BUSINESS COMBINATIONS (Tables)

12 Months Ended

Dec. 31, 2012

Schedule of pro forma impact of merger and acquisition

	Unaudited
	2012			2011
Revenues	$	4,381,138		$	4,137,340
Net loss	(97,549		)	(43,342		)
Basic loss per share	$	(0.32	)	$	(0.14	)
Diluted loss per share	$	(0.32	)	$	(0.14	)

OraPharma

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2012 (as adjusted)
Cash	$	14,119		$	—		$	14,119
Accounts receivable(c)	10,348			—			10,348
Inventories	3,222			(685		)	2,537
Other current assets	4,063			22			4,085
Property and equipment	8,181			—			8,181
Identifiable intangible assets, excluding acquired IPR&D(d)	466,408			(64,095		)	402,313
Acquired IPR&D(e)	15,464			13,151			28,615
Other non-current assets	1,862			—			1,862
Current liabilities	(9,675		)	(395		)	(10,070		)
Long-term debt, including current portion(f)	(37,868		)	—			(37,868		)
Deferred income taxes, net	(173,907		)	18,386			(155,521		)
Other non-current liabilities	(158		)	—			(158		)
Total identifiable net assets	302,059			(33,616		)	268,443
Goodwill(g)	86,802			33,255			120,057
Total fair value of consideration transferred	$	388,861		$	(361	)	$	388,500

(a) As previously reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.

(b) The measurement period adjustments primarily reflect: (i) changes in the estimated fair value of the Arestin® product brand; (ii) the reclassification of intangible assets from product brands to IPR&D; (iii) a decrease in the total fair value of consideration transferred due to a working capital adjustment; and (iv) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) Both the fair value and gross contractual amount of trade accounts receivable acquired were $10.3 million, as the Company expects that the amount to be uncollectible is negligible.

(d) The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brand	12	$	446,958	$	(62,450	)	$	384,508
Corporate brand	15	19,450		(1,645		)	17,805
Total identifiable intangible assets acquired	12	$	466,408	$	(64,095	)	$	402,313

(e) The IPR&D assets primarily relate to the development of Arestin® ER, which is indicated for oral hygiene use and Arestin® Peri-Implantitis, which is indicated for anti-inflammatory and anti-bacterial use.

(f) Effective June 18, 2012, the Company terminated the credit facility agreement, repaid the assumed debt outstanding and cancelled the undrawn credit facilities.

(g) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the provisional values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

· cost savings, operating synergies and other benefits expected to result from combining the operations of OraPharma with those of the Company;

· the value of the continuing operations of OraPharma’s existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, OraPharma’s assembled workforce).

The provisional amount of goodwill has been allocated to the Company’s U.S. Dermatology segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brand	12	$	446,958	$	(62,450	)	$	384,508
Corporate brand	15	19,450		(1,645		)	17,805
Total identifiable intangible assets acquired	12	$	466,408	$	(64,095	)	$	402,313

Other Business Combinations

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Dates			Measurement Period Adjustments(a)			Amounts Recognized as of December 31, 2012 (as adjusted)
Cash and cash equivalents	$	7,255		$	(258	)	$	6,997
Accounts receivable(b)	29,846			(17		)	29,829
Assets held for sale(c)	15,566			—			15,566
Inventories	64,819			(5,970		)	58,849
Other current assets	2,524			—			2,524
Property, plant and equipment	9,027			—			9,027
Identifiable intangible assets, excluding acquired IPR&D(d)	666,619			764			667,383
Acquired IPR&D	1,234			—			1,234
Indemnification assets(e)	27,901			—			27,901
Other non-current assets	21			—			21
Current liabilities	(32,146		)	(350		)	(32,496		)
Long-term debt	(920		)	—			(920		)
Liability for uncertain tax position	(6,682		)	6,682			—
Other non-current liabilities(e)	(28,523		)	—			(28,523		)
Deferred income taxes, net	(10,933		)	373			(10,560		)
Total identifiable net assets	745,608			1,224			746,832
Goodwill(f)	70,600			(8,271		)	62,329
Total fair value of consideration transferred	$	816,208		$	(7,047	)	$	809,161

(a) The measurement period adjustments primarily relate to the Probiotica acquisition and primarily reflect: (i) the elimination of the liability for uncertain tax positions; (ii) the changes in the estimated fair value of the corporate brand intangible asset; and (iii) a decrease in the total fair value of consideration transferred due to a working capital adjustment. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(b) The fair value of trade accounts receivable acquired was $29.8 million, with the gross contractual amount being $31.1 million, of which the Company expects that $1.3 million will be uncollectible.

(c) Assets held for sale relate to a product brand acquired in the Atlantis acquisition. Subsequent to that acquisition, the plan of sale changed, and the Company no longer intends to sell the asset. Consequently, the product brand is not classified as an asset held for sale as of December 31, 2012.

(d) The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	10	$	456,720	$	(2,088	)	$	454,632
Corporate brands	12	31,934		3,725			35,659
Product rights	10	109,274		(873		)	108,401
Royalty agreement	9	36,277		—			36,277
Partner relationships	5	32,414		—			32,414
Total identifiable intangible assets acquired	10	$	666,619	$	764		$	667,383

(e) Other non-current liabilities, and the corresponding indemnification assets, primarily relate to certain asserted and unasserted claims against Probiotica, which include potential tax-related obligations that existed at the acquisition date. The Company is indemnified by the sellers in accordance with indemnification provisions under its contractual arrangements. Indemnification assets and contingent liabilities were recorded at the same amount and classified in the same manner, as components of the purchase price, representing our best estimates of these amounts at the acquisition date, in accordance with guidance for loss contingencies and uncertain tax positions. Under the Company’s contractual arrangement with Probiotica, there is no limitation on the amount or value of indemnity claims that can be made by the Company; however there is a time restriction of either two or five years, depending on the nature of the claim. Approximately $12.9 million (R$22.5 million) of the purchase price for the Probiotica transaction from the date of acquisition has been placed in escrow in accordance with the indemnification provisions. The escrow account will be maintained for two years, with 50% being released to the sellers after the first year, and the remaining balance released after the second year. The Company expects the total amount of such indemnification assets to be collectible from the sellers.

(f) The goodwill relates primarily to the Probiotica acquisition. Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. The Company expects that the Probiotica’s goodwill will be deductible for tax purposes. The goodwill recorded from the J&J ROW, J&J North America, QLT, University Medical, Atlantis and Gerot Lannach acquisitions represents primarily the cost savings, operating synergies and other benefits expected to result from combining the operations with those of the Company. Probiotica’s goodwill recorded represents the following:

· the Company’s expectation to develop and market new product brands and product lines in the future;

· the value associated with the Company’s ability to develop relationships with new customers;

· the value of the continuing operations of Probiotica’s existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, Probiotica’s assembled workforce).

The amount of the goodwill from the J&J North America, QLT and University Medical acquisitions has been allocated to the Company’s U.S. Dermatology segment. The amounts of goodwill from the J&J ROW, Probiotica, Atlantis and Gerot Lannach acquisitions, have been allocated to the Company’s Emerging Markets segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	10	$	456,720	$	(2,088	)	$	454,632
Corporate brands	12	31,934		3,725			35,659
Product rights	10	109,274		(873		)	108,401
Royalty agreement	9	36,277		—			36,277
Partner relationships	5	32,414		—			32,414
Total identifiable intangible assets acquired	10	$	666,619	$	764		$	667,383

iNova

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2012 (as adjusted)
Cash and cash equivalents	$	8,792		$	—		$	8,792
Accounts receivable(c)	30,525			—			30,525
Inventories	43,387			(1,400		)	41,987
Property, plant and equipment(d)	15,257			(749		)	14,508
Identifiable intangible assets(e)	423,950			(2,188		)	421,762
Deferred income taxes, net	—			15,893			15,893
Current liabilities	(32,500		)	(1,713		)	(34,213		)
Total identifiable net assets	489,411			9,843			499,254
Goodwill(f)	211,770			(9,843		)	201,927
Total fair value of consideration transferred	$	701,181		$	—		$	701,181

(a) As previously reported in the 2011 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) resolution of certain tax aspects of the transaction and the tax impact of pre-tax measurement period adjustments; (ii) changes in the estimated fair value of an intangible asset and the related inventory; (iii) additional information obtained with respect to the fair value of an acquired manufacturing facility; and (iv) additional information obtained with respect to the valuation of compensation-related liabilities. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) The fair value of trade accounts receivable acquired was $30.5 million, with the gross contractual amount being $31.5 million, of which the Company expects that $1.0 million will be uncollectible.

(d) Property, plant and equipment includes a manufacturing facility, included in the Canada and Australia segment, which was subsequently sold during the third quarter of 2012 for $10.2 million, which equaled its carrying amount.

(e) The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	8	$	418,252	$	(2,188	)	$	416,064
Corporate brands	4	5,698		—			5,698
Total identifiable intangible assets acquired	8	$	423,950	$	(2,188	)	$	421,762

(f) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

· cost savings, operating synergies and other benefits expected to result from combining the operations of iNova with those of the Company;

· the value of the continuing operations of iNova’s existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, iNova’s assembled workforce).

The goodwill has been allocated to the Company’s Canada and Australia segment ($119.5 million) and the Company’s Emerging Markets segment ($82.4 million).

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	8	$	418,252	$	(2,188	)	$	416,064
Corporate brands	4	5,698		—			5,698
Total identifiable intangible assets acquired	8	$	423,950	$	(2,188	)	$	421,762

Dermik

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2012 (as adjusted)
Inventories	$	32,360		$	(3,792	)	$	28,568
Property, plant and equipment	39,581			—			39,581
Identifiable intangible assets(c)	341,680			1,969			343,649
Deferred tax liability	(1,262		)	—			(1,262		)
Total identifiable net assets	412,359			(1,823		)	410,536
Goodwill(d)	8,141			2,935			11,076
Total fair value of consideration transferred	$	420,500		$	1,112		$	421,612

(a) As previously reported in the 2011 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) changes in estimated inventory reserves, (ii) revisions to certain assumptions impacting the fair value of intangible assets; and (iii) an increase in the total fair value of consideration transferred pursuant to a working capital adjustment provision under the purchase agreement. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	9	$	292,472	$	1,816		$	294,288
Product rights	5	33,857		227			34,084
Manufacturing agreement	5	15,351		(74		)	15,277
Total identifiable intangible assets acquired	9	$	341,680	$	1,969		$	343,649

(d) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. The Company expects that $6.4 million of the goodwill will be deductible for tax purposes in Canada. The goodwill recorded represents primarily the value of Dermik’s assembled workforce. The goodwill has been allocated to the Company’s U.S. Dermatology segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	9	$	292,472	$	1,816		$	294,288
Product rights	5	33,857		227			34,084
Manufacturing agreement	5	15,351		(74		)	15,277
Total identifiable intangible assets acquired	9	$	341,680	$	1,969		$	343,649

Ortho Dermatologics

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2012 (as adjusted)
Inventories	$	6,169		$	—		$	6,169
Property, plant and equipment	206			—			206
Identifiable intangible assets, excluding acquired IPR&D(c)	333,599			—			333,599
Acquired IPR&D(d)	4,318			—			4,318
Deferred tax liability	(1,690		)	—			(1,690		)
Total identifiable net assets	342,602			—			342,602
Goodwill(e)	3,507			(915		)	2,592
Total fair value of consideration transferred	$	346,109		$	(915	)	$	345,194

(a) As previously reported in the 2011 Form 10-K.

(b) The measurement period adjustment reflects a decrease in the total fair value of consideration transferred pursuant to a working capital adjustment provision under the purchase agreement. The measurement period adjustment was made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. This adjustment did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) The identifiable intangible assets acquired relate to product brands intangible assets with an estimated weighted-average useful life of approximately nine years.

(d) The acquired IPR&D asset relates to the development of the MC5 program, a topical treatment for acne vulgaris. In the second quarter of 2012, the Company terminated the MC5 program and recognized a charge of $4.3 million to write off the related IPR&D asset. This charge was recognized as In-process research and development impairments and other charges in the Company’s consolidated statements of (loss) income.

(e) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents primarily the cost savings, operating synergies and other benefits expected to result from combining the operations of Ortho Dermatologics with those of the Company. The goodwill has been allocated to the Company’s U.S. Dermatology segment.

Afexa

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2012 (as adjusted)
Cash	$	1,558		$	—		$	1,558
Accounts receivable(c)	9,436			(1,524		)	7,912
Inventories	22,489			—			22,489
Other current assets	5,406			—			5,406
Property and equipment	8,766			—			8,766
Identifiable intangible assets(d)	80,580			(5,850		)	74,730
Current liabilities	(18,104		)	—			(18,104		)
Deferred income taxes, net	(20,533		)	1,462			(19,071		)
Other non-current liabilities	(1,138		)	—			(1,138		)
Total identifiable net assets	88,460			(5,912		)	82,548
Goodwill(e)	3,070			5,912			8,982
Total fair value of consideration transferred	$	91,530		$	—		$	91,530

(a) As previously reported in the 2011 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) changes in the estimated fair value of certain intangible assets; (ii) changes in estimated sales reserves; and (iii) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) Both the fair value and gross contractual amount of trade accounts receivable acquired were $7.9 million, as the Company expects that the amount to be uncollectible is negligible.

(d) The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	11	$	65,194	$	(5,850	)	$	59,344
Patented technology	7	15,386		—			15,386
Total identifiable intangible assets acquired	10	$	80,580	$	(5,850	)	$	74,730

· cost savings, operating synergies and other benefits expected to result from combining the operations of Afexa with those of the Company; and

· intangible assets that do not qualify for separate recognition (for instance, Afexa’s assembled workforce).

The goodwill has been allocated to the Company’s Canada and Australia business segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2012 (as adjusted)
Product brands	11	$	65,194	$	(5,850	)	$	59,344
Patented technology	7	15,386		—			15,386
Total identifiable intangible assets acquired	10	$	80,580	$	(5,850	)	$	74,730

Sanitas

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date(a)
Cash and cash equivalents	$	5,607
Accounts receivable(b)	25,645
Inventories	22,010
Other current assets	3,166
Property, plant and equipment	83,288
Identifiable intangible assets, excluding acquired IPR&D(c)	247,127
Acquired IPR&D	747
Other non-current assets	2,662
Current liabilities	(30,428		)
Long-term debt, including current portion(d)	(67,134		)
Deferred income taxes, net	(43,269		)
Other non-current liabilities	(6,049		)
Total identifiable net assets	243,372
Goodwill(e)	204,791
Total fair value of consideration transferred	$	448,163

(a) As previously reported in the 2011 Form 10-K. The Company has not recognized any measurement period adjustments to the amounts previously reported in the 2011 Form 10-K.

(b) The fair value of trade accounts receivable acquired was $25.6 million, with the gross contractual amount being $27.8 million, of which the Company expects that $2.2 million will be uncollectible.

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date
Product brands	7	$	164,823
Product rights	7	43,027
Corporate brands	15	25,227
Partner relationships	7	14,050
Total identifiable intangible assets acquired	8	$	247,127

(d) Effective December 1, 2011, Sanitas terminated its Facility Agreement and Revolving Credit Line Agreement, repaid the amounts outstanding under its credit facilities and cancelled the undrawn credit facilities.

· cost savings, operating synergies and other benefits expected to result from combining the operations of Sanitas with those of the Company;

· the value of the continuing operations of Sanitas’s existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, Sanitas’s assembled workforce).

The goodwill has been allocated to the Company’s Emerging Markets segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date
Product brands	7	$	164,823
Product rights	7	43,027
Corporate brands	15	25,227
Partner relationships	7	14,050
Total identifiable intangible assets acquired	8	$	247,127

PharmaSwiss S.A.

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date (as previously reported)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2011 (as adjusted)(a)
Cash and cash equivalents	$	43,940		$	—		$	43,940
Accounts receivable(c)	63,509			(1,880		)	61,629
Inventories(d)	72,144			(1,825		)	70,319
Other current assets	14,429			—			14,429
Property, plant and equipment	9,737			—			9,737
Identifiable intangible assets(e)	202,071			7,169			209,240
Other non-current assets	3,122			—			3,122
Current liabilities	(46,866		)	826			(46,040		)
Deferred income taxes, net	(18,176		)	11,568			(6,608		)
Other non-current liabilities	(720		)	—			(720		)
Total identifiable net assets	343,190			15,858			359,048
Goodwill(f)	171,105			(11,445		)	159,660
Total fair value of consideration transferred	$	514,295		$	4,413		$	518,708

(a) As previously reported in the 2011 Form 10-K. The Company has not recognized any measurement period adjustments in 2012 to the amounts previously reported in the 2011 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) changes to deferred taxes based on estimates of income tax rates; (ii) changes in the estimated fair value of certain intangible assets; (iii) an increase in the total fair value of consideration transferred pursuant to a working capital adjustment provision of the purchase agreement; and (iv) the tax impact of pre-tax measurement period adjustments. The measurement period adjustments were made to reflect facts and circumstances existing as of the acquisition date, and did not result from intervening events subsequent to the acquisition date. These adjustments did not have a significant impact on the Company’s previously reported consolidated financial statements and, therefore, the Company has not retrospectively adjusted those financial statements.

(c) The fair value of trade accounts receivable acquired was $61.6 million, with the gross contractual amount being $66.8 million, of which the Company expects that $5.2 million will be uncollectible.

(d) Includes $18.2 million to record PharmaSwiss inventory at its estimated fair value.

(e) The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Amounts Recognized as of December 31, 2011 (as adjusted)
Partner relationships(1)	7	$	130,183	$	—	$	130,183
Product brands	9	71,888		7,169		79,057
Total identifiable intangible assets acquired	7	$	202,071	$	7,169	$	209,240

(1) The partner relationships intangible asset represents the value of existing arrangements with various pharmaceutical and biotech companies, for whom PharmaSwiss provides regulatory, compliance, sales, marketing and distribution functions.

· cost savings, operating synergies and other benefits expected to result from combining the operations of PharmaSwiss with those of the Company;

· the value of the going-concern element of PharmaSwiss existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, PharmaSwiss assembled workforce).

The goodwill has been allocated to the Company’s Emerging Markets segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date (as previously reported)		Measurement Period Adjustments		Amounts Recognized as of December 31, 2011 (as adjusted)
Partner relationships(1)	7	$	130,183	$	—	$	130,183
Product brands	9	71,888		7,169		79,057
Total identifiable intangible assets acquired	7	$	202,071	$	7,169	$	209,240

Valeant

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Merger Date (as previously reported)(a)			Measurement Period Adjustments(b)			Amounts Recognized as of December 31, 2011 (as adjusted)(c)
Cash and cash equivalents	$	348,637		$	—		$	348,637
Accounts receivable(d)	194,930			—			194,930
Inventories(e)	208,874			—			208,874
Other current assets	30,869			—			30,869
Property, plant and equipment	184,757			—			184,757
Identifiable intangible assets, excluding acquired IPR&D(f)	3,844,310			(224,939		)	3,619,371
Acquired IPR&D(g)	1,404,956			(4,195		)	1,400,761
Other non-current assets	6,108			—			6,108
Current liabilities(h)	(385,574		)	874			(384,700		)
Long-term debt, including current portion(i)	(2,913,614		)	—			(2,913,614		)
Deferred income taxes, net(j)	(1,467,791		)	157,816			(1,309,975		)
Other non-current liabilities(k)	(149,307		)	(46,022		)	(195,329		)
Total identifiable net assets	1,307,155			(116,466		)	1,190,689
Equity component of convertible debt(i)	(225,971		)	—			(225,971		)
Call option agreements(l)	(28,000		)	—			(28,000		)
Goodwill(m)	2,878,856			116,466			2,995,322
Total fair value of consideration transferred	$	3,932,040		$	—		$	3,932,040

(a) As previously reported in the 2010 Form 10-K.

(b) The measurement period adjustments primarily reflect: (i) changes in the estimated fair values of certain identifiable intangible assets to better reflect the competitive environment, market potential and economic lives of certain products; and (ii) the tax impact of pre-tax measurement period adjustments and resolution of certain tax aspects of the transaction. The measurement period adjustments were made to reflect market participant assumptions about facts and circumstances existing as of the Merger Date, and did not result from intervening events subsequent to the Merger Date.

(d) The fair value of accounts receivable acquired was $194.9 million, which comprised trade receivables ($151.9 million) and royalty and other receivables ($43.1 million). The gross contractual amount of trade receivables was $159.0 million, of which the Company expects that $7.1 million will be uncollectible.

(e) Includes $78.5 million to record Valeant’s inventory at its estimated fair value.

(f) The following table summarizes the amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2011 (as adjusted)
Product brands	16	$	3,114,689	$	(190,779	)	$	2,923,910
Corporate brands	20	168,602		98			168,700
Product rights	9	360,970		(52,949		)	308,021
Out-licensed technology and other	7	200,049		18,691			218,740
Total identifiable intangible assets acquired	15	$	3,844,310	$	(224,939	)	$	3,619,371

(g) Acquired IPR&D assets are initially recognized at fair value and are classified as indefinite-lived intangible assets until the successful completion or abandonment of the associated research and development efforts. The significant components of the acquired IPR&D assets relate to the development of ezogabine/retigabine in collaboration with Glaxo Group Limited, a subsidiary of GlaxoSmithKline plc (the entities within The Glaxo Group of Companies are referred throughout as “GSK”), as an adjunctive treatment for refractory partial-onset seizures in adult patients with epilepsy (as described in note 5), and a number of dermatology products in development for the treatment of severe acne and fungal infections, among other indications. The following table summarizes the amounts assigned to the acquired IPR&D assets:

	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2011 (as adjusted)
Ezogabine/retigabine(1)	$	891,461	$	—		$	891,461
Dermatology products	431,323		(3,100		)	428,223
Other	82,172		(1,095		)	81,077
Total IPR&D assets acquired	$	1,404,956	$	(4,195	)	$	1,400,761

(1) Refer to note 5 — “COLLABORATION AGREEMENTS”

A multi-period excess earnings methodology (income approach) was used to determine the estimated fair values of the acquired IPR&D assets. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project. A risk-adjusted discount rate of 9% was used to present value the projected cash flows. See note 12 titled “INTANGIBLE ASSETS AND GOODWILL” for further information regarding IPR&D asset impairments recognized in 2012 and 2011.

(h) Includes accounts payable, accrued liabilities and income taxes payable.

(i) As described in note 14, concurrent with the closing of the Merger, Valeant issued $500.0 million aggregate principal amount of 6.75% senior notes due 2017 (the “2017 Notes”) and $700.0 million aggregate principal amount of 7.00% senior notes due 2020 (the “2020 Notes”). A portion of the proceeds of the 2017 Notes and 2020 Notes offering was used to pay down $1.0 billion outstanding under previous term loan B facility.

The following table summarizes the fair value of long-term debt assumed as of the Merger Date:

	Amounts Recognized as of Merger Date
Term Loan A Facility(1)	$	1,000,000
Term Loan B Facility(1)	500,000
2017 Notes	497,500
2020 Notes	695,625
4.0% Convertible Notes(2)	220,489
Total long-term debt assumed	$	2,913,614

(1) Effective November 29, 2010, the Term Loan B Facility was repaid in full. Effective March 8, 2011, Valeant terminated the Credit and Guaranty Agreement and repaid the amounts outstanding under the Term Loan A Facility.

(2) 4% Convertible Notes were redeemed in the second quarter of 2011.For further details regarding the settlement of the 4% Convertible Notes, see note 14 titled “SHORT-TERM BORROWINGS AND LONG-TERM DEBT”.

(j) Comprises current deferred tax assets ($68.5 million), non-current deferred tax assets ($4.3 million), current deferred tax liabilities ($6.5 million) and non-current deferred tax liabilities ($1,376.3 million).

(k) Includes the fair value of contingent consideration related to Valeant’s acquisition of Princeton Pharma Holdings LLC, and its wholly-owned operating subsidiary, Aton Pharma, Inc. (“Aton”), on May 26, 2010. The aggregate fair value of the contingent consideration was determined to be $21.6 million as of the Merger Date. The contingent consideration consists of future milestones predominantly based upon the achievement of approval and commercial targets for certain pipeline products (which are included in the fair value ascribed to the IPR&D assets acquired, as described above under (g)). As a result of an agreement entered in the third quarter of 2012, the future milestones that the Company may be required to pay with respect to the acquisition of Aton, have been reduced by $190.0 million, from up to $390.0 million to up to $200.0 million.

(l) The Company assumed Valeant’s existing call option agreements in respect of the shares underlying the conversion of $200.0 million principal amount of the 4.0% Convertible Notes. These agreements consisted of purchased call options on 15,813,338 common shares of the Company, which matured on May 20, 2011, and written call options on the identical number of shares, which matured on August 18, 2011. For further details regarding the settlement of these call options, see note 14 titled “SHORT-TERM BORROWINGS AND LONG-TERM DEBT”.

In addition, the Company assumed written call option agreements in respect of 3,863,670 common shares of the Company underlying Valeant’s 3.0% convertible subordinated notes that matured in August 2010. The written call options on shares underlying the 3.0% convertible subordinated notes expired on November 15, 2010, and were settled over the following 30 business days. On November 19, 2010, the call option agreements were amended to require cash settlement, resulting in the reclassification of the $32.8 million fair value of the written call options as a liability as of that date. The Company recognized a loss of $10.1 million on the written call options settled for cash, which has been included in loss on extinguishment of debt (as described in note 19).

(m) Goodwill is calculated as the difference between the Merger Date fair value of the consideration transferred and the values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

· cost savings, operating synergies and other benefits expected to result from combining the operations of Valeant with those of Biovail;

· the value of the going-concern element of Valeant’s existing business (that is, the higher rate of return on the assembled net assets versus if Biovail had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, Valeant’ assembled workforce), as well as future, as yet unidentified research and development projects.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2011 (as adjusted)
Product brands	16	$	3,114,689	$	(190,779	)	$	2,923,910
Corporate brands	20	168,602		98			168,700
Product rights	9	360,970		(52,949		)	308,021
Out-licensed technology and other	7	200,049		18,691			218,740
Total identifiable intangible assets acquired	15	$	3,844,310	$	(224,939	)	$	3,619,371

Fair Value of Consideration Transferred

(Number of shares, stock options and restricted share units in thousands)	Conversion Calculation		Fair Value		Form of Consideration
Number of common shares of Biovail issued in exchange for Valeant common stock outstanding as of the Merger Date	139,137
Multiplied by Biovail’s stock price as of the Merger Date(a)	$	26.35	$	3,666,245	Common shares
Number of common shares of Biovail expected to be issued pursuant to vested Valeant RSUs as a result of the Merger	1,694
Multiplied by Biovail’s stock price as of the Merger date(a)	$	26.35	44,643		Common shares
Fair value of vested and partially vested Valeant stock options converted into Biovail stock options			110,687		Stock options(b)
Fair value of vested and partially vested Valeant RSUs converted into Biovail RSUs			58,726		RSUs(c)
Cash consideration paid and payable			51,739		Cash(d)
Total fair value of consideration transferred			$	3,932,040

(a) As the Merger was effective at 12:01 a.m. on September 28, 2010, the conversion calculation reflects the closing price of Biovail’s common shares on the New York Stock Exchange (“NYSE”) at September 27, 2010.

(b) The fair value of the vested and partially vested portions of Valeant stock options that were converted into stock options of Biovail was recognized as a component of the consideration transferred, based on a weighted-average fair value of $17.63 per stock option, which was calculated using the Black-Scholes option pricing model. This calculation considered the closing price of Biovail’s common shares of $26.35 per share as of the Merger Date and the following assumptions:

Expected volatility		32.9%
Expected life		3.4 years
Risk-free interest rate		1.1%
Expected dividend yield		1.5%

The expected life of the options was determined by taking into account the contractual life of the options and estimated exercise pattern of the option holders. The expected volatility and risk-free interest rate were determined based on current market information, and the dividend yield was derived based on the expectation of the post-Merger special dividend of $1.00 per common share of the Company and no dividends thereafter.

The fair values of the exchanged Biovail stock options exceeded the fair values of the vested and partially vested Valeant stock options as of the Merger Date in an amount of $17.2 million, which was recognized immediately as post-Merger compensation expense.

(c) The fair value of the vested portion of Valeant time-based and performance-based RSUs converted into RSUs of Biovail was recognized as a component of the purchase price. The fair value of the vested portion of the Valeant time-based RSUs was determined based on the closing price of Biovail’s common shares of $26.35 per share as of the Merger Date. The fair value of Valeant performance-based RSUs was determined using a Monte Carlo simulation model, which utilizes multiple input variables to estimate the probability that the performance condition will be achieved.

The fair value of the exchanged Biovail time-based RSUs exceeded the fair value of the vested and partially vested Valeant time-based RSUs as of the Merger Date in an amount of $3.8 million, which was recognized immediately as post-Merger compensation expense.

(d) Cash consideration includes $39.7 million of income tax withholdings paid by the Company on behalf of employees of Valeant, in connection with the net share settlement of certain vested Valeant RSUs as of the Merger Date. In addition, under the terms of the Company’s employment agreement with J. Michael Pearson, Chief Executive Officer, cash equal to the pre-Merger special dividend payment was paid to Mr. Pearson in respect of any of his 2008 performance awards that vested in February 2011 at the time of such vesting. As of the Merger Date, the aggregate amount of this cash payment in respect of the pre-Merger special dividend was estimated to be $13.7 million, based on the assumption that Mr. Pearson’s 2008 performance awards will vest at the maximum performance target. Of that amount, the portion attributable to Mr. Pearson’s pre-Merger service ($12.1 million) was recognized in the fair value of consideration transferred, while the portion attributable to Mr. Pearson’s post-Merger service ($1.6 million) was recognized as share-based compensation expense over the remaining vesting period from the Merger Date to February 2011.

Assumptions for the calculation of the closing price

Expected volatility		32.9%
Expected life		3.4 years
Risk-free interest rate		1.1%
Expected dividend yield		1.5%

Summary of amounts assigned to acquired IPR&D assets

	Amounts Recognized as of Merger Date (as previously reported)		Measurement Period Adjustments			Amounts Recognized as of December 31, 2011 (as adjusted)
Ezogabine/retigabine(1)	$	891,461	$	—		$	891,461
Dermatology products	431,323		(3,100		)	428,223
Other	82,172		(1,095		)	81,077
Total IPR&D assets acquired	$	1,404,956	$	(4,195	)	$	1,400,761

(1) Refer to note 5 — “COLLABORATION AGREEMENTS”

Summary of fair value of long-term debt assumed

	Amounts Recognized as of Merger Date
Term Loan A Facility(1)	$	1,000,000
Term Loan B Facility(1)	500,000
2017 Notes	497,500
2020 Notes	695,625
4.0% Convertible Notes(2)	220,489
Total long-term debt assumed	$	2,913,614

Medicis

Business Combinations

Summary of estimated fair value of assets acquired and liabilities assumed as of the acquisition date

	Amounts Recognized as of Acquisition Date
Cash and cash equivalents	$	169,583
Accounts receivable(a)	81,092
Inventories(b)	145,157
Short-term and long-term investments(c)	626,559
Income taxes receivable	40,416
Other current assets(d)	74,622
Property and equipment, net	8,239
Identifiable intangible assets, excluding acquired IPR&D(e)	1,390,724
Acquired IPR&D(f)	153,817
Other non-current assets	616
Current liabilities(g)	(453,909		)
Long-term debt, including current portion(h)	(777,985		)
Deferred income taxes, net	(205,009		)
Other non-current liabilities	(8,841		)
Total identifiable net assets	1,245,081
Goodwill(i)	1,333,798
Total fair value of consideration transferred	$	2,578,879

(a) Both the fair value and gross contractual amount of trade accounts receivable acquired were $81.1 million.

(b) Includes $109.3 million to record Medicis’s inventory at its estimated fair value.

(c) Short-term and long-term investments consist of corporate and various government agency and municipal debt securities and the investments in auction rate floating securities (student loans). Subsequent to the acquisition date, the Company liquidated the majority of the investments for proceeds of$615.4 million, with the investment in auction rate floating securities and the investment in equity securities outstanding as of December 31, 2012.

(d) Includes prepaid expenses and an asset related to a supplemental executive retirement program. The supplemental executive retirement program was settled as of December 31, 2012.

(e) The following table summarizes the provisional amounts and useful lives assigned to identifiable intangible assets:

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date
In-licensed products	12	$	633,429
Product brands	10	491,627
Patents	5	224,985
Corporate brand	14	40,683
Total identifiable intangible assets acquired	10	$	1,390,724

(f) The significant components of the acquired IPR&D assets relate to the development of dermatology products, such as Luliconazole, a new imidazole, antimycotic cream for the treatment of tinea cruris, pedis and corporis, and Metronidazole 1.3%, a topical antibiotic for the treatment of bacterial vaginosis ($130.9 million, in the aggregate), and the development of several aesthetics programs ($22.9 million). A New Drug Application (“NDA”) for Luliconazole was submitted to the FDA on December 11, 2012. A multi-period excess earnings methodology (income approach) was used to determine the estimated fair values of the acquired IPR&D assets. The projected cash flows from these assets were adjusted for the probabilities of successful development and commercialization of each project. Risk-adjusted discount rates of 10% - 11% were used to present value the projected cash flows.

(g) Includes accounts payable, a liability for a supplemental executive retirement program, a liability for stock appreciation rights, deferred revenue, accrued liabilities, and reserves for sales returns, rebates, managed care and Medicaid. The supplemental executive retirement program was settled as of December 31, 2012.

(h) The following table summarizes the fair value of long-term debt assumed as of the acquisition date:

	Amounts Recognized as of Acquisition Date
1.375% Convertible Senior Notes(1)	$	546,668
2.50% Contingent Convertible Senior Notes(1)	231,111
1.50% Contingent Convertible Senior Notes(1)	206
Total long-term debt assumed	$	777,985

(1) During the period from the acquisition date to December 31, 2012, the Company redeemed a portion of the 1.375% Convertible Senior Notes, 2.50% Contingent Convertible Senior Notes and 1.50% Contingent Convertible Senior Notes. For further details, see note 14 titled “SHORT-TERM BORROWINGS AND LONG-TERM DEBT”.

(i) Goodwill is calculated as the difference between the acquisition date fair value of the consideration transferred and the provisional values assigned to the assets acquired and liabilities assumed. None of the goodwill is expected to be deductible for tax purposes. The goodwill recorded represents the following:

· cost savings, operating synergies and other benefits expected to result from combining the operations of Medicis with those of the Company;

· the value of the continuing operations of Medicis’ existing business (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately); and

· intangible assets that do not qualify for separate recognition (for instance, Medicis’ assembled workforce).

The provisional amount of goodwill has been allocated to the Company’s U.S. Dermatology segment.

Summary of amounts and useful lives assigned to identifiable intangible assets

	Weighted- Average Useful Lives (Years)	Amounts Recognized as of Acquisition Date
In-licensed products	12	$	633,429
Product brands	10	491,627
Patents	5	224,985
Corporate brand	14	40,683
Total identifiable intangible assets acquired	10	$	1,390,724

Fair Value of Consideration Transferred

(Number of shares, stock options and restricted share units in thousands)	Conversion Calculation		Fair Value
Number of common shares of Medicis outstanding as of acquisition date	57,135
Multiplied by Per Share Consideration	$	44.00	$	2,513,946
Number of stock options of Medicis cancelled and exchanged for cash(a)	3,152		33,052
Number of outstanding restricted shares cancelled and exchanged for cash(a)	1,974		31,881
Total fair value of consideration transferred			$	2,578,879

(a) The cash consideration paid for Medicis stock options and restricted shares attributable to pre-combination services has been included as a component of purchase price. The remaining $77.3 million balance related to the acceleration of unvested stock options, restricted stock awards, and share appreciation rights for Medicis employees that was triggered by the change in control was recognized as a post-combination expense within Restructuring, integration and other costs in the fourth quarter of 2012.

Summary of fair value of long-term debt assumed

	Amounts Recognized as of Acquisition Date
1.375% Convertible Senior Notes(1)	$	546,668
2.50% Contingent Convertible Senior Notes(1)	231,111
1.50% Contingent Convertible Senior Notes(1)	206
Total long-term debt assumed	$	777,985

- Definition

Tabular disclosure of pro forma results of operations for a material business acquisition or series of individually immaterial business acquisitions that are material in the aggregate.

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- Definition

Tabular disclosure of characteristics and cost, by total and major class, of indefinite-lived intangible assets acquired as part of a business combination. Indefinite-lived intangible assets are assets that have no physical form, but have expected future economic benefit. The future benefit is not expected to diminish over a stated period of time. Acquired indefinite-lived intangible assets are disclosed by major class (assets that can be grouped together because they are similar, either by their nature or by their use in operations of the entity) and in total.

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