RESTRUCTURING, INTEGRATION AND OTHER COSTS

In connection with the Salix Acquisition, the Bausch & Lomb Holdings Incorporated (“B&L”) acquisition (the "B&L Acquisition"), as well as other acquisitions, the Company has implemented cost-rationalization and integration initiatives to capture operating synergies and generate cost savings across the Company. These measures included:


•	workforce reductions across the Company and other organizational changes;


•	closing of duplicative facilities and other site rationalization actions company-wide, including research and development facilities, sales offices and corporate facilities;


•	leveraging research and development spend; and/or


•	procurement savings.

Salix Acquisition-Related Cost-Rationalization and Integration Initiatives

The Company estimates that it will incur total costs of approximately $300 million in connection with the cost-rationalization and integration initiatives relating to the Salix Acquisition, which we expect to substantially complete by mid 2016. Since the acquisition date, total costs of $124 million have been incurred through June 30, 2015, including (i) $82 million of restructuring expenses, (ii) $29 million of integration expenses, and (iii) $13 million of acquisition-related costs. The estimate of total costs to be incurred primarily includes: employee termination costs payable to approximately 400 employees of the Company and Salix who have been or will be terminated as a result of the Salix Acquisition; IPR&D termination costs related to the transfer to other parties of product-development programs that do not align with our research and development model; costs to consolidate or close facilities and relocate employees; and contract termination and lease cancellation costs.

Salix Restructuring Costs

The following table summarizes the major components of the restructuring costs incurred in connection with the Salix Acquisition since the acquisition date through June 30, 2015:



	Severance and Related Benefits			IPR&D Termination Costs		Contract Termination, Facility Closure and Other Costs		Total
Balance, January 1, 2015	$	—		$	—	$	—	$	—
Costs incurred and/or charged to expense	82.4			—		—		82.4
Cash payments	(25.7		)	—		—		(25.7		)
Non-cash adjustments	2.2			—		—		2.2
Balance, June 30, 2015	$	58.9		$	—	$	—	$	58.9

Salix Integration Costs

As mentioned above, the Company has incurred $29 million of integration costs related to the Salix Acquisition since the acquisition date, which related primarily to integration consulting, duplicate labor, transition service, and other costs. The Company made payments of $16 million related to Salix integration costs since the acquisition date.

B&L Acquisition-Related Cost-Rationalization and Integration Initiatives

The Company estimated that it will incur total costs of approximately $600 million (excluding charges of $53 million described under the table below) in connection with the cost-rationalization and integration initiatives relating to the B&L Acquisition, which were substantially completed by the end of 2014. However, restructuring and integration costs of $8 million, in the aggregate, have been incurred in 2015. Since the acquisition date, total costs of $577 million (including $52 million related to cost-rationalization measures at a contact lens manufacturing plant in Waterford, Ireland, as described below) were incurred through June 30, 2015, including (i) $307 million of restructuring expenses, (ii) $257 million of integration expenses, and (iii) $13 million of acquisition-related costs. The estimate of total costs to be incurred primarily includes: employee termination costs payable to approximately 3,000 employees of the Company and B&L who have been or will be terminated as a result of the B&L Acquisition; IPR&D termination costs related to the transfer to other parties of product-development programs that did not align with our research and development model; costs to consolidate or close facilities and relocate employees; and contract termination and lease cancellation costs.

B&L Restructuring Costs

The following table summarizes the major components of the restructuring costs incurred in connection with the B&L Acquisition since the acquisition date through June 30, 2015:



	Employee Termination Costs						IPR&D Termination Costs		Contract Termination, Facility Closure and Other Costs
	Severance and Related Benefits			Share-Based Compensation⁽¹⁾			IPR&D Termination Costs		Contract Termination, Facility Closure and Other Costs			Total
Balance, January 1, 2013	$	—		$	—		$	—	$	—		$	—
Costs incurred and/or charged to expense	155.7			52.8			—		25.6			234.1
Cash payments	(77.8		)	(52.8		)	—		(7.8		)	(138.4		)
Non-cash adjustments	11.4			—			—		(6.8		)	4.6
Balance, December 31, 2013	$	89.3		$	—		$	—	$	11.0		$	100.3
Costs incurred and charged to expense	46.0			—			—		23.7			69.7
Cash payments	(110.7		)	—			—		(24.9		)	(135.6		)
Non-cash adjustments	(5.7		)	—			—		(5.4		)	(11.1		)
Balance, December 31, 2014⁽²⁾	$	18.9		$	—		$	—	$	4.4		$	23.3
Costs incurred and charged to expense	3.0			—			—		0.9			3.9
Cash payments	(12.6		)	—			—		(1.3		)	(13.9		)
Non-cash adjustments	(1.5		)	—			—		(1.2		)	(2.7		)
Balance, March 31, 2015	$	7.8		$	—		$	—	$	2.8		$	10.6
Costs incurred and charged to expense	(0.5		)	—			—		0.1			(0.4		)
Cash payments	(3.7		)	—			—		(0.1		)	(3.8		)
Non-cash adjustments	0.3			—			—		—			0.3
Balance, June 30, 2015	$	3.9		$	—		$	—	$	2.8		$	6.7

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(1)	Relates to B&L’s previously cancelled performance-based options and the acceleration of unvested stock options for B&L employees as a result of the B&L Acquisition were recognized in Other expense (income).


(2)	In the six-month period ended June 30, 2014, the Company recognized $52 million of restructuring charges and made payments of $82 million related to the B&L Acquisition.

B&L Integration Costs

As mentioned above, the Company has incurred $257 million of integration costs related to the B&L Acquisition since the acquisition date. In the six-month periods ended June 30, 2015 and 2014, the Company incurred $8 million and $100 million, respectively, of integration costs related to the B&L Acquisition, which related primarily to integration consulting, duplicate labor, transition service, and other costs. The Company made payments of $10 million and $112 million related to B&L integration costs during the six-month periods ended June 30, 2015 and 2014, respectively.

In addition to the restructuring and integration costs described above, the Company has recognized $52 million of restructuring costs related to a contact lens manufacturing plant in Waterford, Ireland (the plant was acquired as part of the B&L Acquisition) since the acquisition date (substantially all of which were recognized in the second quarter of 2014). These costs related to employee termination costs with respect to cost-rationalization measures. A reduction of $4 million was recognized in the three-month and six-month periods ended June 30, 2015 based on revised estimates. The Company made payments of $19 million in the six-month period ended June 30, 2015 with respect to this initiative. The Company did not make any payments in the three-month period ended June 30, 2014 with respect to this initiative.

Other Restructuring and Integration-Related Costs (Excluding Salix and B&L)

In the six-month period ended June 30, 2015, in addition to the restructuring and integration costs associated with the Salix Acquisition and the B&L Acquisition described above, the Company incurred an additional $79 million of other restructuring, integration-related and other costs. These costs included (i) $52 million of integration consulting, duplicate labor, transition service, and other costs, (ii) $24 million of severance costs, (iii) $2 million of facility closure costs, and (iv) $1 million of other costs. These costs primarily related to integration and restructuring costs for the Dendreon and other smaller acquisitions. The Company made payments of $54 million during the six-month period ended June 30, 2015 (in addition to the payments related to the Salix Acquisition and the B&L Acquisition described above).

In the six-month period ended June 30, 2014, in addition to the restructuring and integration costs associated with the B&L Acquisition described above, the Company incurred an additional $68 million of other restructuring, integration-related and other costs. These costs included (i) $46 million of integration consulting, duplicate labor, transition service, and other costs, (ii) $12 million of severance costs, (iii) $6 million of other costs, and (iv) $4 million of facility closure costs. These costs primarily related to (i) integration and restructuring costs for Solta Medical and other smaller acquisitions and (ii) intellectual property migration and the global consolidation of the Company’s manufacturing facilities. The Company made payments of $58 million during the six-month period ended June 30, 2014 (in addition to the payments related to the B&L Acquisition described above).