee Directors shall be subject to the limitations set forth in Section 14 hereof.

SECTION 6.  STOCK OPTIONS.
Options may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan. Any Option granted under the Plan shall be evidenced by an Award Agreement in such form as the Committee may from time to time approve. Any such Option shall be subject to the following terms and conditions and to such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall deem desirable:

(a)

OPTION PRICE.  The purchase price per Share purchasable under an Option shall be determined by the Committee in its sole discretion; provided, however, that, except in the case of Substitute Awards or in connection with an adjustment provided for in Section 4(c), such purchase price of an Option shall not be less than the Fair Market Value of the Share on the date of the grant, provided, further that the Committee shall have the authority to provide for a post-grant reduction in exercise price to reflect any floating index as specified in an Award Agreement, provided that, unless the Committee determines otherwise, no such provision shall be included in any Award Agreement of a Participant who the Committee determines is or may be a Covered Employee in the year in which the Option is expected to be taxable to such Participant to the extent that such provision would result in such Option failing to meet the requirements of the Section 162(m) Exemption.

(b)

OPTION PERIOD.  The term of each Option shall be fixed by the Committee in its sole discretion; provided that (except as specifically provided in Section 6) no Option shall be exercisable after the expiration of ten years from the date the Option is granted.

(c)

EXERCISABILITY.  Options shall be exercisable at such time or times as determined by the Committee at or subsequent to grant. Except under certain circumstances in connection with a Participant's Termination of Service or in the event of a Change in Control, Options will not be exercisable before the expiration of one year from the date the Option is granted.

(d)

METHOD OF EXERCISE.  Subject to the other provisions of the Plan, any Option may be exercised by the Participant in whole or in part at such time or times, (i) by delivering written notice of exercise to the Company specifying the number of shares of Common Stock subject to the Option to be purchased and (ii) by making payment of the option price in such form or forms, including, without limitation, payment by delivery of cash, delivery of Shares (either actually or by attestation) already owned by the Participant for at least six months (or any shorter period sufficient to avoid a charge to the Company's

earnings for financial reporting purposes) or delivery of other consideration (including, where permitted by law and the Committee), Awards having a Fair Market Value on the exercise date equal to the total option price, or by any combination of cash, such Shares and other consideration as the Committee may specify in the applicable Award Agreement. If approved by the Committee, except to the extent prohibited by applicable law, payment in full or in part may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay the option price, and, if requested, the amount of any federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. No shares of Common Stock shall be delivered until full payment therefor has bee n made. Except as otherwise provided herein or in an applicable Award Agreement, a Participant shall have all of the rights of a shareholder of the Company holding the class or series of Common Stock that is subject to such Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the Participant has delivered written notice of exercise and has paid in full for such shares.

(e)

INCENTIVE STOCK OPTIONS.  In accordance with rules and procedures established by the Committee, and except as otherwise provided in Section 11, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options held by any Participant which are exercisable for the first time by such Participant during any calendar year under the Plan (and under any other employee benefit plans of the Company or any Subsidiary) shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. Incentive Stock Options shall not be granted to Participants who are Non-Employee Directors or prospective employees. The terms of any Incentive Stock Option granted hereunder shall comply in all respects with the provisions of Section 422 of the Code or any successor provision, and any regulations promulgated thereund er. The aggregate number of Shares with respect to which Incentive Stock Options may be issued under the Plan shall not exceed 5,000,000.

(f)

FORM OF SETTLEMENT.  In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option's exercise shall be in the form of Restricted Stock or other similar securities, or may reserve the right so to provide after the time of grant.

(g)

Termination by Reason of Death.  Unless otherwise determined by the Committee, if a Participant incurs a Termination of Service by reason of death, any Option held by such Participant shall vest in full and shall remain exercisable (i) in the case of a Nonstatutory Stock Option, until the first anniversary of such Termination of Service (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) and (ii) in the case of an Incentive Stock Option, until the earlier of (A) the first anniversary of the date of death or (B) the expiration of the stated term of such Incentive Stock Option.

(h)

Termination by Reason of Disability.  Unless otherwise determined by the Committee, if a Participant incurs a Termination of Service by reason of Disability, any Option held by such Participant shall vest in full and remain exercisable until (i) in the case of a Nonstatutory Stock Option, the first anniversary of such Termination of Service (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) and (ii) in the case of an Incentive Stock Option, the earlier of (A) the first anniversary of such Termination of Service or (B) the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, notwithstanding the expiration of such period, any unexercised Option, may thereafter be exercised (x) in the case of a Nonstatutory Stock Option, for a period of one year from the date of such death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) and (y) in the cas e of an Incentive Stock Option, until the earlier of (1) the first anniversary of the date of death or (2) the expiration of the stated term of such Incentive Stock Option. In the event of Termination of Service by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonstatutory Stock Option.

(i)

Termination by Reason of Retirement.  Unless otherwise determined by the Committee, if a Participant incurs a Termination of Service by reason of Retirement, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such Termination of Service, or on such accelerated basis as the Committee may determine, until the earlier of (i) the third anniversary of such Termination of Service or (ii) the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, any unexercised

Option may to the extent exercisable on the date of death thereafter be exercised (A) in the case of a Nonstatutory Stock Option, until the later of (x) the first anniversary of the date of death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) or (y) the third anniversary of the Termination of Service by reason of Retirement and (B) in the case of an Incentive Stock Option, until the earlier of (xx) the later of (1) the first anniversary of the date of death or (2) the third anniversary of the Termination of Service by reason of Retirement or (yy) the expiration of the stated term of such Incentive Stock Option. In the event of Termination of Service by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonstatutory Stock Option.

(j)

Other TerminationS.  Unless otherwise determined by the Committee: (i) if a Participant incurs a Termination of Service for Cause, all Options held by such Participant shall thereupon immediately terminate; (ii) if a Participant incurs a Termination of Service due to a termination by the Company for any reason other than death, Disability, Retirement or for Cause, any Option held by such Participant, may, to the extent it was exercisable at the time of Termination of Service, be exercised until the earlier of (A) 90 days from the date of such Termination of Service or (B) the expiration of the stated term of the Option; and (iii) if a Participant incurs a Termination of Service due to a voluntary termination by the Participant (other than for Retirement), any Option held by such Participant, may, to the extent it was exercisable at the time of Termination of Service, be exercised until the earlier of (A) 30 days from the date of such Termination of Service or (B) the expiration of t he stated term of the Option; provided, however, that if the Participant dies within either of the exercise periods established by Sections 5(j)(ii) and 5(j)(iii), any unexercised Option held by such Participant shall, continue to be exercisable to the extent to which it was exercisable at the time of death until (x) in the case of Nonstatutory Stock Options, the first anniversary of the date of death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) or (y) in the case of Incentive Stock Options, the earlier of (A) the first anniversary of the date of death or (B) the expiration of the stated term of such Option.

(k)

Change in Control Termination.  Unless otherwise determined by the Committee, notwithstanding any other provision of this Plan to the contrary, in the event a Participant incurs a Termination of Service other than for Cause during the 24-month period following a Change in Control, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such Termination of Service until the earlier of (i) the latest of (A) the second anniversary of such date of Termination of Service or (B) such other date as may be provided in the Plan for such Termination of Service or as the Committee may provide in the Award Agreement or (C) such other date as may be provided in any Individual Agreement, or (ii) the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, notwithstanding the expiration of such period, any unexercised Option may to the extent exercisable on the date of death thereafter be exercised (x) in the case of a Nonstatutory Stock Option, until the later of (i) the end of such exercise period or (ii) the first anniversary of the date of death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) or (y) in the case of an Incentive Stock Option, until the earlier of (i) the later of (A) the end of such exercise period or (B) the first anniversary of the date of death or (ii) the expiration of the stated term of such Incentive Stock Option. If an Incentive Stock Option is exercised after the expiration of the post-termination exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonstatutory Stock Option

SECTION 7.  STOCK APPRECIATION RIGHTS.
Stock Appreciation Rights may be granted hereunder to Participants either alone or in addition to other Awards granted under the Plan and may, but need not, relate to a specific Option granted under Section 6. The provisions of Stock Appreciation Rights need not be the same with respect to each recipient. Any Stock Appreciation Right related to a Nonstatutory Stock Option may be granted at the same time such Option is granted or at any time thereafter before exercise or expiration of such Option. Any Stock Appreciation Right related to an Incentive Stock Option must be granted at the same time such Option is granted. In the case of any Stock Appreciation Right related to any Option, the Stock Appreciation Right or applicable portion thereof shall terminate and no longer be exercisable upon the termination or exercise of the related Option, except that a Stock Appreciation Right granted with respect to less than the full number of Shares covered by a related Option shall not be reduced until the exercise or termination of the related Option exceeds the number of Shares not covered by the Stock Appreciation Right. Any Option related to any Stock Appreciation Right shall no longer be exercisable to the extent the related Stock Appreciation Right has been exercised. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right, as it shall deem appropriate; provided that a Stock Appreciation Right shall not have a term of greater than ten years.

SECTION 8. RESTRICTED STOCK.

(a)

ADMINISTRATION.  Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Employees and Non-Employee Directors to whom and the time or times at which grants of Restricted Stock will be awarded, the number of shares to be awarded to any Employee or Non-Employee Director, the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition to those contained in Section 15(f).

(b)

ISSUANCE.  A Restricted Stock Award shall be subject to restrictions imposed by the Committee during a period of time specified by the Committee (the "Restriction Period"). Restricted Stock Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The provisions of Restricted Stock Awards need not be the same with respect to each recipient. Except for certain situations specified by the Committee (and as provided in Section 11(a)(ii)), Restricted Stock Awards shall be subject to restrictions for a minimum of three years from date of grant.

(c)

REGISTRATION.  Any Restricted Stock issued hereunder may be evidenced in such manner, as the Committee, in its sole discretion, shall deem appropriate, including, without limitation, book entry registration or issuance of a stock certificate or certificates. In the event any stock certificates are issued in respect of shares of Restricted Stock awarded under the Plan, such certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.

(d)

FORFEITURE.  Except as otherwise determined by the Committee at the time of grant or thereafter, upon Termination of Service for any reason during the Restriction Period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participant and reacquired by the Company and the Company shall cancel any book entry registrations. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the Participant promptly after expiration of the period of forfeiture, as determined or modified by the Committee.

SECTION 9.  PERFORMANCE AWARDS.
Performance Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The performance criteria to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Award; provided, however, that a Performance Period may not be shorter than 12 months or longer than five years. Except as provided in Section 11 or as otherwise specified by the Committee, Performance Awards will be distributed only after the end of the relevant Performance Period. Performance Awards may be paid in cash, Shares, other property, or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance levels to be achieved for each Performance Period and the amount of the Award to be distributed shall be conclusively determined by the Committee. Perform ance Awards may be paid in a lump sum or in installments following the close of the Performance Period or, in accordance with procedures established by the Committee, on a deferred basis.

SECTION 10.  OTHER STOCK UNIT AWARDS.

(a)

ADMINISTRATION.  Other Awards of Shares and other Awards that are valued in whole or in part by reference to, or are otherwise based on, Shares or other property ("Other Stock Unit Awards") may be granted hereunder to Participants, either alone or in addition to other Awards granted under the Plan, and such Other Stock Unit Awards shall also be available as a form of payment in the settlement of other Awards granted under the Plan. Other Stock Unit Awards may be paid in Shares, cash or any other form of property, as the Committee shall determine. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the Employees and Non-Employee Directors to whom and the time or times at which such Awards shall be made, the number of Shares to be granted pursuant to such Awards, and all other conditions of the Awards. The provisions of Other Stock Unit Awards need not be the same with respect to each recipient. Unless Other Stock Unit Awards are ma de in lieu of cash compensation, they will be subject to performance and/or vesting restrictions similar to those identified in Section 8 or 9.

(b)

TERMS AND CONDITIONS.  Shares (including securities convertible into Shares) subject to Awards granted under this Section 10 may be issued for no cash consideration or for such minimum consideration as may be required by applicable law. Shares (including securities convertible into Shares) purchased pursuant to a purchase right awarded under this Section 10 shall be purchased for such consideration as the Committee shall determine in its sole discretion, which, except in the case of Substitute Awards, shall not be less than the Fair Market Value of such Shares or other securities as of the date such purchase right is awarded.

SECTION 11.  CHANGE IN CONTROL PROVISIONS.

(a)

IMPACT OF EVENT.  Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise at the time of grant with respect to a particular Award, in the event of a Change in Control:

(i)

any Options and Stock Appreciation Rights outstanding as of the date such Change in Control occurs, and which are not then exercisable and vested, shall become fully exercisable and vested;

(ii)

the restrictions and deferral limitations applicable to any Restricted Stock outstanding as of the date such Change in Control occurs shall lapse, and such Restricted Stock shall become free of all restrictions and limitations and become fully vested and transferable;

(iii)

all Performance Awards outstanding as of the date such Change in Control occurs shall be considered to be earned and payable in full, or at such other level as may be specified in the applicable Award agreement between the Participant and the Company, and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed; and

(iv)

the restrictions and deferral limitations and other conditions applicable to any Other Stock Unit Awards or any other Awards outstanding as of the date such Change in Control occurs shall lapse, and such Other Stock Unit Awards or such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable.

(b)

CHANGE IN CONTROL CASH-OUT.  Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the "Exercise Period"), if the Committee shall determine at, or at any time after, the time of grant, a Participant holding an Option or Stock Appreciation Right shall have the right, whether or not the Option or Stock Appreciation Right is fully exercisable and in lieu of the payment of the purchase price for the Shares being purchased under the Option or Stock Appreciation Right and by giving notices to the Company, to elect (within the Exercise Period) to surrender all or part of the Option or Stock Appreciation Right to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per Share on the date of such election shall exceed the purchase price per Share under the Option or Stock Appreciation Right (the "spread') multiplied by the number of Shares granted under the Option or Stock Appreciation Right as to which the right granted under this Section 11(b) shall have been exercised.

SECTION 12.  CODE SECTION 162(m) PROVISIONS.

(a)

Notwithstanding any other provision of the Plan, if the Committee determines at the time Restricted Stock, a Performance Award or an Other Stock Unit Award is granted to a Participant who is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 12 is applicable to such Award.

(b)

If Restricted Stock, a Performance Award or an Other Stock Unit Award is subject to this Section 12, then, in addition to any other restrictions imposed on such Awards, the grant, the lapsing of restrictions thereon and/or the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following: net cash provided by operating activities, earnings per share from continuing operations, operating income, revenues, operating margins, return on operating assets, return on equity, economic value added, stock price appreciation, total shareholder return, cost control, strategic initiatives, market share, net income, or return on invested capital of the Company or the Affiliate or division of the Company for or within which the Participant is primarily employed. Such performance goa ls also may be based on the achievement of specified levels of Company performance (or performance of an applicable Affiliate or division of the Company) under one or more of the measures described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.

(c)

Notwithstanding any provision of the Plan other than Section 11, with respect to any Restricted Stock, Performance Award or Other Stock Unit Award that is subject to this Section 12, the Committee may adjust downwards, but not upwards, the number of such Awards to be granted to such Participant and/or the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of a Termination of Service due to the death or disability of the Participant or due to a Termination of Service by the Company (or the Participant's employer) without Cause or a Termination of Service by the Participant for Good Reason.

(d)

The Committee shall have the power to impose such other restrictions on Awards subject to this Section 12 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements of the Section 162(m) Exemption.

(e)

Notwithstanding any provision of the Plan other than Section 4(c), no Participant may be granted Options or Stock Appreciation Rights during any three-year period with respect to more than 2,000,000 (two million) shares, or Restricted Stock or Performance Awards subject to this Section 12 that are denominated in Shares, in any three-year period with respect to more than 1,000,000 (one million) Shares, and the maximum dollar value payable with respect to Performance Units and/or Other Stock Unit Awards that are valued with reference to property other than Shares and granted to any Participant in any three-year period is $10,000,000.

SECTION 13.  AMENDMENTS AND TERMINATION.
The Board may amend, alter, suspend, discontinue or terminate the Plan or any portion thereof at any time; provided, however, that no such amendment, alteration, suspension, discontinuation or termination (collectively, a "change") (a) shall be made without shareholder approval if such approval is necessary to qualify for or comply with any tax or regulatory requirement for which or with which the Board deems it necessary or desirable to qualify or comply or (b) except as required by applicable law or stock exchange or accounting rules, shall be made without the consent of the affected Participant, if such action would impair the rights of such Participant under any outstanding Award or (c) shall cause a Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption. Notwithstanding anything to the contrary herein, the Committee or Board may amend or alter the Plan in such manner as may be necessary so as to have the Plan conform to local rules and regulations in any jurisd iction outside the United States. Notwithstanding the foregoing, any adjustments made pursuant to Section 4(c) shall not be subject to these restrictions. Shareholder approval of changes to this Plan shall be required to the extent such approval is required by law or agreement, or if such change would: (i) expand the classes of persons to whom Awards may be made under this Plan; (ii) increase the number of shares of Common Stock authorized for grant under this Plan; (iii) increase the number of Shares which may be granted under Awards to any one Participant under this Plan; (iv) increase the number of Shares available for Awards other than Options and Stock Appreciation Rights; (v) allow the creation of additional types of Awards; (vi) decrease performance award criteria except to the extent permitted under Section 12(e); or (vii) change any of the provisions of this sentence of Section 13.

SECTION 14. DIRECTOR STOCK OPTIONS.

Each Non-Employee Director of the Company shall, within ninety (90) days following the director's election at the annual meeting of shareholders (commencing in 2004) and within ninety (90) days after each successive annual meeting of shareholders thereafter during such director's term, be granted nonstatutory stock options to purchase shares at a purchase price per share determined in accordance with subsection 6(a) of the Plan. The number of shares subject to each such option shall be subject to the direction and discretion of the Committee and Board, but shall not exceed in any instance an amount which is equal to (i) three times the average of all compensation paid to Non-Employee Directors, divided by (ii) the fair market value per share of the Company's Common Stock on the date of grant. The average of Non-Employee Director compensation shall be determined by dividing the number of Non-Employee Directors who were eligible for director stock options throughout the entire twelve (12) month period ending on the date of the Annual Meeting of the Shareholders of the Company preceding the grant (the "Calculation Year") into the aggregate compensation paid or payable (including compensation which is deferred) to all such directors with respect to services rendered to the Company as directors during the Calculation Year. No other option grants may be made to Non-Employee Directors of the Company.

SECTION 15.  GENERAL PROVISIONS.

(a)

No Award, and no Shares subject to Awards described in Section 10 that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or by the laws of descent and distribution; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award shall be exercisable, during the Participant's lifetime, only by the Participant or, if permissible under applicable law, by the Participant's guardian or legal representative. Notwithstanding the foregoing, and subject to Section 422 of the Code, the Committee, in its sole discretion, may permit a Participant to assign or transfer an Award (i) by will or by the laws of descent and distribution; or (ii) in the case of a Nonstat utory Stock Option, unless otherwise determined by the Committee, to such Employee's or Non-Employee Director's children or family members, whether directly or indirectly or by means of a trust or partnership or otherwise. For purposes of this Plan, unless otherwise determined by the Committee, "family member" shall have the meaning given to such term in General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933 as amended, or any successor thereto; provided, however, that an Award so assigned or transferred shall be subject to all the terms and conditions of the Plan and the instrument evidencing the Award; provided, further, that Termination of Service shall continue to refer to the Termination of Service of the original Participant.

(b)

No Employee or Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.

(c)

The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, or taken such other similar action as is determined and communicated in writing by the Committee, and otherwise complied with the then applicable terms and conditions.

(d)

Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment or service contract or confer or be deemed to confer on any Participant any right to continue in the employ or service of, or to continue any other relationship with, the Company or any Affiliate or limit in any way the right of the Company or any Affiliate to terminate a Participant's employment or service or other relationship at any time, with or without Cause

(e)

Except as provided in Section 12, the Committee shall be authorized to make adjustments in performance award criteria or in the terms and conditions of other Awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry it into effect. In the event that the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of or combination with another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate.

(f)

The Committee shall have full power and authority to determine whether, to what extent and under what circumstances any Award shall be canceled or suspended. In addition, all outstanding Awards to any Participant may, as determined by the Committee in its sole discretion in any applicable Award Agreement be canceled if the Participant, without the consent of the Company, while employed by the Company or after a Termination of Service, establishes a relationship with a competitor of the Company or engages in activity that is in conflict with or adverse to the interest of the Company or any of its Affiliates, as determined by the Committee. Furthermore, the Committee may determine that an Award agreement require that, under the circumstances described above calling for cancellation of an Award, the Participant shall also be required to remit to the Company, with respect to any Option exercised by the Participant on or after the date which is six months prior to the date that the Participant est ablishes a competitive relationship or engages in competing activity as foresaid an amount in cash or a certified or bank check equal to 100% of the excess of (A) the fair market value per share of the Company's Common Stock on the date of exercise, multiplied by the number of shares with respect to which the Option is exercised; over (B) the aggregate option price for such number of shares. Any provisions implemented pursuant to this Section 15(f) shall be inapplicable following a Change in Control.

(g)

All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

(h)

No Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would comply with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject. The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock under the Plan prior to fulfillment of all of the following cond itions: (i) listing or approval for listing upon notice of issuance, of such shares on the New York Stock Exchange or such other securities exchange as may at the time be the principal market for the Common Stock; (ii) any registration or other qualification of such shares of the Company under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii) obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.

(i)

The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award) may, if so determined by the Committee, be entitled to receive, currently or on a deferred or restricted (based on vesting) basis, cash dividends, or cash payments in amounts equivalent to cash dividends on Shares ("dividend equivalents") with respect to the number of Shares covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested.

(j)

Except as otherwise required in any applicable Award Agreement or by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.

(k)

The Company shall be authorized to withhold from any Award granted or payment due under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by delivery of or transfer of Shares to the Company (up to the employer's minimum required tax withholding rate to the extent the Participant has owned the surrendered shares for less than six months if such a limitation is necessary to avoid a charge to the Company for financial reporting purposes), or by directing the Company to retain Shares (up to the employer's minimum required tax withholding rate) otherwise deliverable in connection with the Award.

(l)

Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.

(m)

The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New York and applicable federal law.

(n)

If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.

(o)

Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in currency, local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company's obligation with respect to tax equalization for Employees on assignments outside their home country.

SECTION 16.  EFFECTIVE DATE OF PLAN.
The Plan shall be effective as of the date that the Plan is approved by the shareholders of the Company (the "Effective Date").

SECTION 17.  TERM OF PLAN.
The Plan will terminate on the tenth anniversary of the Effective Date unless sooner terminated by the Board pursuant to Section 13; provided, however, that (a) no Incentive Stock Options may be granted more than ten years after the later of (i) the adoption of the Plan by the Board and (ii) the adoption by the Board of any amendment to the Plan that constitutes the adoption of a new plan for purposes of Section 422 of the Code. Notwithstanding the foregoing, the Plan provisions applicable to outstanding Awards shall continue after the Plan termination date until the last of such Awards have been paid out or have expired by their own terms.

EX-11 5 ex11q203.htm COMPUTATION OF PER SHARE EARNINGS Bausch & Lomb Incorporated

Bausch & Lomb Incorporated

Exhibit 11

Statement Regarding Computation of Per Share Earnings
(Dollar Amounts in Millions, Share Amounts in Thousands Except Per Share Data)

        Second Quarter Ended

            Six Months Ended

June 28,
      2003

June 29,
      2002

June 28,
      2003

June 29,
      2002

Income From Continuing Operations
   Before Cumulative Effect of Change
   in Accounting Principle

$28.3

$21.8

$44.8

$30.7

   Cumulative Effect of Change in
      Accounting Principle, Net of Taxes

           -

           -

     (0.9)

           -

Net Income (a)

$28.3

$21.8

$43.9

$30.7

==========

==========

=========

=========

Actual outstanding Common and Class
   B shares at beginning of period

53,140

53,836

53,893

53,543

Sum of weighted average activity of
   Common and Class B shares issued
   for stock options, restricted stock
   awards and cancellations, and net
   activity of shares held in deferred
   compensation plan

           5

           1

    (437)

     224

Weighted Basic Shares (b)

53,145

53,837

53,456

53,767

Effect of assumed exercise of

   Common stock equivalents

       286

       198

     160

     190

Weighted Diluted Shares (c)

53,431

54,035

53,616

53,957

=========

==========

==========

==========

Basic Earnings Per Share (a/b)

$  0.53

$  0.41

$ 0.82

$ 0.57

=========

==========

==========

==========

Diluted Earnings Per Share (a/c)

$  0.53

$  0.40

$ 0.82

$ 0.57

=========

==========

==========

==========

EX-31.A 6 e31aq203.htm CEO 302 CERTIFICATION Exhibit 31-a
Exhibit 31-a

Bausch & Lomb Incorporated
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Ronald L. Zarrella, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Bausch & Lomb Incorporated;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days
    prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
    registrant's ability to record, process, summarize and report financial data and have identified for the
    registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role
    in the registrant's internal controls; and

6.

The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 7, 2003

By: /s/ Ronald L. Zarrella

Ronald L. Zarrella
Chairman and Chief Executive Officer

EX-31.B 7 e31bq203.htm CFO 302 CERTIFICATION Exhibit 31-b
Exhibit 31-b

Bausch & Lomb Incorporated
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Stephen C. McCluski, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Bausch & Lomb Incorporated;

2.

Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.

Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant,
    including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
    the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days
    prior to the filing date of this quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and
    procedures based on our evaluation as of the Evaluation Date;

5.

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the
    registrant's ability to record, process, summarize and report financial data and have identified for the
    registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role
    in the registrant's internal controls; and

6.

The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: August 7, 2003

By: /s/ Stephen C. McCluski

Stephen C. McCluski
Senior Vice President and
Chief Financial Officer

EX-32.A 8 e32aq203.htm CEO 906 CERTIFICATION EXHIBIT 99(a) EXHIBIT 32(a)

Bausch & Lomb Incorporated

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350

I, Ronald L. Zarrella, Chairman and Chief Executive Officer of Bausch & Lomb Incorporated (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.

the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 28, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Bausch & Lomb Incorporated and will be retained by Bausch & Lomb Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Ronald L. Zarrella
Ronald L. Zarrella
Chairman and
Chief Executive Officer

Date: August 7, 2003

EX-32.B 9 e32bq203.htm CFO 906 CERTIFICATION EXHIBIT 99(a) EXHIBIT 32(b)

Bausch & Lomb Incorporated

Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350

I, Stephen C. McCluski, Senior Vice President and Chief Financial Officer of Bausch & Lomb Incorporated (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1.

the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 28, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to Bausch & Lomb Incorporated and will be retained by Bausch & Lomb Incorporated and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ Stephen C. McCluski
Stephen C. McCluski
Senior Vice President and
Chief Financial Officer

Date: August 7, 2003

-----END PRIVACY-ENHANCED MESSAGE-----

Fiscal year ended	Amount
December 27, 2003	$26.2
December 25, 2004	26.2
December 31, 2005	25.8
December 30, 2006	23.2
December 29, 2007	20.5

	Second Quarter Ended		Six Months Ended
	----------------------------------		----------------------------------
	June 28, 2003	June 29, 2002	June 28, 2003	June 29, 2002
	--------------	--------------	--------------	--------------

Product Category
Contact Lens	$149	$132	$282	$252
Lens Care	126	117	232	223
Pharmaceuticals	125	101	225	186
Cataract and Vitreoretinal	82	75	161	147
Refractive	31	33	61	65
	--------------	--------------	--------------	--------------
	$513	$458	$961	$873
	========	========	========	========

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings
	In its Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the period ended March 29, 2003, the company reported on a consolidated shareholder class action lawsuit currently pending in the U.S. District Court for the Western District of New York. On March 31, 2003, the District Court, on the company's motion, dismissed certain claims asserted against the company by the plaintiffs. In addition to dismissing certain claims against the company, all direct claims against Stephen C. McCluski were dismissed and those direct claims paralleling the claims dismissed against the company were also dismissed as to Messrs. Carpenter and Sassano. In its Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the period ended March 29, 2003, the company reported on several pending patent proceedings relating to silicon hydrogel contact lens technology, including its PureVision contact lens product line. One of those proceedings is a lawsuit filed by CIBA Vision Corporation (CIBA) in the U.S. District Court for the Northern District of Georgia. The discovery phase has closed in this lawsuit and following the Court's July 8, 2003 order denying the company's motions for summary judgment the Company now anticipates that a trial date will be set for late 2003 or early 2004. Another proceeding pertaining to the company's PureVision contact lens product line as reported in the company's Annual Report on Form 10-K for 2002 and its Quarterly Report on Form 10-Q for the period ended March 29, 2003 is a lawsuit filed in the Administrative Court of Duesseldorf, Germany by Novartis AG, CIBA's parent corporation. The German court issued its ruling in March of 2003 that the company's PureVision lens product infringes the Novartis patent at issue. CIBA served this non-final judgment on the company on April 29, 2003, enjoining the company from further sales of PureVision contact lenses in Germany. The company is appealing the German decision. In addition, the company continues to challenge the validity of the Novartis patent in the European Patent Office. If the European Patent Office finally determines that the patent is invalid, it will not be enforceable in Europe and the decision by the German court will be vacated. A preliminary opini on was rendered by the European Patent Office in April 2003 citing grounds for determining that based on the record then before it, the patent would be invalid. A decision is expected after a hearing scheduled for September 17, 2003. Finally, the company commenced an additional patent infringement lawsuit against CIBA relating to CIBA's Night & Day product line on July 22, 2003 in the U. S. District Court for the Western District of New York.
Item 4.	Submission of Matters to a Vote of Security Holders
	The 2003 annual meeting of shareholders was held on April 29, 2003. The following matters were voted upon and received the votes set forth below:
	1.	The individuals named below were elected to three-year terms as directors.
		VOTES CAST
		DIRECTOR	FOR	WITHHELD
		Franklin E. Agnew	41,033,755	7,189,263
		Ruth R. McMullin	46,242,135	1,980,883
		Linda Johnson Rice	46,220,278	2,002,740
		Barry W. Wilson	46,571,075	1,651,943
		Directors continuing in office are Domenico DeSole, Jonathan S. Linen, John R. Purcell, William H. Waltrip, Kenneth L. Wolfe, and Ronald L. Zarrella.
	2.	The election of PricewaterhouseCoopers, LLP as independent accountants for 2003 was ratified, with 46,133,137 shares voting for, 1,735,609 shares voting against, and 354,272 shares abstaining.
	3.	The Bausch & Lomb 2003 Long Term Incentive Plan was approved, with 30,247,841 shares voting for, 11,455,447 shares voting against, and 457,540 shares abstaining.
	4.	A proposal to amend the company's By-Laws and Certificate of Incorporation to authorize the annual election of the Board of Directors did not receive the requisite number of votes to effectuate the change, with 32,560,369 shares voting for, 9,134,884 shares voting against, and 470,722 shares abstaining.
Item 6.	Exhibits and Reports on Form 8-K
(a)	Item 601 Exhibits.
	Those exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index immediately preceding the exhibits filed herewith and such listing is incorporated herein by reference.
(b)	Reports on Form 8-K.
	On April 24, 2003, the company furnished the SEC with a current report on Form 8-K, announcing its issuance of a press release relative to its financial results for the first quarter ended March 29, 2003. In accordance with Securities and Exchange Commission Release No. 33-8216, such information, which was intended to be furnished under Item 12 of Form 8-K, "Results of Operations and Financial Condition," was instead furnished under Item 9, "Regulation FD Disclosure". No financial statements were filed with the Form 8-K.

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.





	BAUSCH & LOMB INCORPORATED

Date: August 7, 2003	By: /s/ Ronald L. Zarrella
	Ronald L. Zarrella Chairman and Chief Executive Officer

Date: August 7, 2003	By: /s/ Stephen C. McCluski
	Stephen C. McCluski Senior Vice President and Chief Financial Officer

S-K Item 601 No.	Document
(3)-a	Certificate of Incorporation of Bausch & Lomb Incorporated (filed as Exhibit (3)-a to the company's Annual Report on Form 10-K for the fiscal year ended December 29, 1985, File No. 1-4105, and incorporated herein by reference).
(3)-b	Certificate of Amendment of Bausch & Lomb Incorporated (filed as Exhibit (3)-b to the company's Annual Report on Form 10-K for the fiscal year ended December 31, 1988, File No. 1-4105, and incorporated herein by reference).
(3)-c	Certificate of Amendment of Bausch & Lomb Incorporated (filed as Exhibit (3)-c to the company's Annual Report on Form 10-K for the fiscal year ended December 26, 1992, File No. 1-4105, and incorporated herein by reference).
(3)-d	By-Laws of Bausch & Lomb Incorporated, as amended, effective October 26, 1998 (filed as Exhibit (3)-a to the company's Form 10-Q for the quarter ended September 26, 1998, File No. 1-4105, and incorporated herein by reference).
(4)-a	See Exhibit 3(a).
(4)-b	See Exhibit 3(b).
(4)-c	See Exhibit 3(c).
(4)-d	Form of Indenture, dated as of September 1, 1991, between the company and Citibank, N.A., as Trustee, with respect to the company's Medium-Term Notes (filed as Exhibit 4-(a) to the company's Registration Statement on Form S-3, File No. 33-42858, and incorporated herein by reference).
(4)-e	Supplemental Indenture No. 1, dated May 13, 1998, between the company and Citibank, N.A. (filed as Exhibit 3.1 to the company's current report on Form 8-K, dated July 24, 1998, File No. 1-4105, and incorporated herein by reference).
(4)-f	Supplemental Indenture No. 2, dated as of July 29, 1998, between the company and Citibank N.A. (filed as Exhibit 3.2 to the company's current report on Form 8-K, dated July 24, 1998, File No. 1-4105, and incorporated herein by reference).
(4)-g	Supplemental Indenture No. 3, dated November 21, 2002, between the company and Citibank, N.A. (filed as Exhibit 4.8 to the company's current report on Form 8-K, dated November 18, 2002, File No. 1-4105, and incorporated herein by reference).
(4)-h	Supplemental Indenture No. 4, dated August 1, 2003, between the company and Citibank N.A. (filed as Exhibit 4.1 to the company's current report on Form 8-K, dated August 6, 2003, File No. 1-4105, and incorporated herein by reference).
(4)-i	Supplemental Indenture No. 5, dated August 4, 2003, between the company and Citibank N.A. (filed as Exhibit 4.2 to the company's current report on Form 8-K, dated August 6, 2003, File No. 1-4105, and incorporated herein by reference).
(10)-a	Director Deferred Compensation Plan as amended and restated on April 28, 2003 (filed herewith).
(10)-b	2003 Long Term Incentive Plan as amended and restated on July 15, 2003 (filed herewith).
(11)	Statement Regarding Computation of Per Share Earnings (filed herewith).
(31)-a	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
(31)-b	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
(32)-a	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (furnished herewith).
(32)-b	Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350 (furnished herewith).

1.	Introduction
	The Director Deferred Compensation Plan (the "Plan") provides the opportunity for Directors of Bausch & Lomb Incorporated (the "Company") to defer all or part of their cash and certain non-cash compensation for serving on the Company's Board of Directors or Committees of the Board of Directors pursuant to the terms of this Plan. This Plan is a restatement of the Company's Deferred Compensation Plan dated February 25, 1992, as amended (the "1992 Plan").
2.	Effective Date
	The effective date of the Plan is January 1, 1997 (the "Effective Date"). It covers eligible compensation earned after the Effective Date as well as all monies previously deferred under the 1992 Plan.
3.	Eligibility
	Any director of the company who is not an officer or employee of the Company is eligible to participate in the Plan with respect to the cash and certain non-cash compensation otherwise payable to him or her for serving on the Company's Board of Directors or Committees of the Board of Directors.
4.	Amount of Deferral
	A director may elect to defer receipt of the compensation described in Section 3 hereof; provided that a minimum amount of $5,000 per year must be deferred.
5.	Time of Election of Deferral
	A director's election to defer cash compensation must be made before the compensation is earned, which means that the election for any year of service commencing with the meeting of the Board of Directors immediately following the Annual Meeting of the Company's Shareholders must be made prior to that meeting. In addition, deferred stock equivalent awards will be deferred automatically pursuant to the terms of the award itself.
6.	Deferral Election
	a)	To defer compensation under the Plan, a director must give written notice to the Plan Administrator. This notice must include (1) the amount or percentage of compensation to be deferred; (2) selection of investment account(s) (as described in Section 7 hereof); (3) the payment commencement date, (i.e. retirement or date certain); (4) the method of payment desired (i.e. annual, lump sum) and, if annual, the number of years of equal installment payments; and (5) the designation of payment to the director's estate or beneficiary in the event of the director's death. Deferred stock equivalent unit awards shall be deferred automatically into Common Stock unit accounts, but participants will be required to provide notice including the information under clauses 4 and 5 above. The Company will provide notice forms for deferral elections (see Exhibits I and II).
	b)	If a director names someone other than his or her spouse as a beneficiary in the event of director's death, a spousal consent form must be signed by that director's spouse and returned to the Company.
	c)	A deferral election (including payment commencement date and method of payout) will continue in effect as to compensation earned in future years until such time as the Company is notified in writing that (1) the director no longer wishes to defer compensation payable subsequent to such notification, or (2) an alternate payment commencement date and/or method of payout is elected for future deferrals of earnings.
	d)	For all compensation deferred after the Effective Date of this Plan, a director may elect only two payment options, each consisting of a payment commencement date and a method of payment.
	e)	If a director elects to receive his or her deferred compensation in installments, the installment payments will be calculated in the following manner: the director's account balance at the payment commencement date will be multiplied by a fraction, the numerator of which is 1, and the denominator of which is the number of remaining installment periods.
	f)	Retirement, for purposes of the Plan shall mean the date on which the director is both (i) at least age 55 and (ii) no longer a director of the Company.
7.	Deferred Compensation Accounts
	a)	Monies deferred under the Plan will be transferred to a trustee subject to a "Rabbi" Trust Agreement between the Company and a trustee designated by the Plan Administrator (the "Trust").
	b)	The rate of return on deferred compensation is determined by the performance of one or more deferred compensation investment accounts selected by the director pursuant to the Plan or, in the case of deferred stock equivalent units, as mandated by the award. Deferred compensation investment accounts available under the Plan are determined by the Company's Investment Committee ("Investment Account(s)"). Information on each Investment Account currently available under the Plan may be obtained from the Plan Administrator. The Investment Committee may, from time to time, in its discretion, deem it necessary or advisable to add or delete Investment Accounts or substitute new Investment Accounts for existing Investment Accounts. In such an event, the Plan Administrator will provide directors with reasonable notice of the effective date of the change to permit directors to change their future investment elections.
	c)	All investments in Investment Accounts under the Plan are hypothetical. At the time of each deferral of compensation into the Plan, a director will be credited with an imputed number of shares for the Investment Account(s) selected by the director. Thereafter, the value of a director's Investment Accounts will fluctuate in accordance with the actual performance of the Investment Accounts. Dividends on the imputed shares also will be credited to the director's Investment Accounts.
	d)	Earnings/losses on Investment Accounts hypothetically invested in mutual funds or other assets for which daily pricing is available ("Daily-Priced Investments") shall be valued daily in accordance with the relevant terms and conditions of the Daily-Priced Investments. Earnings/losses on Investment Accounts hypothetically invested in investments other than Daily-Priced Investments shall be credited effective on the last business day of each month. All such earnings are net of expenses. Quarterly statements will be provided by the Plan Administrator.
	e)	The deferral of compensation on a current basis will be allocated into Investment Account(s) pursuant to the deferral election determined by the director. The allocation must be in whole percentages; (i.e. 100% into one Investment Account, a 60-20-20 split among three Investment Accounts, etc.).
	f)	A Participant may elect to reallocate amounts already in his/her Investment Accounts among the various Investment Accounts at such times and in accordance with such procedures as the Plan Administrator may, in its sole discretion, prescribe; except that (i) a reallocation into or out of the Bausch & Lomb Common Stock Investment Account by directors of the Company may not be made more than once in any twelve (12) month period and (ii) there may be no allocation of deferred stock equivalent units out of the Bausch & Lomb Common Stock Investment Account.
8.	Payment of Deferred Compensation
	a)	A director's right to payment of deferred compensation under the Plan is a contractual obligation of the Company to the director, and his or her right to such monies shall be an unsecured claim against the general assets of the Company. However, the Company has established the Trust as an irrevocable rabbi trust for directors for the purpose of holding assets used to provide the benefits required by this Plan. The Company shall make periodic contributions to the Trust as may be required to fund amounts payable under the Plan. The Trust provides a director with assurance that deferred monies will be paid to him or her in accordance with the Plan, except in the event of the Company's bankruptcy or insolvency. Amounts previously deferred have also been transferred to the Trust for the benefit of directors. Notwithstanding the establishment of the Trust, the Company remains ultimately responsible to pay deferred compensation to each director. This obligation shall be met from the general assets of the Company if the Trust has insufficient funds to pay benefits.
	b)	Payments of deferred compensation to a director shall be pursuant to the director's deferral election notice given pursuant to Section 6 hereof. Except as provided in Subsections c) and d) below, a director may not change the payment commencement date or method of payment for monies already in his or her Investment Account(s). However, a director may choose a different payment commencement date and/or method payout for future deferrals subject to Section 6 above.
	c)	If, in the discretion of the Plan Administrator, a director has a need for funds due to a financial emergency beyond the control of the director, a payment may be made to the director from the funds in his or her account at a date earlier than the payment commencement date chosen by the director at the time of deferral. A distribution based upon financial hardship may not exceed the amount required to meet the immediate financial need created by the hardship less the amount reasonably available to the director from other sources. Notwithstanding the foregoing, a director may not obtain a distribution based on financial hardship as to amounts paid into the director's Bausch & Lomb Common Stock account subsequent to April 30, 1991 (including earnings credited to those amounts). A director requesting a hardship distribution must supply the Plan Administrator with a statement indicating the nature of the need creating the financial hardship, the fact that all other available resources are insufficient to meet the need, and any other information that the Plan Administrator deems necessary to evaluate whether a financial hardship exists.
	d)	A director may make an early withdrawal of monies deferred under the Plan at anytime, subject to the following penalties: - forfeiture of 10% of the amount of the early withdrawal; and - suspension of eligibility to make further deferral elections for a period of five years. Notwithstanding the foregoing, a director may not obtain a distribution under this Subsection as to amounts paid into the director's Bausch & Lomb Common Stock account subsequent to April 30, 1991 (including earnings credited to those amounts). A Participant may make a change in the form of payment from the form previously elected to any other form permitted under the Plan at any time up to 24 months prior to the date payments commence. Any change elected within 24 months of a Participant's payment commencement date shall be disregarded.
	e)	In the event of a director's death before he or she has received all of the deferred payments to which he or she is entitled, payments will be made, according to the director's election pursuant to Section 6 hereof, to the director's estate or beneficiary either (a) continuing in the same manner as designated with respect to payments to the director while living or (b) in a single lump sum payment the value of which is determined as of the date immediately following the director's death and paid on the first January 15 or July 15 following such valuation date (or as soon as reasonably possible thereafter).
	f)	All payments made to a director shall be subject to all taxes required to be withheld under applicable laws and regulations of any governmental authorities.
	g)	If a director is terminated as a director of the Company, the first day of February next following the date of termination will be deemed to be the payment commencement date for account balances of less than $3,500 and, payment will be made to the director in a lump sum.
	h)	Upon a Change of Control (as defined below) notwithstanding a director's payment commencement date with respect to any compensation deferred hereunder or method of payout with respect to any compensation deferred hereunder, all amounts in a director's deferred compensation account (including earnings credited thereto) shall be due and payable to the director in a cash lump sum within 15 days following the Change of Control; provided, however that amounts paid into the director's Bausch & Lomb Common Stock account during a Section 16 Period (including earnings credited to those amounts) shall be due and payable only upon termination of the director's status as a director following a Change in Control or, if earlier, the payment commencement date previously elected by the director. For purposes of this Plan, Change of Control shall mean:
		(a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (ii) the combined voting power of the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company), (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corpora tion controlled by the Company or (iv) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (i), (ii) and (iii) of subsection (c) of this Section 2 are satisfied; or (b) Individuals who, as of the date hereof, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (c) Approval by the shareholders of the Company of a reorganization, merger, binding share exchange or consolidation, in each case, unless, following such reorganization, merger, binding share exchange or consolidation, (i) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger, binding share exchange or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, bind ing share exchange or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such reorganization, merger, binding share exchange or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger, binding share exchange or consolidation, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (iii) at least a majority of the members of the boar d of directors of the corporation resulting from such reorganization, merger, binding share exchange or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger, binding share exchange or consolidation; or (d) Approval by the shareholders of the Company of (i) a complete liquidation or dissolution of the Company or (ii) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (A) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Ou tstanding Company Voting Securities, as the case may be, (B) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.
9.	Administration
	The Treasurer of the Company, as the designee of the Committee on Management of the Board of Directors, shall be the Plan Administrator and has the authority to control and manage the operation and administration of the Plan. The Investment Committee shall be the Investment Committee of Bausch & Lomb Incorporated.
10.	Assignability
	No right to receive payments under the Plan is transferable or assignable by a director except by will or by the laws of descent and distribution.
11.	Business Days
	In the event any date specified falls on a Saturday, Sunday, or holiday, such date will be deemed to refer to the next business day thereafter.
12.	Amendment
	The Plan may at any time or from time to time be amended, modified, or terminated by the Board of Directors or the Committee on Management of the Board of Directors of the Company. No such amendment, modification, or termination will, without the consent of the director, adversely affect the director's accruals in his or her deferred compensation account.

	BAUSCH & LOMB INCORPORATED
	By: /s/ David R. Nachbar ________ David R. Nachbar Corporate Senior Vice President Human Resources
	Dated: 28 of April, 2003

	Amount of Deferral (minimum of $5,000 per year):
	$	(dollar amount)
	or
		(Percentage amount)

		$5,000 shall be deferred in that year notwithstanding my percentage choice.
		None of my earnings shall be deferred in that year.

		Single lump sum payment
		Annual installments (insert number-maximum of 10)

	a)	Upon my retirement, as defined in the Director Deferred Compensation Plan; or
	b)		February 1 May 1 August 1 November 1

	Bausch & Lomb Common Stock Fund			Fidelity Magellan Fund
	Fidelity Equity Income Fund			Fidelity OTC Portfolio
	Fidelity US Bond Fund			Fidelity Freedom 2010 Fund
	Fidelity Puritan Fund			Fidelity Freedom 2020 Fund
	Fidelity Spartan Equity Index Fund			Fidelity Freedom 2030 Fund
	Fidelity Contrafund			Fidelity Retirement Government Money Market Portfolio
	Fidelity Diversified International Fund
	*Information on specific funds currently chosen by the Plan Administrator is available upon request.

		Payments shall be made to my estate in the same manner as selected above for payment to me
		The value of my deferred compensation account shall be paid to my estate in a single payment following my death.

Received on the day of 2003 on behalf of Bausch & Lomb Incorporated	____________________________________ Signature of Director Dated: _______________________________
By: _________________________________

		Three years after the date of the Annual Meeting with respect to which the shares of Common Stock were originally payable.
		On the date upon which I cease to be a director for any reason.
		In five equal annual installments commencing on the date upon which I cease to be a director for any reason.

_________	Lump sum payment
_________	5 annual installments
_________	10 annual insstallments

Received on the day of 2003 on behalf of Bausch & Lomb Incorporated	____________________________________ <<fullname>> Date: _______________________________
By: _________________________________ Jean F. Geisel, Corporate Secretary

(a)	"Affiliate" shall mean (i) any Person that directly, or through one or more intermediaries, controls, or is controlled by, or is under common control with, the Company or (ii) any entity in which the Company has a significant equity interest, as determined by the Committee.
(b)	"Award" shall mean any Option, Stock Appreciation Right, Restricted Stock Award, Performance Share, Performance Unit, dividend equivalent, Other Stock Unit Award or any other right, interest or option relating to Shares or other property granted pursuant to the provisions of the Plan.
(c)	"Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by both the Company and the Participant.
(d)	"Board" shall mean the Board of Directors of the Company.
(e)	"Cause" shall mean, unless otherwise provided by the Committee, (i) "Cause" as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Cause: (A) conviction of the Participant for committing a felony under federal law or the law of the state in which such action occurred, (B) dishonesty in the course of fulfilling the Participant's employment duties, (C) willful and deliberate failure on the part of the Participant to perform his or her employment duties in any material respect, or (D) prior to a Change in Control, such other events as shall be determined by the Committee. Prior to a Change in Control, the Committee shall, unless otherwise provided in an Individual Agreement with the Participant, have the sole discretion to determine whether "Cause" exists, and its determination shall be final.
(f)	"Change in Control" shall mean:
	(i)	The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") or (B) the combined voting power of the election of directors (the "Outstanding Company Voting Securities"); provided, however, that the following acquisitions shall not constitute a Change of Control: (W) any acquisition directly from the Company (excluding an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Company), (X) any acquisition by the Company, (Y) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation con trolled by the Company or (Z) any acquisition by any corporation pursuant to a reorganization, merger or consolidation, if, following such reorganization, merger or consolidation, the conditions described in clauses (A), (B) and (C) of subsection (iii) of this Section 2(f) are satisfied; or
	(ii)	Individuals who, as of April 28, 2003, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to April 28, 2003 whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
	(iii)	Approval by the shareholders of the Company of a reorganization, merger, binding share exchange or consolidation, in each case, unless, following such reorganization, merger, binding share exchange or consolidation, (A) more than 60% of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such reorganization, merger, binding share exchange or consolidation in substantially the same proportions as their ownership, immediately prior to such reorganization, merger, binding share exchange or consolidation, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) no person (excluding the Company, any employee benefit plan (or related trust) of the Company or such corporation resulting from such reorganization, merger, binding share exchange or consolidation and any Person beneficially owning, immediately prior to such reorganization, merger, binding share exchange or consolidation, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such reorganization, merger, binding share exchange or consolidation or the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (C) at least a majority of the members of the board of director s of the corporation resulting from such reorganization, merger, binding share exchange or consolidation were members of the Incumbent Board at the time of the execution of the initial agreement providing for such reorganization, merger, binding share exchange or consolidation; or
	(iv)	Approval by the shareholders of the Company of (A) a complete liquidation or dissolution of the Company or (B) the sale or other disposition of all or substantially all of the assets of the Company, other than to a corporation, with respect to which following such sale or other disposition, (1) more than 60% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company V oting Securities, as the case may be, (2) no Person (excluding the Company and any employee benefit plan (or related trust) of the Company or such corporation and any Person beneficially owning, immediately prior to such sale or other disposition, directly or indirectly, 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities, as the case may be) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of such corporation and the combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors and (3) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action of the Board providing for such sale or other disposition of assets of the Company.
(g)	"Change in Control Price" means, with respect to a Share, the highest price per such Share paid in such tender or exchange offer or corporate transaction. To the extent the consideration paid in any such transaction described above consists all or in part of securities or other noncash consideration, the value of such securities or other noncash consideration shall be determined by the Committee.
(h)	"Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.
(i)	"Committee" shall mean the Committee on Management of the Board, or any successor to such committee, composed of no fewer than three directors, each of whom is an Outside Director.
(j)	"Company" shall mean Bausch & Lomb Incorporated, a New York corporation.
(k)	"Covered Employee" shall mean a "covered employee" within the meaning of Section 162(m)(3) of the Code, or any successor provision thereto.
(l)	"Disability" shall mean, unless otherwise provided by the Committee, (i) "Disability" as defined in any Individual Agreement to which the Participant is a party, or (ii) if there is no such Individual Agreement or it does not define "Disability," total disability as determined under the Company's Long-Term Disability Plan applicable to the Participant
(m)	"Effective Date" shall have the meaning set forth in Section 16.
(n)	"Employee" shall mean any employee or prospective employee of the Company or any Affiliate, other than a Non-Employee Director. Unless otherwise determined by the Committee in its sole discretion, for purposes of the Plan, an Employee shall be considered to have incurred a Termination of Service and to have ceased to be an Employee if his or her employer ceases to be an Affiliate, even if he or she continues to provide services to such employer.
(o)	"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
(p)	"Fair Market Value" shall mean, with respect to any property, the market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. Unless otherwise determined by the Committee, the Fair Market Value of Shares as of any date shall be the average of the high and low trading prices during normal business hours for the Shares as reported on the New York Stock Exchange (or on any national securities exchange on which the Shares are then listed) for that date or, if no such prices are reported for that date, the average of the high and low trading prices on the preceding date for which such prices were reported, all as reported by such source as the Committee may select.
(q)	"Good Reason" shall have the meaning ascribed to such term in a Participant's Individual Agreement, if any.
(r)	"Incentive Stock Option" shall mean an Option granted under Section 6 that is intended to meet the requirements of Section 422 of the Code or any successor provision thereto.
(s)	"Individual Agreement" means an employment, consulting or similar agreement between a Participant and the Company or one of its Subsidiaries or Affiliates, including without limitation any Change of Control Employment Agreement with a Participant.
(t)	"Non-Employee Director" shall mean a member of the Board who is not an employee of the Company, or any of its Affiliates or Subsidiaries.
(u)	"Nonstatutory Stock Option" shall mean an Option granted under Section 6 that is not intended to be an Incentive Stock Option.
(v)	''Option" shall mean any right granted to a Participant under the Plan allowing such Participant to purchase Shares at such price or prices and during such period or periods as the Committee shall determine.
(w)	"Other Stock Unit Award" shall mean any right granted to a Participant by the Committee pursuant to Section 10.
(x)	"Outside Director" means a director who qualifies as an "independent director" within the meaning of the New York Stock Exchange Listed Company Manual Section 303.01(B)(2)(a), as amended from time to time and any successor thereto, as an "outside director" within the meaning of Section 162(m) of the Code, and as a "non-employee director" within the meaning of Rule 16b-3 promulgated under the Exchange Act.
(y)	"Participant" shall mean an Employee or Non-Employee Director who is selected by the Committee to receive an Award under the Plan.
(z)	"Performance Award" shall mean any Award of Performance Shares or Performance Units pursuant to Section 9.
(aa)	"Performance Period" shall mean that period established by the Committee at the time any Performance Award is granted or at any time thereafter during which any performance goals specified by the Committee with respect to such Award are to be measured.
(bb)	"Performance Share" shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated number of Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(cc)	"Performance Unit" shall mean any grant pursuant to Section 9 of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, other property, or any combination thereof, upon achievement of such performance goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
(dd)	"Person" shall mean any individual, corporation, partnership, association, limited liability company, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.
(ee)	"Qualified Performance-Based Award" shall mean an Award of Restricted Stock, Performance Units, Performance Shares or Other Stock Unit Awards designated as such by the Committee at the time of grant, based upon a determination that (i) the recipient is or may be a "covered employee" within the meaning of Section 162(m)(3) of the Code in the year in which the Company would expect to be able to claim a tax deduction with respect to such Restricted Stock, Performance Units or Performance Shares and (ii) the Committee wishes such Award to qualify for the Section 162(m) Exemption.
(ff)	"Restricted Stock" shall mean any Share issued with the restriction that the holder may not sell, transfer, pledge or assign such Share and with such other restrictions as the Committee, in its sole discretion, may impose (including, without limitation, any restriction on the right to vote such Share, and the right to receive any cash dividends), which restrictions may lapse separately or in combination at such time or times, in installments or otherwise, as the Committee may deem appropriate.
(gg)	"Restricted Stock Award" shall mean an award of Restricted Stock under Section 8.
(hh)	"Retirement" shall mean retirement from active employment with the Company, a Subsidiary or Affiliate as defined in the Company's retirement program, as determined by the Committee.
(ii)	"Section 162(m) Exemption" shall mean the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.
(jj)	"Shares" shall mean the shares of common stock of the Company.
(kk)	''stock Appreciation Right" shall mean any right granted to a Participant pursuant to Section 7 to receive, upon exercise by the Participant, the excess of (i) the Fair Market Value of one Share on the date of exercise or, if the Committee shall so determine in the case of any such right other than one related to any Incentive Stock Option, at any time during a specified period before the date of exercise over (ii) the grant price of the right on the date of grant, or if granted in connection with an outstanding Option on the date of grant of the related Option, as specified by the Committee in its sole discretion. The grant price shall not be less than the Fair Market Value of one Share on such date of grant of the right or the related Option, as the case may be, except in the case of Substitute Awards or in connection with an adjustment provided in Section 4(c). Any payment by the Company in respect of such right may be made in cash, Shares, other property, or any combination thereof, as th e Committee, in its sole discretion, shall determine.
(ll)	"Subsidiary" shall mean any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of the granting of the Award, each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in the chain.
(mm)	"Substitute Awards" shall mean Awards granted or Shares issued by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, by a company acquired by the Company or with which the Company combines.
(nn)	"Termination of Service" shall mean the termination of the Participant's employment with, or performance of services for, the Company and any of its Subsidiaries or Affiliates. A Participant employed by, or performing services for, a Subsidiary or an Affiliate shall also be deemed to incur a Termination of Service if the Subsidiary or Affiliate ceases to be such a Subsidiary or an Affiliate, as the case may be, and the Participant does not immediately thereafter become an employee of, or service-provider for, the Company or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered Terminations of Service.

(a)	Subject to adjustment as provided in Section 4(c), a total of 6,000,000 Shares shall be authorized for issuance under the Plan, of which no more than 1,800,000 Shares may be issued pursuant to Awards other than Options and Stock Appreciation Rights. If any Shares subject to an Award or to an award under the Company's 1990 Stock Incentive Plan or 2001 Stock Incentive Plan for Non-Officers (the "Pre-Existing Plans") are forfeited or if any Award or award under the Pre-Existing Plans based on Shares is settled for cash, or expires or otherwise is terminated without issuance of such Shares, the Shares subject to such Award shall, to the extent of such cash settlement, forfeiture or termination, again be available for Awards under the Plan. In the event that any Option or other Award granted hereunder is exercised through the tendering of Shares (either actually or by attestation) or in the event that withholding tax liabilities arising from such Option or other Award are satisfied by th e tendering of Shares or by the withholding of Shares by the Company, only the number of Shares issued net of the Shares tendered or withheld shall be counted for purposes of determining the maximum number of Shares available for issuance under the Plan. In the event that any option or award granted under the Pre-Existing Plans is exercised through the tendering of Shares or in the event that withholding tax liabilities arising from such options or awards are satisfied by the tendering of Shares or the withholding of Shares by the Company, the Shares so tendered or withheld shall again be available
	for Awards under the Plan. Shares reacquired by the Company on the open market using the cash proceeds received by the Company from the exercise of Options granted under the Plan or options granted under the Pre-Existing Plans that are exercised after the effective date of the Plan shall be available for Awards under the Plan; provided, that the number of Shares available shall not exceed the amount of (A) such cash proceeds divided by (B) the Fair Market Value of the Shares on the date of exercise of the applicable Options. In addition, Substitute Awards shall not reduce the Shares authorized for issuance under the Plan or authorized for grant to a Participant in any calendar year.
(b)	Any Shares issued hereunder may consist, in whole or in part, of authorized and unissued shares, treasury shares or shares purchased in the open market or otherwise.
(c)	In the event of any merger, reorganization, consolidation, recapitalization, stock dividend, stock split, reverse stock split, spin-off or similar transaction or other change in corporate structure affecting the Shares or in the event of any extraordinary dividend or other similar event, such adjustments and other substitutions shall be made to the Plan and to Awards as the Committee, in its sole discretion, deems equitable or appropriate, including, without limitation, such adjustments in the aggregate number, class and kind of securities that may be delivered under the Plan, in the aggregate or to any one Participant, in the number, class, kind and option or exercise price of securities subject to outstanding Options, Stock Appreciation Rights or other Awards granted under the Plan, and in the number, class and kind of securities subject to Awards granted under the Plan (including, if the Committee deems appropriate, the substitution of similar options to purchase the shares of, or other aw ards denominated in the shares of, another company or the payment of cash) as the Committee may determine to be appropriate in its sole discretion; provided, however, that the number of Shares subject to any Award shall always be a whole number.

(a)	OPTION PRICE. The purchase price per Share purchasable under an Option shall be determined by the Committee in its sole discretion; provided, however, that, except in the case of Substitute Awards or in connection with an adjustment provided for in Section 4(c), such purchase price of an Option shall not be less than the Fair Market Value of the Share on the date of the grant, provided, further that the Committee shall have the authority to provide for a post-grant reduction in exercise price to reflect any floating index as specified in an Award Agreement, provided that, unless the Committee determines otherwise, no such provision shall be included in any Award Agreement of a Participant who the Committee determines is or may be a Covered Employee in the year in which the Option is expected to be taxable to such Participant to the extent that such provision would result in such Option failing to meet the requirements of the Section 162(m) Exemption.
(b)	OPTION PERIOD. The term of each Option shall be fixed by the Committee in its sole discretion; provided that (except as specifically provided in Section 6) no Option shall be exercisable after the expiration of ten years from the date the Option is granted.
(c)	EXERCISABILITY. Options shall be exercisable at such time or times as determined by the Committee at or subsequent to grant. Except under certain circumstances in connection with a Participant's Termination of Service or in the event of a Change in Control, Options will not be exercisable before the expiration of one year from the date the Option is granted.
(d)	METHOD OF EXERCISE. Subject to the other provisions of the Plan, any Option may be exercised by the Participant in whole or in part at such time or times, (i) by delivering written notice of exercise to the Company specifying the number of shares of Common Stock subject to the Option to be purchased and (ii) by making payment of the option price in such form or forms, including, without limitation, payment by delivery of cash, delivery of Shares (either actually or by attestation) already owned by the Participant for at least six months (or any shorter period sufficient to avoid a charge to the Company's
	earnings for financial reporting purposes) or delivery of other consideration (including, where permitted by law and the Committee), Awards having a Fair Market Value on the exercise date equal to the total option price, or by any combination of cash, such Shares and other consideration as the Committee may specify in the applicable Award Agreement. If approved by the Committee, except to the extent prohibited by applicable law, payment in full or in part may also be made by delivering a properly executed exercise notice to the Company, together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay the option price, and, if requested, the amount of any federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. No shares of Common Stock shall be delivered until full payment therefor has bee n made. Except as otherwise provided herein or in an applicable Award Agreement, a Participant shall have all of the rights of a shareholder of the Company holding the class or series of Common Stock that is subject to such Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the Participant has delivered written notice of exercise and has paid in full for such shares.
(e)	INCENTIVE STOCK OPTIONS. In accordance with rules and procedures established by the Committee, and except as otherwise provided in Section 11, the aggregate Fair Market Value (determined as of the time of grant) of the Shares with respect to which Incentive Stock Options held by any Participant which are exercisable for the first time by such Participant during any calendar year under the Plan (and under any other employee benefit plans of the Company or any Subsidiary) shall not exceed $100,000 or, if different, the maximum limitation in effect at the time of grant under Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. Incentive Stock Options shall not be granted to Participants who are Non-Employee Directors or prospective employees. The terms of any Incentive Stock Option granted hereunder shall comply in all respects with the provisions of Section 422 of the Code or any successor provision, and any regulations promulgated thereund er. The aggregate number of Shares with respect to which Incentive Stock Options may be issued under the Plan shall not exceed 5,000,000.
(f)	FORM OF SETTLEMENT. In its sole discretion, the Committee may provide, at the time of grant, that the Shares to be issued upon an Option's exercise shall be in the form of Restricted Stock or other similar securities, or may reserve the right so to provide after the time of grant.
(g)	Termination by Reason of Death. Unless otherwise determined by the Committee, if a Participant incurs a Termination of Service by reason of death, any Option held by such Participant shall vest in full and shall remain exercisable (i) in the case of a Nonstatutory Stock Option, until the first anniversary of such Termination of Service (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) and (ii) in the case of an Incentive Stock Option, until the earlier of (A) the first anniversary of the date of death or (B) the expiration of the stated term of such Incentive Stock Option.
(h)	Termination by Reason of Disability. Unless otherwise determined by the Committee, if a Participant incurs a Termination of Service by reason of Disability, any Option held by such Participant shall vest in full and remain exercisable until (i) in the case of a Nonstatutory Stock Option, the first anniversary of such Termination of Service (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) and (ii) in the case of an Incentive Stock Option, the earlier of (A) the first anniversary of such Termination of Service or (B) the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, notwithstanding the expiration of such period, any unexercised Option, may thereafter be exercised (x) in the case of a Nonstatutory Stock Option, for a period of one year from the date of such death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) and (y) in the cas e of an Incentive Stock Option, until the earlier of (1) the first anniversary of the date of death or (2) the expiration of the stated term of such Incentive Stock Option. In the event of Termination of Service by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonstatutory Stock Option.
(i)	Termination by Reason of Retirement. Unless otherwise determined by the Committee, if a Participant incurs a Termination of Service by reason of Retirement, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such Termination of Service, or on such accelerated basis as the Committee may determine, until the earlier of (i) the third anniversary of such Termination of Service or (ii) the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, any unexercised
	Option may to the extent exercisable on the date of death thereafter be exercised (A) in the case of a Nonstatutory Stock Option, until the later of (x) the first anniversary of the date of death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) or (y) the third anniversary of the Termination of Service by reason of Retirement and (B) in the case of an Incentive Stock Option, until the earlier of (xx) the later of (1) the first anniversary of the date of death or (2) the third anniversary of the Termination of Service by reason of Retirement or (yy) the expiration of the stated term of such Incentive Stock Option. In the event of Termination of Service by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonstatutory Stock Option.
(j)	Other TerminationS. Unless otherwise determined by the Committee: (i) if a Participant incurs a Termination of Service for Cause, all Options held by such Participant shall thereupon immediately terminate; (ii) if a Participant incurs a Termination of Service due to a termination by the Company for any reason other than death, Disability, Retirement or for Cause, any Option held by such Participant, may, to the extent it was exercisable at the time of Termination of Service, be exercised until the earlier of (A) 90 days from the date of such Termination of Service or (B) the expiration of the stated term of the Option; and (iii) if a Participant incurs a Termination of Service due to a voluntary termination by the Participant (other than for Retirement), any Option held by such Participant, may, to the extent it was exercisable at the time of Termination of Service, be exercised until the earlier of (A) 30 days from the date of such Termination of Service or (B) the expiration of t he stated term of the Option; provided, however, that if the Participant dies within either of the exercise periods established by Sections 5(j)(ii) and 5(j)(iii), any unexercised Option held by such Participant shall, continue to be exercisable to the extent to which it was exercisable at the time of death until (x) in the case of Nonstatutory Stock Options, the first anniversary of the date of death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) or (y) in the case of Incentive Stock Options, the earlier of (A) the first anniversary of the date of death or (B) the expiration of the stated term of such Option.
(k)	Change in Control Termination. Unless otherwise determined by the Committee, notwithstanding any other provision of this Plan to the contrary, in the event a Participant incurs a Termination of Service other than for Cause during the 24-month period following a Change in Control, any Option held by such Participant may thereafter be exercised by the Participant, to the extent it was exercisable at the time of such Termination of Service until the earlier of (i) the latest of (A) the second anniversary of such date of Termination of Service or (B) such other date as may be provided in the Plan for such Termination of Service or as the Committee may provide in the Award Agreement or (C) such other date as may be provided in any Individual Agreement, or (ii) the expiration of the stated term of such Option; provided, however, that if the Participant dies within such period, notwithstanding the expiration of such period, any unexercised Option may to the extent exercisable on the date of death thereafter be exercised (x) in the case of a Nonstatutory Stock Option, until the later of (i) the end of such exercise period or (ii) the first anniversary of the date of death (notwithstanding any earlier expiration of the stated term of such Nonstatutory Stock Option) or (y) in the case of an Incentive Stock Option, until the earlier of (i) the later of (A) the end of such exercise period or (B) the first anniversary of the date of death or (ii) the expiration of the stated term of such Incentive Stock Option. If an Incentive Stock Option is exercised after the expiration of the post-termination exercise periods that apply for purposes of Section 422 of the Code, such Option will thereafter be treated as a Nonstatutory Stock Option

(a)	ADMINISTRATION. Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the Employees and Non-Employee Directors to whom and the time or times at which grants of Restricted Stock will be awarded, the number of shares to be awarded to any Employee or Non-Employee Director, the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition to those contained in Section 15(f).
(b)	ISSUANCE. A Restricted Stock Award shall be subject to restrictions imposed by the Committee during a period of time specified by the Committee (the "Restriction Period"). Restricted Stock Awards may be issued hereunder to Participants, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The provisions of Restricted Stock Awards need not be the same with respect to each recipient. Except for certain situations specified by the Committee (and as provided in Section 11(a)(ii)), Restricted Stock Awards shall be subject to restrictions for a minimum of three years from date of grant.
(c)	REGISTRATION. Any Restricted Stock issued hereunder may be evidenced in such manner, as the Committee, in its sole discretion, shall deem appropriate, including, without limitation, book entry registration or issuance of a stock certificate or certificates. In the event any stock certificates are issued in respect of shares of Restricted Stock awarded under the Plan, such certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Award.
(d)	FORFEITURE. Except as otherwise determined by the Committee at the time of grant or thereafter, upon Termination of Service for any reason during the Restriction Period, all Shares of Restricted Stock still subject to restriction shall be forfeited by the Participant and reacquired by the Company and the Company shall cancel any book entry registrations. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the Participant promptly after expiration of the period of forfeiture, as determined or modified by the Committee.

(a)	IMPACT OF EVENT. Notwithstanding any other provision of the Plan to the contrary, unless the Committee shall determine otherwise at the time of grant with respect to a particular Award, in the event of a Change in Control:
	(i)	any Options and Stock Appreciation Rights outstanding as of the date such Change in Control occurs, and which are not then exercisable and vested, shall become fully exercisable and vested;
	(ii)	the restrictions and deferral limitations applicable to any Restricted Stock outstanding as of the date such Change in Control occurs shall lapse, and such Restricted Stock shall become free of all restrictions and limitations and become fully vested and transferable;
	(iii)	all Performance Awards outstanding as of the date such Change in Control occurs shall be considered to be earned and payable in full, or at such other level as may be specified in the applicable Award agreement between the Participant and the Company, and any deferral or other restriction shall lapse and such Performance Awards shall be immediately settled or distributed; and
	(iv)	the restrictions and deferral limitations and other conditions applicable to any Other Stock Unit Awards or any other Awards outstanding as of the date such Change in Control occurs shall lapse, and such Other Stock Unit Awards or such other Awards shall become free of all restrictions, limitations or conditions and become fully vested and transferable.
(b)	CHANGE IN CONTROL CASH-OUT. Notwithstanding any other provision of the Plan, during the 60-day period from and after a Change in Control (the "Exercise Period"), if the Committee shall determine at, or at any time after, the time of grant, a Participant holding an Option or Stock Appreciation Right shall have the right, whether or not the Option or Stock Appreciation Right is fully exercisable and in lieu of the payment of the purchase price for the Shares being purchased under the Option or Stock Appreciation Right and by giving notices to the Company, to elect (within the Exercise Period) to surrender all or part of the Option or Stock Appreciation Right to the Company and to receive cash, within 30 days of such notice, in an amount equal to the amount by which the Change in Control Price per Share on the date of such election shall exceed the purchase price per Share under the Option or Stock Appreciation Right (the "spread') multiplied by the number of Shares granted under the Option or Stock Appreciation Right as to which the right granted under this Section 11(b) shall have been exercised.

(a)	Notwithstanding any other provision of the Plan, if the Committee determines at the time Restricted Stock, a Performance Award or an Other Stock Unit Award is granted to a Participant who is, or is likely to be as of the end of the tax year in which the Company would claim a tax deduction in connection with such Award, a Covered Employee, then the Committee may provide that this Section 12 is applicable to such Award.
(b)	If Restricted Stock, a Performance Award or an Other Stock Unit Award is subject to this Section 12, then, in addition to any other restrictions imposed on such Awards, the grant, the lapsing of restrictions thereon and/or the distribution of cash, Shares or other property pursuant thereto, as applicable, shall be subject to the achievement of one or more objective performance goals established by the Committee, which shall be based on the attainment of specified levels of one or any combination of the following: net cash provided by operating activities, earnings per share from continuing operations, operating income, revenues, operating margins, return on operating assets, return on equity, economic value added, stock price appreciation, total shareholder return, cost control, strategic initiatives, market share, net income, or return on invested capital of the Company or the Affiliate or division of the Company for or within which the Participant is primarily employed. Such performance goa ls also may be based on the achievement of specified levels of Company performance (or performance of an applicable Affiliate or division of the Company) under one or more of the measures described above relative to the performance of other corporations. Such performance goals shall be set by the Committee within the time period prescribed by, and shall otherwise comply with the requirements of, Section 162(m) of the Code, or any successor provision thereto, and the regulations thereunder.
(c)	Notwithstanding any provision of the Plan other than Section 11, with respect to any Restricted Stock, Performance Award or Other Stock Unit Award that is subject to this Section 12, the Committee may adjust downwards, but not upwards, the number of such Awards to be granted to such Participant and/or the amount payable pursuant to such Award, and the Committee may not waive the achievement of the applicable performance goals except in the case of a Termination of Service due to the death or disability of the Participant or due to a Termination of Service by the Company (or the Participant's employer) without Cause or a Termination of Service by the Participant for Good Reason.
(d)	The Committee shall have the power to impose such other restrictions on Awards subject to this Section 12 as it may deem necessary or appropriate to ensure that such Awards satisfy all requirements of the Section 162(m) Exemption.
(e)	Notwithstanding any provision of the Plan other than Section 4(c), no Participant may be granted Options or Stock Appreciation Rights during any three-year period with respect to more than 2,000,000 (two million) shares, or Restricted Stock or Performance Awards subject to this Section 12 that are denominated in Shares, in any three-year period with respect to more than 1,000,000 (one million) Shares, and the maximum dollar value payable with respect to Performance Units and/or Other Stock Unit Awards that are valued with reference to property other than Shares and granted to any Participant in any three-year period is $10,000,000.

(a)	No Award, and no Shares subject to Awards described in Section 10 that have not been issued or as to which any applicable restriction, performance or deferral period has not lapsed, may be sold, assigned, transferred, pledged or otherwise encumbered, except by will or by the laws of descent and distribution; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary to exercise the rights of the Participant with respect to any Award upon the death of the Participant. Each Award shall be exercisable, during the Participant's lifetime, only by the Participant or, if permissible under applicable law, by the Participant's guardian or legal representative. Notwithstanding the foregoing, and subject to Section 422 of the Code, the Committee, in its sole discretion, may permit a Participant to assign or transfer an Award (i) by will or by the laws of descent and distribution; or (ii) in the case of a Nonstat utory Stock Option, unless otherwise determined by the Committee, to such Employee's or Non-Employee Director's children or family members, whether directly or indirectly or by means of a trust or partnership or otherwise. For purposes of this Plan, unless otherwise determined by the Committee, "family member" shall have the meaning given to such term in General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933 as amended, or any successor thereto; provided, however, that an Award so assigned or transferred shall be subject to all the terms and conditions of the Plan and the instrument evidencing the Award; provided, further, that Termination of Service shall continue to refer to the Termination of Service of the original Participant.
(b)	No Employee or Participant shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Employees or Participants under the Plan.
(c)	The prospective recipient of any Award under the Plan shall not, with respect to such Award, be deemed to have become a Participant, or to have any rights with respect to such Award, until and unless such recipient shall have executed an agreement or other instrument evidencing the Award and delivered a copy thereof to the Company, or taken such other similar action as is determined and communicated in writing by the Committee, and otherwise complied with the then applicable terms and conditions.
(d)	Nothing in the Plan or any Award granted under the Plan shall be deemed to constitute an employment or service contract or confer or be deemed to confer on any Participant any right to continue in the employ or service of, or to continue any other relationship with, the Company or any Affiliate or limit in any way the right of the Company or any Affiliate to terminate a Participant's employment or service or other relationship at any time, with or without Cause
(e)	Except as provided in Section 12, the Committee shall be authorized to make adjustments in performance award criteria or in the terms and conditions of other Awards in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in applicable laws, regulations or accounting principles. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry it into effect. In the event that the Company shall assume outstanding employee benefit awards or the right or obligation to make future such awards in connection with the acquisition of or combination with another corporation or business entity, the Committee may, in its discretion, make such adjustments in the terms of Awards under the Plan as it shall deem appropriate.
(f)	The Committee shall have full power and authority to determine whether, to what extent and under what circumstances any Award shall be canceled or suspended. In addition, all outstanding Awards to any Participant may, as determined by the Committee in its sole discretion in any applicable Award Agreement be canceled if the Participant, without the consent of the Company, while employed by the Company or after a Termination of Service, establishes a relationship with a competitor of the Company or engages in activity that is in conflict with or adverse to the interest of the Company or any of its Affiliates, as determined by the Committee. Furthermore, the Committee may determine that an Award agreement require that, under the circumstances described above calling for cancellation of an Award, the Participant shall also be required to remit to the Company, with respect to any Option exercised by the Participant on or after the date which is six months prior to the date that the Participant est ablishes a competitive relationship or engages in competing activity as foresaid an amount in cash or a certified or bank check equal to 100% of the excess of (A) the fair market value per share of the Company's Common Stock on the date of exercise, multiplied by the number of shares with respect to which the Option is exercised; over (B) the aggregate option price for such number of shares. Any provisions implemented pursuant to this Section 15(f) shall be inapplicable following a Change in Control.
(g)	All certificates for Shares delivered under the Plan pursuant to any Award shall be subject to such stock-transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any stock exchange upon which the Shares are then listed, and any applicable federal or state securities law, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.
(h)	No Award granted hereunder shall be construed as an offer to sell securities of the Company, and no such offer shall be outstanding, unless and until the Committee in its sole discretion has determined that any such offer, if made, would comply with all applicable requirements of the U.S. federal securities laws and any other laws to which such offer, if made, would be subject. The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock under the Plan prior to fulfillment of all of the following cond itions: (i) listing or approval for listing upon notice of issuance, of such shares on the New York Stock Exchange or such other securities exchange as may at the time be the principal market for the Common Stock; (ii) any registration or other qualification of such shares of the Company under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii) obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.
(i)	The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of the Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award) may, if so determined by the Committee, be entitled to receive, currently or on a deferred or restricted (based on vesting) basis, cash dividends, or cash payments in amounts equivalent to cash dividends on Shares ("dividend equivalents") with respect to the number of Shares covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested.
(j)	Except as otherwise required in any applicable Award Agreement or by the terms of the Plan, recipients of Awards under the Plan shall not be required to make any payment or provide consideration other than the rendering of services.
(k)	The Company shall be authorized to withhold from any Award granted or payment due under the Plan the amount of withholding taxes due in respect of an Award or payment hereunder and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes. The Committee shall be authorized to establish procedures for election by Participants to satisfy such obligation for the payment of such taxes by delivery of or transfer of Shares to the Company (up to the employer's minimum required tax withholding rate to the extent the Participant has owned the surrendered shares for less than six months if such a limitation is necessary to avoid a charge to the Company for financial reporting purposes), or by directing the Company to retain Shares (up to the employer's minimum required tax withholding rate) otherwise deliverable in connection with the Award.
(l)	Nothing contained in the Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or applicable only in specific cases.
(m)	The validity, construction and effect of the Plan and any rules and regulations relating to the Plan shall be determined in accordance with the laws of the State of New York and applicable federal law.
(n)	If any provision of the Plan is or becomes or is deemed invalid, illegal or unenforceable in any jurisdiction, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan, it shall be stricken and the remainder of the Plan shall remain in full force and effect.
(o)	Awards may be granted to Participants who are foreign nationals or employed outside the United States, or both, on such terms and conditions different from those applicable to Awards to Employees employed in the United States as may, in the judgment of the Committee, be necessary or desirable in order to recognize differences in currency, local law or tax policy. The Committee also may impose conditions on the exercise or vesting of Awards in order to minimize the Company's obligation with respect to tax equalization for Employees on assignments outside their home country.

Bausch & Lomb Incorporated
Exhibit 11
Statement Regarding Computation of Per Share Earnings (Dollar Amounts in Millions, Share Amounts in Thousands Except Per Share Data)
	Second Quarter Ended		Six Months Ended
	June 28, 2003	June 29, 2002	June 28, 2003	June 29, 2002
Income From Continuing Operations Before Cumulative Effect of Change in Accounting Principle	$28.3	$21.8	$44.8	$30.7
Cumulative Effect of Change in Accounting Principle, Net of Taxes	-	-	(0.9)	-
Net Income (a)	$28.3	$21.8	$43.9	$30.7
	==========	==========	=========	=========

Actual outstanding Common and Class B shares at beginning of period	53,140	53,836	53,893	53,543

Sum of weighted average activity of Common and Class B shares issued for stock options, restricted stock awards and cancellations, and net activity of shares held in deferred compensation plan	5	1	(437)	224

Weighted Basic Shares (b)	53,145	53,837	53,456	53,767

Effect of assumed exercise of
Common stock equivalents	286	198	160	190

Weighted Diluted Shares (c)	53,431	54,035	53,616	53,957
	=========	==========	==========	==========

Basic Earnings Per Share (a/b)	$ 0.53	$ 0.41	$ 0.82	$ 0.57
	=========	==========	==========	==========

Diluted Earnings Per Share (a/c)	$ 0.53	$ 0.40	$ 0.82	$ 0.57
	=========	==========	==========	==========

1.	I have reviewed this quarterly report on Form 10-Q of Bausch & Lomb Incorporated;
2.	Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3.	Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;
	a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
	c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
	a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6.	The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

1.	the Quarterly Report on Form 10-Q of the Company for the quarterly period ended June 28, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.