8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 18, 2013 (August 5, 2013)

Valeant Pharmaceuticals International, Inc.

(Exact name of registrant as specified in its charter)

Canada	001-14956	98-0448205
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2150 St. Elzéar Blvd. West

Laval, Quebec

Canada H7L 4A8

(Address of principal executive offices with zip code)

(514) 744-6792

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

On August 8, 2013, Valeant Pharmaceuticals International, Inc., a corporation organized under the laws of Canada (the “Company”), filed a Current Report on Form 8-K reporting that pursuant to the Agreement and Plan of Merger, dated May 24, 2013 (as amended, the “Merger Agreement”), among Valeant Pharmaceuticals International, a Delaware corporation (“VPI”), Stratos Merger Corp., a Delaware corporation and wholly owned subsidiary of VPI (“Merger Sub”), Bausch & Lomb Holdings Incorporated, a Delaware corporation (“B&L”) and, with respect to limited provisions of the Merger Agreement, the Company, Merger Sub merged with and into B&L, with B&L continuing as the surviving entity and wholly owned subsidiary of VPI (the “Merger”). B&L is a leading global eye health company. This Form 8-K/A is being filed to provide the historical and pro forma financial information required by Item 9.01 of Form 8-K.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired.

The audited consolidated financial statements of B&L required by Item 9.01(a) of Form 8-K and related notes are filed as Exhibit 99.2 to this amendment. The unaudited consolidated financial statements of B&L required by Item 9.01(a) of Form 8-K and related notes are filed as Exhibit 99.3 to this amendment.

(b) Pro Forma Financial Information.

The unaudited pro forma financial statements of B&L required by Item 9.01(b) of Form 8-K and related notes are filed as Exhibit 99.4 to this amendment.

(d) Exhibits.

The following exhibits are filed as part of this Current Report on Form 8-K:

  2.1 Agreement and Plan of Merger, dated as of May 24, 2013, among Valeant Pharmaceuticals International, Inc., Valeant Pharmaceuticals International, Stratos Merger Corp. and Bausch & Lomb Holdings Incorporated (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K (File No. 001-14956) filed on May 31, 2013).

23.1 Consent of PricewaterhouseCoopers LLP (U.S.).

23.2 Consent of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft.

99.2 Audited Consolidated Financial Statements and Related Notes of Bausch & Lomb Holdings Incorporated as at and for the years ended December 29, 2012 and December 31, 2011, together with the report of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft relating to the consolidated financial statements of Technolas Perfect Vision GmbH (incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K (File No. 001-14956) filed on June 10, 2013).

99.3 Unaudited Consolidated Financial Statements and Related Notes of Bausch & Lomb Holdings Incorporated as at and for the quarterly period ended June 29, 2013.

99.4 Unaudited Pro Forma Condensed Combined Financial Statements and Related Notes.

SIGNATURE

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

	VALEANT PHARMACEUTICALS INTERNATIONAL, INC.
Date: October 18, 2013	By:	/s/ Howard B. Schiller
	Name:	Howard B. Schiller
	Title:	Executive Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
2.1	Agreement and Plan of Merger, dated as of May 24, 2013, among Valeant Pharmaceuticals International, Inc., Valeant Pharmaceuticals International, Stratos Merger Corp. and Bausch & Lomb Holdings Incorporated (incorporated by reference to Exhibit 2.1 of the Current Report on Form 8-K (File No. 001-14956) filed on May 31, 2013).
23.1	Consent of PricewaterhouseCoopers LLP (U.S.).
23.2	Consent of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft.
99.2	Audited Consolidated Financial Statements and Related Notes of Bausch & Lomb Holdings Incorporated as at and for the years ended December 29, 2012 and December 31, 2011, together with the report of Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft relating to the consolidated financial statements of Technolas Perfect Vision GmbH (incorporated by reference to Exhibit 99.1 of the Current Report on Form 8-K (File No. 001-14956) filed on June 10, 2013).
99.3	Unaudited Consolidated Financial Statements and Related Notes of Bausch & Lomb Holdings Incorporated as at and for the quarterly period ended June 29, 2013.
99.4	Unaudited Pro Forma Condensed Combined Financial Statements and Related Notes.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No.’s 333-92229, 333-138697, 333-168629, 333-168254, 333-176205) of Valeant Pharmaceuticals International, Inc. of our report dated March 22, 2013, except for the effects of finalization of purchase accounting described in Note 2 — Acquisitions and Licensing Agreements—Acquisition of ISTA Pharmaceuticals, Inc., as to which the date is June 7, 2013 relating to the financial statements of Bausch & Lomb Holdings Incorporated, which are incorporated by reference in the Current Report on Form 8-K/A of Valeant Pharmaceuticals International, Inc. dated October 18, 2013.

PricewaterhouseCoopers LLP

Rochester, NY

October 18, 2013

EX-23.2

Exhibit 23.2

Consent of Independent Auditors

October 18, 2013

We consent to the incorporation by reference in the following Registration Statements:

1) Registration Statement (Form S-8 No. 333-92229),

2) Registration Statement (Form S-8 No. 333-138697),

3) Registration Statement (Form S-8 No. 333-168629),

4) Registration Statement (Form S-8 No. 333-168254),

5) Registration Statement (Form S-8 No. 333-176205);

of Valeant Pharmaceuticals International, Inc. of our report dated March 13, 2013 with respect to the consolidated financial statements of Technolas Perfect Vision GmbH incorporated by reference in this Current Report (on Form 8-K) of Valeant Pharmaceuticals International, Inc. to be filed on or about October 18, 2013.

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Munich

/s/ Räpple Wirtschaftsprüfer	/s/ Breyer Wirtschaftsprüfer
[German Public Auditor]	[German Public Auditor]

EX-99.3

Exhibit 99.3

SECOND QUARTER 2013

FINANCIAL INFORMATION REPORT

Page 1 of 26

TABLE OF CONTENTS

FINANCIAL STATEMENTS		3
STATEMENTS OF INCOME		3
STATEMENTS OF COMPREHENSIVE INCOME		4
BALANCE SHEETS		5
STATEMENTS OF CASH FLOWS		6
NOTES TO FINANCIAL STATEMENTS		8
1.	ACQUISITIONS AND LICENSING AGREEMENTS	8
2.	GOODWILL	12
3.	ACQUIRED INTANGIBLE ASSETS	13
4.	DEBT	14
5.	DERIVATIVE FINANCIAL INSTRUMENTS	15
6.	PROVISION FOR INCOME TAXES	16
7.	EMPLOYEE BENEFITS	17
8.	EMPLOYEE STOCK PLANS	18
9.	BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION	19
10.	COMMITMENTS AND CONTINGENCIES	21
11.	SUPPLEMENTAL BALANCE SHEET INFORMATION	22
12.	EQUITY	22
13.	NEW ACCOUNTING GUIDANCE	23
14.	OTHER MATTERS	24
15.	SUBSEQUENT EVENT	26

Page 2 of 26

FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements of Bausch & Lomb Holdings Incorporated and Consolidated Subsidiaries (“Bausch & Lomb” or “the Company”) have been prepared by the Company in accordance with the accounting policies stated in the Company’s 2012 Financial Information report for the year ended December 29, 2012 and should be read in conjunction with the Financial Statements appearing therein. The results of operations for the three and six months ended June 29, 2013 and June 30, 2012 have been based in part on approximations and may not be indicative of annual results. In the opinion of management, all adjustments necessary for a fair statement in accordance with accounting principles generally accepted in the United States of America have been included in these unaudited interim consolidated financial statements. The tax provision and related balance sheet amounts, and related cash flows data, for the quarter and six months ended June 30, 2012 have been revised to reflect the effect of an update to the purchase price accounting for the ISTA acquisition. Certain prior year balances have been reclassified to conform to the current year presentation.

BAUSCH & LOMB HOLDINGS INCORPORATED AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF INCOME

	(Unaudited) Quarter Ended						(Unaudited) Six Months Ended
Dollar Amounts in Millions	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net Sales	$	811.8		$	770.6		$	1,575.4		$	1,496.8
Costs and Expenses
Cost of products sold		309.5			288.3			602.6			568.3
Selling, general and administrative		347.0			406.2			682.7			723.6
Research and development		68.2			49.9			134.5			111.7
		724.7			744.4			1,419.8			1,403.6
Operating Income		87.1			26.2			155.6			93.2
Other Expense (Income)
Interest expense and other financing costs		70.7			80.9			125.9			120.4
Interest and investment income		(1.0	)		(0.4	)		(3.0	)		(1.9	)
Foreign currency, net		4.0			1.8			4.2			3.2
		73.7			82.3			127.1			121.7
Income (Loss) before Income Taxes and Equity in Losses of Equity Method Investee		13.4			(56.1	)		28.5			(28.5	)
Provision for (Benefit from) income taxes		16.6			(82.4	)		21.9			(65.0	)
Equity in losses of equity method investee		—			6.0			7.4			11.1
Net (Loss) Income		(3.2	)		20.3			(0.8	)		25.4
Net income attributable to noncontrolling interest		2.0			0.3			1.4			1.4
Net (Loss) Income Attributable to Bausch & Lomb Holdings Incorporated	$	(5.2	)	$	20.0		$	(2.2	)	$	24.0

See Notes to Financial Statements.

Page 3 of 26

BAUSCH & LOMB HOLDINGS INCORPORATED AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF COMPREHENSIVE INCOME

	(Unaudited) Quarter Ended						(Unaudited) Six Months Ended
Dollar Amounts in Millions	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Net (Loss) Income	$	(3.2	)	$	20.3		$	(0.8	)	$	25.4
Other Comprehensive Income
Foreign Currency Translation Adjustments		1.5			(30.1	)		(35.2	)		(21.7	)
Change in Fair Value of Effective Cash Flow Hedges:
Reclassification adjustments for losses included in net income		—			—			—			0.8
Income tax expense		—			—			—			(0.3	)
		—			—			—			0.5
Changes in Defined Benefit Plans:
Reclassification adjustment for recognized actuarial losses included in net income		5.4			5.5			11.0			9.0
Reclassification adjustment for recognized prior service credits included in net income		(1.3	)		(1.2	)		(2.6	)		(2.4	)
Interim plan measurement		—			(8.9	)		—			(8.9	)
Income tax (expense) benefit		(1.0	)		0.9			(2.2	)		0.1
Currency impact		(1.9	)		1.2			0.6			1.0
		1.2			(2.5	)		6.8			(1.2	)
Other Comprehensive Income (Loss)		2.7			(32.6	)		(28.4	)		(22.4	)
Comprehensive (Loss) Income		(0.5	)		(12.3	)		(29.2	)		3.0
Comprehensive income attributable to noncontrolling interest 1		2.0			0.3			1.3			1.4
Comprehensive (Loss) Income Attributable to Bausch & Lomb Holdings Incorporated	$	(2.5	)	$	(12.6	)	$	(30.5	)	$	1.6

¹ Comprehensive income attributable to noncontrolling interests consists primarily of net income.

See Notes to Financial Statements.

Page 4 of 26

BAUSCH & LOMB HOLDINGS INCORPORATED AND CONSOLIDATED SUBSIDIARIES

BALANCE SHEETS

(UNAUDITED)

Dollar Amounts in Millions—Except Per Share Data	June 29, 2013			December 29, 2012
Assets
Current Assets:
Cash and cash equivalents	$	122.2		$	359.2
Trade receivables, less allowances of $7.6 and $5.5, respectively		583.6			573.8
Inventories		380.3			317.4
Other current assets		183.8			178.0
Deferred income taxes		111.8			126.2
Total Current Assets		1,381.7			1,554.6
Property, Plant and Equipment, net		747.4			718.6
Goodwill		1,587.5			1,415.5
Other Intangibles, net		1,939.1			1,904.6
Other Long-Term Assets		118.6			323.8
Deferred Income Taxes		20.0			20.7
Total Assets	$	5,794.3		$	5,937.8
Liabilities and Shareholders’ Equity
Current Liabilities:
Notes payable	$	1.0		$	3.0
Current portion of long-term debt		231.3			52.3
Accounts payable		161.1			146.3
Accrued compensation		146.9			181.2
Accrued liabilities		479.6			636.2
Income taxes payable		56.8			15.1
Deferred income taxes		1.4			0.4
Total Current Liabilities		1,078.1			1,034.5
Long-Term Debt, less current portion		3,930.0			3,251.4
Pension and Other Benefit Liabilities		266.4			272.8
Other Long-Term Liabilities		13.9			7.7
Income Tax Liabilities		47.3			46.2
Deferred Income Taxes		450.2			520.3
Total Liabilities		5,785.9			5,132.9
Commitments and Contingencies (Notes 10 and 14)
Shareholders’ Equity:
Common Stock, par value $0.01 per share, 450 million shares authorized, 104,468,541 shares issued in 2013 and 104,227,439 shares issued in 2012		1.0			1.0
Preferred Stock, par value $0.01 per share, 50 million shares authorized, none issued		—			—
Common Stock in Treasury, at cost, no shares in 2013 and 9,863 shares in 2012		—			(0.4	)
Capital in Excess of Par Value		1,374.9			2,143.0
Retained Deficit		(1,148.1	)		(1,145.9	)
Accumulated Other Comprehensive Loss		(236.5	)		(208.1	)
Total Bausch & Lomb Holdings Incorporated Shareholders’ Equity		(8.7	)		789.6
Noncontrolling interest		17.1			15.3
Total Shareholders’ Equity		8.4			804.9
Total Liabilities and Shareholders’ Equity	$	5,794.3		$	5,937.8

See Notes to Financial Statements.

Page 5 of 26

BAUSCH & LOMB HOLDINGS INCORPORATED AND CONSOLIDATED SUBSIDIARIES

STATEMENTS OF CASH FLOWS

	(Unaudited) Six Months Ended
Dollar Amounts in Millions	June 29, 2013			June 30, 2012
Cash Flows from Operating Activities
Net (Loss) Income	$	(0.8	)	$	25.4
Adjustments to Reconcile Net Income to Net Cash (Used in) Provided by Operating Activities
Depreciation		58.3			57.2
Amortization of intangible assets		69.7			48.9
Amortization of debt issue costs		7.8			6.2
Modification of debt		8.6			22.4
Equity in losses of equity method investee		7.4			11.1
Stock-based compensation expense		9.9			8.7
Excess tax benefits associated with share-based compensation		(5.0	)		—
Deferred income taxes		(48.3	)		(100.1	)
Loss on retirement of fixed assets		0.7			0.4
Impairment charge on investments		5.0			—
Gain on previously held equity interest		(2.4	)		—
Gain on settlement of pre-existing relationship		(1.0	)		—
Non-cash charges related to step-up in carrying value of inventory		6.9			5.3
Changes in Assets and Liabilities 1
Trade receivables		(17.2	)		(68.0	)
Inventories		(27.3	)		(12.5	)
Other current assets		10.6			4.9
Other long-term assets, including equipment on operating lease		(6.7	)		9.0
Accounts payable and accrued liabilities		(241.4	)		74.1
Income taxes payable		41.8			(8.6	)
Other long-term liabilities		8.9			(5.6	)
Net Cash (Used in) Provided by Operating Activities		(114.5	)		78.8
Cash Flows from Investing Activities
Capital expenditures		(50.8	)		(46.2	)
Net cash paid for acquisition of businesses and other intangibles		(125.3	)		(465.5	)
Advances to TPV joint venture		—			(25.2	)
Cash paid for investment in available-for-sale securities		(9.7	)		—
Cash paid for investment in equity securities		—			(5.0	)
Cash received from sale of available-for-sale securities		0.1			8.9
Proceeds from sale of PP&E		0.3			—
Restricted cash		(10.0	)		—
Other		(2.8	)		—
Net Cash Used in Investing Activities		(198.2	)		(533.0	)
Cash Flows from Financing Activities
Proceeds from issuance of short-term debt		213.6			51.3
Proceeds from issuance of long-term debt		700.0			2,690.8
Early repayment of short-term debt		—			(60.0	)
Early repayment of long-term debt		—			(1,975.9	)
Repayment of short-term debt		(23.8	)		(51.2	)
Repayment of long-term debt		(21.1	)		(4.6	)
Debt issuance costs paid		(11.8	)		(75.0	)
Other financing costs paid		(3.4	)		—
Capital contributions		5.0			7.7
Repurchase of Common Stock		(0.3	)		(2.9	)
Exercise of stock options		0.3			1.3
Excess tax benefits associated with share-based compensation		5.0			—
Distributions to stockholders		(772.2	)		—
Distributions to option holders		(12.1	)		—
Net (payments to) proceeds from notes payable		(1.9	)		1.4
Net distributions to noncontrolling interest		—			(0.2	)
Net Cash Provided by Financing Activities		77.3			582.7
Effect of exchange rate changes on cash and cash equivalents		(1.6	)		(2.0	)

Page 6 of 26

	(Unaudited) Six Months Ended
Dollar Amounts in Millions	June 29, 2013			June 30, 2012
Net Change in Cash and Cash Equivalents		(237.0	)		126.5
Cash and Cash Equivalents—Beginning of Period		359.2			148.5
Cash and Cash Equivalents—End of Period	$	122.2		$	275.0
Supplemental Cash Flow Disclosures
Cash paid for interest	$	154.2		$	62.7
Net cash payments for income taxes	$	26.4		$	17.5

¹  Exclusive of acquisitions and investment in TPV joint venture.

See Notes to Financial Statements.

Page 7 of 26

BAUSCH & LOMB HOLDINGS INCORPORATED AND CONSOLIDATED SUBSIDIARIES

NOTES TO FINANCIAL STATEMENTS

Dollar Amounts in Millions

1. ACQUISITIONS AND LICENSING AGREEMENTS

Bausch & Lomb Holdings Incorporated Acquired by Valeant Pharmaceuticals International, Inc.

On August 5, 2013, Valeant Pharmaceuticals International, Inc. (“Valeant”) acquired Bausch & Lomb Holdings Incorporated (“B&L”) pursuant to a definitive agreement and plan of merger (the “Merger Agreement”) dated May 24, 2013. Subject to the terms and conditions set forth in the Merger Agreement, B&L became a wholly-owned subsidiary of Valeant. In accordance with the Merger Agreement, the aggregate purchase price was $8.7 billion minus B&L’s existing indebtedness for borrowed money (which was paid off by Valeant in accordance with the terms of the Merger Agreement) and related fees and costs and other amounts as further described in the Merger Agreement.

Acquisition of Remaining Shares of Technolas Perfect Vision GmbH

On January 25, 2013, the Company completed the acquisition of all outstanding and unowned shares of Technolas Perfect Vision GmbH (TPV), representing 45.9 percent of TPV’s outstanding equity. TPV is a leading ophthalmology laser company based in Munich, Germany, established in 2009 through a joint venture between the Company and 20/10 Perfect Vision AG. The TPV femtosecond and excimer laser platforms for cataract and refractive surgery will broaden the Company’s already robust surgical product portfolio and new product pipeline. Pursuant to the terms of a share option agreement (the “TPV Share Option Agreement”) entered into during 2011, among the Company, 20/10 Perfect Vision AG, and other shareholders of TPV, the Company purchased a call option allowing it to acquire the unowned shares of TPV based on the achievement of certain milestones and earn-outs. The Company exercised its call option in November 2012. The consideration for the unowned shares at closing was a cash payment of €99.5 ($134.0) which is subject to certain adjustments and contingent consideration in the form of milestone payments of up to €92.0 contingent on achievement of sales targets for specific TPV products in future years. The preliminary fair value of this contingent consideration was estimated to be $4.6.

Prior to the acquisition of the remaining unowned shares in TPV, the Company accounted for its investment in TPV under the equity method in accordance with ASC 323—Investments—Equity Method and Joint Ventures. Under the equity method, the results of operations of the joint venture were included in Equity in Losses of Equity Method Investee on the Company’s Statements of Income. The carrying amount of the investment was adjusted to reflect the Company’s share of TPV’s net earnings and certain other adjustments. During the second quarters and first six months of 2012, the Company recorded losses of $6.0 and $11.1, respectively; and during the first quarter of 2013 (prior to the acquisition), the Company recorded losses of $7.4, primarily reflecting its share of TPV’s net loss. The carrying amount of the investment (including the cost of the call option) as of December 29, 2012 and January 25, 2013 (immediately prior to the acquisition) was $168.1 and $160.7, respectively.

The following table presents summarized financial information for the Company’s TPV Joint Venture for the six months ended June 30, 2012. The amounts shown represent 100 percent of TPV’s results of operations except where noted:

	(Unaudited) Six Months Ended June 30, 2012
Net sales	$	36.9
Gross profit		9.8
Loss from continuing operations		18.9
Net loss		20.2
Bausch & Lomb’s share of net loss		10.9

Page 8 of 26

The purchase of the remaining unowned shares in TPV resulted in the Company’s obtaining control over TPV. Accordingly, the transaction is being accounted for as a business combination according to ASC 805—Business Combinations. Under ASC 805, the Company is required to measure the fair value of its previously held equity interest and record a gain or loss for the difference between this fair value and the equity interest’s carrying value. Using an income approach, which the Company considers to be a Level 3 measurement, the fair value of the equity interest was determined to be $163.1; therefore, a gain of $2.4 was recorded. Some of the assumptions and estimates used include revenue growth rates, operating margins and capital requirements used to calculate projected future cash flows along with terminal growth rates and risk adjusted discount rates.

Additionally, the Company held a note receivable of €39.6 ($53.3) from TPV which was to be repaid with proceeds of certain laser units produced by TPV and sold to third parties (the “Laser Financing”). Pursuant to ASC 805, the Laser Financing qualifies as a preexisting relationship and requires the Company to recognize a gain or loss on the effective settlement of the preexisting relationship at the lower of the stated settlement provisions or the amount the contract terms are favorable or unfavorable (from the acquirer’s perspective) compared to pricing for current market transactions for the same or similar loans. The agreement is silent regarding settlement terms other than through the proceeds of certain laser units. The Company’s preliminary evaluation is that the terms of this loan result in a gain of $1.0. The fair value of the Laser Financing was determined using a discounted cash flow method which the Company considers to be a Level 2 measurement. Subsequent to the transaction, this note receivable eliminates in consolidation with the liability recorded by TPV for the Laser Financing.

In accordance with the requirements under Topic 805, the Company has recorded the identifiable assets acquired and liabilities assumed at their estimated fair values as of January 25, 2013. The estimates of fair value were developed using a variety of valuation approaches as considered appropriate for each of the assets or liabilities valued. A market approach considering recent sales prices of the same or similar assets in an arm’s-length transaction was utilized in estimating the fair value of inventory. The fair value of property, plant and equipment was estimated using a cost approach unless sufficient data on sales and offerings of similar equipment was available to apply a market approach. The relief from royalty income approach was used to estimate the fair value of the trade name and technology intangible assets. The relief from royalty approach reflects the present value of the cost savings that accrue to an owner of an intangible asset who would otherwise have to pay royalties or license fees on revenues earned through the use of an asset, taking into account an appropriate discount rate to reflect the time value and risk associated with the asset. The trade name and technology intangible assets will be amortized over their weighted average remaining useful lives of 25 years and 9 years, respectively. The excess earnings income approach method was used to estimate the fair values of customer relationships, which reflects the present value of the operating cash flows generated by the intangible assets after taking into account the cost to realize the revenue and an appropriate discount rate to reflect the time value and risk associated with the invested capital. The customer relationship intangible assets will be amortized over a weighted average remaining useful life of 8 years. The non-competition agreement was valued using the with and without method of the income approach. The with and without method measures the value of an asset by the difference in the businesses’ cash flows with and without the asset in place. The non-competition intangible asset will be amortized over the three year life of the agreement. The weighted average remaining useful life for all identified intangible assets is 12 years. The fair value of the contingent consideration was estimated using a Monte Carlo simulation model using the following assumptions:

• Expected volatility was based on revenue volatilities in companies comparable to TPV. The revenue volatilities were based on the average of historical quarterly revenue volatilities;

• The look-back period for the historical volatility is ten years (or the comparable company’s entire history if ten years of data was not available); and

• The risk-free rate of interest was based on the Euro sovereign AAA strips curve as of the acquisition date. The cost of debt was based on the Euro BB Industrial yield curve as of the acquisition date.

The excess of the consideration transferred over the net tangible and intangible assets was recorded as goodwill. The goodwill arising from the acquisition was attributed to the ability of TPV’s products to augment Bausch & Lomb’s new product pipeline with cutting-edge surgical technology and enhance the Company’s ability to grow its surgical business. The goodwill is not tax deductible.

The preliminary fair values were based upon preliminary valuation data and estimates that are subject to change. The Company continues to refine the valuation data and estimates and expects to complete the valuation no later than the first anniversary date of the acquisition which is January 25, 2014. The Company anticipates that adjustments will continue to be made to the preliminary fair value estimates and those adjustments may be material.

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The fair value of the consideration transferred was:

Purchase price of unowned shares	$	134.0
Fair value of pre-existing equity ownership		163.1
Laser Financing effective settlement		54.3
Contingent consideration		4.6
Total fair value of consideration transferred	$	356.0

Provisionally recognized amounts of identifiable assets acquired and liabilities assumed are:

Cash	$	8.7
Inventory		54.1
PP&E		24.3
Customer relationships		22.7
Technology		59.5
Trade name		21.7
Non-competition agreement		8.6
Goodwill		191.7
Accounts payable and accrued liabilities		(41.4	)
Other assets and liabilities, net		6.1
Total	$	356.0

The results of operations of TPV were included in the consolidated financial statements of the Company beginning on January 26, 2013, including sales of $33.0. TPV was integrated into the Company’s surgical business in 2013. As a result, it is not practicable to determine standalone TPV earnings.

Pro Forma Information

The pro forma financial information is not intended to represent or be indicative of the actual results of operations of the Company that would have been reported had the acquisition been completed on January 1, 2012 (the first day of fiscal 2012), nor is it representative of future operating results of the Company. The pro forma information does not include any operating efficiencies or cost savings that the Company may achieve with respect to combining the companies.

The following table presents unaudited supplemental pro forma information for the Company as if the acquisition of TPV had occurred as of the beginning of fiscal year 2012:

	(Unaudited) Six Months Ended
	June 29, 2013		June 30, 2012
Net Sales	$	1,579.1	$	1,533.6
Net Income (Loss) Attributable to Bausch & Lomb Holdings Incorporated		9.4		(4.9	)

These results include certain adjustments for the quarters ended June 29, 2013 and June 30, 2012, which are directly attributable to the acquisition, such as (1) to record certain incremental expenses resulting from the fair value of consideration transferred, such as amortization expense in connection with the fair value adjustments to acquisition-related intangible assets and fair value step-up to inventory, (2) to eliminate interest related to intercompany loans between the Company and TPV, and (3) to eliminate net sales and costs of goods sold on intercompany transactions between the Company and TPV.

The unaudited pro forma financial information also includes adjustments for certain non-recurring items such as (1) the impact of TPV’s Management Incentive Program (MIP), which vested due to a qualifying exit event, and a special management bonus decreasing stock compensation expense $9.4 for the six months ended June 29, 2013 and increasing stock compensation expense $9.4 for the six months ended June 30, 2012, (2) the inclusion of transaction costs of $1.9 for the six months ended June 30, 2012, (3) the elimination of acquisition costs, including restructuring costs of $1.7 for the six months ended June 29, 2013 that were included as part of the $1.9 transaction cost for the six months ended June 30, 2012 and (4) the impact of eliminating equity in losses of equity method investee of $7.4 and $11.1 for the six months ended June 29, 2013 and June 30, 2012, respectively.

Income tax expense of $8.5 and an income tax benefit of $3.6 for the six months ended June 29, 2013 and June 30, 2012, respectively, were computed by applying the statutory tax rates of the relevant

Page 10 of 26

jurisdictions to the pro forma adjustments listed above. These tax rates do not reflect the Company’s effective tax rate, which includes other items such as valuation allowance impacts and other tax charges or benefits. The effective tax rate of the combined company may be significantly different from the rates assumed for purposes of preparing the unaudited pro forma condensed consolidated financial statements for a variety of factors. The Company’s tax provision for the quarter and six months ended June 29, 2013 includes a non-recurring benefit related to the release of valuation allowance as a result of taxable temporary differences that were recorded as part of the TPV acquisition.

Acquisition of ISTA Pharmaceuticals, Inc.

On June 6, 2012, the Company completed the acquisition of ISTA Pharmaceuticals, Inc. (ISTA), a leading pharmaceutical company, under which it acquired all outstanding stock of ISTA for $9.10 per share or $487.5 ($465.5, net of cash acquired). The purchase was financed by $170.0 of borrowings under the Company’s delayed draw term loan facility and cash on-hand. The combination added ISTA’s portfolio of industry-proven allergy drugs, glaucoma drugs, spreading agents and a non-steroidal anti-inflammatory drug to the Company’s complementary portfolio of existing prescription ophthalmology and over-the-counter eye health products.

The Company accounted for the acquisition in accordance with the requirements under Topic 805, and has recorded the identifiable assets acquired and liabilities assumed at their estimated fair values as of June 6, 2012. The fair values of identifiable assets acquired and liabilities assumed were based upon preliminary valuation data and estimates that were subject to change.

During the second quarter of 2013, the Company recorded certain adjustments to the preliminary fair values of certain assets acquired and liabilities assumed in the ISTA acquisition. Following these adjustments, the Company has finalized the determination of fair value relative to the ISTA acquisition. The Company has retrospectively adjusted the fair values as of the acquisition date.

Pro Forma Information

The pro forma financial information is not intended to represent or be indicative of the actual results of operations of the Company that would have been reported had the acquisition been completed on January 1, 2011 (the first day of fiscal 2011), nor is it representative of future operating results of the Company. The pro forma information does not include any operating efficiencies or cost savings that the Company may achieve with respect to combining the companies.

The following table presents unaudited supplemental pro forma information for the Company as if the acquisition of ISTA had occurred as of the beginning of fiscal year 2011:

	(Unaudited) Six Months Ended June 30,  2012
Net Sales	$	1,526.2
Net Loss Attributable to Bausch & Lomb Holdings Incorporated		(31.8	)

These results include certain adjustments for the six months ended June 30, 2012, which are directly attributable to the acquisition, such as (1) to record certain incremental expenses resulting from the fair value of consideration transferred, such as amortization expense in connection with the fair value adjustments to acquisition-related intangible assets, (2) to record the effect of interest expense and amortization of incremental debt issuance costs related to the delayed draw term loan used to finance the acquisition, and (3) to eliminate net sales and costs of goods sold on intercompany transactions related to the Company’s contract to manufacture products for ISTA. The unaudited pro forma financial information also includes a non-recurring items to exclude transaction costs of $32.9.

There is an income tax expense of $11.5, which was computed by applying the statutory tax rates of the relevant jurisdictions to the pro forma adjustments listed above. These tax rates do not reflect the Company’s effective tax rate, which includes other items such as valuation allowance impacts and other tax charges or benefits. The effective tax rate of the combined company may be significantly different than the rates assumed for purposes of preparing the unaudited pro forma condensed consolidated financial statements for a variety of factors. The Company’s tax provision for the quarter and six months ended June 30, 2012 includes a non-recurring benefit related to the release of valuation allowance as a result of taxable temporary differences that were recorded as part of the ISTA acquisition.

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Worldwide Licensing Agreement for Latanoprostene Bunod

In March 2010, the Company entered into a licensing agreement with NicOx, S.A. (NicOx), which granted the Company exclusive worldwide rights to develop and commercialize latanoprostene bunod, a nitric oxide-donating compound for the treatment of glaucoma and ocular hypertension. The Company initiated a global phase 3 development program for latanoprostene bunod in January 2013. Also under the terms of the agreement, the Company may be required to make potential regulatory, commercialization and sales success-based milestones payments over time. NicOx will receive royalties on the sales of latanoprostene bunod and will have the option to co-promote latanoprostene bunod products in the United States. No amounts associated with this agreement have been recorded in 2013.

2. GOODWILL

The changes in the carrying amount of goodwill for the period ended June 29, 2013 are as follows:

	Pharmaceuticals			Vision Care			Surgical			Total
Balance as of December 29, 2012 1	$	672.5		$	592.4		$	150.6		$	1,415.5
Acquisition of TPV 2		—			—			191.7			191.7
Other (primarily currency)		(2.3	)		(12.6	)		(4.8	)		(19.7	)
Balance as of June 29, 2013	$	670.2		$	579.8		$	337.5		$	1,587.5
Balance as of June 29, 2013
Goodwill	$	670.2		$	579.8		$	632.7		$	1,882.7
Accumulated impairment losses		—			—			(295.2	)		(295.2	)
	$	670.2		$	579.8		$	337.5		$	1,587.5

¹  In accordance with Topic 805 the information presented for the period ended December 29, 2012 has been revised to reflect the effect of an update to the fair value of net assets related to the ISTA acquisition. (See Note 1 — Acquisitions and Licensing Agreements, Acquisition of ISTA Pharmaceuticals, Inc.)

²  See further discussion in Note 1 — Acquisitions and Licensing Agreements.

In June 2013, the FDA did not provide approval for Lens Fragmentation, a specific indication sought for the Victus Femtosecond laser. The Company believes this is a temporary delay, however any changes required by the FDA or further delays in approval could have a significant impact on future revenues for the Victus Femtosecond laser. As part of the Company’s ongoing assessment of potential impairment indicators related to goodwill, the Company considered the TPV FDA approval delay to be a triggering event for the Surgical reporting unit. As a result, the Company performed a quantitative assessment of its Surgical reporting unit as of June 29, 2013. The carrying value including goodwill of the Company’s Surgical reporting unit was less than the respective fair value. Goodwill was not considered impaired.

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3. ACQUIRED INTANGIBLE ASSETS

The components of intangible assets as of June 29, 2013 and December 29, 2012 are as follows:

	June 29, 2013						December 29, 2012
	Weighted Average Remaining Amortization Period 1		Gross Carrying Amount		Accumulated Amortization		Weighted Average Remaining Amortization Period 1		Gross Carrying Amount		Accumulated Amortization
Technology 2, 3		8 years	$	803.8	$	332.9		8 years	$	736.0	$	299.0
Company trade name		Indefinite		755.0		—		Indefinite		755.0		—
Developed products 3		11 years		429.5		45.0		11 years		429.6		25.5
Customer/distributor relationships 2		13 years		309.4		91.2		14 years		294.1		81.1
Sub-brand tradenames 2		17 years		113.5		29.7		15 years		92.2		26.7
In-Process Research & Development 1, 3		Indefinite		11.5		—		Indefinite		21.4		—
Other 2, 4		9 years		19.7		4.5		15 years		11.6		3.0
Total		11 years	$	2,442.4	$	503.3		11 years	$	2,339.9	$	435.3

¹  The IPR&D intangible asset includes two products which will be amortized upon commercialization based upon the expected life of the products. The remaining intangible assets are being amortized over the expected period of benefit.

²  In the first quarter 2013, the Company recorded intangible assets as a result of the acquisition of all outstanding and unowned shares of Technolas Perfect Vision GmbH (TPV). The intangible assets included $59.5 ascribed to Technology, $22.7 ascribed to Customer Relationships, $21.7 ascribed to Sub-brand trade names and $8.6 ascribed to other, related to a non-competition agreement (see Note 1 — Acquisitions and Licensing Agreements).

³  In June 2012, the Company recorded intangible assets as a result of the acquisition of ISTA. The intangible assets included $418.2 ascribed to developed products and $21.4 ascribed to IPR&D. In June 2013, one IPR&D product valued at $9.9 was commercialized and is now classified in Technology.

⁴  Other primarily consists of proprietary databases and the TPV non-competition agreement.

As part of our ongoing assessment of potential impairment indicators related to our intangible assets, the Company will closely monitor the performance of our product portfolio, including the Victus Femtosecond laser which has an intangible asset with a carrying amount of $47.4 as of June 30, 2013. If the Company’s ongoing assessments reveal an impairment to these assets or others, that impairment charge could be material.

Amortization expense of intangibles for the quarters ended June 29, 2013 and June 30, 2012 was $35.6 and $25.8, respectively. Amortization expense of intangibles for the six months ended June 29, 2013 and June 30, 2012 was $69.7 and $48.9, respectively. Total estimated amortization expense for fiscal years 2013 through 2017 is as follows:

Fiscal Year	Amount
2013	$	139.5
2014		139.2
2015		138.5
2016		133.6
2017		106.9

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4. DEBT

Debt outstanding as of December 29, 2012 and June 29, 2013 was:

Type	Maturity		Coupon Interest Rate	June 29, 2013			December 29, 2012
Holdco unsecured term loan		2018	LIBOR + 5.25%	$	700.0		$	—
U.S. dollar-denominated senior secured term loan 1		2019	LIBOR + 3.00%		1,903.3			1,915.8
Euro-denominated senior secured term loan 1		2019	EURIBOR + 3.50%		589.3			602.8
U.S. dollar-denominated delayed draw term loan		2016	LIBOR + 3.25%		398.0			400.0
U.S. dollar-denominated revolver loan		2015	LIBOR + 2.75%		170.0			—
Multi-Currency revolver loan		2015	LIBOR + 2.75%		5.0			—
Senior notes 1		2015	9.875%		349.7			349.7
Japanese yen-denominated revolving credit facility		2013	TIBOR + 0.75%		34.3			23.7
Debentures		2028	7.125%		11.6			11.6
Other		Various	Various		0.1			0.1
					4,161.3			3,303.7
Less current portion					(231.3	)		(52.3	)
				$	3,930.0		$	3,251.4

¹  Amounts shown reflect outstanding borrowings net of unamortized original issue discount.

Holdco Unsecured Term Loan

On March 19, 2013, Holdco borrowed $700.0 under a new senior unsecured term loan facility (Holdco Senior Term Loans) to finance, in part, the payment of the March 2013 Dividend, along with the payment of related fees and expenses.

Until March 19, 2014 (or earlier, between October 1, 2013 and March 19, 2014, under certain circumstances), the Holdco Senior Term Loans will bear interest at a rate per annum equal to 5.25 percent (or 6.00 percent if paid as PIK Interest) plus LIBOR, provided that LIBOR rates are subject to a floor of 1 percent per annum; on and after March 19, 2014 (or earlier, between October 1, 2013 and March 19, 2014, under certain circumstances), the term loans will bear interest at a rate per annum equal to 9.50 percent (or 10.25 percent if paid as PIK Interest).

Amendment to Opco Senior Secured Facilities

On May 20, 2013, Opco amended the Opco senior secured credit facilities (the “May 2013 Repricing”). Following the May 2013 Repricing, dollar-denominated term loans bear interest based on LIBOR plus a credit spread of 3.00 percent; dollar-denominated delayed draw term loans bear interest based on LIBOR plus a credit spread of 3.25 percent; euro-denominated term loans bear interest based on EURIBOR plus a credit spread of 3.50 percent and revolving credit loans bear interest based on LIBOR or EURIBOR, as applicable, plus a credit spread of 2.75 percent. Each of the foregoing interest rates are subject to a 0.50 percent reduction if the ratio of Consolidated Total Debt to Consolidated EBITDA, both as defined in the credit agreement, is equal to or less than 4.50 to 1.00 as of the end of each quarter. The LIBOR and EURIBOR rates on the term loans are each subject to a floor equivalent to 1 percent per annum, which floors are, following the May 2013 Repricing, no longer applicable to the delayed draw term loans.

Following the May 2013 Repricing, the five-year $500 senior secured revolving credit facility was reduced to $466.8.

Additionally, if on or prior to November 16, 2013, Opco prepays or refinances the term loans with long-term bank debt financing for the primary purpose of reducing the effective interest or weighted average yield, it will pay a repricing premium of 1 percent of the principal amount that is refinanced. Opco has not made any voluntary prepayments of U.S., Dutch, or delayed draw term loans since the May 2013 Repricing.

Page 14 of 26

The fair value of the Company’s long-term debt as of June 29, 2013 and December 29, 2012 was approximately $4,195.8 and $3,365.6, respectively. The fair values were determined in accordance with Topic 820 and fall within Level 2 in the fair value hierarchy, using significant other observable inputs. The measurement was based on the market approach technique. Inputs used to determine the fair value of debt include a combination of market price quotations obtained from several third-party banks or services for the various tranches of outstanding debt. Fair market value is determined using a model which computes an average of the quotations received.

5. DERIVATIVE FINANCIAL INSTRUMENTS

The table below presents information concerning the balance sheet classification and fair value of the Company’s derivative instruments.

	June 29, 2013			December 29, 2012
Derivatives Not Designated as Hedging Instruments
Foreign currency contracts:
Other current assets	$	1.1		$	0.5
Accrued liabilities		(3.2	)		(2.7	)
Total Fair Value of Derivatives	$	(2.1	)	$	(2.2	)

Foreign Currency Risk Management The Company enters into foreign currency derivative instruments primarily to offset foreign currency exposures related to foreign currency transactions. Although allowable, a hedging relationship for this risk has not been designated, as designation would not achieve different financial reporting results. Foreign currency derivative instruments are carried on the balance sheet at fair value with changes in fair value recorded in income. The fair value measurements fall within Level 2 in the fair value hierarchy, using significant other observable inputs. The measurement was based on the income approach technique. Inputs used to determine the fair value include prevailing market spot rates and forward points. In addition, from time to time the Company may selectively hedge firm commitments that represent both a right and an obligation, mainly for committed purchase orders for foreign-sourced equipment.

As of June 29, 2013 and December 29, 2012, the Company was a party to approximately 40 outstanding foreign currency derivative instruments. The following table is a summary of the Company’s primary hedging positions and corresponding net fair values held:

	June 29, 2013					December 29, 2012
Currency Hedged	Gross Notional Value		Net (Liability) Asset			Gross Notional Value		Net Asset (Liability)
Euro / U.S. Dollar	$	79.5	$	(0.4	)	$	71.3	$	0.3
Euro / Great Britain Pound		63.4		0.2			27.5		(0.5	)
Euro / Japanese Yen		17.3		(2.0	)		19.7		(1.9	)
Euro / Russian Ruble		16.4		0.3			27.6		(0.1	)
U.S. Dollar / Japanese Yen		13.3		—			19.6		—
U.S. Dollar / Canadian Dollar		1.9		—			5.8		—
All others, less than $5 individually		28.4		(0.2	)		34.6		—
	$	220.2	$	(2.1	)	$	206.1	$	(2.2	)

Summary of Non-Designated Derivative Instrument Losses The following table presents the net gains (losses) associated with foreign currency derivative instruments not designated as cash flow hedges on the Statements of Income:

	Quarter Ended				Six Months Ended
Caption on Statements of Income	June 29, 2013		June 30, 2012		June 29, 2013			June 30, 2012
Foreign currency, net	$	0.6	$	2.1	$	(0.8	)	$	(0.7	)

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6. PROVISION FOR INCOME TAXES

	Quarter Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Earnings (Loss) before Income Taxes and Equity in Losses of Equity Method Investee	$	13.4		$	(56.1	)	$	28.5		$	(28.5	)
Provision for (Benefit from) Income Taxes		16.6			(82.4	)		21.9			(65.0	)
Effective Tax Rate		124.1	%		146.8	%		76.9	%		228.1	%

Effective Tax Rate The differences between the effective tax rates above and the income tax computed by applying the statutory U.S. Federal income tax rate of 35.0 percent to Income before Income Taxes and Equity in Losses of Equity Method Investee continue to be primarily attributable to losses for which no tax benefit could be recorded, and the geographic mix of income before taxes from operations outside the United States and the related tax rates in those jurisdictions.

The second quarter ended June 29, 2013 reflects a discrete tax benefit of $5.2 related to the Wilmington settlement (See Note 14 — Other Matters, Material Tax Litigation). This settlement includes: (i) $39.5 of tax, penalties and interest payable in 2013 and (ii) $44.7 of net deferred tax benefit, including the estimated valuation allowance impact, to account for applying certain settlement concessions agreed to by the Company, and unwinding the Wilmington structure. In addition, the deferred tax adjustments referenced above impact the valuation allowance requirements associated with the current year financial activity and this impact is reflected in the annual ordinary effective tax rate. The full year estimated impact of the settlement is expected to be $30.3, of which $10.7 has been recorded in the quarter ended June 29, 2013.

The quarter ended June 29, 2013 also reflects (i) a discrete tax charge of $5.6 related to the write-off of a prepaid asset associated with deferred charges on intercompany profit, (ii) a discrete tax charge of $5.1 related to the tax effect of equity compensation computed using the tax law ordering methodology with a corresponding tax benefit recorded to APIC, and (iii) a discrete tax benefit of $0.3 ($3.8 year-to-date), related to a decrease in valuation allowance, which was recorded in connection with the TPV acquisition (see Note 1 — Acquistions and Licensing Agreements).

The second quarter and six months ended June 30, 2012 both reflect a discrete tax benefit of $18.2, which was recorded in order to recognize the Company’s deferred tax assets at their net realizable value. This change in net realizable value relates to an increase of projected future income in the United States as a result of the acquisition of ISTA Pharmaceuticals (see Note 1 — Acquisitions and Licensing Agreements).

Unrecognized Tax Benefits The Company had $36.1 and $34.9 of unrecognized tax benefits as of June 29, 2013 and December 29, 2012, respectively. The year-to-date increase in unrecognized tax benefits was primarily attributable to the uncertain tax positions recorded through purchase accounting in connection with the acquisition of TPV. The Company believes it is reasonably possible that, due to the conclusion of audits and the expiration of statutes of limitation anticipated within the next 12 months, $3.7 of its previously unrecognized tax benefits, primarily related to international uncertain tax positions, may become recognized, resulting in an impact to the effective tax rate.

Based on the outcome of ongoing examinations, tax litigation, settlements, or as a result of changes in tax law, it is reasonably possible that the unrecognized tax benefits for uncertain tax positions will materially change from those which are recorded as of June 29, 2013. In addition, the outcome of these proceedings may impact the reported amount of certain deferred tax assets (such as net operating losses or tax credits) and related valuation allowance, if any. Based on the number of tax years currently under examination by the respective taxing authorities, the Company anticipates that several of these audits may be finalized in the foreseeable future. However, based on the current status of these examinations, and the protocol for finalizing audits by the respective taxing authorities, which may include formal legal proceedings, it is not possible to estimate the impact that changes in these examinations will have on the amounts recorded as unrecognized tax benefits. There have been no significant changes to the status of these examinations during the quarter ended June 29, 2013.

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7. EMPLOYEE BENEFITS

The Company’s benefit plans, which in the aggregate cover substantially all U.S. employees and employees in certain other countries, consist of defined benefit pension plans, a participatory defined benefit postretirement plan and defined contribution plans. The following table provides the components of net periodic benefit cost for the Company’s defined benefit pension plans and postretirement benefit plan for the quarters and six months ended June 29, 2013 and June 30, 2012:

	Pension Benefit Plans
	U.S. Plan						Non-U.S. Plans						Postretirement Benefit Plan
	Quarter Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Service cost	$	0.1		$	0.1		$	0.7		$	0.6		$	0.6		$	0.3
Interest cost		2.4			2.6			1.9			1.9			0.8			1.1
Expected return on plan assets		(3.4	)		(2.9	)		(1.6	)		(1.3	)		(0.2	)		(0.3	)
Amortization of prior service cost		—			—			—			—			(1.3	)		(1.2	)
Amortization of net loss		1.7			2.1			3.0			2.0			0.7			1.1
Settlements 1		—			—			—			0.3			—			—
Net periodic benefit cost	$	0.8		$	1.9		$	4.0		$	3.5		$	0.6		$	1.0

	Pension Benefit Plans
	U.S. Plan						Non-U.S. Plans						Postretirement Benefit Plan
	Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Service cost	$	0.2		$	0.2		$	1.5		$	1.2		$	1.2		$	0.6
Interest cost		4.8			5.2			3.8			3.9			1.6			2.2
Expected return on plan assets		(6.8	)		(5.8	)		(3.2	)		(2.7	)		(0.4	)		(0.6	)
Amortization of prior service cost		—			—			—			—			(2.6	)		(2.4	)
Amortization of net loss		3.4			4.2			6.2			2.3			1.4			2.2
Settlements 1		—			—			—			0.3			—			—
Net periodic benefit cost	$	1.6		$	3.8		$	8.3		$	5.0		$	1.2		$	2.0

¹  The 2012 settlement loss represents losses recognized for a non-U.S. plan with settlements exceeding the sum of the service cost and interest cost components of net periodic benefit cost.

Defined Contribution Plans Total Company costs associated with the U.S. defined contribution plan were $7.6 and $18.8 for the quarter and six months ended June 29, 2013, respectively, and $6.9 and $16.6 for the comparable periods in 2012. Total Company costs associated with the non-U.S. defined contribution plan were $3.4 and $6.9 for the quarter and six months ended June 29, 2013, respectively, and $3.5 and $7.1 for the comparable periods in 2012.

Page 17 of 26

8. EMPLOYEE STOCK PLANS

The Company accounts for its share-based compensation plans in accordance with FASB ASC Topic 718, Compensation—Stock Compensation.

The fair value of the common stock underlying the following equity awards was determined using both a discounted cash flow method (DCF), an income approach, and the guideline company method (GPC), a market approach. The results of the DCF method and the GPC method were averaged on an equal weight basis and then discounted for lack of marketability. The resulting fair value was then divided by outstanding shares to arrive at the fair value per common share.

Special Performance Award

In February 2013, the Company granted a special equity award in the form of 117,500 special performance stock options and 117,500 time-based stock options to a key executive. Compensation cost for time-based stock options is recognized on a straight-line basis over the three-year vesting period. Unrecognized stock compensation expense related to the nonvested portion of this award is approximately $1.8. The special performance award will vest subject to a requisite service period and the achievement of several performance goals. The grant date fair value of $43.25 per share was based on the market value of the Company’s stock on the grant date. The Company will recognize compensation cost for this award over the requisite service period if and when the Company concludes that it is probable that the performance conditions will be achieved. As of June 29, 2013, no compensation cost was recognized with respect to the performance stock options.

Restricted Stock Award

In February 2013, the Company also granted a special equity award in the form of 116,000 restricted shares of the Company’s common stock and 175,000 time-based stock options. Compensation cost for time-based stock options is recognized on a straight-line basis over the three-year vesting period. Unrecognized stock compensation expense related to the nonvested portion of this award is approximately $2.7. The restricted stock award will vest over a period of three years (33.3 percent on the anniversary of the grant date each year) subject to earlier vesting upon the occurrence of both (i) a Change in Control and (ii) the date on which the Grantee’s employment terminates (subject to certain conditions). The grant date fair value of $43.25 per share was based on the market value of the Company’s stock on the grant date. Compensation cost is recognized on a straight-line basis over the expected vesting period. As of June 29, 2013, $0.6 of equity-based compensation cost was recognized for this award, and there was approximately $4.4 of unrecognized compensation cost related to the non-vested award, which is expected to be recognized over a period of approximately three years.

March 2013 Dividend

On March 15, 2013, the Company’s board of directors declared a cash dividend of $7.40 per share on its outstanding common stock (the “March 2013 Dividend”). In connection with the March 2013 Dividend, the Company modified certain stock-based compensation awards held by current and former employees and directors of the Company, including (i) by making a cash payment in respect of, and adjusting the exercise price of, certain vested time-based stock options, (ii) by reducing the exercise price of all other stock options and (iii) in respect of the outstanding restricted stock by adjusting the market-based vesting condition and paying dividends subject to the underlying vesting conditions. Cash payments related to the modified stock-compensation awards totaled $12.1. Amounts related to the restricted stock grants of $3.2 were unpaid as of June 29, 2013. There was no incremental cost of the make-whole modification of time-based and performance-based stock options and restricted stock.

The following actions were taken to adjust the stock options outstanding and the restricted stock grants:

Time-Based Stock Options A cash payment of $3.70 per option was made for each time-based stock option that was vested and exercisable as of March 15, 2013 with respect to the named executive officers and other active employees, but not with respect to former employees. For the unvested portion of each such stock option, and for each other stock option held by a named executive officer, current or former employee, the exercise price per share was reduced by $7.40.

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Performance-Based Stock Options The exercise price of each performance-based FEP stock option was reduced by $7.40 and each performance-based FEP stock option was cancelled effective with respect to the named executive officers and other active employees, but not with respect to former employees, as of March 21, 2013. In connection with such cancellation, a minimum cash payment will be made to performance-based stock option holders, who are executive officers and/or active employees, per the Merger Agreement.

Operations Leadership Team Action Agenda Incentive Plan (OLTAAIP) Stock Options For each OLTAAIP stock option, the per share exercise price was reduced by $7.40.

Restricted Stock Award A cash dividend of $7.40 per share will be paid for each share of restricted stock, subject to, in the same proportion as, and at the time of the vesting of such restricted stock and a market-based vesting condition as applicable, will be adjusted by reducing the fair market value threshold by $7.40.

9. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

The Company considers Adjusted EBITDA an indicator of the operational strength and performance of its business. Adjusted EBITDA is included because it is a key financial measure used by management to internally measure the Company’s operating performance and assess its ability to incur additional debt and meet liquidity requirements.

Costs associated with support functions that are not directly associated with one of the three business segments, such as certain manufacturing, research and development and administrative expenses, including corporate, are not allocated to or included in segment results.

Business Segment

The following table presents sales by business segment for the quarters and six months ended June 29, 2013 and June 30, 2012:

	Quarter Ended				Six Months Ended
	June 29, 2013		June 30, 2012		June 29, 2013		June 30, 2012
Net Sales:
Pharmaceuticals	$	366.9	$	325.9	$	690.0	$	625.9
Vision Care		292.8		315.1		589.8		616.7
Surgical		152.1		129.6		295.6		254.2
	$	811.8	$	770.6	$	1,575.4	$	1,496.8

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The following table presents Segment Adjusted EBITDA and a reconciliation to net income.

	Quarter Ended						Six Months Ended
	June 29, 2013			June 30, 2012			June 29, 2013			June 30, 2012
Adjusted EBITDA:
Pharmaceuticals	$	139.5		$	113.1		$	250.8		$	210.3
Vision Care		85.7			93.2			172.9			181.8
Surgical		8.4			24.4			27.6			41.1
Segment Adjusted EBITDA	$	233.6		$	230.7		$	451.3		$	433.2
Other, including support functions and corporate		(65.9	)		(61.4	)		(135.2	)		(127.4	)
Stock-based compensation 1		(4.9	)		(3.8	)		(9.9	)		(8.7	)
Other Significant Items:
Business realignment and exit activities 2		(0.2	)		(1.0	)		0.1			(4.0	)
Acquisition accounting adjustments 3		(4.2	)		(5.0	)		(3.9	)		(5.3	)
Asset impairment charges 4		—			—			(5.0	)		—
Other Adjustments:
Product liability and litigation expenses 5		(0.4	)		(63.0	)		(0.9	)		(64.5	)
Acquisition related costs 6		(0.1	)		(15.9	)		(2.1	)		(17.8	)
Licensing milestone 7		(1.8	)		—			(2.8	)		(10.0	)
Fees associated with initial public offering 8		(4.2	)		—			(6.1	)		—
Legal judgment related to Brazil distributor termination 9		—			—			—			3.0
Other, net 10		(2.5	)		(0.4	)		(3.3	)		(0.6	)
Net (income) loss attributable to noncontrolling interest		2.0			0.3			1.4			1.4
Depreciation and amortization		(64.3	)		(54.3	)		(128.0	)		(106.1	)
Operating Income		87.1			26.2			155.6			93.2
Interest expense and other financing costs		(70.7	)		(80.9	)		(125.9	)		(120.4	)
Interest and investment income		1.0			0.4			3.0			1.9
Foreign currency, net		(4.0	)		(1.8	)		(4.2	)		(3.2	)
(Provision for) Benefit from income taxes		(16.6	)		82.4			(21.9	)		65.0
Equity in losses of equity method investee		—			(6.0	)		(7.4	)		(11.1	)
Net (loss) income	$	(3.2	)	$	20.3		$	(0.8	)	$	25.4

¹  Represents stock-based compensation expense recognized under FASB ASC Topic 718 Compensation—Stock Compensation.

²  Includes exit activity (reversals) charges of $(0.2) and (0.6) in the quarter and six months ended June 29, 2013, respectively, and $(0.1) and $1.4 in the quarter and end six months ended June 30, 2012, respectively. Also includes other expenses for business realignment initiatives benefitting ongoing operations of $0.4 and $0.5 in the quarter and six months ended June 29, 2013, respectively, and $1.1 and $2.6 in the quarter and six months ended June 30, 2012, respectively.

³  Represents the increase in cost of goods sold as a result of the step-up of inventory to fair market value recorded in connection with the Waicon, ISTA and TPV acquisitions. The Waicon and ISTA inventory that was revalued was sold in 2012. The TPV inventory that was revalued will primarily be sold in 2013. The 2013 amount also includes a $3.4 gain related to the Company’s acquisition of the remaining unowned shares of TPV. See Note 1 — Acquisitions and Licensing Agreements.

⁴  Represents charges associated with the write-down of investments in equity securities using the cost method of accounting.

⁵  Represents expenses associated with product liability cases related to the 2006 MoistureLoc product recall and the cost of actual MoistureLoc claims settled (net of insurance recoveries); and expenses associated with the legal proceedings, including the Wilmington Partners matter, the Rembrandt arbitration and certain governmental investigations, described in Note 14 — Other Matters.

⁶  Represents costs associated with the acquisition and integration of Waicon, ISTA and TPV, including severance, integration costs and professional fees, as well as a reversal of $0.9 income recorded in the second quarter of 2013 to true-up a litigation accrual originally recorded as part of the ISTA opening balance sheet to reflect the settlement reached with the U.S. government described in Note 14 — Other Matters.

⁷  The 2013 amounts relate to payment of development milestones associated with the development of a technology to treat ocular redness. The 2012 year-to-date amount represents payment of a development milestone to NicOx upon publication of favorable results of a Phase 2b clinical study related to latanoprostene bunod, a development stage drug compound for which the Company has global rights from NicOx. The 2013 amount relates to payment of a development milestone associated with development of a technology to treat ocular redness. GAAP requires such payments to be expensed to research and development expense, up until the time a product is approved for commercial sale, after which time such milestone payments are capitalized as intangible assets and amortized.

⁸  Represents expenses, mainly professional fees, associated with a planned initial public offering of stock that did not occur.

⁹  Represents income recorded upon the reversal of a 2011 legal judgment associated with our termination of a distributor in Brazil, which was partially overturned on appeal in the first quarter of 2012.

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¹⁰  Represents non-cash losses associated with the retirement of fixed assets and other individually immaterial items.

Geographic Region Net sales in markets outside the United States totaled $479.4 in the second quarter of 2013 and $469.0 in the second quarter of 2012. Net U.S. sales totaled $332.4 in the second quarter of 2013 and $301.6 in the second quarter of 2012.

Net sales in markets outside the United States totaled $927.0 in the six months ended June 29, 2013 and $917.7 in the six months ended June 30, 2012. Net U.S. sales totaled $648.4 in the six months ended June 29, 2013 and $579.1 in the six months ended June 30, 2012.

No single non-U.S. country, or single customer, generated more than 10 percent of total product net sales during the second quarters or first six months of either 2013 or 2012.

10. COMMITMENTS AND CONTINGENCIES

Subsidiary Debt Guarantees The Company guarantees in writing for its subsidiaries certain indebtedness used for working capital and other obligations. Those written guarantees totaled approximately $907.9 and $913.9 at June 29, 2013 and December 29, 2012, respectively. The written guarantees are principally attributed to the Company’s guarantee of a euro-denominated senior secured term loan facility on behalf of its Dutch subsidiary and its guarantee of a bank loan on behalf of its Japanese subsidiary. Outstanding balances under the guaranteed debt facilities were $636.5 and $647.2 at June 29, 2013 and December 29, 2012, respectively. From time to time, the Company may also make verbal assurances with respect to indebtedness of its subsidiaries under certain lines of credit or other credit facilities, also used for working capital.

Letters of Credit The Company had outstanding standby letters of credit totaling approximately $18.6 and $30.4 at June 29, 2013 and December 29, 2012, respectively, on behalf of various subsidiaries. Additionally, outstanding standby letters of credit totaling approximately $28.5 at June 29, 2013 and December 29, 2012 were in place to ensure payment of possible workers’ compensation, product liability (exclusive of the MoistureLoc product liability¹) and other insurance claims. At June 29, 2013 and December 29, 2012, the Company had recorded liabilities of approximately $10.5 and $9.6, respectively, related to workers’ compensation, product liability (exclusive of the MoistureLoc product liability¹) and other insurance claims.

¹  Letters of credit are not necessary due to the corresponding insurance recovery asset as described in Note 14 — Other Matters, Product Liability Lawsuits.

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11. SUPPLEMENTAL BALANCE SHEET INFORMATION

	June 29, 2013			December 29, 2012
Inventories
Raw materials and supplies	$	107.1		$	84.5
Work in process		28.9			18.3
Consigned inventory		14.5			13.0
Finished products		229.8			201.6
	$	380.3		$	317.4
	June 29, 2013			December 29, 2012
Property, Plant and Equipment, net
Land	$	47.6		$	47.6
Buildings		397.3			391.1
Machinery and equipment		799.4			749.2
Leasehold improvements		37.9			34.4
Equipment on operating lease		26.2			23.4
		1,308.4			1,245.7
Less accumulated depreciation		(561.0	)		(527.1	)
	$	747.4		$	718.6

Reserve balances included in Accrued Liabilities on our Balance Sheets are as follows:

	June 29, 2013		December 29, 2012
Chargebacks	$	23.2	$	29.2
Discounts and other contractual adjustments		158.4		157.5
Returns		54.2		54.3
	$	235.8	$	241.0

12. EQUITY

On March 15, 2013, the Company’s board of directors declared a cash dividend of $7.40 per share on the Company’s outstanding common stock, resulting in total distributions to its stockholders of $772.4.

The following table summarizes the change in the components of Accumulated Other Comprehensive Loss (AOCL) balance for the periods presented (all amounts are presented net of tax):

	Currency Translation Adjustment			Minimum Additional Pension Liability 1			Total Accumulated Other Comprehensive Loss (AOCL)
Balance at December 29, 2012	$	(37.6	)	$	(170.5	)	$	(208.1	)
Other comprehensive (loss) income before reclassifications		(35.2	)		0.6			(34.6	)
Amounts reclassified from AOCL		—			6.2			6.2
Net change in other comprehensive (loss) income		(35.2	)		6.8			(28.4	)
Balance at June 29, 2013	$	(72.8	)	$	(163.7	)	$	(236.5	)

¹  For additional information about pension plans, refer to Note 7 — Employee Benefits.

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13. NEW ACCOUNTING GUIDANCE

Recently Adopted

In February 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02), which finalizes the requirements of ASU 2011-05 that were deferred by ASU 2011-12. ASU 2013-02 clarifies how to report the effect of significant reclassifications out of accumulated other comprehensive income. The Company is required to present, either on the face of the financial statements or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required to be reclassified in its entirety in the same reporting period. For amounts that are not required to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. ASU 2013-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2012 and early adoption is permitted. The Company adopted this guidance in the first quarter of 2013. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Not Yet Adopted

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force), which clarifies the applicable guidance for a parent company’s accounting for the release of the cumulative translation adjustment into net income upon derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. This guidance also clarifies that the sale of an investment in a foreign entity includes both (1) events that result in the loss of a controlling financial interest in a foreign entity (that is, irrespective of any retained investment) and (2) events that result in an acquirer obtaining control of an acquiree in which it held an equity interest immediately before the acquisition date. ASU 2013-05 is effective for fiscal years and interim periods within those years beginning after December 15, 2013 on a prospective basis, and early adoption is permitted. The Company is evaluating the potential impact that the adoption of ASU 2013-05 will have on its consolidated financial statements.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists, to eliminate diversity in practice. Topic 740, Income Taxes, does not include explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The new standard provides that a liability related to an unrecognized tax benefit would be presented as a reduction of a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. ASU 2013-11 is effective for fiscal years and interim periods within those years beginning after December 15, 2013 on a prospective basis, and early adoption is permitted. The Company is evaluating the potential impact that the adoption of ASU 2013-11 will have on its consolidated financial statements.

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14. OTHER MATTERS

Legal Proceedings

The Company has been involved as a party in a number of material legal proceedings or investigations, including governmental investigations, tax litigation, product liability litigation, including lawsuits related to the MoistureLoc recall initiated in 2006, and breach of contract disputes. The Company intends to defend itself in all of these matters. See further discussion below.

ISTA Investigation

In April 2008, ISTA Pharmaceuticals, Inc. (ISTA), a company we acquired in 2012, received a series of Grand Jury Subpoenas from the office of the United States Attorney for the Western District of New York requesting information relating primarily to ISTA’s marketing and promotion of Xibrom. In October 2011, ISTA, and some of its officers and current and former employees received correspondence from the government identifying them as targets of an ongoing Department of Justice (DOJ) criminal investigation into ISTA’s marketing and promotional practices. Parallel civil DOJ investigations also commenced and these investigations focused on potential violations of civil and/or criminal laws, including the Federal False Claims Act, the Food, Drug and Cosmetic Act, and the Anti-Kickback Statute. In addition, two related qui tam complaints were brought against ISTA. Bausch & Lomb had no involvement in the alleged events that are the focus of the government’s investigations, but on June 6, 2012, Bausch & Lomb acquired ISTA and therefore assumed responsibility for the matter. We executed tolling agreements to allow cooperation and discussions regarding resolution. ISTA executed indemnification agreements with each of the individuals under investigation, and each of these individuals executed a corresponding undertaking agreement. The Company cooperated fully with the government’s investigations and on May 24, 2013, ISTA reached agreement with the U.S. government to resolve and conclude all civil and criminal allegations against it. In connection with the settlement, ISTA pled guilty to charges of Conspiracy to Introduce a Misbranded Drug in Interstate Commerce with Intent to Defraud and Mislead and Conspiracy to Violate the Anti-Kickback Statute. As part of the settlement, ISTA paid approximately $34 in civil and criminal fines, including interest and attorney’s fees. In addition, ISTA will be prohibited from participating in federal healthcare programs such as Medicare and Medicaid. However, former ISTA products, such as Bromday, Bepreve, Istalol and Vitrase, have been transferred to the Company and will continue to be eligible for reimbursement under those programs. The liabilities assumed in connection with the acquisition of ISTA had included an estimated fair value of the loss contingency of $35.0. See Note 1 — Acquisitions and Licensing Agreements for further discussion.

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MoistureLoc Product Liability Lawsuits

As of July 19, 2013, the Company has been served or is aware that it has been named as a defendant in approximately 324 currently active product liability lawsuits (some with multiple plaintiffs) pending in a New York State Consolidated Proceeding described below as well as certain other U.S. state courts on behalf of individuals who claim they suffered personal injury as a result of using a contact lens solution with MoistureLoc. The Company has also received a small number of unfiled claims of injury which are not included within totals for currently active lawsuits.

Two consolidated cases were established to handle MoistureLoc claims. First, on August 14, 2006, the Federal Judicial Panel on Multidistrict Litigation created a coordinated proceeding in the Federal District Court for the District of South Carolina. Second, on January 2, 2007, the New York State Litigation Coordinating Panel ordered the consolidation of cases filed in New York State, and assigned the coordination responsibilities to the Supreme Court of the State of New York, New York County. There are approximately 320 currently active non-fusarium cases pending in the New York Consolidated Proceeding.

On July 15, 2009, the New York State Supreme Court overseeing the New York Consolidated Proceeding granted the Company’s motion to exclude plaintiffs’ general causation testimony with regard to non-fusarium infections, which effectively excluded plaintiffs from testifying that MoistureLoc caused non-fusarium infections. On September 15, 2011, the New York State Appellate Division, First Department, affirmed the Trial Court’s ruling. On February 7, 2012, the New York Court of Appeals denied plaintiffs’ additional appeal. Plaintiffs subsequently filed a motion to renew the trial court’s ruling, and the Company crossfiled a motion for summary judgment to dismiss all remaining claims. On May 31, 2013, the Trial Court denied Plaintiffs’ motion to renew, and granted the Company’s motion for summary judgment, dismissing all remaining non-fusarium claims. On June 28, 2013, Plaintiffs filed a Notice of Appeal to the Trial Court’s ruling.

All matters under jurisdiction of the coordinated proceedings in the Federal District Court for the District of South Carolina have been dismissed, including individual actions for personal injury and a class action purporting to represent a class of consumers who suffered economic claims as a result of purchasing a contact lens solution with MoistureLoc.

As of July 19, 2013, the Company has settled approximately 629 cases in connection with MoistureLoc product liability suits. All U.S. based fusarium claims have now been resolved and less than five fusarium claims involving claimants outside of the United States remain pending. Based on this settlement experience, the Company’s Balance Sheets include an additional liability and a corresponding insurance recovery asset which were less than one percent of the Company’s total current liabilities as of June 29, 2013 and December 29, 2012.

The insurance recovery asset has been recorded following an assessment of (1) the Company’s available product liability insurance coverage, (2) reservations of rights raised by the carriers under such policies, (3) experience to date in working with insurance carriers in the resolution and payment of claims, and (4) third-party assessments as to the solvency of such carriers and their ability to support payment of claims against the underlying policies. The Company could in future periods incur judgments or enter into settlements that individually or in the aggregate could have a material adverse effect on its results of operations and financial condition in any such period.

Material Tax Litigation

The Company has been engaged in proceedings with the IRS concerning certain transactions relating to Wilmington Partners and their respective corporate partners. On May 12, 2006, the IRS issued a Notice of Final Partnership Administrative Adjustment (“FPAA”) to Wilmington Partners for its two taxable periods that ended during 1999. The IRS disallowed losses that were reported in connection with the transactions referenced above, including losses carried back to taxable year 1998 and carried forward to taxable years 2001 through 2004, and asserted that the Company should have reported additional gains.

The Company settled the litigation matters with the IRS on May 30, 2013. As a condition to settlement, the Company unwound the Wilmington Partners structure by (i) repaying intercompany notes owed to Wilmington Partners and (ii) liquidating Wilmington Partners into its corporate partners. This settlement includes: (i) $39.5 of tax, penalties and interest payable in 2013 and (ii) $44.7 of net deferred tax benefit, including the estimated valuation allowance impact, to account for applying certain settlement concessions agreed to by the Company, as well as unwinding the Wilmington structure. The full year estimated impact of the settlement is expected to be $30.3, of which $10.7 has been recorded in the quarter ended June 29, 2013.

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Rembrandt Arbitration

In October 2007, the Company entered into a Master Agreement with Rembrandt Vision Technologies LP (Rembrandt) in settlement of a prior patent infringement litigation in which Rembrandt had alleged that the Company’s PureVision contact lenses, and certain CIBA Vision Corporation products, had infringed a Rembrandt patent. In March 2009, Rembrandt terminated the Master Agreement and subsequently filed a demand for arbitration, alleging a breach of its terms. An arbitration panel issued a decision on January 6, 2011, finding that it breached or potentially breached certain terms of the Master Agreement. A partial final award was rendered on July 31, 2012 in the amount of $62.0, plus $10.3 of interest expense. In December 2012, the matter was settled for $68.5, representing $58.4 of damages and $10.1 of interest. The settlement was paid in January 2013.

Subpoenas from the New York Office of Inspector General for the U.S. Department of Health and Human Services

On June 29, 2011, the Company received a subpoena from the New York Office of Inspector General for the U.S. Department of Health and Human Services regarding payments and communications between Bausch & Lomb and medical professionals related to its pharmaceutical products Lotemax and Besivance. The government has indicated that the subpoena was issued in connection with a civil investigation, and the Company is cooperating fully with the government’s investigation. The Company believes it has complied with all relevant laws and has produced certain documents in response to the subpoena. The Company has been made aware that one former Bausch & Lomb employee was interviewed in March 2012 by the government. The Company has heard of no additional activity at this time, and whether the government’s investigation is ongoing or will result in further requests for information is unknown. The Company will continue to work with the U.S. Attorney’s Office regarding the scope of the subpoena and any additional specific information that may be requested. The Company’s liability in this matter, if any, is unknown.

General Litigation Statement

From time to time, the Company is engaged in, or is the subject of, various lawsuits, claims, investigations and proceedings, including product liability, patent, trademark, commercial and other matters, in the ordinary course of business. In addition to pending litigation matters, the Company may from time to time learn of alleged non-compliance with laws or regulations or other improprieties through compliance hotlines, communications by employees, former employees or other third parties, as a result of its internal audit procedures, or otherwise.

The Company operates in various countries and is subject to local laws and regulations. From time to time, local governmental agencies make inquiries or conduct investigations relating to the Company’s local business or business practices. One or more of these inquiries or investigations could result in fines or other remedies. As of June 29, 2013, no reserve has been established.

15. SUBSEQUENT EVENT

Subsequent events have been evaluated through October 18, 2013, the date the Bausch & Lomb Holdings Incorporated and Consolidated Subsidiaries Financial Statement were available to be issued.

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EX-99.4

Exhibit 99.4

VALEANT PHARMACEUTICALS INTERNATIONAL, INC., MEDICIS PHARMACEUTICAL

CORPORATION AND BAUSCH & LOMB HOLDINGS INCORPORATED

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL INFORMATION

The unaudited pro forma condensed combined statements of loss for the fiscal year ended December 31, 2012 and for the six months ended June 30, 2013 are prepared by Valeant Pharmaceuticals International, Inc. (“Valeant”) and give effect to the following transactions as if they had occurred on January 1, 2012:

• The acquisition of Bausch & Lomb Holdings Incorporated (“B&L”) by Valeant on August 5, 2013 and the effect from the debt and equity that were issued by Valeant to finance the acquisition; and

• the acquisition of Medicis Pharmaceutical Corporation (“Medicis”) by Valeant, which took place on December 11, 2012, and the effect of the term loan and senior notes that were issued by Valeant to finance the acquisition.

The unaudited pro forma condensed combined balance sheet as of June 30, 2013 combines the historical consolidated balance sheets of Valeant and B&L, giving effect to the acquisition of B&L by Valeant as if it had occurred on June 30, 2013.

The historical consolidated financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the aforementioned transactions, (2) factually supportable, and (3) with respect to the statements of loss, expected to have a continuing impact on the combined results. The unaudited pro forma condensed combined financial information should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements. In addition, the unaudited pro forma condensed combined financial information was based on and should be read in conjunction with the:

• separate audited consolidated financial statements of Valeant as of and for the year ended December 31, 2012 and the related notes, included in Valeant’s Annual Report on Form 10-K for the year ended December 31, 2012;

• separate audited consolidated financial statements of B&L as of and for the year ended December 29, 2012 and the related notes, filed by Valeant on SEDAR on June 7, 2013 and on EDGAR on June 10, 2013;

• separate unaudited consolidated financial statements for the nine months ended September 30, 2012 and the related notes, included in Medicis’ Quarterly Report on Form 10-Q for the quarter ended September 30, 2012;

• separate unaudited consolidated financial statements of Valeant as of and for the six months ended June 30, 2013 and the related notes, included in Valeant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013; and

• separate unaudited consolidated financial statements of B&L as of and for the six months ended June 29, 2013 and the related notes, included in this report.

The unaudited pro forma condensed combined financial information has been presented for informational purposes only. The pro forma information is not necessarily indicative of what the combined company’s financial position or results of operations actually would have been had the acquisition been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company. Any material transactions between Valeant, B&L, and/or Medicis during the periods presented in the unaudited pro forma condensed combined financial statements have been eliminated.

1

The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting under U.S. GAAP. The accounting for the acquisition of B&L is dependent upon certain valuations that are provisional and are subject to change. Valeant will finalize these amounts as it obtains the information necessary to complete the measurement process. Accordingly, the pro forma adjustments are preliminary and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Differences between these preliminary estimates and the final acquisition accounting may occur and these differences could be material. Additionally, the differences, if any, could have a material impact on the accompanying unaudited pro forma condensed combined financial statements and Valeant’s future results of operations and financial position.

In addition, the unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisitions of B&L and Medicis, the costs to integrate the operations of Valeant, B&L and Medicis or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

2

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF LOSS

For the year ended December 31, 2012

	Valeant			Medicis January 1 to September 30, 2012 1			Medicis October 1 to December 10, 2012			Pro forma adjustments (Note 6)			Valeant Pro forma			B&L For the year ended December 29, 2012 2			Pro forma adjustments (Note 7)			Valeant combined pro forma
	I			II			III			IV			V = I+II+III+IV			VI			VII			V + VI + VII
	(All dollar amounts expressed in thousands of U.S. dollars except per share data)
Revenues
Product sales	$	3,309,895		$	574,263		$	111,223		$	—		$	3,995,381		$	3,037,601		$	—		$	7,032,982
Alliance and royalty		171,841			—			—			—			171,841			—			—			171,841
Service and other		64,890			4,228			988			—			70,106			—			—			70,106
		3,546,626			578,491			112,211			—			4,237,328			3,037,601			—			7,274,929
Expenses
Cost of goods sold (exclusive of amortization of intangible assets shown below)		921,533			62,303			14,352			(22,922	)(a)		975,266			1,152,902			—			2,128,168
Cost of alliance and service revenues		116,983			—			—			—			116,983			—			—			116,983
Selling, general and administrative		756,083			317,813			84,003			(7,697	)(c)		1,150,202			1,205,207			—			2,355,409
Research and development		79,052			40,900			10,549			—			130,501			224,935			—			355,436
Amortization of intangible assets		928,885			49,893			11,994			95,335	(b)		1,086,107			114,675			214,492	(a)		1,415,274
Restructuring, integration and other costs		344,387			—			—			—			344,387			31,547			—			375,934
In-process research and development impairments and other charges		189,901			46,506			—			—			236,407			—			—			236,407
Acquisition-related costs		78,604			6,378			12,172			(73,961	)(d)		23,193			11,059			—			34,252
Legal settlements and related fees		56,779			—			—			—			56,779			59,728			—			116,507
Acquisition-related contingent consideration		(5,266	)		—			—			—			(5,266	)		—			—			(5,266	)
		3,466,941			523,793			133,070			(9,245	)		4,114,559			2,800,053			214,492			7,129,104
Operating income (loss)		79,685			54,698			(20,859	)		9,245			122,769			237,548			(214,492	)		145,825
Interest income		5,986			2,123			693			—			8,802			2,776			—			11,578
Interest expense		(473,396	)		(12,240	)		(5,478	)		(115,024	)(e)		(606,138	)		(211,825	)		(212,607	)(b)		(1,030,570	)
Write-down of deferred financing charges		(8,200	)		—			—			—			(8,200	)		—			—			(8,200	)
Loss on extinguishment of debt		(20,080	)		—			—			—			(20,080	)		(34,207	)		34,207	(b)		(20,080	)
Foreign exchange and other		19,721			(7,643	)		7,000			7,743	(f)		26,821			(8,608	)		—			18,213
Gain on investments, net		2,056			—			—			—			2,056			—			—			2,056
(Loss) income before (recovery of) provision for income and equity in losses of equity method investee		(394,228	)		36,938			(18,644	)		(98,036	)		(473,970	)		(14,316	)		(392,892	)		(881,178	)
(Recovery of) provision for income taxes		(278,203	)		15,725			(6,917	)		(47,631	)(g)		(317,026	)		32,217			(104,116	)(c)		(388,925	)
Equity in losses of equity method investee		—			—			—			—			—			24,074			—			24,074
Net (loss) income	$	(116,025	)	$	21,213		$	(11,727	)	$	(50,405	)	$	(156,944	)	$	(70,607	)	$	(288,776	)	$	(516,327	)
Net income attributed to noncontrolling interest		—			—			—			—			—			2,923			—			2,923
Net (loss) income attributed to Valeant	$	(116,025	)	$	21,213		$	(11,727	)	$	(50,405	)	$	(156,944	)	$	(73,530	)	$	(288,776	)	$	(519,250	)
Basic (loss) income per share	$	(0.38	)										$	(0.51	)							$	(1.56	)
Diluted (loss) income per share	$	(0.38	)										$	(0.51	)							$	(1.56	)
Weighted-average number of common shares outstanding (000)
Basic		305,446												305,446						27,059	(s)		332,505
Diluted		305,446												305,446						27,059	(s)		332,505

1. The consolidated statement of income of Medicis for the nine months ended September 30, 2012 has been derived from the Medicis historical consolidated financial statements as of and for the nine months ended September 30, 2012 with certain re-classification adjustments made by Valeant as described in Note 2. Basis of Presentation.

2. The consolidated statement of loss of B&L for the year ended December 29, 2012 has been derived from the B&L historical consolidated financial statements for the year ended December 29, 2012 with certain re-classification adjustments made by Valeant as described in further detail in Note 2. Basis of Presentation .

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Note 6. Pro Forma Adjustments in Connection with the Medicis Acquisition and Note 7. Pro Forma Adjustments in Connection with the B&L Acquisition .

3

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF LOSS

For the six months ended June 30, 2013

	Valeant			Pro forma adjustments (Note 6)			Valeant Pro forma			B&L For the six months ended June 29 2013 1			Pro forma adjustments (Note 7)			Valeant combined pro forma
	I			II			III = I+II			IV			V			III+IV+V
	(All dollar amounts expressed in thousands of U.S. dollars except per share data)
Revenues
Product sales	$	2,102,380		$	—		$	2,102,380		$	1,575,399		$	—		$	3,677,779
Alliance and royalty		23,180			—			23,180			—			—			23,180
Service and other		38,557			—			38,557			—			—			38,557
		2,164,117			—			2,164,117			1,575,399			—			3,739,516
Expenses
Cost of goods sold (exclusive of amortization of intangible assets shown below)		568,087			(59,174	)(a)		508,913			601,520			—			1,110,433
Cost of alliance and service revenues		29,888			—			29,888			—			—			29,888
Selling, general and administrative		499,272			—			499,272			613,690			—			1,112,962
Research and development		48,264			—			48,264			134,170			—			182,434
Amortization of intangible assets		629,773			—			629,773			69,678			94,905	(a)		794,356
Restructuring, integration and other costs		102,650			—			102,650			388			—			103,038
In-proces research and development impairments and other charges		4,830			—			4,830			—			—			4,830
Acquisition-related costs		15,778			(601	)(d)		15,177			2,900			(2,995	)(d)		15,082
Legal settlements and related fees		5,572			—			5,572			900			—			6,472
Acquisition-related contingent consideration		1,484			—			1,484			—			—			1,484
		1,905,598			(59,775	)		1,845,823			1,423,246			91,910			3,360,979
Operating income		258,519			59,775			318,294			152,153			(91,910	)		378,537
Interest income		2,650			—			2,650			1,571			—			4,221
Interest expense		(332,108	)		—			(332,108	)		(124,881	)		(61,136	)(b)		(518,125	)
Loss on extinguishment of debt		(21,379	)		—			(21,379	)		(1,050	)		1,050	(b)		(21,379	)
Foreign exchange and other		(8,643	)		—			(8,643	)		(2,724	)		—			(11,367	)
Gain on investments, net		5,822			—			5,822			3,400			—			9,222
(Loss) income before recovery of income taxes and equity in losses of equity method investee		(95,139	)		59,775			(35,364	)		28,469			(151,996	)		(158,891	)
(Recovery of) provision for income taxes		(78,475	)		15,681	(g)		(62,794	)		21,902			(47,493	)(c)		(88,385	)
Equity in losses of equity method investee		—			—			—			7,384			—			7,384
Net (loss) income	$	(16,664	)	$	44,094		$	27,430		$	(817	)	$	(104,503	)	$	(77,890	)
Net income attributed to noncontrolling interest		—			—			—			1,354			—			1,354
Net (loss) income attributed to Valeant	$	(16,664	)	$	44,094		$	27,430		$	(2,171	)	$	(104,503	)	$	(79,244	)
Basic loss per share	$	(0.05	)				$	0.09								$	(0.24	)
Diluted loss per share	$	(0.05	)				$	0.09								$	(0.24	)
Weighted-average number of common shares outstanding (000)
Basic		307,677						307,677						26,162	(s)		333,839
Diluted		307,677						314,118						26,162	(s)		333,839

1. The consolidated statement of income of B&L for the six months ended June 29, 2013 has been derived from the B&L historical consolidated financial statements as of and for the six months ended June 29, 2013 with certain re-classification adjustments made by Valeant as described in further detail in Note 2. Basis of Presentation .

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Note 6. Pro Forma Adjustments in Connection with the Medicis Acquisition and Note 7. Pro Forma Adjustments in Connection with the B&L Acquisition.

4

UNAUDITED PRO FORMA CONDENSED COMBINED

BALANCE SHEET

As of June 30, 2013

	Valeant			B&L As of June 29 2013 1			Pro forma adjustments (Note 7)			Valeant combined Pro forma
	I			II			III			I + II + III
	(All dollar amounts expressed in thousands of U.S. dollars)
Assets
Current
Cash and cash equivalents	$	2,539,390		$	122,187		$	(1,796,390	) (p)	$	865,187
Accounts receivable, net		1,127,006			583,578			—			1,710,584
Inventories, net		497,059			380,330			274,997	(e)		1,152,386
Prepaid expenses and other current assets		115,497			183,805			—			299,302
Assets held for sale		54,400			—			—			54,400
Deferred tax assets, net		198,674			111,792			20,516	(c)		330,982
Total current assets		4,532,026			1,381,692			(1,500,877	)		4,412,841
Property, plant and equipment, net		440,998			747,372			—			1,188,370
Intangible assets, net		9,289,669			1,939,086			2,775,161	(f)		14,003,916
Goodwill		5,277,798			1,587,513			2,787,176	(g)		9,652,487
Deferred tax assets, net		42,331			19,989			—			62,320
Other long-term assets, net		199,436			118,648			(59,688	) (h)		258,396
Total assets	$	19,782,258		$	5,794,300		$	4,001,772		$	29,578,330
Liabilities
Current liabilities:
Accounts payable	$	284,544		$	161,121		$	—		$	445,665
Accrued liabilities and other current liabilities		1,035,007			684,305			(46,023	) (i)		1,673,289
Acquisition-related contingent consideration		91,029			—			—			91,029
Current portion of long-term debt		346,875			231,321			(71,821	) (j)		506,375
Deferred tax liabilities, net		4,363			1,390			53,107	(c)		58,860
Total current liabilities		1,761,818			1,078,137			(64,737	)		2,775,218
Acquisition-related contingent consideration		342,079			3,851			(3,851	) (k)		342,079
Long-term debt		10,447,230			3,929,952			3,076,307	(j)		17,453,489
Liabilities for uncertain tax positions		105,766			47,280			—			153,046
Deferred tax liabilities, net		1,261,125			450,217			1,034,201	(c)		2,745,543
Other long-term liabilities		161,711			276,483			(43,462	) (l)		394,732
Total liabilities		14,079,729			5,785,920			3,998,458			23,864,107
Shareholders’ equity
Common shares		8,250,192			1,002			(1,002	) (m)		8,250,192
Additional paid-in capital		225,289			1,374,896			(1,374,896	) (n)		225,289
Accumulated deficit		(2,429,051	)		(1,148,100	)		1,057,494	(q)		(2,519,657	)
Accumulated other comprehensive loss		(343,901	)		(236,522	)		236,522	(o)		(343,901	)
Total shareholders’ equity		5,702,529			(8,724	)		(81,882	)		5,611,923
Noncontrolling interest		—			17,104			85,196	(r)		102,300
Total equity		5,702,529			8,380			3,314			5,714,223
Total liabilities and equity	$	19,782,258		$	5,794,300		$	4,001,772		$	29,578,330

1. The consolidated balance sheet of B&L as of June 29, 2013 has been derived from the B&L historical consolidated financial statements as of and for the six months ended June 29, 2013 with certain re-classification adjustments made by Valeant as described in further detail in Note 2. Basis of Presentation.

See the accompanying notes to the unaudited pro forma condensed combined financial statements, which are an integral part of these statements. The pro forma adjustments are explained in Note 7. Pro Forma Adjustments in Connection with the B&L Acquisition.

5

NOTES TO THE UNAUDITED PRO FORMA CONDENSED

COMBINED FINANCIAL STATEMENTS

1. Description of Transactions

Acquisition of B&L

On August 5, 2013, Valeant acquired B&L, pursuant to the merger agreement dated May 24, 2013 (the “Merger Agreement”), among Valeant, Valeant Pharmaceutical International, Stratos Merger Corp., a Delaware corporation and wholly-owned subsidiary of Valeant (“Merger Sub”), and B&L (the “B&L Acquisition”). Subject to the terms and conditions set forth in the Merger Agreement, B&L became a wholly-owned subsidiary of Valeant. B&L is a global eye health company that focuses primarily on the development, manufacture and marketing of eye health products, including contact lenses, contact lens care solutions, ophthalmic pharmaceuticals and ophthalmic surgical products.

In accordance with the Merger Agreement, at the effective time of the B&L Acquisition, each share of B&L common stock, par value $0.01 per share, issued and outstanding immediately prior to such effective time was converted into the right to receive its pro rata shares, without interest, of an aggregate purchase price equal to $8.7 billion minus B&L’s existing indebtedness for borrowed money (which was paid off by Valeant in accordance with the terms of the Merger Agreement) and related fees and costs, minus certain of B&L’s transaction expenses, minus certain payments with respect to certain cancelled B&L performance-based options (which were not outstanding immediately prior to such effective time), plus the aggregate exercise price applicable to B&L’s outstanding options immediately prior to the effective time, and plus certain cash amounts, all as further described in the Merger Agreement. The B&L Acquisition was financed with debt and equity issuances, which is further discussed in Note 7. The net proceeds from the debt and equity issuances were utilized to fund (i) the B&L Acquisition, (ii) the repayment of B&L’s outstanding debt, and (iii) the related transaction costs and expenses.

Acquisition of Medicis

On September 2, 2012, Valeant, Valeant Pharmaceuticals International, a Delaware corporation and wholly owned subsidiary of Valeant (“VPI”), Merlin Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of VPI (“Merger Sub”) and Medicis entered into an agreement and plan of merger under which Merger Sub merged with and into Medicis, with Medicis continuing as the surviving entity and a wholly-owned subsidiary of Valeant (the “Medicis Acquisition”). The Medicis Acquisition was completed on December 11, 2012.

On the date of the Medicis Acquisition, each share of Medicis Class A common stock, issued and outstanding immediately prior to the date of the Medicis Acquisition was converted into the right to receive $44.00 in cash (the “Per Share Merger Consideration”), without interest.

Each Medicis stock option and stock appreciation right, whether vested or unvested, that was outstanding immediately prior to the date of the Medicis Acquisition was cancelled and converted into the right to receive an amount equal to the excess, if any, of the Per Share Merger Consideration over the exercise price of such stock option or stock appreciation right, as applicable. Each Medicis restricted share, whether vested or unvested, that was outstanding immediately prior to the date of the Medicis Acquisition was cancelled and converted into the right to receive the Per Share Merger Consideration.

6

In connection with the Medicis Acquisition, Valeant obtained $2.75 billion in financing through a syndication of the incremental term B loan under its existing senior secured credit facilities of $1.0 billion (the “Incremental Term Loan B Facility”) and the issuance of the 6.375% senior notes due 2020 (the “2020 Senior Notes”) in the aggregate principal amount of $1.75 billion. The proceeds from the issuance of the Incremental Term Loan B Facility and the 2020 Senior Notes were utilized to fund (i) the Medicis Acquisition, (ii) Medicis’ obligation to pay the conversion consideration with respect to, or repurchase, the Medicis convertible senior notes, and (iii) transaction costs and expenses.

2. Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 805, Business Combinations, and uses the fair value concepts defined in ASC Topic 820, Fair Value Measurement, and was based on the historical financial statements of Valeant, B&L, and Medicis.

Certain reclassifications have been made to the historical financial statements of Medicis and B&L to conform to the financial statement presentation adopted by Valeant, which include the following:

Adjustments made to Medicis’ historical consolidated statement of income for the nine months ended September 30, 2012:

• Reclassification of depreciation expense of $7.3 million from depreciation and amortization to selling, general, and administrative expense;

• Reclassification of impairment of intangible assets of $2.7 million to amortization of intangible assets;

• Reclassification of certain milestone payments of $46.5 million from research and development to in-process research and development impairments and other charges; and

• Reclassification of acquisition-related costs of $6.4 million from selling, general and administrative expense to acquisition-related costs.

Adjustments made to B&L’s historical consolidated statements of income for the year ended December 29, 2012 and for the six months ended June 29, 2013:

• Reclassification of intangible asset amortization expense of $114.7 million for the year ended December 29, 2012 and $69.7 million for the six months ended June 29, 2013 from selling, general, and administrative expense to amortization of intangible assets;

• Reclassification of litigation and settlement-related costs of $59.7 million for the year ended December 29, 2012 and $0.9 million for the six months ended June 29, 2013 from selling, general, and administrative expense to legal settlements and related fees;

• Reclassification of loss incurred on extinguishment of debt of $34.2 million for the year ended December 29, 2012 and $1.1 million for the six months ended June 29, 2013 from interest expense and other financing costs to loss on extinguishment of debt;

• Reclassification of gain recorded on the acquisition of unowned shares of a previously-held equity method investment of $3.4 million for the six months ended June 29, 2013 from selling, general, and administrative expense to gain on investments, net;

• Reclassification of acquisition-related costs of $0.6 million for the year ended December 29, 2012 and $0.5 million for the six months ended June 29, 2013 from cost of goods sold to acquisition-related costs;

7

• Reclassification of acquisition-related costs of $10.4 million for the year ended December 29, 2012 and $2.4 million for the six months ended June 29, 2013 from selling, general and administrative expense to acquisition-related costs;

• Reclassification of investment income of $1.2 million for the year ended December 29, 2012 and $1.4 million for the six months ended June 29, 2013 from interest and investment income to foreign exchange and other;

• Reclassification of restructuring-related costs of $8.7 million for the year ended December 29, 2012 and $0.6 million for the six months ended June 29, 2013 from cost of products sold to restructuring, integration and other costs;

• Reclassification of restructuring-related costs (recoveries) of $20.3 million for the year ended December 29, 2012 and $(0.6) million for the six months ended June 29, 2013 from selling, general and administrative expense to restructuring, integration and other costs; and

• Reclassification of restructuring-related costs of $2.5 million for the year ended December 29, 2012 and $0.3 million for the six months ended June 29, 2013 from research and development expenses to restructuring, integration and other costs.

Adjustments made to B&L’s historical consolidated balance sheet as of June 29, 2013:

• Reclassification of note payable to accrued liabilities and other current liabilities;

• Reclassification of accrued compensation to accrued liabilities and other current liabilities;

• Reclassification of income taxes payable to accrued liabilities and other current liabilities;

• Reclassification of contingent consideration liability of $3.8 million from other long-term liabilities to acquisition-related contingent consideration;

• Reclassification of pension and other benefit liabilities to other long-term liabilities; and

• Reclassification of income tax liabilities to liabilities for uncertain tax positions.

Under the acquisition method of accounting, the assets acquired and liabilities assumed are recorded as of date of the B&L Acquisition, primarily at their respective fair values and added to those of Valeant. Financial statements and reported results of operations of Valeant issued after completion of the B&L Acquisition will reflect these values, but will not be retroactively restated to reflect the historical financial position or results of operations of B&L. Similarly, in respect of the Medicis Acquisition, the assets acquired and liabilities assumed have been recorded as of the date of the acquisition, primarily at their respective fair values and added to those of Valeant. Financial statements and reported results of operations of Valeant issued after completion of the Medicis Acquisition reflect these values, but are not retroactively restated to reflect the historical financial position or results of operations of Medicis.

Under ASC 805, acquisition-related transaction costs (i.e., advisory, legal, valuation, other professional fees) and certain acquisition-related restructuring charges are not included as a component of consideration transferred but are accounted for as expenses in the periods in which the costs are incurred.

In connection with the B&L Acquisition, total transaction costs expected to be incurred by Valeant are estimated to be approximately $73.3 million (includes $37.3 million commitment fee relating to the bridge loan facility incurred by Valeant in connection with the B&L Acquisition), of which $26.5 million had been incurred in the six months ended June 30, 2013. The remaining estimated transaction costs are reflected in the unaudited pro forma condensed combined balance sheet as of June 30, 2013 as a reduction to cash and cash equivalents and an increase to accumulated deficit. The unaudited pro forma condensed combined financial statements do not reflect any acquisition-related restructuring charges and integration charges expected to be incurred by Valeant in connection with the B&L Acquisition. Valeant estimates that it will incur total costs significantly less than the estimated annual synergies of more than $800 million in connection with the cost-rationalization and integration initiatives, which are expected to be substantially completed by the end of 2014. The cash and non-cash acquisition-related restructuring charges are expected to be in the range of $375 million to $425 million, on a pre-tax basis, exclusive of the charge of $4.3 million recognized by Valeant related to the unvested B&L stock options that were accelerated, by Valeant, in connection with the B&L Acquisition and an additional charge of $48.5 million incurred by Valeant, pursuant to the Merger Agreement, to holders of certain B&L performance-based options, which were cancelled prior to the execution of the Merger Agreement. Both charges will be recognized by Valeant in its consolidated statement of loss for the three and nine months ended September 30, 2013 as restructuring, integration and other costs.

8

In connection with the Medicis Acquisition, total acquisition-related transaction costs incurred by Valeant and Medicis in connection with the Medicis Acquisition were approximately $82.7 million. The unaudited pro forma condensed combined financial statements do not reflect any acquisition-related restructuring charges and integration charges expected to be incurred in connection with the Medicis Acquisition. Valeant estimates that it will incur total costs significantly less than the estimated annual synergies of $300 million in connection with the cost-rationalization and integration initiatives, which are expected to be substantially completed by the end of 2013. The estimated costs do not include a charge of $77.3 million recognized and paid in the fourth quarter of 2012 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. Since the acquisition date, total costs of $161.3 million have been incurred by Valeant through June 30, 2013.

3. Accounting Policies

In connection with the B&L Acquisition and the Medicis Acquisition, Valeant completed a review of B&L’s and Medicis’ accounting policies and did not identify any differences, other than the presentation differences as described in Note 2, that would have a material impact on the combined financial statements.

As a result, the unaudited pro forma condensed combined financial statements do not assume any differences in accounting policies.

4. Fair Value of Consideration Transferred in Connection with the B&L Acquisition

The following is a preliminary estimate of the purchase price for the B&L Acquisition:

(In thousands)
Enterprise value	$	8,700,000
Adjusted for the following:
B&L’s outstanding debt, including accrued interest		(4,248,310	)
B&L’s company expenses		(6,377	)
Payment in B&L’s performance-based options (a)		(48,478	)
Payment for B&L’s cash balance		149,000
Additional cash payment		75,000
Other		(3,189	)
Equity purchase price		4,617,646
Less: Estimated cash consideration to be paid for B&L’s unvested stock options that would be accelerated at the closing of the B&L Acquisition (b)
		(4,320	)
Estimated purchase price	$	4,613,326

(a) Pursuant to the Merger Agreement, Valeant paid $48.5 million to holders of certain B&L performance-based options, which were previously cancelled by B&L. Cash consideration paid in connection with these cancelled performance-based options is accounted for as post-combination expense.

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(b) In accordance with ASC 805, the cash consideration paid to holders of B&L stock options and restricted stock attributable to pre-combination services has been included as a component of purchase price. Cash consideration paid for outstanding stock options that were accelerated, by Valeant, in connection with the B&L Acquisition is accounted for as post-combination expense and consequently, has been excluded from the estimated purchase price.

5. Assets Acquired and Liabilities Assumed in Connection with the B&L Acquisition

Assuming an acquisition date of June 30, 2013, the following is a preliminary estimate of the assets acquired and the liabilities assumed by Valeant in connection with the B&L Acquisition, reconciled to the estimated purchase price:

(In thousands)
Cash and cash equivalents	$	122,187
Inventories, net (a)		655,327
Other current assets		767,383
Property, plant and equipment, net (b)		747,372
Intangible assets, net (c)		4,714,247
Other assets		62,091
Accounts payable		(161,121	)
Other current liabilities		(683,296	)
Long-term debt (d)		(4,195,818	)
Other liabilities (e)		(280,301	)
Deferred tax liabilities, net (f)		(1,407,134	)
Total identifiable net assets acquired		340,937
Non-controlling interest (g)		(102,300	)
Goodwill (h)		4,374,689
Estimated purchase price	$	4,613,326

(a) A preliminary fair value estimate of $655.3 million has been allocated to inventories acquired. The pro forma fair value adjustment to inventories acquired is based on B&L’s inventories as of the date of the B&L Acquisition, adjusted as follows based on Valeant management’s estimates using the following methods:

i. Finished goods at estimated selling prices less the sum of costs of disposal and a reasonable profit allowance for the selling effort of a market participant;

ii. Work in process at estimated selling prices of finished goods less the sum of costs to complete, costs of disposal, and a reasonable profit allowance for the completing and selling effort of a market participant based on profit for similar finished goods; and

iii. Raw materials at current replacement costs.

(b) A preliminary fair value estimate of $747.4 million has been allocated to property, plant and equipment acquired, primarily consisting of land, buildings, machinery and equipment, leasehold improvements, equipment under operating lease and construction in progress. Depreciation related to the fair value of these assets has been reflected as pro forma adjustments to the unaudited pro forma condensed combined statements of loss.

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The fair value of the property, plant and equipment and the estimated useful lives are as follows:

(In thousands)	Estimated Fair Value		Average Estimated Useful Life
Estimated fair value adjustment:
Land	$	47,198		N/A
Buildings		276,036		19 years
Machinery and equipment		272,765		6 years
Leasehold improvements		19,955		6 years
Assets under operating lease		12,290		4 years
Construction in progress		119,128		N/A
Total property, plant and equipment	$	747,372

(c) A preliminary fair value estimate of $4,714.2 million has been allocated to intangible assets acquired, primarily consisting of product brands, product rights, corporate trademark, and in-process research and development (“IPR&D”). Amortization related to the fair value of the finite-lived intangible assets has been reflected as pro forma adjustments to the unaudited pro forma condensed combined statements of loss.

A key variable in determining the fair value of IPR&D includes the application of probability factors related to the likelihood of success of the respective products reaching each remaining stage of clinical and regulatory development, including market commercialization. The fair value of IPR&D is supported by industry and academic research papers that calculate probabilities of success by phase of development, and by Valeant management’s view on the regulatory risks associated with IPR&D from a market participant’s perspective. Changes in these probability factors may have a significant impact on the asset values.

The fair value of the identifiable intangible assets and their weighted-average useful lives are as follows:

(In thousands)	Estimated Fair Value		Average Estimated Useful Life
Product brands	$	1,770,164		10 years
Product rights		855,402		8 years
Corporate trademark (i)		1,690,551		N/A
In-process research and development (i)		398,130		N/A
Total	$	4,714,247

(i) Corporate trademark and acquired IPR&D assets are initially recognized at fair value and are classified as indefinite-lived assets.

Acquired IPR&D assets are classified as indefinite-lived assets until the successful completion or abandonment of the associated research and development efforts. Accordingly, during the development period after the date of the B&L Acquisition, these assets will not be amortized into earnings; instead these assets will be subject to periodic impairment testing. Upon successful completion of the development process for an acquired IPR&D project, a determination as to the useful life of the asset will be made; at that point in time, the asset would then be considered a finite-lived intangible asset and amortization of the asset into earnings would commence. The impact on earnings can be significant. If an IPR&D project were not successfully developed, an impairment charge may result.

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(d) Reflects the fair value of B&L’s debt as of the assumed acquisition date as follows:

(In thousands)
Unsecured term loan	$	707,010
U.S. dollar-denominated senior secured term loan		1,915,832
Euro-denominated senior secured term loan		603,952
U.S. dollar-denominated senior secured delayed draw term loan		398,003
U.S. dollar-denominated revolver loan		170,383
Multi-currency denominated revolver loan		5,000
9.875% senior notes		350,000
Japanese yen denominated revolving credit facility		33,835
Debentures		11,803
Total (i)	$	4,195,818

(i) B&L incurred additional debt of $14.5 million subsequent to June 29, 2013, which was assumed by Valeant as part of the B&L Acquisition in addition to those outlined in the table above.

(e) Included in other liabilities is $223.0 million related to the preliminary fair value estimate of B&L’s pension and other benefit liabilities.

(f) Represents the net deferred income tax liability, based on the statutory tax rates of the relevant jurisdictions. The effect of deferred taxes was estimated as follows:

(In thousands)
Deferred income tax impact due to:
Estimated fair value adjustment for inventory	$	(87,999	)
Estimated fair value adjustment for intangible assets		(1,016,080	)
Estimated fair value adjustment for pension and other benefit liabilities		(16,596	)
Estimated fair value adjustment related to debt		34,892
Estimated fair value adjustment for contingent consideration liability		(1,525	)
Estimated adjustments to deferred income taxes		(1,087,308	)
B&L’s historical deferred tax liability, net		(319,826	)
Estimated deferred income tax liability, net	$	(1,407,134	)

For purposes of these unaudited pro forma condensed combined financial statements, no adjustment has been made to the balance of unrecognized tax benefits, which is based on Valeant’s preliminary assessment and is subject to change. The effective tax rate of the combined company could be significantly different than the statutory tax rates used for the purposes of preparing the pro forma condensed combined financial statements for a variety of factors, including post-acquisition activities.

(g) Represents the preliminary fair value estimate of B&L’s noncontrolling interest.

(h) 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. Goodwill is not amortized and is not deductible for tax purposes.

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6. Pro Forma Adjustments in Connection with the Medicis Acquisition

This note should be read in conjunction with Note 1. Description of Transaction; and Note 2. Basis of Presentation. The following summarizes the pro forma adjustments in connection with the Medicis Acquisition to give effect to the acquisition as if it had occurred on January 1, 2012 for purposes of the pro forma condensed combined statements of loss:

(a) Valeant’s cost of sales for the year ended December 31, 2012 and the six months ended June 30, 2013 included a fair value adjustment related to inventory acquired as part of the Medicis Acquisition. Given the sale of the acquired inventory is expected to occur within the first year subsequent to the acquisition, there is no continuing impact of the acquired inventory adjustment on Valeant’s operating results, and as such, the inventory fair value adjustments recognized for year ended December 31, 2012 and the six months ended June 30, 2013 have been reversed for purposes of the unaudited pro forma condensed combined statements of loss.

(b) To adjust amortization of intangible assets as follows:

(In thousands)	Year Ended December 31, 2012
Eliminate Medicis’ historical intangible asset amortization expense	$	(61,887	)
Estimated amortization expense of acquired finite-lived intangibles:
Product brands ($466,750 over an average useful life of 8 years)		57,965
Patents ($226,133 over an average useful life of 5 years)		45,227
In-licensed products ($635,712 over an average useful life of 11 years)		59,403
Corporate brand ($40,286 over a useful life of 14 years)		2,878
Less: amortization recorded by Valeant in the post-combination period		(8,251	)
Total	$	95,335

(c) To adjust depreciation expense as follows:

(In thousands)	Year Ended December 31, 2012
Eliminate Medicis’ recorded depreciation expense	$	(9,859	)
Estimated depreciation expense		2,613
Less: depreciation expense recorded by Valeant in post-combinationperiod		(451	)
Estimated depreciation expense	$	(7,697	)

(d) To reverse acquisition-related transaction costs incurred by Valeant and Medicis in connection with the Medicis Acquisition as they do not have a continuing impact on the combined company’s financial results.

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(e) To record the following debt-related adjustments:

(In thousands)	Year Ended December 31, 2012
Eliminate interest expense recorded by Medicis related to the convertible senior notes that were settled in connection with the Medicis Acquisition	$	(17,718	)
Additional interest expense related to the Incremental Term Loan B and the 2020 Senior Notes issued in connection with the Medicis Acquisition (a)		161,177
Amortization of deferred financing costs related to the Incremental Term Loan B and the 2020 Senior Notes issued in connection with the Medicis Acquisition (a)		1,483
Less: interest expense recognized by Valeant in its consolidated statement of loss for the year ended December 31, 2012 related to the Incremental Term Loan B and the 2020 Senior Notes		(29,918	)
Total	$	115,024

(a) In connection with the Medicis Acquisition, Valeant obtained $2.75 billion in financing through a syndication of the Incremental Term Loan B Facility of $1.0 billion and the issuance of the 2020 Senior Notes in the aggregate principal amount of $1.75 billion. The proceeds from the issuance of the Incremental Term Loan B Facility and the 2020 Senior Notes were utilized to fund (i) the Medicis Acquisition, (ii) Medicis’ obligation to pay the conversion consideration with respect to, or repurchase, the Medicis convertible Senior Notes, and (iii) transaction costs and expenses. Details pertaining to the (i) Incremental Term Loan B Facility and (ii) the 2020 Senior Notes are as follows:

(i) Incremental Term Loan B Facility:

The Incremental Term Loan B Facility with a principal amount of $1.0 billion bears interest at Valeant’s option, (i) at the Base Rate (as defined in the Third Amended and Restated Credit and Guaranty Agreement dated February 13, 2012 as filed by Valeant on Form 8-K on February 17, 2012, (the “Credit Agreement”)) plus the applicable margin (which was 2.25% per annum as of December 31, 2012); or (ii) at LIBO rate plus the applicable margin (which was 3.25% per annum as of December 31, 2012) subject to a LIBO rate “floor” of 1.00% per annum and a Base Rate “floor” of 2.00% per annum. In connection with the issuance of the Incremental Term Loan B Facility, Valeant incurred approximately $26.2 million in fees, which have been recognized as debt issue discount, which resulted in the net proceeds of $973.8 million. The Incremental Term Loan B Facility has a maturity of 7 years and bore interest at a rate of 4.25%. The outstanding principal amount of the Incremental Term Loan B Facility will be payable in equal quarterly amounts of 1% per annum with the remaining balance due at the maturity of the Incremental Term Loan B Facility. Approximately $6.2 million of debt issuance costs was incurred in connection with the Incremental Term Loan B Facility and will be amortized using the effective interest method.

On February 21, 2013, Valeant and certain of its subsidiaries as guarantors entered into Amendment No. 4 to the Credit Agreement to effectuate a repricing of the Term Loan B

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Facility and the Incremental Term Loan B Facility (the “Term Loan B Repricing Transaction”) by the issuance of the Repriced Term Loan B Facilities. Term loans under the Term Loan B Facility and the Incremental Term Loan B Facility were either exchanged for, or repaid with the proceeds of the Repriced Term Loan B Facilities. The applicable margins for borrowings under the Repriced Term Loan B Facilities are 1.75% with respect to base rate borrowings and 2.75% with respect to LIBO rate borrowings, subject to a 0.75% LIBO rate floor and a 1.75% base rate floor. Consistent with the previous Incremental Term Loan B Facility, the Repriced Incremental Term Loan B Facility mature on December 11, 2019 and begins amortizing quarterly on June 30, 2013 at an annual rate of 1.0%. In connection with the refinancing of the Term Loan B Facility and the Incremental Term Loan B Facility pursuant to the Term Loan B Repricing Transaction, Valeant paid a prepayment premium of approximately $23.0 million, equal to 1.0% of the refinanced term loans under the Term Loan B Facility and Incremental Term Loan B Facility. In addition, repayments of outstanding loans under the Repriced Term Loan B Facilities in connection with certain refinancings on or prior to August 21, 2013 require a prepayment premium of 1.0% of such loans prepaid. In connection with the Term Loan B Repricing Transaction, Valeant recognized a loss on extinguishment of debt of $21.4 million in the six-month period ended June 30, 2013, of which $14.4 million of the loss related to the extinguishment of the Incremental Term Loan B Facility. As of June 30, 2013, the effective rate of interest on Valeant’s borrowings under both the Repriced Term Loan B Facility and the Repriced Incremental Term Loan B Facility was 4.07% per annum.

On September 17, 2013, Valeant and certain of its subsidiaries, as guarantors, entered into Amendment No. 7 to the Credit Agreement to effectuate a repricing of the Repriced Term Loan B Facilities by issuance of the New Term Loan B Facilities. Term loans under the Repriced Term Loan B Facility and the Repriced Incremental Term Loan B Facility were either exchanged for, or repaid with the proceeds of the New Term Loan B Facilities. The applicable margins for borrowings under the New Term Loan B Facilities are 2.0% with respect to base rate borrowings and 3.0% with respect to LIBO rate borrowings, subject to a 0.75% LIBO rate floor. The incremental term loans under the New Term Loan B Facility and the New Incremental Term Loan B Facility have terms consistent with the previous Repriced Term Loan B Facility and the Repriced Incremental Term Loan B Facility. As of September 30, 2013, the effective rate of interest on the Valeant’s borrowings under both the New Term Loan B Facility and the New Incremental Term Loan B Facility was 3.83% per annum.

(ii) 2020 Senior Notes

The 2020 Senior Notes, in the aggregate principal amount of $1,750.0 million, accrue interest at the rate of 6.375% per annum payable semi-annually in arrears on April 15 and October 15, commencing on April 15, 2013. The 2020 Senior Notes mature on October 15, 2020. In connection with the issuance of the 2020 Senior Notes, Valeant incurred approximately $26.3 million in underwriting fees, which have been recognized as debt issue discount, which resulted in the net proceeds of $1,723.7 million. Approximately $4.7 million of debt issuance costs was incurred in connection with the 2020 Senior Notes and will be amortized using the effective interest method.

The 2020 Senior Notes are guaranteed by Valeant and each of its subsidiaries (other than VPI) that is a guarantor of the Senior Secured Credit Facilities. The indenture governing the terms of the 2020 Senior Notes provides that the 2020 Senior Notes will be

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redeemable at the option of VPI, in whole or in part, at any time on or after October 15, 2016, at the specified redemption prices, plus accrued and unpaid interest, if any, to the redemption date. In addition, VPI may redeem some or all of the 2020 Senior Notes prior to October 15, 2016, in each case at a price equal to 100% of the principal amount thereof, plus a make-whole premium. Prior to October 15, 2015, VPI may also redeem up to 35% of the aggregate principal amount of the 2020 Senior Notes using the proceeds from certain equity offerings at a redemption price equal to 106.375% of the principal amount of the 2020 Senior Notes, plus accrued and unpaid interest to the date of redemption.

If VPI or Valeant experiences a change in control, VPI may be required to repurchase the 2020 Senior Notes, as applicable, in whole or in part, at a purchase price equal to 101% of the aggregate principal amount thereof, plus accrued and unpaid interest to, but excluding, the purchase date of the 2020 Senior Notes, as applicable.

The 2020 Senior Notes indenture contains covenants that limit the ability of Valeant and certain of its subsidiaries to, among other things: incur or guarantee additional debt, make certain investments and other restricted payments, create liens, enter into transactions with affiliates, engage in mergers, consolidations or amalgamations, repurchase capital stock, repurchase subordinated debt and make certain investments and transfer and sell assets.

Based on the terms of the Incremental Term Loan B Facility and the 2020 Senior Notes, a 0.125 percent change in LIBO rate would not have an impact on the interest expense for the year ended December 31, 2012 and for the six months ended June 30, 2013.

(f) To reverse debt-related charges, triggered by the Medicis Acquisition, recognized by Medicis in its historical financial statements as they do not have a continuing impact on the combined company’s financial results.

(g) To record the deferred income tax impact of the acquisition on the income statement, primarily related to fair value adjustments for inventories, identifiable intangible assets, property and equipment, and the additional expense on incremental debt to finance the Medicis Acquisition (see Notes 4(a), (b), (c), (e), and (f)) based on Valeant’s statutory tax rate of 26.5%. The effective tax rate of the combined company could be significantly different than the statutory tax rates assumed for purposes of preparing the unaudited pro forma condensed combined financial statements for a variety of factors, including post-acquisition activities.

7. Pro Forma Adjustments in Connection with the B&L Acquisition

This note should be read in conjunction with Note 1. Description of Transaction; Note 2. Basis of Presentation; Note 4. Fair Value of Consideration Transferred in Connection with the B&L Acquisition; and Note 5. Assets Acquired and Liabilities Assumed in Connection with the B&L Acquisition. The following summarizes the pro forma adjustments in connection with the B&L Acquisition to give effect to the acquisition as if it had occurred on January 1, 2012 for purposes of the pro forma condensed combined statements of income and on June 30, 2013 for purposes of the pro forma condensed combined balance sheet:

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(a) To adjust amortization of intangible assets as follows:

(In thousands)	Year Ended December 31, 2012			Six Months Ended June 30, 2013
Eliminate B&L’s historical intangible asset amortization expense	$	(114,675	)	$	(69,678	)
Estimated amortization expense of acquired finite-lived intangibles:
Product brands (estimated to be $1,770,164 over an average useful life of 10 years)		189,105			94,553
Product rights (estimated to be $855,402 over an average useful life of 8 years)		140,062			70,030
Total	$	214,492		$	94,905

(b) To record the following debt-related adjustments:

(In thousands)	Year Ended December 31, 2012			Six Months Ended June 30, 2013
Eliminate interest expense recorded by B&L relating to outstanding debt that is expected to be repaid in connection with the B&L Acquisition	$	(210,567	)	$	(124,321	)
Eliminate loss on debt extinguishment related to the 9.875% Senior Notes that are expected to be repaid in connection with the B&L Acquisition		(34,207	)		(1,050	)
Additional interest expense related to the senior term loan and the unsecured notes to be issued in connection with the B&L Acquisition (a)		423,174			209,686
Reverse amortization of commitment fee relating to the bridge loan facility obtained by Valeant in connection with the B&L Acquisition (b)		—			(24,229	)
Total	$	178,400		$	60,086

(a) In connection with the B&L Acquisition, Valeant obtained $9.6 billion in financing through a syndication of the incremental term loan facilities, the issuance of senior unsecured notes, and the issuance of new equity of approximately $2.3 billion prior to the closing of the B&L Acquisition. Details pertaining to the incremental term loan facilities and the senior unsecured notes are as follows:

(i) The Incremental Term Loan Facilities

Concurrent with the closing of the B&L Acquisition, Valeant incurred incremental term loan facilities in the aggregate principal amount of $4,050.0 million (the “Incremental Term Loan Facilities”) under its existing Senior Secured Credit Facilities. The Incremental Term Loan Facilities consist of (1) $850.0 million of tranche A term loans (the “Tranche A Term Loans”), which bears interest at a rate per annum equal to, at the election of Valeant, (i) the base rate plus 1.25% or (ii) LIBO rate plus 2.25% and having terms that are consistent with Valeant’s existing New Term Loan A Facility, and (2) $3,200.0 million of tranche B term loans (the “Tranche B Term Loans”), which bears interest at a rate per annum equal to, at the election of Valeant, (i) the base rate plus 2.75% or (ii) LIBO rate plus 3.75%, subject to a 0.75% LIBO rate floor and a 1.75% base rate floor, and having terms that are consistent with the Valeant’s New Term Loan B Facility.

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Tranche A Term Loans mature on April 20, 2016 and begin amortizing quarterly on September 30, 2013 at an annual rate of 10.0% and at an annual rate of 20.0% commencing March 31, 2014.

Tranche B Term Loans mature on August 5, 2020 and begin amortizing quarterly on September 30, 2013 at an annual rate of 1.0%.

For purposes of the unaudited pro forma condensed combined financial statements, the interest rates for the Tranche A Term Loans and the Tranche B Term Loans are assumed to be 2.44% and 4.50%, respectively.

The effective rates of interest for the Tranche A Term Loans and the Tranche B Term Loans are 3.91% and 5.03% per annum, respectively.

(ii) The senior unsecured notes

On July 12, 2013, Valeant issued $1,600.0 million aggregate principal amount of the 6.75% senior notes due 2018 (the “2018 Senior Notes”) and $1,625.0 million aggregate principal amount of the 7.50% senior notes due 2021 (the “2021 Senior Notes” and together with the 2018 Senior Notes, the “Senior Unsecured Notes”) in a private placement. The 2018 Senior Notes mature on August 15, 2018 and bear interest at the rate of 6.75% per annum, payable semi-annually on February 15 and August 15 of each year, commencing on February 15, 2014. The 2021 Senior Notes mature on July 15, 2021 and bear interest at the rate of 7.50% per annum, payable semi-annually on January 15 and July 15 of each year, commencing on January 15, 2014. In connection with the issuances of the 2018 Senior Notes and the 2021 Senior Notes, Valeant incurred approximately $20.0 million and $20.3 million in underwriting fees, respectively, which are recognized as debt issue discount and which resulted in net proceeds of $1,580.0 million and $1,604.7 million, respectively.

The Notes are guaranteed by each of the Valeant’s subsidiaries that is a guarantor of the Valeant’s existing Senior Secured Credit Facilities. The 2018 Senior Notes and the 2021 Senior Notes are redeemable at the option of Valeant, in whole or in part, at any time on or after August 15, 2015 and July 15, 2016, respectively, plus accrued and unpaid interest, if any, to the applicable redemption date. In addition, Valeant may redeem some or all of the 2018 Senior Notes prior to August 15, 2015 and some or all of the 2021 Senior Notes prior to July 15, 2016, in each case at a price equal to 100% of the principal amount thereof, plus a make-whole premium. Prior to August 15, 2015, Valeant may redeem up to 35% of the aggregate principal amount of the 2018 Senior Notes and prior to July 15, 2016, Valeant may redeem up to 35% of the aggregate principal amount of the 2021 Senior Notes, in each case using the proceeds of certain equity offerings at the respective redemption price equal to 106.75% and 107.50% of the principal amount of the 2018 Senior Notes and 2021 Senior Notes, respectively, plus accrued and unpaid interest to the applicable date of redemption.

The Notes indentures contains covenants that limit the ability of Valeant, among other things: to incur or guarantee additional indebtedness, make certain investments and other restricted payments, create liens, enter into transactions with affiliates, engage in mergers, consolidations or amalgamations and transfer and sell assets.

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The effective rates of interest for the 2018 Senior Notes and the 2021 Senior Notes are 7.07 % and 7.73 % per annum, respectively.

Based on the terms of the loans incurred in connection with the B&L Acquisition, a change in market interest rate would only impact the interest expense on the Tranche A Term Loans. A 0.125 percent change in LIBO rate could result in an increase or decrease in interest expense on the Tranche A Term Loans for the year ended December 31, 2012 and for the six months ended June 30, 2013 by $1.0 million and $0.4 million, respectively.

(b) Valeant incurred a commitment fee of $37.3 million relating to the bridge loan facility that was obtained in connection with the B&L Acquisition. Of the $37.3 million commitment fee, $24.2 million was recognized as expense during the six months ended June 30, 2013. Such amount has been reversed for purposes of the unaudited pro forma condensed combined financial statements as they do not have a continuing impact on the combined company’s financial results.

(c) To record an estimate of the deferred income tax impacts of the B&L Acquisition on the balance sheet and statements of loss, primarily related to the additional expense on incremental debt to finance the B&L Acquisition, estimated fair value adjustments for identifiable intangible assets, property, plant and equipment, and inventory (see Notes 7(a), (b), and (e)) based on Valeant’s statutory tax rate of 26.5%. Additionally, the deferred income tax balances have been adjusted to reflect the estimated tax effect associated with post-combination expenses related to the acceleration of B&L’s unvested options and B&L’s cancelled performance-based options as well as the commitment fee related to the bridge loan facility incurred by Valeant in connection with the B&L Acquisition, as further described in Note 7(q). The effective tax rate of the combined company could be significantly different than the statutory tax rates assumed for purposes of preparing the unaudited pro forma condensed combined financial statements for a variety of factors, including post-acquisition activities.

(d) To reverse acquisition-related transaction costs incurred by Valeant and B&L in connection with the B&L Acquisition as they do not have a continuing impact on the combined company’s financial results.

(e) To adjust acquired inventory to an estimate of fair value. The combined company’s cost of sales will reflect the increased valuation of B&L’s inventory as the acquired inventory is sold, which is expected to occur within the first year post-acquisition. There is no continuing impact of the acquired inventory adjustment on the combined operating results, and as such, it is not included in the unaudited pro-forma condensed combined statement of income.

(f) To adjust identifiable intangible assets to an estimate of fair value as follows:

(In thousands)
Eliminate B&L’s historical intangible assets	$	(1,939,086	)
Fair value of acquired identifiable intangible assets		4,714,247
Total	$	2,775,161

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(g) To adjust goodwill to an estimate of acquisition-date goodwill as follows:

(In thousands)
Eliminate B&L’s historical goodwill	$	(1,587,513	)
Estimated transaction goodwill		4,374,689
Total	$	2,787,176

(h) To eliminate B&L’s historical deferred charges associated with long-term debt, eliminate unamortized commitment fee associated with the bridge loan facility, and record the deferred financing costs incurred by Valeant in connection with the issuance of term loans and the senior notes in connection with the B&L Acquisition, as follows:

(In thousands)
Eliminate B&L’s historical deferred charges associated with long-term debt	$	(56,557	)
Eliminate unamortized commitment fee related to the bridge loan facility that was obtained by Valeant in connection with the B&L Acquisition		(13,084	)
Estimated debt issuance costs associated with the senior term loan and the unsecured notes to be issued in connection with the B&L Acquisition		9,953
Total	$	(59,688	)

(i) To record the payments for commitment fee related to the bridge loan facility incurred by Valeant in connection with the B&L acquisition and for accrued interests related to the B&L’s debt that was repaid by Valeant concurrent with the B&L Acquisition and to eliminate B&L’s deferred rent balance, as follows:

(In thousands)
Payment of commitment fee related to the bridge loan facility incurred by Valeant in connection with the B&L Acquisition	$	(37,313	)
Payment for accrued interests related to B&L’s debt that was repaid concurrent with the B&L Acquisition		(7,701	)
Eliminate B&L’s deferred rent balance		(1,009	)
Total	$	(46,023	)

(j) To record the debt incurred by Valeant in connection with the B&L Acquisition, to adjust B&L’s existing debt to an estimate of fair value, and to record the repayment of B&L’s debt in connection with the B&L Acquisition, as follows:

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(In thousands)
Establish Tranche A Term Loans and Tranche B Term Loans in connection with the B&L Acquisition, net of discount (a)	$	3,935,433
Issuance of 2018 Senior Notes and 2021 Senior Notes in connection with the B&L Acquisition (a)		3,184,688
Fair value adjustment related to assumed debt		34,545
Repayment of unsecured term loan (b)		(707,010	)
Repayment of U.S. dollar-denominated senior secured term loan (c)		(1,915,832	)
Repayment of Euro-denominated senior secured term loan (c)		(603,952	)
Repayment of U.S. dollar-denominated senior secured delayed draw term loan (c)		(398,003	)
Repayment of U.S. dollar-denominated revolver loan (c)		(170,383	)
Repayment of multi-currency denominated revolve loan (c)		(5,000	)
Repayment of 9.875% senior notes (c)		(350,000	)
Total	$	3,004,486

(a) Valeant incurred $7.3 billion of debt and issued $2.3 billion of equity to finance the B&L Acquisition as described in more details in Note 7(b) and 7(q).

(b) In accordance with the debt indenture, B&L is required to offer to repurchase all of the unsecured term loan at a price of 101% of the principal amount in the event of a change of control. The unsecured term loan has been repaid by Valeant at a price of 101% of the principal amount concurrent with the B&L Acquisition.

(c) Consists of repayment of the principal balance of each of B&L outstanding debt.

(k) To adjust B&L’s contingent consideration liability to an estimate of fair value.

(l) To adjust B&L’s pension and other benefit liabilities to an estimate of fair value and to eliminate B&L’s deferred rent balance as follows:

(In thousands)
Adjust pension and other benefit obligations to an estimate of fair value	$	(43,331	)
Eliminate B&L’s deferred rent balance		(131	)
Total	$	(43,462	)

(m) To eliminate B&L’s common stock.

(n) To eliminate B&L’s additional paid-in capital.

(o) To eliminate B&L’s accumulated other comprehensive loss.

(p) To record the cash impact of financing and transaction costs as follows:

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(In thousands)
Cash consideration for the B&L Acquisition	$	(4,613,326	)
Payment of performance stock options		(48,478	)
Payment of unvested stock options that would be accelerated at the closing of the B&L Acquisition		(4,320	)
Net proceeds from Tranche A Term Loans, Tranche B Term Loans, 2018 Senior Notes and 2021 Senior Notes		7,110,168
Repayment of unsecured term loan (a)		(708,225	)
Repayment of U.S. dollar-denominated senior secured term loan (a)		(1,916,045	)
Repayment of Euro-denominated senior secured term loan (a)		(604,027	)
Repayment of U.S. dollar-denominated senior secured delayed draw term loan (a)		(398,041	)
Repayment of U.S. dollar-denominated revolver loan (a)		(170,785	)
Repayment of multi-currency denominated revolver loan (a)		(5,012	)
Repayment of 9.875% senior notes (b)		(367,281	)
Estimated acquisition-related transaction costs (c)		(71,018	)
Total (d)	$	(1,796,390	)

(a) Consist of repayment of principal balance and accrued and unpaid interests.

(b) Consist of repayment of principal balance, accrued and unpaid interests as of the acquisition date and additional payment of $11.5 million to early settle the 9.875% senior notes.

(c) Consist of acquisition-related transaction costs and commitment fee relating to the bridge loan facility incurred by Valeant in connection with the B&L Acquisition.

(d) As noted in Note 5(d), B&L incurred additional debt of $14.5 million subsequent to June 29, 2013, which was assumed by Valeant as part of the B&L Acquisition in addition to the outstanding debt as of June 29, 2013. The additional debt of $14.5 million was also repaid by Valeant concurrent with the B&L Acquisition.

(q) To eliminate B&L’s accumulated deficit, to record the cash consideration paid for unvested B&L stock options that are accelerated in connection with the B&L Acquisition as post-combination expense, to record the cash consideration paid for the B&L performance-based options, and to record acquisition-related costs to be incurred by Valeant in connection with the B&L Acquisition as follows:

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(In thousands)
Eliminate B&L’s accumulated deficit	$	1,148,100
Expense related to unvested B&L’s performance stock options that would vest in connection with the B&L Acquisition, net of tax of $12,847		(35,631	)
Expense related to unvested B&L’s stock options that would be accelerated in connection with the B&L Acquisition, net of tax of $1,145		(3,175	)
Loss to be recognized by Valeant related to additional payment made to repay B&L’s 9.875% senior notes (see Note 7(p)), net of tax of $3,057		(8,478	)
Estimated acquisition-related costs to be incurred by Valeant and B&L in connection with the B&L Acquisition, net of tax of $3,467		(43,322	)
Total	$	1,057,494

The unaudited pro forma condensed combined financial statements do not reflect the acquisition-related restructuring charges associated with the expected pre-tax cost saving, except for the expense of $4.3 million related to the unvested B&L stock options that were accelerated in accordance with the Merger Agreement and an additional charge of $48.5 million made to holders of certain B&L performance-based options, which were cancelled by B&L prior to the execution of the Merger Agreement. The anticipated cash and non-cash acquisition-related restructuring charges are estimated to be in the range of $375 to $425 million, exclusive of the charges described above and on a pre-tax basis, and will be expensed as incurred.

(r) To adjust noncontrolling interest to an estimate of fair value.

(s) The unaudited pro forma combined basic and diluted earnings per share for the periods presented have been adjusted by the shares issued by Valeant in a public offering, which was completed on June 24, 2013, as if they were issued on January 1, 2012. As a result of the public offering of its commons shares, Valeant issued 27,058,824 of its common shares, no par value, at a price of $85.00 per share, or aggregate gross proceeds of approximately $2.3 billion. In connection with the issuance of these new common shares, Valeant incurred approximately $30.5 million of issuance costs, which has been reflected as reduction to the gross proceeds from the equity issuance.

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