BAUSCH HEALTH : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-K)

INTRODUCTION

This "Management's Discussion and Analysis of Financial Condition and Results of
Operations" has been updated through February 19, 2020 and should be read in
conjunction with the audited Consolidated Financial Statements and the related
notes thereto included elsewhere in this Annual Report on Form 10-K. Additional
company information, including this Form 10-K, is available on SEDAR at
www.sedar.com and on the U.S. Securities and Exchange Commission (the "SEC")
website at www.sec.gov. All currency amounts are expressed in U.S. dollars,
unless otherwise noted.
OVERVIEW
Bausch Health Companies Inc. ("we", "us", "our" or the "Company") is a global
company whose mission is to improve people's lives with our health care
products. We develop, manufacture and market, primarily in the therapeutic areas
of eye-health, gastroenterology ("GI") and dermatology, a broad range of: (i)
branded pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii)
over-the-counter ("OTC") products and (iv) medical devices (contact lenses,
intraocular lenses, ophthalmic surgical equipment and aesthetics devices).
We generated revenues for 2019, 2018 and 2017, of $8,601 million, $8,380 million
and $8,724 million, respectively. Our portfolio of products falls into four
operating and reportable segments: (i) Bausch + Lomb/International, (ii) Salix,
(iii) Ortho Dermatologics and (iv) Diversified Products.
•      The Bausch + Lomb/International segment consists of: (i) sales in the U.S.

of pharmaceutical products, OTC products and medical device products,

primarily comprised of Bausch + Lomb products, with a focus on the Vision

       Care, Surgical, Consumer and Ophthalmology Rx products and (ii) with the
       exception of sales of Solta products, sales in Canada, Europe, Asia,
       Australia, Latin America, Africa and the Middle East of branded
       pharmaceutical products, branded generic pharmaceutical products, OTC
       products, medical device products and Bausch + Lomb products.

• The Salix segment consists of sales in the U.S. of GI products.

•      The Ortho Dermatologics segment consists of: (i) sales in the U.S. of
       Ortho Dermatologics (dermatological) products and (ii) global sales of
       Solta medical aesthetic devices.

• The Diversified Products segment consists of sales: (i) in the U.S. of

pharmaceutical products in the areas of neurology and certain other

therapeutic classes, (ii) in the U.S. of generic products, (iii) in the

U.S. of dentistry products and (iv) of certain other businesses divested

during 2017 that were not core to the Company's operations, including the

Company's equity interests in Dendreon Pharmaceuticals LLC ("Dendreon")

(June 28, 2017) and Sprout Pharmaceuticals, Inc. ("Sprout") (December 20,

2017). As a result of the divestitures of Dendreon and Sprout, the Company

exited the oncology and women's health businesses, respectively.

For additional discussion of our reportable segments, see the discussion in Item
1 "Business - Segment Information" and Note 23, "SEGMENT INFORMATION" to our
audited Consolidated Financial Statements for further details on these
reportable segments.
Focus on Core Businesses
Our strategy is to focus our business on core therapeutic classes that offer
attractive growth opportunities. Within our chosen therapeutic classes, we
prioritize durable products which we believe have the potential for strong
operating margins and evidence of growth opportunities. We believe this strategy
has reduced complexity in our operations and maximizes the value of our: (i)
eye-health, (ii) GI and (iii) dermatology businesses which, collectively, now
represent a substantial portion of our revenues. We have found and continue to
believe there is significant opportunity in these businesses and we believe our
existing portfolio, commercial footprint and pipeline of product development
projects position us to successfully compete in these markets and provide us
with the greatest opportunity to build value for our shareholders. We identify
these businesses as "core", meaning that we believe we are best positioned to
grow and develop them. In order to continue to focus on our core businesses we
have: (i) directed capital allocation to drive growth within our core
businesses, (ii) made measurable progress in effectively managing our capital
structure, (iii) increased our efforts to improve patient access and (iv)
continued to invest in sustainable growth drivers to position us for long-term
growth.

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Direct Capital Allocation to Drive Growth Within Our Core Businesses
Our capital allocation is driven by our long-term growth strategies. We have
been aggressively allocating resources to promote our core businesses globally
through: (i) strategic acquisitions, (ii) research and development ("R&D")
investment and (iii) strategic investments in our infrastructure. The outcome of
this process allows us to better drive value in our product portfolio and
generate operational efficiencies.
Strategic Acquisitions - We remain very selective when considering any
acquisition and pursue only those opportunities that we believe align well with
our current organization. In being selective, we seek to enter into only those
acquisitions that provide us with significant synergies with our existing
business, thereby minimizing risks to our core businesses and providing
long-term growth opportunities. Recently, we have entered into transactions that
although not immediately impactful to our operating results, are expected to be
accretive to our bottom line in future years and contribute to our long-term
growth strategies.
In March 2019, we completed the acquisition of certain assets of Synergy
Pharmaceuticals Inc. ("Synergy") whereby we acquired the worldwide rights to the
Trulance® (plecanatide) product, a once-daily tablet for adults with chronic
idiopathic constipation, or CIC and irritable bowel syndrome with constipation,
or IBS-C. We believe that the Trulance® product complements our existing Salix
products and allows us to effectively leverage our existing GI sales force.
On February 18, 2019, we acquired the U.S. rights to EM-100 from Eton
Pharmaceuticals, Inc. EM-100, is an investigational eye drop that, if approved
by the FDA, will be the first OTC preservative-free formulation eye drop for the
treatment of ocular itching associated with allergic conjunctivitis. A Phase 3
trial has been completed and submitted to the FDA for review and we anticipate
their response in the second half of 2020. If approved, EM-100 is expected to
complement our broad range of Bausch + Lomb integrated eye-health products.
In October 2018, we completed the planned acquisition of Medpharma
Pharmaceutical and Chemical Industries LLC ("Medpharma"). The completion of this
acquisition provides us with full control over the business activities of
Medpharma and allows us to wholly benefit from the allocation of additional
Company resources and the growth, if any, in the Arab Emirates and the
surrounding region.
We are considering further acquisition opportunities within our core therapeutic
areas, some of which could be sizable.
R&D Investment - We continuously search for new product opportunities through
internal development and strategic licensing agreements, that if successful,
will allow us to leverage our commercial footprint, particularly our sales
force, and supplement our existing product portfolio and address specific unmet
needs in the market.
Internal R&D Projects - Our R&D organization focuses on the development of
products through clinical trials. As of December 31, 2019, approximately 1,400
dedicated R&D and quality assurance employees in 23 R&D facilities were involved
in our R&D efforts internally.
Our R&D expenses for 2019, 2018 and 2017, were $471 million, $413 million and
$361 million, respectively, and was approximately 5% as a percentage of revenue
for 2019 and 2018 and approximately 4% for 2017. As part of our turnaround, we
removed projects related to divested businesses and rebalanced our portfolio to
better align with our long-term plans and focus on core businesses. Our
investment in R&D reflects our commitment to drive organic growth through
internal development of new products, a pillar of our strategy. We have over 225
projects in our global pipeline and anticipate submitting approximately 100 of
those projects for regulatory approval in 2020 and 2021.
Core assets that have received a significant portion of our R&D investment in
current and prior periods are listed below.
•      Dermatology - In June 2019, we launched Duobrii®, the first and only

topical lotion that contains a unique combination of halobetasol

propionate and tazarotene for the treatment of moderate-to-severe plaque

psoriasis in adults. Halobetasol propionate and tazarotene are each

approved to treat plaque psoriasis when used separately, but the duration

of halobetasol propionate is limited by Food and Drug Administration

("FDA") labeling constraints and the use of tazarotene can be limited due

to tolerability concerns. However, the combination of these ingredients

in Duobrii®, with a dual mechanism of action, allows for expanded duration

of use, with reduced adverse events.

• Dermatology - In November 2018, we launched Bryhali®, a novel product that

       contains a unique, lower concentration of halobetasol propionate for the
       treatment of moderate-to-severe psoriasis which is FDA approved for 8
       weeks of use. The FDA has previously approved halobetasol propionate to
       treat plaque psoriasis, but limited duration of use to two weeks.



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• Bausch + Lomb - Bausch + Lomb ULTRA® for Astigmatism is a monthly planned

       replacement contact lens for astigmatic patients.  The Bausch + Lomb
       ULTRA® for Astigmatism lens was developed using the proprietary
       MoistureSeal® technology. In addition, the Bausch + Lomb ULTRA® for
       Astigmatism lens integrates an OpticAlign® design engineered for lens
       stability and to promote a successful wearing experience for the

astigmatic patient. In 2017, we launched this product and the extended

       power range for this product. In 2018, we launched the Bausch + Lomb
       ULTRA® for Astigmatism -2.75 cylinder expanded SKU range.


•      Bausch + Lomb - SiHy Daily AQUALOX™ is a silicone hydrogel daily
       disposable contact lens designed to provide clear vision throughout the

day. Product validation was completed in June 2018 and SiHy Daily AQUALOX™

       was launched in Japan in September 2018. We expect to launch our SiHy
       Daily disposable contact lens in the U.S. in the second half of 2020.

• Dermatology - Internal Development Project ("IDP") 126 is an acne product

       with a fixed combination of benzoyl peroxide, clindamycin phosphate and
       adapalene. Phase 3 studies were initiated in December 2019.

• Bausch + Lomb - Lumify® (brimonidine tartrate ophthalmic solution, 0.025%)

is an OTC eye drop developed as an ocular redness reliever. We have

several line extensions currently under development and further clinical

studies are planned to start in 2020.

• Gastrointestinal - We have initiated a Phase 2 study for the treatment of

overt hepatic encephalopathy with a new formulation of rifaximin, which we

       acquired as part of the Salix Acquisition. We expect to complete an
       interim analysis in the first quarter of 2020.


•      Gastrointestinal - Following the read out of the overt hepatic

encephalopathy study, we are planning to initiate a study potentially

evaluating the new formulation of rifaximin in potential hepatic

encephalopathy and gastrointestinal conditions. The study is expected to

start in the second half of 2020. This study replaces the planned Xifaxan®

550mg tablets Phase 2 study evaluating the prevention of complications of

       decompensation cirrhosis referenced in our Quarterly Report on Form 10-Q
       for the quarterly period ended June 30, 2019.

• Gastrointestinal - We are initiating a Phase 2 study to evaluate rifaximin

       for the treatment of small intestinal bacterial overgrowth or SIBO.
       Patient enrollment is expected to begin in the first half of 2020.


•      Dermatology - IDP-120 is an acne product with a fixed combination of

mutually incompatible ingredients: benzoyl peroxide and tretinoin. Phase 3

clinical studies are ongoing.

• Dermatology - Arazlo™ (tazarotene) Lotion, 0.045% (formerly IDP-123) is an

acne product containing lower concentration of tazarotene in a lotion form

to help reduce irritation while maintaining efficacy. The FDA approved the

New Drug Application ("NDA") for Arazlo™ on December 18, 2019, which we

       expect to launch in the first half of 2020.


•      Gastrointestinal - Our partner Alfasigma S.p.A. ("Alfasigma") is

initiating a Phase 2/3 study for the treatment of postoperative Crohns

disease using a novel rifaximin extended release formulation. The study is

expected to start in the first half of 2020.

• Gastrointestinal - We are developing a probiotic supplement to address

       gastrointestinal disturbances. Patient enrollment for clinical trial has
       been completed and we expect to launch this product in 2020.


•      Dermatology - IDP-124 is a topical lotion product designed to treat
       moderate to severe atopic dermatitis, with pimecrolimus, currently in
       Phase 3 testing.

• Bausch + Lomb - Biotrue® ONEday for Astigmatism is a daily disposable

contact lens for astigmatic patients. The Biotrue® ONEday contact lens

incorporates Surface Active Technology™ to provide a dehydration barrier.

The Biotrue® ONEday for Astigmatism also includes evolved peri-ballast

geometry to deliver stability and comfort for the astigmatic patient. We

launched this product in December 2016 and launched an extended power

       range and further extended power ranges in 2017, 2018 and November 2019.


•      Bausch + Lomb - We are developing a new Ophthalmic Viscosurgical Device

product, with a formulation to protect corneal endothelium during

phacoemulsification process during a cataract surgery and to help chamber

maintenance and lubrication during interocular lens delivery. We

anticipate filing a Premarket Approval application for the dispersive

       Ophthalmic Viscosurgical Device with the FDA in the first quarter of 2020.

• Bausch + Lomb - In April 2019, we launched Lotemax® SM (loteprednol

etabonate ophthalmic gel) 0.38%, a new formulation for the treatment of

post-operative inflammation and pain following ocular surgery. Lotemax® SM

       is the



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lowest concentrated loteprednol ophthalmic corticosteroid indicated for the
treatment of post-operative inflammation and pain following ocular surgery in
the U.S.
•      Bausch + Lomb - enVista® Trifocal intraocular lens is an innovative lens
       design. We initiated an investigative device exemption study for this
       product in May 2018 and initiated a Phase 2 study in October of 2019.

• Bausch + Lomb - Enhanced enVista® Toric intraocular lens was launched in

July 2018.

• Bausch + Lomb - We are developing a preloaded intraocular lens injector

platform for enVista interocular lens. We have received approvals from the

European Union and Canada and received FDA clearance for the injector. We

anticipate launching this platform in the second quarter of 2020.

• Bausch + Lomb - We are developing an extended depth of focus intraocular

lens which we anticipate launching in 2020, excluding the U.S., starting

with Europe.

• Bausch + Lomb ULTRA® Multifocal for Astigmatism contact lens is the first

and only multifocal toric lens available as a standard offering in the eye

       care professional's fit set. The new monthly silicone hydrogel lens, which
       was specifically designed to address the lifestyle and vision needs of

patients with both astigmatism and presbyopia, combines the Company's

       unique 3-Zone Progressive™ multifocal design with the stability of its
       OpticAlign® toric with MoistureSeal® technology to provide eye care
       professionals and their patients an advanced contact lens technology that
       offers the convenience of same-day fitting during the initial lens

exam. Bausch + Lomb ULTRA® Multifocal for Astigmatism was launched in June

2019.

• Bausch + Lomb - Renu® Advanced Multi-Purpose Solution ("MPS") contains a

triple disinfectant system that kills 99.9% of germs, and has a dual

surfactant system that provides up to 20 hours of moisture. Renu® Advanced

MPS is FDA cleared with indications for use to condition, clean, remove

protein, disinfectant, rinse and store soft contact lenses including those

composed of silicone hydrogels. Renu® Advanced MPS has gained regulatory

approvals in Korea, India, Mexico, Indonesia, Malaysia and Singapore.

• Bausch + Lomb - Custom soft contact lens (Ultra buttons) is a latheable

       silicone hydrogel button for custom soft specialty lenses including;
       Sphere, Toric, Multifocal, Toric Multifocal and irregular corneas. If
       approved by the FDA, we expect to launch in the first quarter of 2021.

• Bausch + Lomb - In January 2019, we launched Zen™ Multifocal Scleral Lens

for presbyopia exclusively available with Zenlens™ and Zen™ RC scleral

lenses and will allow eye care professionals to fit presbyopic patients

with irregular and regular corneas and those with ocular surface disease,

such as dry eye. The Zen™ Multifocal Scleral Lens incorporates decentered

       optics, enabling the near power to be positioned over the visual axis.


•      Bausch + Lomb - In March 2019, we launched Tangible® Hydra-PEG®, a

high-water polymer coating that is bonded to the surface of a contact lens

and designed to address contact lens discomfort and dry eye. Tangible®

Hydra-PEG® coating technology in combination with our Boston® materials

and Zenlens™ family of scleral lenses will help eye care professionals

provide a better lens wearing experience for their patients with

challenging vision needs.

Strategic Licensing Agreements - To supplement our reliance on our internal R&D
organization to build-out and refresh our product portfolio, we also search for
opportunities to augment our pipeline through arrangements that allow us to gain
access to unique products and investigational treatments, by strategically
aligning ourselves with other innovative product solutions.
In the normal course of business, the Company will enter into select licensing
and collaborative agreements for the commercialization and/or development of
unique products primarily in the U.S. and Canada. These products are sometimes
investigational treatments in early stage development that target unique
conditions. The ultimate outcome, including whether the product will be: (i)
fully developed, (ii) approved by the FDA, (iii) covered by third-party payors
or (iv) profitable for distribution cannot be fairly predicted.
On February 27, 2018, we announced that we entered into an exclusive license
agreement with Kaken Pharmaceutical Co., Ltd. to develop and commercialize a new
chemical entity, IDP-131 (KP-470), for the topical treatment of psoriasis.  An
early proof of concept study was initiated in the first half of 2019. If
approved by the FDA, IDP-131 could represent a novel drug with an alternative
mechanism of action in the topical treatment of psoriasis.
In December 2019, we announced that we had acquired an exclusive license from
Novaliq GmbH for the commercialization and development in the U.S. and Canada of
the investigational treatment NOV03 (perfluorohexyloctane), a first-in-class
investigational drug with a novel mechanism of action to treat Dry Eye Disease
("DED") associated with Meibomian gland dysfunction ("MGD"). A Phase 3 study is
underway for NOV03, and we anticipate starting an additional Phase 3 study in
2020.

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If approved by the FDA, we believe the addition of this investigational
treatment for DED will help build upon our strong portfolio of integrated
eye-health products.
In October 2019, we acquired an exclusive license from Clearside Biomedical,
Inc. ("Clearside") for the commercialization and development of Xipere™
(triamcinolone acetonide suprachoroidal injectable suspension) in the U.S. and
Canada. Xipere™ is a proprietary suspension of the corticosteroid triamcinolone
acetonide formulated for suprachoroidal administration via Clearside's
proprietary SCS Microinjector™ that is being investigated as a targeted
treatment of macular edema associated with uveitis. Clearside expects to
resubmit its NDA for Xipere™ to the FDA in mid-year 2020.
In April 2019, we entered into two licensing agreements which present us with
unique developmental opportunities to address unmet needs of individuals
suffering with certain GI and liver diseases. The first of these two licensing
agreements is with the University of California for certain intellectual
property relating to an investigational compound targeting the pituitary
adenylate cyclase receptor 1 in non-alcoholic fatty liver disease ("NAFLD"),
nonalcoholic steatohepatitis ("NASH") and other GI and liver diseases. The
second is an exclusive licensing agreement with Mitsubishi Tanabe Pharma
Corporation to develop and commercialize MT-1303 (amiselimod), a late-stage oral
compound that targets the sphingosine 1-phosphate receptor that plays a role in
autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis.
We plan to initiate a Phase 2 study for the development of MT-1303 in ulcerative
colitis in 2020.
Strategic Investments in our Infrastructure - In support of our core businesses,
we have and continue to make strategic investments in our infrastructure, the
most significant of which are at our Waterford facility in Ireland and our
Rochester facility in New York.
To meet the forecasted demand for our Biotrue® ONEday lenses, in July 2017, we
placed into service a $175 million multi-year strategic expansion project of the
Waterford facility. The emphasis of the expansion project was to: (i) develop
new technology to manufacture, automatically inspect and package contact lenses,
(ii) bring that technology to full validation and (iii) increase the size of the
Waterford facility.
To address the expected global demand for our Bausch + Lomb ULTRA® contact lens,
in December 2017, we completed a multi-year, $200 million strategic upgrade to
our Rochester facility. The upgrade increased production capacity in support of
our Bausch + Lomb Ultra® and SiHy Daily AQUALOX™ product lines and better
supports the production of other well-established contact lenses such as our
PureVision®, PureVision®2 (SVS, Toric, and Multifocal), SofLens® 38 and
SilSoft®.
To address the expected global demand for our SiHy Daily disposable contact
lenses, in November 2018, we initiated $300 million of additional expansion
projects to add multiple production lines to our Rochester and Waterford
facilities. SiHy Daily disposable contact lenses are expected to be launched in
the U.S. in the second half of 2020.
We believe the investments in our Waterford and Rochester facilities and related
expansion of labor forces further demonstrates the growth potential we see in
our Bausch + Lomb products and our eye-health business.
Effectively Managing Our Capital Structure
We continue to effectively manage our capital structure by: (i) reducing our
debt through repayments, (ii) extending the maturities of debt through
refinancing and (iii) improving our credit ratings.
Financing of Litigation Settlement - In December 2019, we announced that we had
agreed to resolve the putative securities class action litigation in the U.S.
(the "U.S. Securities Litigation") for $1,210 million, subject to final court
approval. Once approved by the court, the settlement will resolve and discharge
all claims against the Company in the class action. As part of the settlement,
the Company and the other settling defendants admitted no liability as to the
claims against it and deny all allegations of wrongdoing. This settlement, once
approved by the court, will resolve the most significant of the Company's
remaining legacy legal matters and eliminate a material uncertainty regarding
our Company.
To finance the settlement of the U.S. Securities Litigation, on December 30,
2019 we accessed the credit markets and issued: (i) $1,250 million aggregate
principal amount of 5.00% Senior Unsecured Notes due January 2028 (the "5.00%
January 2028 Unsecured Notes") and (ii) $1,250 million aggregate principal
amount of 5.25% Senior Unsecured Notes due January 2030 (the "January 2030
Unsecured Notes") in a private placement. The proceeds and cash on hand were
used to: (i) redeem $1,240 million of 5.875% Senior Unsecured Notes due 2023
(the "May 2023 Unsecured Notes") on January 16, 2020, (ii) finance amounts owed
under the Company's recently announced $1,210 million settlement agreement
relating to the U.S. Securities Litigation (which is subject to final court
approval), of which we paid $200 million during January 2020 and (iii) pay all
fees and expenses associated with these transactions (collectively, the
"December 2019 Financing and Refinancing Transactions"). On December 18, 2019,
the Company issued a conditional notice of redemption for $1,240 million of May
2023 Unsecured Notes on January 16, 2020. On December 30, 2019, the Company
received the proceeds associated with the December 2019 Financing and
Refinancing Transactions, satisfying the condition included in the conditional
notice of redemption. Through this financing, we have in effect

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extended the payment terms of the pending settlement of $1,210 million out to
2028 and 2030, without negatively impacting our working capital available for
operations.
Debt Repayments - Excluding the impact of the $1,210 million financing of the
U.S. Securities Litigation settlement discussed above, we have been able to
repay (net of additional borrowings) over $7,700 million of long-term debt
during the period January 1, 2016 through the date of this filing using the net
cash proceeds from divestitures of non-core assets, cash generated from
operations and cash generated from tighter working capital management. This
includes $906 million of repayments with cash on hand during 2019.
2017 Refinancing Transactions - In March, October, November and December of
2017, we accessed the credit markets and completed a series of transactions,
whereby we extended approximately $9,500 million in aggregate maturities of
certain debt obligations due to mature in April 2018 through April 2022, out to
March 2022 through December 2025. As part of these transactions we also extended
commitments under our revolving credit facility, originally set to expire in
April 2018, out to April 2020.
2018 Refinancing Transactions - In March, June and November 2018, we accessed
the credit markets and completed a series of transactions, whereby we extended
approximately $8,300 million in aggregate maturities of certain debt obligations
due to mature in March 2020 through July 2022, out to June 2025 through January
2027.  As part of these transactions we obtained less stringent loan financial
maintenance covenants under our Senior Secured Credit Facilities and extended
commitments under our revolving credit facility by more than three years by
replacing our then-existing revolving credit facility, set to expire in April
2020 with a revolving credit facility of $1,225 million due in June 2023 (the
"2023 Revolving Credit Facility").
2019 Refinancing Transactions - In March, May and December 2019, we accessed the
credit markets and completed a series of transactions, whereby, through the date
of this filing, we extended $4,240 million in aggregate maturities of certain
debt obligations due to mature in December 2021 through May 2023, out to January
2027 through January 2030.
See Note 11, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial
Statements for the details of our debt portfolio as of December 31, 2019 and
2018.
The debt repayments and refinancings outlined above have allowed us to: (i)
improve our credit ratings as discussed under "Management's Discussion and
Analysis - Liquidity and Capital Resources: Long-term Debt", (ii) to finance
amounts owed under the Company's recently announced $1,210 million settlement
agreement relating to the U.S. Securities Litigation without negatively
impacting our working capital available for operations and (iii) as of the date
of this filing, reduce our mandatory scheduled principal repayments of our debt
obligations in 2020 and 2021 to $0 and $103 million, respectively.
Our prepayment and refinancings of debt over the last four years translate into
lower repayments of principal over the next four years, which, in turn, we
believe will permit more cash flows to be directed toward developing our core
assets, identifying new product opportunities and repaying additional debt
amounts. The mandatory scheduled principal repayments of our debt obligations as
of December 31, 2019 and February 19, 2020, the date of this filing, were as
follows:
(in millions)               2020 - 2021       2022 - 2023       2024 - 2025 

2026 - 2027 2028 - 2029 2030 Total As of December 31, 2019 $ 1,343 $ 4,148 $ 12,935

$ 3,750 $ 2,762 $ 1,250 $ 26,188 As of February 19, 2020

             103             4,148            12,935             3,750             2,762       1,250       24,948


In addition, as a result of the changes in our debt portfolio, approximately 80%
of our debt is fixed rate debt as of December 31, 2019, as compared to
approximately 60% as of January 1, 2016. The weighted average stated interest
rate of the Company's outstanding debt as of December 31, 2019 and 2018 was
6.21% and 6.23%, respectively.
We continue to monitor our capital structure and to evaluate other opportunities
to simplify our business and improve our capital structure, giving us the
ability to better focus on our core businesses. While we anticipate focusing any
future divestiture activities on non-core assets, consistent with our duties to
our shareholders and other stakeholders, we will consider dispositions in core
areas that we believe represent attractive opportunities for the Company. Also,
the Company regularly evaluates market conditions, its liquidity profile and
various financing alternatives for opportunities to enhance its capital
structure. If the Company determines that conditions are favorable, the Company
may refinance or repurchase existing debt or issue additional debt, equity or
equity-linked securities.
See Note 11, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial
Statements for further details and "Management's Discussion and Analysis -
Liquidity and Capital Resources: Long-term Debt" for additional discussion of
these matters. Cash requirements for future debt repayments including interest
can be found in "Management's Discussion and Analysis - Off-Balance Sheet
Arrangements and Contractual Obligations."

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Improve Patient Access
Improving patient access to our products, as well as making them more
affordable, is at the forefront of our business strategies.
Patient Access and Pricing Committee - In 2016, we formed the Patient Access and
Pricing Committee which is responsible for setting, changing and monitoring the
pricing of our products and evaluating contract arrangements that determine the
placement of our products on drug formularies. The Patient Access and Pricing
Committee considers new to market product pricing, price changes and their
impact across channels on patient accessibility and affordability. The Patient
Access and Pricing Committee has been committed to limiting the average annual
price increase for our branded prescription pharmaceutical products to no
greater than single digits and reaffirmed this commitment for 2020. These
pricing changes and programs could affect the average realized pricing for our
products and may have a significant impact on our company revenue and profit.
Dermatology.com Cash-pay Prescription Program - In February 2019, we launched
Dermatology.com, a cash-pay product acquisition program offering certain branded
Ortho Dermatologics products directly to patients. This program is designed to
address the affordability and availability of certain branded dermatology
products, when insurers and pharmacy benefit managers are no longer offering
those branded prescription pharmaceutical products under their designated
pharmacy benefit offerings. Through Dermatology.com, any patient with a valid
prescription is able to purchase medicines at prices ranging from $50 to $115
per prescription. By doing so, the program provides branded products that offer
proven treatment options for certain disease states that typically encounter
insurance coverage challenges and high patient out of pocket costs. This program
includes products for acne, actinic keratosis, superficial basal cell carcinoma,
barrier repair (e.g. eczema treatments), wounds and corticosteroid-responsive
diseases such as rashes, psoriasis and atopic dermatitis. All products included
in the Dermatology.com program are eligible for Flexible Spending Accounts or
Health Saving Accounts and continue to be supported by the Company's Patient
Assistance Program, which offers free medication for patients who meet income
and other eligibility criteria. We currently have 15 Ortho Dermatologics branded
prescription pharmaceutical products in the Dermatology.com program and
anticipate adding additional products in the future, including some
investigational therapies that will be added to the program as soon as, and if,
they are approved by the FDA.
Walgreens Fulfillment Arrangements - In the beginning of 2016, we launched a
brand fulfillment arrangement with Walgreen Co. ("Walgreens"). Under the terms
of the brand fulfillment arrangement, as amended in July 2019, we made certain
dermatology and ophthalmology products available to eligible patients through
patient access and co-pay assistance programs at Walgreens U.S. retail pharmacy
locations, as well as participating independent retail pharmacies. Our products
available under this fulfillment agreement include certain Ortho Dermatologics
products, including our Jublia®, Luzu®, Retin-A Micro® Gel, and Onexton® and
select branded prescription pharmaceutical products included in our
Dermatology.com cash-pay prescription program and certain ophthalmology
products, including our Vyzulta®, Besivance®, Lotemax®, Alrex®, Prolensa®,
Bepreve® and Zylet® products.
Invest in Sustainable Growth Drivers to Position us for Long-Term Growth
We are constantly challenged by the changing dynamics of our industry to
innovate and bring new products to market. We have divested certain businesses
where we saw limited growth opportunities, so that we can be more aggressive in
redirecting our R&D spend and other corporate investments to innovate within our
core businesses where we believe we can be most profitable and where we aim to
be an industry leader.
We believe that we have a well-established product portfolio that is diversified
within our core businesses and provides a sustainable revenue stream to fund our
operations. However, our future success is also dependent upon our ability to
continually refresh our pipeline, to provide a rotation of product launches that
meet new and changing demands and replace other products that have lost
momentum. We believe we have a robust pipeline that not only provides for the
next generation of our existing products, but is also poised to bring new
products to market.
Invest in our Eye-Health Business - As part of our Global Bausch + Lomb business
strategy, we continually look for key trends in the eye-health market to meet
changing consumer/patient needs and identify areas for investment to extend our
market share through new launches and effective pricing.
For instance, there is an increasing rate of myopia, and importantly, myopia as
a potential risk factor for glaucoma, macular degeneration and retinal
detachment. We continue to see increased demand for new eye-health products that
address conditions brought on by factors such as increased screen time, lack of
outdoor activities and academic pressures, as well as conditions brought on by
an aging population (for example, as more and more baby-boomers in the U.S. are
reaching the age of 65). To extend our market share in eye-health, we
continually identify new products tailored to address these key trends which we
develop internally with our own R&D team to generate organic growth. Recent
product launches include Biotrue® ONEday daily disposable contact lenses, the
next generation of Bausch + Lomb ULTRA® contact lenses, SiHy Daily contact
lenses, Lumify® (an eye redness treatment), Vyzulta® (a pressure lowering eye
drop for patients with angle glaucoma or ocular hypertension) and Ocuvite® Eye
Performance (vitamins to protect the eye from stressors such as sunlight and
blue light emitted from digital devices).

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We also license selective molecules or technology in leveraging our own R&D
expertise through development, as well as seek out external product development
opportunities. As previously discussed, we acquired exclusive licenses for the
commercialization and development in the U.S. and Canada for Xipere™ which, if
approved by the FDA, will be the first treatment for patients suffering from
macular edema associated with uveitis, and for NOV03, an investigational drug
with a novel mechanism of action to treat DED associated with MGD. We also
acquired the U.S. rights to EM-100 an investigational eye drop that, if approved
by the FDA, will be the first OTC preservative-free formulation eye drop for the
treatment of ocular itching associated with allergic conjunctivitis. We believe
investments in these investigational treatments, if approved by the FDA, will
complement, and help build upon, our strong portfolio of integrated eye-health
products.
As previously discussed, we have also made strategic investments in our
infrastructure, the most significant of which are at our Waterford facility in
Ireland to meet the forecasted demand for our Biotrue® ONEday lenses and our
Rochester facility in New York to address the expected global demand for our
Bausch + Lomb ULTRA® contact lens. During late 2018, we began investing in
additional expansion projects at these facilities in order to address the
expected global demand for our SiHy Daily disposable contact lenses expected to
be launched in the U.S. in the second half of 2020.
We believe our recent product launches, licensing arrangements and the
investments in our Waterford and Rochester facilities demonstrate the growth
potential we see in our Bausch + Lomb products and our eye-health business and
that these investments will position us to further extend our market share in
the eye-health market.
Leveraging our Salix Infrastructure - As we strongly believe in our GI product
portfolio, we have taken initiatives to further capitalize on the value of the
infrastructure we built around these products to extend our market share by
increasing our marketing presence and identifying additional opportunities
outside our existing GI portfolio.
In the first quarter of 2017, we hired approximately 250 trained and experienced
sales force representatives and managers to create, bolster and sustain deep
relationships with primary care physicians ("PCP"). With approximately 70% of
IBS-D patients initially presenting symptoms to a PCP, we continue to believe
that the dedicated PCP sales force is better positioned to reach more patients
in need of IBS-D treatment.
This initiative provided us with positive results, as we experienced consistent
growth in demand for our GI products throughout 2017 and 2018, which was evident
by our growth in Salix revenues of 12% in 2018 when compared to 2017. These
results encouraged us to seek out ways to bring out further value through
leveraging our existing sales force and in the later portion of 2018 and in 2019
we have identified and executed on certain opportunities which we describe
below.
Strategic Acquisition - As previously discussed, in March 2019, we completed the
acquisition of certain assets of Synergy, whereby we acquired the worldwide
rights to the Trulance® product, a once-daily tablet for adults with chronic
idiopathic constipation, or CIC and irritable bowel syndrome with constipation,
or IBS-C. We believe that the Trulance® product complements our existing Salix
products and allows us to effectively leverage our existing GI sales force. As
we focus on reestablishing momentum in the Trulance® product, we have reviewed
certain strategies for the Salix business and as a result, we mutually agreed
with US WorldMeds, LLC and Dova Pharmaceuticals to terminate our arrangements to
co-promote Lucemyra® and Doptelet® effective September 30, 2019 and December 31,
2019, respectively.
Licensing Arrangements - As previously discussed, in April 2019, we entered into
two licensing agreements. The first is for certain intellectual property
relating to an investigational compound targeting the pituitary adenylate
cyclase receptor 1 in NAFLD, NASH and other GI and liver diseases. The second is
to develop and commercialize MT-1303 (amiselimod), a late-stage oral compound
that targets the sphingosine 1-phosphate receptor that plays a role in
autoimmune diseases, such as inflammatory bowel disease and ulcerative colitis.
These licenses present unique developmental opportunities to address unmet needs
of individuals suffering with certain GI and liver diseases and if developed and
approved by the FDA, will allow us to further utilize our existing sales force
and infrastructure to extend our market share in the future and create value.
Investment in Next Generation Formulations - We continue to see growth in our
Xifaxan® product. Revenues from our Xifaxan® product increased approximately
22%, 22% and 11% in 2019, 2018 and 2017, respectively. In order to extend growth
in Xifaxan®, we continue to directly invest in next generation formulations of
Xifaxan® and rifaximin, the principal semi-synthetic antibiotic used in our
Xifaxan® product. In addition to one R&D program in progress, we have three
other R&D programs planned to start in 2020 for next generation formulations of
Xifaxan® (rifaximin) which address new indications.
We believe that the acquisition and licensing opportunities discussed above,
will be accretive to our business by providing us access to products and
investigational compounds that are a natural pairing to our Xifaxan® business,
allowing us to effectively leverage our existing infrastructure and sales force.
We believe these opportunities, coupled with our investment in next generation
formulations, will allow our GI franchise to continue to further extend market
share.

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Position the Ortho Dermatologics Business for Growth - In support of our Ortho
Dermatologics business and the opportunities we see for growth in this business,
we continue to allocate resources and make additional investments in this
business to recruit and retain talent and focus on our core dermatology
portfolio of products.
To position the Ortho Dermatologics business for growth, we have taken and are
taking a number of actions which we believe will help our efforts to stabilize
our dermatology business. These actions include: (i) rebranding our dermatology
business, (ii) recruiting a new experienced leadership team, (iii) making
significant investment in our core dermatology portfolio, (iv) increasing and
reorganizing our dermatology sales force around roughly 195 territories, as we
work to rebuild relationships with prescribers of our products and (v) improving
patient access to our Ortho Dermatologics products through Dermatology.com, our
cash-pay prescription program previously discussed. With these actions
substantially complete, we believe our Ortho Dermatologics business is
positioned for growth in 2020.
Recruit and Retain Talent - In 2017, we identified and retained a proven
leadership team of experienced dermatology sales professionals and marketers. In
January 2018, the leadership team, encouraged by the success of our GI sales
force expansion program, increased our Ortho Dermatologics sales force by more
than 25% in support of our growth initiatives for our Ortho Dermatologics
business. We believe the additional sales force is vital to meet the demand we
expect from our recently launched products and those we expect to launch in the
near term, pending FDA approval. We continue to monitor our pipeline for other
near term launches that we believe will create opportunity needs in our other
core businesses requiring us to make additional investment to retain people for
additional leadership and sales force roles.
Investment in Our Core Dermatology Portfolio - We have made significant
investments to build out our aesthetics, psoriasis and acne product portfolios,
which are the markets within dermatology where we see the greatest opportunities
to extend our market share.
Aesthetics - In 2017, we launched our Next Generation Thermage FLX® product in
the U.S., a fourth-generation non-invasive treatment option using a
radiofrequency platform designed to optimize key functional characteristics and
improve patient outcomes. During 2018 and 2019, Next Generation Thermage FLX®
was launched in Hong Kong, Japan, Korea, Taiwan, Philippines, Singapore,
Indonesia, Malaysia, China, Thailand, Vietnam, and Australia as part of our
Solta medical aesthetic devices portfolio. These launches have been successful
as Next Generation Thermage FLX® revenues for 2019 were in excess of $75
million. We expect additional launches of Next Generation Thermage FLX® in Asia
and Europe in the near term, paced by country-specific regulatory registrations.
Psoriasis - As the number of reported cases of psoriasis in the U.S. has
increased, we believe there is a need to make further investments in this market
in order to maximize our opportunity and supplement our current psoriasis
product portfolio. We have filed NDAs for several new topical psoriasis
products, launched Duobrii® in June 2019 and launched Bryhali® in November 2018.
We expect that Duobrii® and Bryhali® will align well with our existing topical
portfolio of psoriasis treatments and, supplemented by our injectable biologic
products, such as Siliq®, will provide a diverse choice of psoriasis treatments
to doctors and patients. In July 2017, we launched Siliq®, an IL-17 receptor
blocker monoclonal antibody biologic for treatment of moderate-to-severe plaque
psoriasis, which we estimate to be an over $5,000 million market in the U.S.
(Siliq® has a Black Box Warning for the risks in patients with a history of
suicidal thoughts or behavior and was approved with a Risk Evaluation and
Mitigation Strategy involving a one-time enrollment for physicians and one-time
informed consent for patients). As previously discussed, we entered into an
exclusive license agreement with Kaken Pharmaceutical Co., Ltd. to develop and
commercialize products containing a new chemical entity, IDP-131 (KP-470), for
the topical treatment of psoriasis. An early proof of concept study was
initiated in the first half of 2019. If approved by the FDA, IDP-131 could
represent a novel drug with an alternative mechanism of action in the topical
treatment of psoriasis.
Acne - In support of our established acne product portfolio, we have developed
several products, which include Retin-A Micro® 0.06% (launched in January 2018)
and Altreno® (launched in the U.S. October 2018), the first lotion (rather than
a gel or cream) product containing tretinoin for the treatment of acne. We also
anticipate launching ArazloTM (tazarotene) Lotion in the first half of 2020 and
we have three other unique acne projects in earlier stages of development that,
if approved by the FDA, we believe will further innovate and advance the
treatment of acne.
Bolstered by new product launches in our aesthetics, psoriasis and acne product
lines and the potential of other products under development, our experienced
dermatology sales leadership team, our sales force and our Dermatology.com
cash-pay prescription program, we believe we have set the groundwork to position
the Ortho Dermatologics business for growth.
In early 2018, we identified seven of our products, which we called the
"Significant Seven", that, at the time, we believed would be among the key
drivers of our future growth and which we anticipated would have significant
revenues in the future. In 2019, the reported revenue of the Significant Seven
products was approximately $268 million, an increase of 68% as compared to
2018.  Additionally, at the end of 2017, we stated that we believed that our
Dermatology business, Ortho Dermatologics, had

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the potential to double its revenue within five years based on new product
introductions including Siliq®, Duobrii®, Bryhali®, Altreno®, and Arazlo™. We
expect our future company-wide revenue growth will be driven by a broader group
of products that have existed or since emerged from within our product portfolio
(e.g., Xifaxan®, Thermage®, Biotrue® ONEday, Aplenzin®, Bausch + Lomb Ultra®,
Jublia®, enVista®), from our internal development pipeline and/or from business
development efforts (e.g. Trulance®).  As our portfolio evolves over time our
promotional priorities shift based on where we see the greatest potential to
drive profitable growth and to improve returns on invested capital.  Our
company-wide prospects today are different, more wide-ranging, and we believe
that they continue to be as attractive as they were at the time we communicated
our views for the "Significant Seven" and the near-term prospects for Ortho
Dermatologics. While we continue to believe that the "Significant Seven" and
Ortho Dermatologics will be important contributors to future growth, we are
withdrawing our existing outlook with respect to the anticipated revenue for the
Significant Seven group of products and the doubling in revenue of the Ortho
Dermatologics business and, going forward, we do not expect to provide any
specific qualitative or quantitative outlooks as to the revenue related to these
groups. We plan to continue to provide the revenues for our top products, for
both the total Company as well as for our reportable segments, in the earnings
material prepared by the Company.
Business Trends
In addition to the actions previously outlined, the following events have
affected and may affect our business trends:
U.S. Health Care Reform
The U.S. federal and state governments continue to propose and pass legislation
designed to regulate the health care industry. In March 2010, the Patient
Protection and Affordable Care Act (the "ACA") was enacted in the U.S. The ACA
contains several provisions that impact our business, including: (i) an increase
in the minimum Medicaid rebate to states participating in the Medicaid program,
(ii) the extension of the Medicaid rebates to Managed Care Organizations that
dispense drugs to Medicaid beneficiaries, (iii) the expansion of the 340(B)
Public Health Services drug pricing program, which provides outpatient drugs at
reduced rates, to include additional hospitals, clinics and health care centers
and (iv) a fee payable to the federal government based on our
prior-calendar-year share relative to other companies of branded prescription
drug sales to specified government programs.
In addition, in 2013 federal subsidies began to be phased in for brand-name
prescription drugs filled in the Medicare Part D cover gap. The ACA also
included provisions designed to increase the number of Americans covered by
health insurance. In 2014, the ACA's private health insurance exchanges began to
operate. The ACA also allows states to expand Medicaid coverage with most of the
expansion's cost paid for by the federal government.
For 2019, 2018 and 2017, we incurred costs of $20 million, $36 million and $48
million, respectively, related to the annual fee assessed on prescription drug
manufacturers and importers that sell branded prescription drugs to specified
U.S. government programs (e.g., Medicare and Medicaid). For 2019, 2018 and 2017,
we also incurred costs of $137 million, $90 million and $106 million,
respectively, on Medicare Part D utilization incurred by beneficiaries whose
prescription drug costs cause them to be subject to the Medicare Part D coverage
gap (i.e., the "donut hole").
On July 28, 2014, the U.S. Internal Revenue Service issued final regulations
related to the branded pharmaceutical drug annual fee pursuant to the ACA. Under
the final regulations, an entity's obligation to pay the annual fee is triggered
by qualifying sales in the current year, rather than the liability being
triggered upon the first qualifying sale of the following year. We adopted this
guidance in the third quarter of 2014, and it did not have a material impact on
our financial position or results of operations.
The financial impact of the ACA will be affected by certain additional
developments over the next few years, including pending implementation guidance
and certain health care reform proposals. Additionally, policy efforts designed
specifically to reduce patient out-of-pocket costs for medicines could result in
new mandatory rebates and discounts or other pricing restrictions. Also, it is
possible, as discussed further below, that under the current administration,
legislation will be passed by Congress repealing the ACA in whole or in part.
Adoption of legislation at the federal or state level could materially affect
demand for, or pricing of, our products.
In 2018, we faced uncertainties due to federal legislative and administrative
efforts to repeal, substantially modify or invalidate some or all of the
provisions of the ACA. However, we believe there is low likelihood of repeal of
the ACA, given the recent failure of the Senate's multiple attempts to repeal
various combinations of ACA provisions. There is no assurance that any
replacement or administrative modifications of the ACA will not adversely affect
our business and financial results, particularly if the replacing legislation
reduces incentives for employer-sponsored insurance coverage, and we cannot
predict how future federal or state legislative or administrative changes
relating to the reform will affect our business.
In 2019, the U.S. Health and Human Services Administration announced a
preliminary plan to allow for the importation of certain lower-cost drugs from
Canada. The preliminary plan excludes insulin, biological drugs, controlled
substances and intravenous drugs. The preliminary plan relies on individual
states to develop proposals for safe importation of those drugs from

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Canada and submit those proposals to the federal government for approval.
Although the preliminary plan has some support from the current administration,
at this time, studies to evaluate the related costs and benefits, evaluate the
reasonableness of the logistics, and measure the public reaction of such a plan
have not been performed. While we do not believe this will have a significant
impact on our future cash flows, we cannot provide assurance as to the ultimate
context, timing, effect or impact of such a plan.
In 2019, the Government of Canada (Health Canada) published in the Canadian
Gazette the new pricing regulation for patented drugs. These regulations will
become effective on July 1, 2020. The draft application guidelines are available
with the final guidelines to be published in February 2020. The new regulations
will change the mechanics of establishing the pricing for products submitted for
approval after August 21, 2019; they will also require full transparency of
discounts agreed with provincial bodies; and finally, will change the number and
composition of reference countries used to determine if a drug's price is
excessive. While we do not believe this will have a significant impact on our
future cash flows, as additional facts materialize, we cannot provide assurance
as to the ultimate content, timing, effect or impact of such regulations.
Other legislative efforts relating to drug pricing have been proposed and
considered at the U.S. federal and state level. We also anticipate that
Congress, state legislatures and third-party payors may continue to review and
assess alternative health care delivery and payment systems and may in the
future propose and adopt legislation or policy changes or implementations
affecting additional fundamental changes in the health care delivery system.
Generic Competition and Loss of Exclusivity
Certain of our products face the expiration of their patent or regulatory
exclusivity in 2020 or in later years, following which we anticipate generic
competition of these products. In addition, in certain cases, as a result of
negotiated settlements of some of our patent infringement proceedings against
generic competitors, we have granted licenses to such generic companies, which
will permit them to enter the market with their generic products prior to the
expiration of our applicable patent or regulatory exclusivity. Finally, for
certain of our products that lost patent or regulatory exclusivity in prior
years, we anticipate that generic competitors may launch in 2020 or in later
years. Following a loss of exclusivity ("LOE") of and/or generic competition for
a product, we would anticipate that product sales for such product would
decrease significantly shortly following the loss of exclusivity or entry of a
generic competitor. Where we have the rights, we may elect to launch an
authorized generic of such product (either ourselves or through a third party)
prior to, upon or following generic entry, which may mitigate the anticipated
decrease in product sales; however, even with launch of an authorized generic,
the decline in product sales of such product would still be expected to be
significant, and the effect on our future revenues could be material.
A number of our products already face generic competition. Prior to and during
2019, in the U.S., these products include, among others, Ammonul®, Apriso®,
Benzaclin®, Bupap®, Cuprimine®, Edecrin®, Elidel®, Glumetza®, Istalol®,
Isuprel®, Locoid® Lotion, Lotemax® Suspension, Mephyton®, Nitropress®, Solodyn®,
Syprine®, Uceris® Tablet, Virazole®, Wellbutrin XL®, Xenazine®, Zegerid® and
Zovirax® cream. In Canada, these products include, among others, Glumetza®,
Wellbutrin® XL and Zovirax® ointment.
2019 LOE Branded Products - Branded products that began facing generic
competition in the U.S. during 2019 include, Apriso®, Cuprimine®, Lotemax®
Suspension, Solodyn® and Zovirax® cream. In aggregate, these products accounted
for 3% of our total revenues in 2019. We believe the entrance into the market of
generic competition generally would have an adverse impact on the volume and/or
pricing of the affected products, however we are unable to predict the magnitude
or timing of this impact.
2020 through 2024 LOE Branded Products - Based on current patent expiration
dates, settlement agreements and/or competitive information, we have identified
branded products that we believe could begin facing potential loss of
exclusivity and/or generic competition in the U.S. during the years 2020 through
2024. These products and year of expected loss of exclusivity include, but are
not limited to, Clindagel® (2020), Lotemax® Gel (2021), Migranal® (2021),
MoviPrep® (2020), Noritate® (2020), Targretin® Gel (2022), Xerese® (2022) and
certain other products that are subject to settlement agreements which could
impact their exclusivity during the years 2020 through 2024. In aggregate, these
products accounted for 3% of our total revenues in 2019. These dates may change
based on, among other things, successful challenge to our patents, settlement of
existing or future patent litigation and at-risk generic launches. We believe
the entrance into the market of generic competition generally would have an
adverse impact on the volume and/or pricing of the affected products, however we
are unable to predict the magnitude or timing of this impact.
2021 LOE OTC Product - PreserVision® AREDS and PreserVision® AREDS 2 are OTC eye
vitamin formulas for those with moderate-to-advanced age-related macular
degeneration. PreserVision® products accounted for 2% of our total revenues in
2019. The PreserVision® patent expires in 2021, and whereas the Company cannot
predict the magnitude or timing of the impact from its patent expiry, as this is
an OTC product the impact is not expected to be as significant as the loss of
exclusivity of a branded product.

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In addition, for a number of our products (including Uceris®, Relistor®,
Plenvu®, Xifaxan® 200mg and 550mg and Jublia®, in the U.S. and Jublia® in
Canada), we have commenced (or anticipate commencing) and have ongoing
infringement proceedings against potential generic competitors in the U.S. and
Canada. If we are not successful in these proceedings, we may face increased
generic competition for these products.
Bryhali® Lotion, 0/01% - In December 2019, the Company announced that it had
reached an agreement to
resolve the outstanding intellectual property litigation with Glenmark Pharmaceuticals, Ltd.
("Glenmark"). Under the terms of the agreement, the Company will grant Glenmark
a non-exclusive license to its intellectual property relating to Bryhali® in the
U.S. and, beginning in 2026 (or earlier under certain circumstances), Glenmark
will have the option to market a royalty-free generic version of Bryhali®
Lotion, should it receive approval from the FDA. The parties have agreed to
dismiss all litigation related to Bryhali® Lotion, and all intellectual property
protecting Bryhali® Lotion remains intact.
Xifaxan® 550mg Patent Litigation (Sandoz Inc.) - In October 2019, the Company
announced that it and its licensor, AlfaSigma had commenced litigation against
Sandoz Inc. ("Sandoz"), a Novartis division, alleging patent infringement of 14
patents by Sandoz's filing of its ANDA for Xifaxan® (rifaximin) 550 mg tablets.
Xifaxan® is protected by 23 patents covering the composition of matter and the
use of Xifaxan® listed in the FDA's Approved Drug Products with Therapeutic
Equivalence Evaluations, or the Orange Book.
Xifaxan® 550mg Patent Litigation (Norwich Pharmaceuticals Inc.) - On February
17, 2020, the Company and Alfasigma received a Notice of Paragraph IV
Certification from Norwich Pharmaceuticals Inc. ("Norwich"), in which Norwich
asserted that certain U.S. patents, each of which is listed in the FDA's Orange
Book for Salix Pharmaceuticals, Inc.'s ("Salix Inc.") Xifaxan® tablets, 550 mg,
are either invalid, unenforceable and/or will not be infringed by the commercial
manufacture, use or sale of Norwich's generic rifaximin tablets, 550 mg, for
which an ANDA has been filed by Norwich. Salix Inc. and its affiliates and
Alfasigma (the "Plaintiffs") have forty-five (45) days from the date of receipt
of notice to file suit against Norwich pursuant to the Hatch-Waxman Act,
alleging infringement by Norwich of one or more claims of each of the Xifaxan®
Patents, thereby triggering a 30-month stay of the approval of Norwich's ANDA
for rifaximin tablets, 550 mg. The Plaintiffs intend to file suit per the
regulations. The Company remains confident in the strength of the Xifaxan®
patents and will continue to vigorously pursue this matter and defend its
intellectual property.
Relistor® Tablets Patent Litigation - On December 6, 2016, the Company initiated
litigation against Actavis Laboratories FL, Inc.'s ("Actavis"), which alleged
infringement by Actavis of one or more claims of U.S. Patent No. 8,524,276 (the
"276 Patent"), which protects the formulation of RELISTOR® tablets. Actavis had
challenged the validity of such patent and alleged non-infringement by its
generic version of such product. In July 2019, we announced that the U.S.
District Court of New Jersey had upheld the validity of and determined that
Actavis infringed the '276 Patent, expiring in March 2031.
Xifaxan® 550mg Patent Litigation (Actavis)- On March 23, 2016, the Company
initiated litigation against Actavis, which alleged infringement by Actavis of
one or more claims of each of the Xifaxan® patents. On September 12, 2018, we
announced that we had reached an agreement with Actavis that resolved the
existing litigation and eliminated the pending challenges to our intellectual
property protecting Xifaxan® (rifaximin) 550 mg tablets. As part of the
agreement, the parties agreed to dismiss all litigation related to Xifaxan®
(rifaximin), Actavis acknowledged the validity of the licensed patents for
Xifaxan® (rifaximin) 550 mg tablets and all intellectual property protecting
Xifaxan® (rifaximin) 550 mg tablets will remain intact and enforceable until
expiry in 2029. The agreement also grants Actavis a non-exclusive license to the
intellectual property relating to Xifaxan® (rifaximin) 550 mg tablets in the
United States beginning January 1, 2028 (or earlier under certain
circumstances). The Company will not make any financial payments or other
transfers of value as part of the agreement. In addition, under the terms of the
agreement, beginning January 1, 2028 (or earlier under certain circumstances),
Actavis will have the option to: (1) market a royalty-free generic version of
Xifaxan® tablets, 550 mg, should it receive approval from the FDA on its ANDA,
or (2) market an authorized generic version of Xifaxan® tablets, 550 mg, in
which case, we will receive a share of the economics from Actavis on its sales
of such an authorized generic. Actavis will be able to commence such marketing
earlier if another generic rifaximin product is granted approval and such other
generic rifaximin product begins to be sold or distributed before January 1,
2028.
Generic Competition to Uceris® - In July 2018, a generic competitor launched a
product which will directly compete with our Uceris® Tablet product. As
disclosed in Note 21, "LEGAL PROCEEDINGS" to our audited Consolidated Financial
Statements, the Company initiated various infringement proceedings against this
and other generic competitors. The Company continues to believe that its Uceris®
Tablet-related patents are enforceable and is proceeding in the ongoing
litigation between the Company and the generic competitor; however, the ultimate
outcome of the matter is not predictable. The ultimate impact of this generic
competitor on our future revenues cannot be predicted; however, Uceris® Tablet
revenues for 2019, 2018 and 2017 were approximately $20 million, $84 million and
$134 million, respectively.
Generic Competition to Jublia® - On June 6, 2018, the U.S. Patent and Trial
Appeal Board completed its inter partes review for an Orange Book-listed patent
covering Jublia® and issued a written determination invalidating such patent.
Although the Company is not aware of any imminent launches of a generic
competitor to Jublia®, the ultimate impact of this decision on our

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future revenues cannot be predicted. Jublia® revenues for 2019, 2018 and 2017 were approximately $110 million, $89 million and $96 million, respectively.

The

Company continues to believe that the Jublia® related patent is valid and
enforceable and, on August 7, 2018, an appeal of this decision was filed. The
ultimate outcome of this matter is not predictable. Jublia® continues to be
covered by eight remaining Orange Book-listed patents owned by the Company,
which expire in the years 2028 through 2034. In August and September 2018, we
received notices of the filing of a number of ANDAs with paragraph IV
certification, and have timely filed patent infringement suits against these
ANDA filers.
See Note 21, "LEGAL PROCEEDINGS" to our audited Consolidated Financial
Statements for further details regarding certain infringement proceedings.
The risks of generic competition are a fact of the health care industry and are
not specific to our operations or product portfolio. These risks are not
avoidable, but we believe they are manageable. To manage these risks, our
leadership team continually evaluates the impact that generic competition may
have on future profitability and operations. In addition to aggressively
defending the Company's patents and other intellectual property, our leadership
team makes operational and investment decisions regarding these products and
businesses at risk, not the least of which are decisions regarding our pipeline.
Our leadership team actively manages the Company's pipeline in order to identify
what we believe are the proper projects to pursue. Innovative and realizable
projects aligned with our core businesses that are expected to provide
incremental and sustainable revenues and growth into the future. We believe that
our current pipeline is strong enough to meet these objectives and provide
future sources of revenues, in our core businesses, sufficient enough to sustain
our growth and corporate health as other products in our established portfolio
face generic competition and lose momentum.
We believe that we have a well-established product portfolio that is diversified
within our core businesses. We also believe that we have a robust pipeline that
not only provides for the next generation of our existing products, but also
brings new solutions into the market.
See Item 1A "Risk Factors" of this Form 10-K for additional information on our
competition risks.

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SELECTED FINANCIAL INFORMATION
The following table provides selected financial information for each of the last
three years:
                                                 Years Ended December 31,                      Change

(in millions, except per share data) 2019 2018 2017 2018 to 2019 2017 to 2018 Revenues

$  8,601     $  8,380     $  8,724     $         221     $       (344 )
Operating (loss) income                    $   (203 )   $ (2,384 )   $    102     $       2,181     $     (2,486 )
Loss before benefit from income taxes      $ (1,837 )   $ (4,154 )   $ (1,741 )   $       2,317     $     (2,413 )
Net (loss) income                          $ (1,783 )   $ (4,144 )   $  2,404     $       2,361     $     (6,548 )
Net (loss) income attributable to Bausch
Health Companies Inc.                      $ (1,788 )   $ (4,148 )   $  2,404     $       2,360     $     (6,552 )
(Loss) earnings per share attributable
to Bausch Health Companies Inc.
Basic                                      $  (5.08 )   $ (11.81 )   $   6.86     $        6.73     $     (18.67 )
Diluted                                    $  (5.08 )   $ (11.81 )   $   6.83     $        6.73     $     (18.64 )


Financial Performance
Summary of 2019 Compared with 2018
Revenues for 2019 and 2018 were $8,601 million and $8,380 million, respectively,
an increase of $221 million, or 3%. The increase was primarily driven by: (i)
higher gross selling prices, (ii) higher volumes and (iii) sales of our
Trulance® product, which we added to our portfolio in March 2019 as part of the
acquisition of certain assets of Synergy. These increases in Revenues were
partially offset by: (i) the unfavorable effect of foreign currencies, primarily
in Europe, Asia and Latin America, (ii) the impact of divestitures and
discontinuations and (iii) higher sales deductions. The changes in our segment
revenues and segment profits are discussed in further detail in the subsequent
section titled "Reportable Segment Revenues and Profits".
Operating loss for 2019 and 2018 was $203 million and $2,384 million,
respectively, an increase in our operating results of $2,181 million which
reflects, among other factors:
•      an increase in contribution (product sales revenue less cost of goods

sold, exclusive of amortization and impairments of intangible assets) of

$230 million. The increase was primarily driven by: (i) higher gross

selling prices, (ii) higher volumes, (iii) the incremental contribution of

       the sales of our Trulance® product, which we added to our portfolio in
       March 2019 as part of the acquisition of certain assets of Synergy and

(iv) better inventory management, partially offset by: (i) the unfavorable

effect of foreign currencies, (ii) the impact of divestitures and

discontinuations, (iii) higher sales deductions and (iv) the amortization

of the inventory fair value step-up recorded in acquisition accounting

       related to the inventories we acquired as part of the acquisition of
       certain assets of Synergy;

• an increase in Selling, general, and administrative expenses ("SG&A") of

$81 million, primarily attributable to: (i) higher selling, advertising

and promotion expenses, (ii) the impact of the acquisition of certain

assets of Synergy, (iii) costs in 2019 attributable to our IT

infrastructure improvement projects and (iv) the charge associated with

the termination of a co-promotional agreement with US WorldMeds, LLC. The

increase was partially offset by: (i) the favorable effect of foreign

currencies, (ii) lower costs related to professional services and (iii)

the impact of divestitures and discontinuations;

• an increase in R&D of $58 million primarily attributable to a number of

projects within our Bausch + Lomb and GI businesses;

• a decrease in Amortization of intangible assets of $747 million, primarily

due to: (i) the impact of the change in the estimated useful life of the

Xifaxan® related intangible assets made in September 2018 to reflect

management's changes in assumptions, (ii) fully amortized intangible

assets no longer being amortized in 2019 and (iii) lower amortization as a

       result of impairments to intangible assets in prior periods;


•      a decrease in Goodwill impairments of $2,322 million, as a result of
       impairments in 2018 to the goodwill of our: (i) Salix reporting unit upon

adopting the new guidance for goodwill impairment accounting at January 1,

2018, (ii) Ortho Dermatologics reporting unit due to unforeseen changes in

business dynamics during the three months ended March 31, 2018 and (iii)

Dentistry reporting unit as a result of revised forecasts due to changing

       market conditions during the three months ended December 31, 2018;



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• a decrease in Asset impairments of $493 million, primarily related to

specific impairments in 2018 as a result of: (i) decreases in forecasted

sales for the Uceris® Tablet product due to generic competition and (ii)

decreases in forecasted sales for the Arestin® product due to changing

market conditions;

• an increase in Other expense (income), net of $1,434 million, primarily

attributable to: (i) an increase in net charges to Litigation and other

matters primarily related to the settlement of a legacy U.S. securities

class action matter (which is subject to final court approval) in 2019, to

which the Company and the other settling defendants admitted no liability

as to the claims against it and deny all allegations of wrongdoing and

(ii) Acquired in-process research and development costs ("IPR&D") incurred

during 2019 associated with the upfront payments to enter into certain

       exclusive licensing agreements. These increases in other expenses were
       partially offset by the expected receipt for the achievement of a
       milestone related to a certain product.


Operating loss for 2019 and 2018 was $203 million and $2,384 million,
respectively, and includes non-cash charges for Depreciation and amortization of
intangible assets of $2,075 million and $2,819 million, Goodwill impairments of
$0 and $2,322 million, Asset impairments of $75 million and $568 million and
Share-based compensation of $102 million and $87 million, respectively.
Our Loss before benefit from income taxes for 2019 and 2018 was $1,837 million
and $4,154 million, respectively, an increase in our results before benefit from
income taxes of $2,317 million. The decrease in our Loss before benefit from
income taxes is primarily attributable to: (i) the increase in our operating
results of $2,181 million previously discussed, (ii) the decrease in the Loss on
extinguishment of debt of $77 million and (iii) a decrease in Interest expense
of $73 million as a result of lower principal amounts of outstanding debt for
most of 2019, partially offset by the effect of higher interest rates during
2019. The decrease in our Loss before benefit from income taxes was partially
offset by an unfavorable net change in Foreign exchange and other of $15
million.
Net loss attributable to Bausch Health Companies Inc. for 2019 and 2018 was
$1,788 million and $4,148 million, respectively, an increase in our results of
$2,360 million. The increase in our results was primarily due to the decrease in
Loss before benefit from income taxes of $2,317 million, as previously
discussed, and the increase in the Benefit from income taxes of $44 million.
Summary of 2018 Compared with 2017
Revenues for 2018 and 2017 were $8,380 million and $8,724 million, respectively,
a decrease of $344 million, or 4%. The decrease was primarily driven by: (i) the
impact of 2017 divestitures and discontinuations and (ii) lower volumes
primarily as a result of the loss of exclusivity for a number of products in our
Diversified Products and Ortho Dermatologics segments which were partially
offset by higher volumes in our Bausch + Lomb/International segment. These
decreases in Revenue were partially offset by: (i) higher gross selling prices,
(ii) lower sales deductions and (iii) the favorable effect of foreign
currencies, primarily in Europe and Asia.
Operating loss for 2018 was $2,384 million, as compared to operating income for
2017 of $102 million, a decrease of $2,486 million. Our operating loss for 2018
compared to our operating income for 2017 reflects, among other factors:
•      a decrease in contribution (product sales revenue less cost of goods sold,

exclusive of amortization and impairments of intangible assets) of $127

million. The decrease was primarily driven by the impact of 2017

divestitures and discontinuations, partially offset by: (i) higher gross

       selling prices, (ii) lower sales deductions, (iii) lower third-party
       royalty costs and (iv) the favorable effect of foreign currencies;


•      a decrease in SG&A of $109 million, primarily attributable to: (i) the

impact of 2017 divestitures and discontinuations, (ii) a decrease in legal

expenses as we resolved certain legacy legal issues and (iii) a decrease

in bad debt expense. The decrease was partially offset by: (i) higher

       advertising and promotion expenses, (ii) higher compensation costs and
       (iii) the unfavorable impact of the effect of foreign currencies;

• an increase in R&D of $52 million;

• a decrease in Amortization of intangible assets of $46 million, primarily

attributable to: (i) the impact of the change in the estimated useful life

of the Xifaxan®-related intangible assets made in September 2018 to

reflect management's changes in assumptions, (ii) lower amortization as a

result of impairments to intangible assets and divestitures and (iii)

discontinuances of product lines during 2017 as the Company focuses on its

core assets. These decreases were partially offset by the impact of

changes in estimates made in 2017 to reduce the remaining useful lives of

certain products and the Salix brand name to reflect management's changes

       in assumptions;


•      an increase in Goodwill impairments of $2,010 million. In 2018, we

recognized Goodwill impairments of $2,322 million in connection with: (i)

impairment to the goodwill of our Salix reporting unit recognized upon

adopting new accounting guidance at January 1, 2018, (ii) impairment to

the goodwill of the Ortho Dermatologics reporting unit due to unforeseen

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changes in business dynamics and (iii) impairment to the goodwill of the
Dentistry reporting unit as a result of revised forecasts due to changing market
conditions during the three months ended December 31, 2018. In 2017, we
recognized Goodwill impairments of $312 million in connection with a change in
reporting unit during the three months ended September 30, 2017;
•      a decrease in Asset impairments of $146 million, as a result of Asset

impairments of $714 million, recognized in 2017, primarily related to the

Sprout and Obagi businesses being classified as held for sale, compared to

       Asset impairments of $568 million, in 2018, that were primarily due to
       decreases in forecasted sales for the Uceris® Tablet product and other
       product lines due to generic competition;


•      an increase in Acquisition-related contingent consideration of $280

million as a result of a fair value adjustments in 2017 which reflected a

decrease in forecasted sales for specific products, including Addyi®;

•      a decrease in the net charges to Litigation and other matters of $253
       million. Litigation and other matters are included in Other expense

(income), net, and are primarily associated with estimated settlements of

       certain legacy matters; and


•      a decrease in net gains on sales of businesses and other assets of $586
       million.  In order to improve our capital structure and simplify our
       operations, during 2017, we divested certain businesses and assets not
       aligned with our core business objectives. Included in Other expense

(income), net is the net loss on sales of businesses and other assets of

$6 million for 2018 as compared to the net gain on sales of businesses and

other assets $580 million in 2017.

Operating loss for 2018 of $2,384 million and Operating income for 2017 of $102
million includes non-cash charges for Depreciation and amortization of
intangible assets of $2,819 million and $2,858 million, Goodwill impairments of
$2,322 million and $312 million, Asset impairments of $568 million and $714
million and Share-based compensation of $87 million and $87 million,
respectively.
Our Loss before benefit from income taxes for 2018 and 2017 was $4,154 million
and $1,741 million, respectively, an increase of $2,413 million. The increase in
our Loss before benefit from income taxes is primarily attributable to: (i) the
decrease in our operating results of $2,486 million, as previously discussed and
(ii) an unfavorable net change in Foreign exchange and other of $84 million.
These changes in Loss before benefit from income taxes were partially offset by:
(i) a decrease in Interest expense of $155 million as a result of lower
principal amounts of outstanding debt, partially offset by the effect of higher
interest rates during 2018 and (ii) the decrease in the Loss on extinguishment
of debt of $3 million.
Net loss attributable to Bausch Health Companies Inc. for 2018 was $4,148
million as compared to Net income attributable to Bausch Health Companies Inc.
for 2017 of $2,404 million, a decrease of $6,552 million. The decrease in our
results was primarily due to: (i) the decrease in the Benefit from income taxes
of $4,135 million which in 2017 included non-cash income tax benefits related to
the Company's internal corporate restructuring and the accounting for the Tax
Cuts and Jobs Act (the "Tax Act") and (ii) the increase in Loss before benefit
from income taxes of $2,413 million previously described.

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RESULTS OF OPERATIONS
Our results for the years 2019, 2018 and 2017 were as follows:
                                                     Years Ended December 31,                     Change
(in millions)                                      2019         2018        2017       2018 to 2019     2017 to 2018
Revenues
Product sales                                   $  8,489     $  8,271     $ 8,595     $        218     $       (324 )
Other revenues                                       112          109         129                3              (20 )
                                                   8,601        8,380       8,724              221             (344 )
Expenses
Cost of goods sold (excluding amortization and
impairments of intangible assets)                  2,297        2,309       2,506              (12 )           (197 )
Cost of other revenues                                53           42          42               11                -
Selling, general and administrative                2,554        2,473       2,582               81             (109 )
Research and development                             471          413         361               58               52
Amortization of intangible assets                  1,897        2,644       2,690             (747 )            (46 )
Goodwill impairments                                   -        2,322         312           (2,322 )          2,010
Asset impairments                                     75          568         714             (493 )           (146 )
Restructuring and integration costs                   31           22          52                9              (30 )
Acquisition-related contingent consideration          12           (9 )      (289 )             21              280
Other expense (income), net                        1,414          (20 )      (348 )          1,434              328
                                                   8,804       10,764       8,622           (1,960 )          2,142
Operating (loss) income                             (203 )     (2,384 )       102            2,181           (2,486 )
Interest income                                       12           11          12                1               (1 )
Interest expense                                  (1,612 )     (1,685 )    (1,840 )             73              155
Loss on extinguishment of debt                       (42 )       (119 )      (122 )             77                3
Foreign exchange and other                             8           23         107              (15 )            (84 )
Loss before benefit from income taxes             (1,837 )     (4,154 )    (1,741 )          2,317           (2,413 )
Benefit from income taxes                             54           10       4,145               44           (4,135 )
Net (loss) income                                 (1,783 )     (4,144 )     2,404            2,361           (6,548 )
Net income attributable to noncontrolling
interest                                              (5 )         (4 )         -               (1 )             (4 )
Net (loss) income attributable to Bausch Health
Companies Inc.                                  $ (1,788 )   $ (4,148 )   $ 

2,404 $ 2,360 $ (6,552 )

A detailed discussion of the year-over-year changes of the Company's 2018
results compared with that of 2017 can be found under "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in our Annual
Report on Form 10-K for the year ended December 31, 2018 filed on February 20,
2019.

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2019 Compared with 2018
Revenues
Our revenues are primarily generated from product sales, primarily in the
therapeutic areas of eye-health, GI and dermatology that consist of: (i) branded
pharmaceuticals, (ii) generic and branded generic pharmaceuticals, (iii) OTC
products and (iv) medical devices (contact lenses, intraocular lenses,
ophthalmic surgical equipment and aesthetics devices). Other revenues include
alliance and service revenue from the licensing and co-promotion of products and
contract service revenue primarily in the areas of dermatology and topical
medication. Contract service revenue is derived primarily from contract
manufacturing for third parties and is not material. See Note 23, "SEGMENT
INFORMATION" to our audited Consolidated Financial Statements for the
disaggregation of revenue which depicts how the nature, amount, timing and
uncertainty of revenue and cash flows are affected by the economic factors of
each category of customer contracts.
Our revenue was $8,601 million and $8,380 million for 2019 and 2018,
respectively, an increase of $221 million, or 3%. The increase was primarily
driven by: (i) higher gross selling prices of $213 million primarily in our
Salix and Bausch + Lomb/International segments, (ii) higher volumes of $130
million primarily in our Bausch + Lomb/International and Salix segments,
partially offset by lower volumes in our Ortho Dermatologics and Diversified
Products segments, (iii) the incremental product sales of our Trulance® product,
which we added to our portfolio in March 2019 as part of the acquisition of
certain assets of Synergy, of $55 million and (iv) an increase in other revenues
of $3 million. The increases in our revenues were partially offset by: (i) the
unfavorable effect of foreign currencies, primarily in Europe, Asia and Latin
America, of $112 million, (ii) the impact of divestitures and discontinuations
of $54 million and (iii) higher sales deductions of $14 million primarily in our
Diversified Products segment.
Our segment revenues and segment profits are discussed in detail in the
subsequent section titled "Reportable Segment Revenues and Profits".
Cash Discounts and Allowances, Chargebacks and Distribution Fees
As is customary in the pharmaceutical industry, gross product sales are subject
to a variety of deductions in arriving at net product sales. Provisions for
these deductions are recognized concurrently with the recognition of gross
product sales. These provisions include cash discounts and allowances,
chargebacks, and distribution fees, which are paid or credited to direct
customers, as well as rebates and returns, which can be paid or credited to
direct and indirect customers.  Price appreciation credits are generated when we
increase a product's wholesaler acquisition cost ("WAC") under our contracts
with certain wholesalers. Under such contracts, we are entitled to credits from
such wholesalers for the impact of that WAC increase on inventory on hand at the
wholesalers. In wholesaler contracts such credits are offset against the total
distribution service fees we pay on all of our products to each such wholesaler.
In addition, some payor contracts require discounting if a price increase or
series of price increases in a contract period exceeds a negotiated threshold.
Provision balances relating to amounts payable to direct customers are netted
against trade receivables and balances relating to indirect customers are
included in accrued liabilities.
We actively manage these offerings, focusing on the incremental costs of our
patient assistance programs, the level of discounting to non-retail accounts and
identifying opportunities to minimize product returns. We also concentrate on
managing our relationships with our payors and wholesalers, reviewing the ranges
of our offerings and being disciplined as to the amount and type of incentives
we negotiate. Provisions recorded to reduce gross product sales to net product
sales and revenues for 2019 and 2018 were as follows:
                                                             Years Ended December 31,
                                                           2019                    2018
(in millions)                                        Amount       Pct.       Amount       Pct.
Gross product sales                                $  13,776     100.0 %   $  14,158     100.0 %
Provisions to reduce gross product sales to net
product sales
Discounts and allowances                                 776       5.6 %         865       6.1 %
Returns                                                  113       0.8 %         293       2.1 %
Rebates                                                2,265      16.4 %       2,551      18.0 %
Chargebacks                                            1,938      14.1 %       1,966      13.9 %
Distribution service fees                                195       1.5 %         212       1.5 %
                                                       5,287      38.4 %       5,887      41.6 %
Net product sales                                  $   8,489      61.6 %   $   8,271      58.4 %



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Cash discounts and allowances, returns, rebates, chargebacks and distribution
fees as a percentage of gross product sales were 38.4% and 41.6% in 2019 and
2018, respectively. Changes in cash discounts and allowances, returns, rebates,
chargebacks and distribution fees as a percentage of gross product sales were
primarily driven by:
•       discounts and allowances as a percentage of gross product sales was lower

primarily due to lower gross product sales of higher discounted generics,

such as Glumetza® authorized generic ("AG"), Xenazine® AG, Targretin® AG

and Benzamycin® AG. The lower discounts and allowances as a percentage of

gross product sales was partially offset by the impact of: (i) the

release of certain generics such as Elidel® AG (December 2018), Uceris®

AG (July 2018) and Apriso® AG (December 2019) and (ii) higher sales of

Xifaxan®;

• returns as a percentage of gross product sales was lower primarily due

        to: (i) better inventory practices and disciplines and (ii) lower gross
        product sales of Isuprel® and Mephyton® as a result of generic
        competition. Additionally, over the last several years the Company

increased its focus on maximizing operational efficiencies and reducing

product returns. The Company continually takes actions to address product

returns including but not limited to: (i) monitoring and reducing

customer inventory levels, (ii) instituting disciplined pricing policies

and (iii) improving contracting. These actions resulted in improved sales

return experience related to current branded products and previously

        genericized products. As a result, for the year 2019 as compared to 2018,
        the provision for sales returns improved by a net of $180 million. During
        the three months ended September 30, 2019 and 2018 we recorded a

reduction in variable consideration for sales returns of approximately

$80 million and $30 million, respectively, related to past sales. The
        Company's actual return rate experience in the current period was lower

than its historical rate experience primarily in its: (i) GI business

primarily related to Glumetza® SLX and Xifaxan®, (ii) neurology business,

primarily related to Wellbutrin® and Nitropress® and (iii) generics

        business, primarily related to Zegerid® AG and Glumetza® AG. The lower
        returns as a percentage of gross product sales was partially offset by

the impact of higher return experience for a limited number of products,

primarily Mysoline® and Solodyn® AG. See Note 2, "SIGNIFICANT ACCOUNTING

POLICIES" to our audited Consolidated Financial Statements regarding

further details related to product sales provisions;

• rebates as a percentage of gross product sales were lower primarily due

to decreases in gross product sales of certain products which carry

higher rebate rates, such as Solodyn®, Elidel®, Jublia® and Retin-A

Micro® 0.06%. The decreases in gross product sales for these products

were due in part to generic competition and the release of certain

branded generics. The lower rebates as a percentage of gross product

sales were partially offset by the impact of: (i) increased gross product

        sales of products that carry higher contractual rebates and co-pay
        assistance programs, including the impact of incremental rebates from
        contractual price increase limitations for promoted products, such as

Xifaxan® and Apriso®, (ii) sales of our Trulance® product, which we added

to our portfolio in March 2019 as part of the acquisition of certain

assets of Synergy and (iii) rebates associated with our Duobrii® product

which we launched in June 2019;

• chargebacks as a percentage of gross product sales were higher primarily

due to the impact of: (i) higher gross product sales of Xifaxan®,

Glumetza® SLX and Syprine® AG, (ii) higher chargeback rates in 2019 as

compared to 2018 for certain products such as Glumetza® AG and (iii) the

release of certain authorized generics, such as Elidel® AG (December

2018) and Uceris® AG (July 2018). The higher chargebacks as a percentage

of gross product sales were partially offset by the impact of lower gross

product sales of certain generic products, such as Zegerid® AG and

Xenazine® AG and certain branded products, such as Isuprel® and Nifediac;

        and


•       distribution service fees as a percentage of gross product sales were
        unchanged as the impact of lower gross product sales of Solodyn®,
        Elidel®, Targretin® and Cuprimine® were offset by the impact of: (i)
        higher sales of Xifaxan® and Apriso® and other branded products, (ii)
        sales of our Trulance® product, which we added to our portfolio in March
        2019 as part of the acquisition of certain assets of Synergy and (iii)

distribution service fees associated with our Duobrii® product launched

in June 2019. Price appreciation credits are offset against the

distribution service fees we pay wholesalers and were $11 million and $31

million for 2019 and 2018, respectively.

Operating Expenses
Cost of Goods Sold (exclusive of amortization and impairments of intangible
assets)
Cost of goods sold primarily includes: manufacturing and packaging; the cost of
products we purchase from third parties; royalty payments we make to third
parties; depreciation of manufacturing facilities and equipment; and lower of
cost or market adjustments to inventories. Cost of goods sold excludes the
amortization and impairments of intangible assets.
Cost of goods sold was $2,297 million and $2,309 million for 2019 and 2018,
respectively, a decrease of $12 million, or 1%. The decrease was primarily
driven by: (i) the favorable impact of divestitures and discontinuations, (ii)
better inventory management and (iii) the favorable impact of foreign
currencies, partially offset by: (i) the net increase in volumes, (ii) the
incremental costs of sales of our Trulance® product, which we added to our
portfolio in March 2019 as part of the acquisition of

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certain assets of Synergy and (iii) the amortization of the inventory fair value
step-up recorded in acquisition accounting related to the inventories we
acquired as part of the acquisition of certain assets of Synergy.
Cost of goods sold as a percentage of Product sales revenue was 27.1% and 27.9%
for 2019 and 2018, respectively, a decrease of 0.8 percentage points. Costs of
goods sold as a percentage of Product sales revenue was favorably impacted as a
result of: (i) higher gross selling prices, (ii) better inventory management and
(iii) the impact of divestitures and discontinuations, which generally had lower
gross margins than the balance of our product portfolio. These factors were
partially offset by: (i) product mix within our Ortho Dermatologics and
Neurology and Other business units, (ii) the incremental costs of sales of our
Trulance® product, which we added to our portfolio in March 2019 as part of the
acquisition of certain assets of Synergy and (iii) the amortization of
acquisition accounting adjustments related to the inventories we acquired as
part of the acquisition of certain assets of Synergy.
Our segment revenues and segment profits are discussed in detail in the
subsequent section titled "Reportable Segment Revenues and Profits".
Selling, General and Administrative Expenses
SG&A expenses primarily include: employee compensation associated with sales and
marketing, finance, legal, information technology, human resources and other
administrative functions; certain outside legal fees and consultancy costs;
product promotion expenses; overhead and occupancy costs; depreciation of
corporate facilities and equipment; and other general and administrative costs.
SG&A was $2,554 million and $2,473 million for 2019 and 2018, respectively, an
increase of $81 million, or 3%. The increase was primarily driven by: (i) higher
selling, advertising and promotion expenses, (ii) the impact of the acquisition
of certain assets of Synergy, (iii) costs in 2019 attributable to our IT
infrastructure improvement projects and (iv) the charge associated with the
termination of a co-promotional agreement with US WorldMeds, LLC. The increase
was partially offset by: (i) the favorable impact of foreign currencies, (ii)
lower costs related to professional services and (iii) the impact of
divestitures and discontinuations;
Research and Development Expenses
Included in Research and development are costs related to our product
development and quality assurance programs. Expenses related to product
development include: employee compensation costs; overhead and occupancy costs;
depreciation of research and development facilities and equipment; clinical
trial costs; clinical manufacturing and scale-up costs; and other third-party
development costs. Quality assurance are the costs incurred to meet evolving
customer and regulatory standards and include: employee compensation costs;
overhead and occupancy costs; amortization of software; and other third-party
costs.
R&D expenses were $471 million and $413 million for 2019 and 2018, respectively,
an increase of $58 million, or 14%, primarily attributable to a number of
projects within our Bausch + Lomb and GI businesses.
Amortization of Intangible Assets
Intangible assets with finite lives are amortized using the straight-line method
over their estimated useful lives, generally 2 to 20 years.
Amortization of intangible assets was $1,897 million and $2,644 million for 2019
and 2018, respectively, a decrease of $747 million, or 28%. The decrease was
primarily due to: (i) the impact of $420 million related to the change in the
estimated useful life of the Xifaxan® related intangible assets made in
September 2018 to reflect management's changes in assumptions, (ii) fully
amortized intangible assets no longer being amortized in 2019 and (iii) lower
amortization as a result of impairments to intangible assets. Management
continually assesses the useful lives related to the Company's long-lived assets
to reflect the most current assumptions.
See Note 9, "INTANGIBLE ASSETS AND GOODWILL" to our audited Consolidated
Financial Statements for further details related to our intangible assets and
the change in the estimated useful life of the Xifaxan® related intangible
assets.
Goodwill Impairments
Goodwill is not amortized but is tested for impairment at least annually at the
reporting unit level. A reporting unit is the same as, or one level below, an
operating segment. The fair value of a reporting unit refers to the price that
would be received to sell the unit as a whole in an orderly transaction between
market participants. The Company estimates the fair values of all reporting
units using a discounted cash flow model which utilizes Level 3 unobservable
inputs.
Goodwill impairments were $0 and $2,322 million for 2019 and 2018, respectively.
2019 Annual Goodwill Impairment Test

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The Company conducted its annual goodwill impairment test as of October 1, 2019
by first assessing qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying
amount. Where the qualitative assessment suggested that it was more likely than
not that the fair value of a reporting unit was less than its carrying amount, a
quantitative fair value test was performed for that reporting unit. In each
quantitative fair value test performed, the fair value was greater than the
carrying value of the reporting unit. As a result, there was no impairment to
the goodwill of any reporting unit. If market conditions deteriorate, or if the
Company is unable to execute its strategies, it may be necessary to record
impairment charges in the future. Specifically, the Company continues to assess
the performance of the Ortho Dermatologics reporting unit and the Neuro and
Other reporting unit as compared to their respective projections and will
perform qualitative interim assessments of the carrying value and fair value on
a quarterly basis to determine if impairment testing of goodwill will be
warranted. The Company performed quantitative fair value tests for the Ortho
Dermatologics reporting unit and the Neuro and Other reporting unit as of
October 1, 2019, utilizing long-term growth rates of 2.0% and 1.5%, and discount
rates of 9.8% and 9.0%, respectively, in estimation of the fair value of these
reporting units.
March 31, 2018
In January 2017, the Financial Accounting Standards Board issued guidance which
simplifies the subsequent measurement of goodwill by eliminating "Step 2" from
the goodwill impairment test. Instead, goodwill impairment is measured as the
amount by which a reporting unit's carrying value exceeds its fair value. The
Company elected to adopt this guidance effective January 1, 2018.
Upon adopting the new guidance, the Company tested goodwill for impairment and
determined that the carrying value of the Salix reporting unit exceeded its fair
value. As a result of the adoption of new accounting guidance, the Company
recognized a goodwill impairment of $1,970 million associated with the Salix
reporting unit.
As of October 1, 2017, the date of the 2017 annual goodwill impairment test, the
fair value of the Ortho Dermatologics reporting unit exceeded its carrying
value. However, at January 1, 2018, unforeseen changes in the business dynamics
of the Ortho Dermatologics reporting unit, such as: (i) changes in the
dermatology sector, (ii) increased pricing pressures from third-party payors,
(iii) additional risks to the exclusivity of certain products and (iv) an
expected longer launch cycle for a new product, were factors that negatively
impacted the reporting unit's operating results beyond management's expectations
as of October 1, 2017, when the Company performed its 2017 annual goodwill
impairment test. In response to these adverse business indicators, as of January
1, 2018, the Company reduced its near and long term financial projections for
the Ortho Dermatologics reporting unit. As a result of the reductions in the
near and long term financial projections, the carrying value of the Ortho
Dermatologics reporting unit exceeded its fair value at January 1, 2018 and the
Company recognized a goodwill impairment of $243 million.
2018 Annual Goodwill Impairment Test
The Company conducted its annual goodwill impairment test as of October 1, 2018
and determined that the carrying value of the Dentistry reporting unit exceeded
its fair value and, as a result, the Company recognized a goodwill impairment of
$109 million for the Dentistry reporting unit, representing the full amount of
goodwill for the reporting unit. Changing market conditions such as: (i) an
increasing competitive environment and (ii) increasing pricing pressures
negatively impacted the reporting unit's operating results. The Company
continues to monitor these changing market and business conditions.
See Note 9, "INTANGIBLE ASSETS AND GOODWILL" to our audited Consolidated
Financial Statements for further details related to our goodwill impairment
analysis.
Asset Impairments
Long-lived assets with finite lives are tested for impairment whenever events or
changes in circumstances indicate that the carrying value of an asset may not be
recoverable. The Company continues to monitor the recoverability of its
finite-lived intangible assets and tests the intangible assets for impairment if
indicators of impairment are present.
Asset impairments were $75 million and $568 million for 2019 and 2018,
respectively, a decrease of $493 million.
Asset impairments for 2019 included impairments of: (i) $58 million reflecting
decreases in forecasted sales of certain product lines due to generic
competition and other factors, (ii) $8 million related to assets being
classified as held for sale, (iii) $5 million related to certain product/patent
assets associated with the discontinuance of specific product lines not aligned
with the focus of the Company's core businesses and (iv) $4 million related to
Acquired IPR&D not in service.
Asset impairments in 2018 included impairments of: (i) $348 million reflecting
decreases in forecasted sales for the Uceris® Tablet product in the Company's
Salix reporting unit and other product lines due to generic competition, (ii)
$132 million reflecting decreases in forecasted sales for the Arestin® product
in the Company's Dentistry reporting unit and other product lines due to
changing market conditions, (iii) $55 million related to certain product/patent
assets associated with the discontinuance of specific

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product lines not aligned with the focus of the Company's core businesses, (iv)
$28 million to Acquired IPR&D not in service related to a certain product and
(v) $5 million related to assets being classified as held for sale.
See Note 9, "INTANGIBLE ASSETS AND GOODWILL" to our audited Consolidated
Financial Statements regarding further details related to our intangible assets.
Restructuring and Integration Costs
Restructuring and integration costs primarily consist of costs associated with
the implementation of cost savings programs to streamline operations and
eliminate redundant processes and expenses. The expenses associated with the
implementation of these cost savings programs include expenses associated with:
(i) reducing headcount, (ii) eliminating real estate costs associated with
unused or under-utilized facilities and (iii) implementing contribution margin
improvement and other cost reduction initiatives.
Restructuring and integration costs were $31 million and $22 million for 2019
and 2018, respectively, an increase of $9 million. During 2019, these costs
included: (i) $11 million of severance costs and other costs associated with the
acquisition of certain assets of Synergy, (ii) $11 million of facility closure
costs and (iii) $9 million of other severance costs. During 2018 these costs
included: (i) $11 million of severance costs, (ii) $10 million of facility
closure costs and (iii) $1 million of other costs. The Company continues to
evaluate opportunities to streamline its operations and identify additional cost
savings globally. Although a specific plan does not exist at this time, the
Company may identify and take additional exit and cost-rationalization
restructuring actions in the future, the costs of which could be material.
See Note 5, "RESTRUCTURING AND INTEGRATION COSTS" to our audited Consolidated
Financial Statements for further details regarding these actions.
Acquisition-Related Contingent Consideration
Acquisition-related contingent consideration primarily consists of potential
milestone payments and royalty obligations associated with businesses and assets
we acquired in the past. These obligations are recorded in the Consolidated
Balance Sheets at their estimated fair values at the acquisition date, in
accordance with the acquisition method of accounting. The fair value of the
acquisition-related contingent consideration is remeasured each reporting
period, with changes in fair value recorded in the Consolidated Statements of
Operations. The fair value measurement is based on significant inputs not
observable in the market and thus represents a Level 3 measurement as defined in
fair value measurement accounting.
Acquisition-related contingent consideration was a loss of $12 million in 2019
and included accretion for the time value of money of $22 million, partially
offset by net fair value adjustments due to changes in estimates of expected
future royalty payments of $10 million, which included net fair value
adjustments to expected future royalty payments.
Acquisition-related contingent consideration was a net gain of $9 million in
2018 and included net fair value adjustments due to changes in estimates of
expected future royalty payments of $33 million, which included net fair value
adjustments to expected future royalty payments, partially offset by accretion
for the time value of money of $24 million.
See Note 6, "FAIR VALUE MEASUREMENTS" to our audited Consolidated Financial
Statements for further details.
Other expense (income), net
Other expense (income), net for 2019 and 2018 consists of the following:
(in millions)                                          2019       2018
Litigation and other matters                         $ 1,401     $ (27 )
Net (gain) loss on sales of assets                       (31 )       6

Acquired in-process research and development costs 41 1 Acquisition-related costs

                                  8         1
Other, net                                                (5 )      (1 )
Other expense (income), net                          $ 1,414     $ (20 )


In 2019, Litigation and other matters includes the settlement of a legacy U.S.
securities class action matter (which is subject to final court approval)
discussed below. In 2018, Litigation and other matters includes a favorable
adjustment of $40 million related to the Salix legacy litigation matter.
In December 2019, we announced that we had agreed to resolve the U.S. Securities
Litigation for $1,210 million, subject to final court approval. Once approved by
the court, the settlement will resolve and discharge all claims against the
Company in this class action. As part of the settlement, the Company and the
other settling defendants admitted no liability as to the claims against

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it and deny all allegations of wrongdoing. This settlement, once approved by the
court, will resolve the most significant of the Company's remaining legacy legal
matters and eliminate a material uncertainty.
In addition to the anticipated resolution of the U.S. Securities Litigation,
through the date of this filing, we achieved dismissals and other positive
outcomes in a number of litigations, disputes and investigations, as we continue
to actively address others. These matters and other significant matters are
discussed in further detail in Note 21, "LEGAL PROCEEDINGS" to our audited
Consolidated Financial Statements.
In 2019, Net (gain) loss on sales of assets includes $20 million related to the
expected receipt for the achievement of a milestone related to a certain
product. In 2019, Acquired in-process research and development costs includes
$38 million of in-process research and development costs associated with upfront
payments to enter into certain licensing agreements.
Non-Operating Income and Expense
Interest Expense
Interest expense primarily consists of interest payments due and amortization of
debt discounts and deferred financing costs on indebtedness under our credit
facilities and notes. Interest expense was $1,612 million and $1,685 million and
included non-cash amortization and write-offs of debt discounts and deferred
financing costs of $63 million and $79 million for 2019 and 2018, respectively.
The decrease in interest expense is primarily due to lower principal amounts of
outstanding long-term debt throughout most of 2019, partially offset by the
effect of higher interest rates throughout most of 2019. The weighted average
stated rate of interest as of December 31, 2019 and 2018 was 6.21% and 6.23%,
respectively.
See Note 11, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial
Statements for further details.
Loss on Extinguishment of Debt
Loss on extinguishment of debt represents the differences between the amounts
paid to settle extinguished debts and the carrying value of the related
extinguished debt. Loss on extinguishment of debt was $42 million and $119
million for 2019 and 2018, respectively, associated with a series of
transactions which allowed us to refinance and extend the maturities of portions
of our debt arrangements.
See Note 11, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial
Statements for further details.
Foreign Exchange and Other
Foreign exchange and other was a net gain of $8 million and $23 million for 2019
and 2018, respectively, an unfavorable net change of $15 million. Foreign
exchange gains/losses include translation gains/losses on intercompany loans and
third-party liabilities, primarily denominated in euros.
Income Taxes
Income taxes are accounted for under the liability method. Deferred tax assets
and liabilities are recognized for the temporary differences between the
financial statement and income tax bases of assets and liabilities, and for
operating losses and tax credit carryforwards. Deferred tax assets for outside
basis differences in investments in subsidiaries are only recognized if the
difference will be realized in the foreseeable future. Benefit from income taxes
was $54 million and $10 million in 2019 and 2018, respectively, an increase in
the Benefit from income taxes of $44 million.
Our consolidated foreign rate differential reflects the net total tax cost or
benefit on income earned or losses incurred in jurisdictions outside of Canada
as compared to the net total tax cost or benefit of such income (on a
jurisdictional basis) at the Canadian statutory rate of 26.9%. Tax costs below
the Canadian statutory rate generate a beneficial foreign rate differential as
do tax benefits generated in jurisdictions where the statutory tax rate exceeds
the Canadian statutory tax rate. The net total foreign rate differentials
generated in each jurisdiction in which we operate is not expected to bear a
direct relationship to the net total amount of foreign income (or loss) earned
outside of Canada.
In 2019, our effective tax rate differed from the Canadian statutory tax rate of
26.9% primarily due to: (i) the recording of valuation allowance on entities for
which no tax benefit of losses is expected, (ii) the tax benefit generated from
our annualized mix of earnings by jurisdiction and (iii) the discrete treatment
of certain tax matters, primarily related to: (a) the net income tax charge
related to uncertain tax positions and (b) the adjustments for book to income
tax return provisions.
In 2018, our effective tax rate differed from the Canadian statutory tax rate of
26.9% primarily due to: (i) the recording of valuation allowance on entities for
which no tax benefit of losses is expected, (ii) a charge related to the
non-deductibility of goodwill impairments, (iii) a benefit related to internal
integrations and restructurings and (iv) a benefit generated from our annualized
mix of earnings by jurisdiction.

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We record a valuation allowance against our deferred tax assets to reduce their
net carrying value to an amount that we believe is more likely than not to be
realized. In determining our deferred tax asset valuation allowance, we estimate
our ability to utilize future sources of income to realize the benefits of our
temporary income tax differences including: (i) NOL carryforwards in each
jurisdiction, primarily in Canada, the U.S. and Ireland, (ii) research and
development tax credit carryforwards, (iii) scientific research and experimental
development pool carryforwards and (iv) investment tax credit carryforwards.
When we establish/increase or reduce/decrease the valuation allowance, the
provision for income taxes will increase or decrease, respectively, in the
period such determination is made. Our valuation allowance against deferred tax
assets as of December 31, 2019 and 2018 was $2,831 million and $2,913 million,
respectively, a decrease of $82 million which was primarily driven by NOLs
written-off during 2019 for entities which were liquidated.
See Note 18, "INCOME TAXES" to our audited Consolidated Financial Statements for
further details regarding income taxes.
Reportable Segment Revenues and Profits
Our portfolio of products falls into four operating and reportable segments: (i)
Bausch + Lomb/International, (ii) Salix, (iii) Ortho Dermatologics and (iv)
Diversified Products.
The following is a brief description of our segments:
•      The Bausch + Lomb/International segment consists of: (i) sales in the U.S.

of pharmaceutical products, OTC products and medical device products,

primarily comprised of Bausch + Lomb products, with a focus on the Vision

       Care, Surgical, Consumer and Ophthalmology Rx products and (ii) with the
       exception of sales of Solta products, sales in Canada, Europe, Asia,
       Australia, Latin America, Africa and the Middle East of branded
       pharmaceutical products, branded generic pharmaceutical products, OTC
       products, medical device products and Bausch + Lomb products.

• The Salix segment consists of sales in the U.S. of GI products.

•      The Ortho Dermatologics segment consists of: (i) sales in the U.S. of
       Ortho Dermatologics (dermatological) products and (ii) global sales of
       Solta medical aesthetic devices.


•      The Diversified Products segment consists of sales in the U.S. of: (i)
       pharmaceutical products in the areas of neurology and certain other

therapeutic classes, (ii) generic products and (iii) dentistry products.

Effective in the first quarter of 2019, one product historically included in the
reported results of the Ortho Dermatologics business unit in the Ortho
Dermatologics segment is now included in the reported results of the Generics
business unit in the Diversified Products segment and another product
historically included in the reported results of the Ortho Dermatologics
business unit in the Ortho Dermatologics segment is now included in the reported
results of the Dentistry business unit in the Diversified Products segment as
management believes the products better align with the new respective business
units. These changes in product alignment are not material. Prior period
presentations of business unit and segment revenues and profits have been
conformed to current segment and business unit reporting structures.
Segment profit is based on operating income after the elimination of
intercompany transactions. Certain costs, such as Amortization of intangible
assets, Asset impairments, In-process research and development costs,
Restructuring and integration costs, Acquisition-related contingent
consideration costs and Other expense (income), net, are not included in the
measure of segment profit, as management excludes these items in assessing
segment financial performance. See Note 23, "SEGMENT INFORMATION" to our audited
Consolidated Financial Statements for a reconciliation of segment profit to Loss
before benefit from income taxes.

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The following table presents segment revenues, segment revenues as a percentage
of total revenues and the year over year changes in segment revenues for 2019
and 2018. The following table also presents segment profits, segment profits as
a percentage of segment revenues and the year over year changes in segment
profits for 2019 and 2018.
                                                 Years Ended December 31,              Change
                                                 2019                2018           2018 to 2019
(in millions)                               Amount     Pct.     Amount    Pct.     Amount     Pct.
Segment Revenue
Bausch + Lomb/International                $  4,739     55 %   $ 4,664     56 %   $   75       2  %
Salix                                         2,022     23 %     1,749     21 %      273      16  %
Ortho Dermatologics                             565      7 %       617      7 %      (52 )    (8 )%
Diversified Products                          1,275     15 %     1,350     16 %      (75 )    (6 )%
Total revenues                             $  8,601    100 %   $ 8,380    100 %   $  221       3  %

Segment Profits / Segment Profit Margins
Bausch + Lomb/International                $  1,332     28 %   $ 1,330     29 %   $    2       -  %
Salix                                         1,349     67 %     1,149     66 %      200      17  %
Ortho Dermatologics                             222     39 %       257     42 %      (35 )   (14 )%
Diversified Products                            932     73 %     1,012     75 %      (80 )    (8 )%
Total segment profit                       $  3,835     45 %   $ 3,748     45 %   $   87       2  %


Organic Revenues and Organic Growth Rates (non-GAAP)
Organic growth, a non-GAAP metric, is defined as a change on a
period-over-period basis in revenues on a constant currency basis (if
applicable) excluding the impact of recent acquisitions, divestitures and
discontinuations. Organic revenue growth (non-GAAP) is growth in GAAP Revenue
(its most directly comparable GAAP financial measure), adjusted for certain
items, of businesses that have been owned for one or more years. Organic revenue
(non-GAAP) is impacted by changes in product volumes and price. The price
component is made up of two key drivers: (i) changes in product gross selling
price and (ii) changes in sales deductions. The Company uses organic revenue
(non-GAAP) and organic revenue growth (non-GAAP) to assess performance of its
reportable segments, and the Company in total, without the impact of foreign
currency exchange fluctuations and recent acquisitions, divestitures and product
discontinuations. The Company believes that such measures are useful to
investors as they provide a supplemental period-to-period comparison.
Organic revenue growth (non-GAAP) reflects adjustments for: (i) the impact of
period-over-period changes in foreign currency exchange rates on revenues and
(ii) the revenues associated with acquisitions, divestitures and
discontinuations of businesses divested and/or discontinued. These adjustments
are determined as follows:
Foreign currency exchange rates: Although changes in foreign currency exchange
rates are part of our business, they are not within management's control.
Changes in foreign currency exchange rates, however, can mask positive or
negative trends in the underlying business performance. The impact for changes
in foreign currency exchange rates is determined as the difference in the
current period reported revenues at their current period currency exchange rates
and the current period reported revenues revalued using the monthly average
currency exchange rates during the comparable prior period.
Acquisitions, divestitures and discontinuations: In order to present
period-over-period organic revenues (non-GAAP) on a comparable basis, revenues
associated with acquisitions, divestitures and discontinuations are adjusted to
include only revenues from those businesses and assets owned during both
periods. Accordingly, organic revenue growth (non-GAAP) excludes from the
current period, all revenues attributable to each acquisition for twelve months
subsequent to the day of acquisition, as there are no revenues from those
businesses and assets included in the comparable prior period. Organic revenue
growth (non-GAAP) excludes from the prior period (but not the current period),
all revenues attributable to each divestiture and discontinuance during the
twelve months prior to the day of divestiture or discontinuance, as there are no
revenues from those businesses and assets included in the comparable current
period.

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The following table presents a reconciliation of GAAP revenues to organic revenues (non-GAAP) and presents organic revenue (Non-GAAP) and the year over year changes in organic revenue (Non-GAAP) for 2019 and 2018 by segment.

                                          Year Ended December 31, 2019                                         Year ended December 31, 2018
                                                                                                                                                                      Change in
                         Revenue                                                                 Revenue                                                           Organic Revenue
                           as             Changes in                       Organic Revenue         as              Divestitures and         Organic Revenue
(in millions)           Reported        Exchange Rates     Acquisition       (Non-GAAP)         Reported           Discontinuations           (Non-GAAP)         Amount         Pct.
Bausch +
Lomb/International   $    4,739        $          110     $         -     $         4,849     $     4,664     $              (41 )         $         4,623     $    226           5  %
Salix                     2,022                     -             (55 )             1,967           1,749                     (9 )                   1,740          227          13  %
Ortho Dermatologics         565                     2               -                 567             617                      -                       617          (50 )        (8 )%
Diversified Products      1,275                     -               -               1,275           1,350                     (4 )                   1,346          (71 )        (5 )%
Total                $    8,601        $          112     $       (55 )   $         8,658     $     8,380     $              (54 )         $         8,326     $    332           4  %


Bausch + Lomb/International Segment:
Bausch + Lomb/International Segment Revenue
The Bausch + Lomb/International segment has a diversified product line with no
single product group representing 10% or more of its segment product sales. The
Bausch + Lomb/International segment revenue was $4,739 million and $4,664
million for 2019 and 2018, respectively, an increase of $75 million, or 2%. The
increase was primarily attributable to: (i) an increase in volume of $168
million, primarily in our Global Consumer and Global Vision Care businesses,
(ii) an increase in average realized pricing of $52 million primarily driven by
increased selling prices in our International Rx, International Consumer and
Global Ophthalmology Rx businesses and (iii) an increase in other revenues of $6
million. The increase in volume in our Global Consumer business is primarily
attributable to the launch of Lumify® (May 2018) and sales of PreserVision®. The
increase in volume in our Global Vision Care business is primarily attributable
to our Biotrue® ONEday and Ultra® product lines in the U.S. and internationally.
The increase in average realized pricing in our Global Ophthalmology Rx business
is primarily attributable to Lotemax® and Vyzulta®. The increase was partially
offset by: (i) the unfavorable effect of foreign currencies of $110 million
primarily attributable to our revenues in Europe, Asia and Latin America and
(ii) the impact of divestitures and discontinuations of $41 million, primarily
related to the divestiture and discontinuance of several products within our
International Rx business.
Bausch + Lomb/International Segment Profit
The Bausch + Lomb/International segment profit was $1,332 million and $1,330
million for 2019 and 2018, respectively, an increase of $2 million, or less than
1%. The increase was primarily driven by an increase in contribution as a result
of: (i) the increase in volume and average realized pricing as previously
discussed and (ii) better inventory management. The increase was partially
offset by: (i) higher selling, advertising and promotion expenses primarily due
to the launch of Lumify®, (ii) the unfavorable effect of foreign currencies,
(iii) higher R&D expenses and (iv) the impact of divestitures and
discontinuations.
Salix Segment:
Salix Segment Revenue
The Salix segment includes the Xifaxan® product line, which accounted for
approximately 72% and 68% of the Salix segment product sales and approximately
17% and 14% of the Company's product sales for 2019 and 2018, respectively. No
other single product group represents 10% or more of the Salix segment product
sales. The Salix segment revenue was $2,022 million and $1,749 million for 2019
and 2018, respectively, an increase of $273 million, or 16%. The increase
includes: (i) an increase in average realized pricing of $113 million primarily
attributable to higher gross selling prices and lower sales deductions for
Xifaxan®, (ii) an increase in volume of $111 million primarily attributable to
increased demand for Xifaxan®, Glumetza® SLX, and Plenvu®, partially offset by
decreased demand for certain products, primarily Uceris® due to loss of
exclusivity, (iii) sales of our Trulance® product, which we added to our
portfolio in March 2019 as part of the acquisition of certain assets of Synergy,
of $55 million and (iv) an increase in other revenues of $3 million. The
increase in revenue was partially offset by the impact of divestitures and
discontinuations of $9 million. Although Glumetza® SLX contributed to the
increase in volumes during 2019 as discussed above, an accelerated shift in
channel mix could lead to deteriorating average realized pricing for this
product in future periods.
Salix Segment Profit
The Salix segment profit was $1,349 million and $1,149 million for 2019 and
2018, respectively, an increase of $200 million, or 17%. The increase was
primarily driven by a net increase in contribution as a result of the increase
in average realized pricing and volume, as previously discussed. The increase in
segment profit was partially offset by: (i) higher R&D expenses, (ii) the charge
associated with the termination of a co-promotional agreement with US WorldMeds,
LLC and (iii) higher selling, advertising and promotion expenses.

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Ortho Dermatologics Segment:
Ortho Dermatologics Segment Revenue
The Ortho Dermatologics segment revenue was $565 million and $617 million for
2019 and 2018, respectively, a decrease of $52 million, or 8%. The decrease
includes: (i) a decrease in volume of $93 million, (ii) a decrease in other
revenues of $8 million and (iii) the unfavorable effect of foreign currencies of
$2 million. The decrease in volume is primarily due to: (i) the impact of
generic competition as certain products lost exclusivity, including Elidel®,
Solodyn® and Zovirax® and (ii) decreased demand for Tretinoin®, Onexton®,
Jublia®, Retin-A Micro® 0.08% and Targretin®, partially offset by the increased
demand for Thermage FLX®, Siliq® and Clindagel® and the launch of Duobrii® (June
2019). The decrease in revenue was partially offset by an increase in average
realized pricing of $51 million as a result of lower sales deductions primarily
attributable to Jublia® and Retin-A Micro® 0.06%.
Ortho Dermatologics Segment Profit
The Ortho Dermatologics segment profit was $222 million and $257 million for
2019 and 2018, respectively, a decrease of $35 million, or 14%. The decrease was
primarily driven by a decrease in contribution as a result of the decrease in
revenue, as previously discussed, partially offset by decreases in: (i) selling
expenses and (ii) professional fees.
Diversified Products Segment:
Diversified Products Segment Revenue
The following table displays the Diversified Products segment revenues by
product and product revenues as a percentage of segment revenue for 2019 and
2018.
                                            Years Ended December 31,             Change
                                             2019              2018           2018 to 2019
(in millions)                           Amount     Pct.    Amount    Pct.    Amount    Pct.
 Wellbutrin® Franchise                 $    244    19%    $   252    19%    $   (8 )   (3)%
 Arestin®                                    87     7%         96     7%        (9 )   (9)%
 Aplenzin®                                   83     6%         54     4%        29      54%
 Migranal® Franchise                         55     4%         62     5%        (7 )   (11)%
 Cuprimine®                                  49     4%         88     6%       (39 )   (44)%
 Uceris® AG                                  46     4%         13     1%        33     254%
 Ativan®                                     43     3%         54     4%       (11 )   (20)%
 Xenazine® Franchise                         38     3%         52     4%       (14 )   (27)%
 Diastat® Franchise                          35     3%         36     3%        (1 )   (3)%
 Elidel® AG                                  34     3%          4     -%        30     750%
 Other                                      561    44%        639    47%       (78 )   (12)%

Total Diversified Products revenues $ 1,275 100% $ 1,350 100% $ (75 ) (6)%

The Diversified Products segment revenue was $1,275 million and $1,350 million
for 2019 and 2018, respectively, a decrease of $75 million, or 6%. The decrease
was primarily driven by: (i) a decrease in volume of $56 million, (ii) a
decrease in average realized pricing of $17 million and (iii) the impact of
divestitures and discontinuations of $4 million. The decrease was partially
offset by an increase in other revenues of $2 million. The decrease in volume
was primarily attributable to our Neurology and Other business due to: (i) the
loss of exclusivity of Cuprimine®, Isuprel®, Mephyton®, Syprine® and Xenazine®
and (ii) lower demand for Wellbutrin® XL and Ativan®, partially offset by
increased demand for Aplenzin®. The net decrease in volume in our Neurology and
Other business was partially offset by the impact of the launches of Elidel® AG
(December 2018) and Uceris® AG (July 2018) and other increases in product
volumes in our Generics business. The decrease in average realized pricing is
primarily attributable to the impact of generic competition in our Generics
business for Glumetza® AG, Syprine® AG, Targretin® AG, Mephyton® AG and
Cardizem® AG, partially offset by an increase in average realized pricing in our
Neurology and Other business. Although the launches of Elidel® AG and Uceris® AG
positively impacted the product volumes in our Generics business in 2019,
generic versions of these products launched by competitors could lead to
deteriorating revenues for these and other products in our Generics business in
future periods.

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Diversified Products Segment Profit
The Diversified Products segment profit was $932 million and $1,012 million for
2019 and 2018, respectively, a decrease of $80 million, or 8%. The decrease was
primarily driven by: (i) the decrease in volume and average realized pricing, as
previously discussed and (ii) higher selling, advertising and promotion
expenses, partially offset by lower third-party royalty costs.

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LIQUIDITY AND CAPITAL RESOURCES
Cash Flows
Summarized cash flow information for the years 2019, 2018 and 2017 is as
follows:
                                                      Years Ended December 31,                     Change
(in millions)                                       2019         2018        2017       2018 to 2019     2017 to 2018
Net (loss) income                                $ (1,783 )   $ (4,144 )   $ 2,404     $      2,361     $     (6,548 )
Adjustments to reconcile net (loss) income to
net cash provided by operating activities           3,602        5,627        (958 )         (2,025 )          6,585
Cash provided by operating activities before
changes in operating assets and liabilities         1,819        1,483       1,446              336               37

Changes in operating assets and liabilities (318 ) 18

    844             (336 )           (826 )
Net cash provided by operating activities           1,501        1,501       2,290                -             (789 )
Net cash (used in) provided by investing
activities                                           (419 )       (196 )     2,887             (223 )         (3,083 )
Net cash provided by (used in) financing
activities                                          1,443       (1,353 )    (4,963 )          2,796            3,610
Effect of exchange rate changes on cash and
cash equivalents                                       (4 )        (26 )        41               22              (67 )
Net increase (decrease) in cash and cash
equivalents and restricted cash                     2,521          (74 )       255            2,595             (329 )
Cash and cash equivalents and restricted cash,
beginning of year                                     723          797         542              (74 )            255
Cash and cash equivalents and restricted cash,
end of year                                      $  3,244     $    723

$ 797 $ 2,521 $ (74 )

A detailed discussion of the year-over-year changes of the Company's 2018
summarized cash flow information compared with that of 2017 can be found under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our Annual Report on Form 10-K for the year ended December 31,
2018 filed on February 20, 2019.
Operating Activities
Net cash provided by operating activities was $1,501 million in each of the
years 2019 and 2018.
Cash provided by operating activities before changes in operating assets and
liabilities for the years 2019 and 2018 was $1,819 million and $1,483 million,
respectively, an increase of $336 million. The increase is primarily
attributable to: (i) Payments of accrued legal settlements during 2018 not
recurring in 2019 and (ii) higher revenues, improved gross margins and cash
expense reductions in 2019 as compared to 2018 as previously discussed. During
2018, Payments of accrued legal settlements were $224 million and were related
to the settlements of the Solodyn® antitrust litigations, the Allergan
litigation and other matters.
Changes in operating assets and liabilities resulted in a net decrease in cash
of $318 million in 2019, as compared to the net increase in cash of $18 million
in 2018, a decrease of $336 million. During 2019, Changes in operating assets
and liabilities was negatively impacted by: (i) the build-up of inventories of
$209 million and (ii) the timing of other payments in the ordinary course of
business of $148 million, partially offset by the collection of trade
receivables of $39 million. During 2018, Changes in operating assets and
liabilities was positively impacted by the collection of trade receivables of
$216 million partially offset by the timing of payments in the ordinary course
of business of $193 million and the buildup of inventories of $5 million.
Investing Activities
Net cash used in investing activities was $419 million in 2019 and was driven
by: (i) Purchases of property, plant and equipment of $270 million and (ii)
Acquisition of businesses, net of cash acquired of $180 million, related to the
acquisition of certain assets of Synergy. Net cash used in investing activities
was partially offset by Proceeds from sale of assets and businesses, net of
costs to sell of $45 million, primarily related to the receipt of a milestone
payment associated with a prior year divestiture.
Net cash used in investing activities was $196 million in 2018 and was driven
by: (i) Purchases of property, plant and equipment of $157 million and (ii)
Payments for intangible and other assets previously acquired of $78 million.
Financing Activities
Our financing activities reflect our leadership's commitment to improve the
Company's capital structure. Through debt repayments and refinancings during
2019, we have effectively managed our capital structure which has allowed us to,
among other things: (i) improve our credit ratings as discussed under "Credit
Ratings" below, (ii) access the credit markets to finance amounts owed under the
Company's recently announced $1,210 million settlement agreement relating to the
U.S. Securities Litigation without negatively impacting our working capital
available for operations and (iii) as of the date of this filing, reduce our
mandatory scheduled principal repayments of our debt obligations through 2021 to
$103 million.

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Net cash provided by financing activities during 2019 was $1,443 million and
primarily reflects the aggregate net proceeds from the issuance of the 5.00%
January 2028 Unsecured Notes and January 2030 Unsecured Notes of $2,472 million,
partially offset by: (i) debt repayments during 2019 with cash on hand of $906
million and (ii) payments for all other financing activities. The aggregate net
proceeds from the issuance of the January 2028 Unsecured Notes and January 2030
Unsecured Notes are to be used and were used to: (i) pay the Company's recently
announced $1,210 million settlement agreement relating to the U.S. Securities
Litigation (which is subject to final court approval), of which we paid $200
million during January 2020 and (ii) redeem $1,240 million of May 2023 Unsecured
Notes on January 16, 2020.
In 2019, net proceeds from the issuances of long-term debt of $5,960 million
consists of: (i) $1,236 million from the issuance of $1,250 million in principal
amount of 5.00% January 2028 Unsecured Notes, (ii) $1,236 million from the
issuance of $1,250 million in principal amount of January 2030 Unsecured Notes,
(iii) $1,018 million from the issuance of $1,000 million in principal amount of
8.50% Senior Unsecured Notes due January 2027 (the "January 2027 Unsecured
Notes"), (iv) $740 million from the issuance of $750 million in principal amount
of 7.00% Senior Unsecured Notes due January 2028 (the "7.00% January 2028
Unsecured Notes"), (v) $740 million from the issuance of $750 million in
principal amount of 7.25% Senior Unsecured Notes due May 2029 (the "May 2029
Unsecured Notes"), (vi) $492 million from the issuance of $500 million in
principal amount of 5.75% Senior Secured Notes due August 2027 (the "August 2027
Secured Notes") and (vii) $500 million of borrowings under our revolving credit
facilities. Net proceeds from the issuances of long-term debt is net of $2
million in payments we made in 2019 for issuance costs associated with long-term
debt issued in previous years. Repayments of long-term debt during 2019 was
$4,406 million consisting of: (i) repayments of principal amounts due under our
Senior Notes of $3,100 million, (ii) repayments of term loans under our Senior
Secured Credit Facilities of $731 million and (iii) repayments of our revolving
credit facility of $575 million. Payments of financing costs associated with the
refinancing of certain debt was $28 million.
Net cash used in financing activities during 2018 was $1,353 million and
included repayments of long-term debt of $10,101 million consisting of: (i)
repayments of term loans under our Senior Secured Credit Facilities of $3,711
million, (ii) repayments of principal amounts due under our Senior Notes of
$5,465 million, (iii) refinancing $500 million of outstanding amounts under our
2020 Revolving Credit Facility with our 2023 Revolving Credit Facility and (iv)
repayments of our revolving credit facilities of $425 million. Issuance of
long-term debt, net of discounts for 2018 was $8,944 million and included: (i)
the net proceeds of: (a) $4,507 million from the issuance of $4,565 million in
principal amount of our seven year Tranche B Term Loan Facility maturing in June
2025 (the "June 2025 Term Loan B Facility"), (b) $1,480 million from the
issuance of $1,500 million in principal amount of April 2026 Unsecured Notes,
(c) $1,476 million from the issuance of $1,500 million in principal amount of
our seven year Tranche B Term Loan Facility maturing in November 2025 (the
"November 2025 Term Loan B Facility") and (d) $738 million from the issuance of
$750 million in principal amount of January 2027 Unsecured Notes, (ii)
refinancing $500 million of outstanding amounts under our 2020 Revolving Credit
Facility with our 2023 Revolving Credit Facility and (iii) $250 million of
borrowings under our revolving credit facilities.  The net proceeds from the
Issuance of long-term debt, net of discounts in 2018 is further reduced by $7
million in payments we made in 2018 for issuance costs associated with senior
notes issued during 2017. Payments for costs associated with the refinancing of
certain debt was $102 million for 2018.
See Note 11, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial
Statements for further details regarding the financing activities previously
described.
Liquidity and Debt
Future Sources of Liquidity
Our primary sources of liquidity are our cash and cash equivalents, cash
collected from customers, funds as available from our revolving credit facility,
issuances of long-term debt and issuances of equity and equity-linked
securities. We believe these sources will be sufficient to meet our current
liquidity needs for the next twelve months.
The Company regularly evaluates market conditions, its liquidity profile, and
various financing alternatives for opportunities to enhance its capital
structure. If opportunities are favorable, the Company may refinance or
repurchase existing debt or issue equity or equity-linked securities. We believe
our existing cash and cash generated from operations will be sufficient to
service our debt obligations in the years 2020 through 2022.
Long-term Debt
Long-term debt, net of unamortized discounts and finance costs was $25,895
million and $24,305 million as of December 31, 2019 and 2018, respectively.
Aggregate contractual principal amounts due under our debt obligations were
$26,188 million and $24,632 million as of December 31, 2019 and 2018,
respectively, an increase of $1,556 million.
Financing of Litigation Settlement - In December 2019, we announced that we had
agreed to resolve the U.S. Securities Litigation for $1,210 million, subject to
final court approval. Once approved by the court, the settlement will resolve
and discharge all claims against the Company in the class action. As part of the
settlement, the Company and the other settling defendants admitted

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no liability as to the claims against it and deny all allegations of wrongdoing.
This settlement, once approved by the court, will resolve the most significant
of the Company's remaining legacy legal matters and eliminate a material
uncertainty regarding our Company. To finance this settlement, on December 30,
2019 we accessed the credit markets in a private offering and issued the January
2028 Unsecured Notes (defined below) and the January 2030 Unsecured Notes
(defined below), the net proceeds of which, along with cash on hand, are to be
used and were used to: (i) finance the $1,210 million pending settlement of the
U.S. Securities Litigation and (ii) replace $1,240 million of debt due May 2023
on January 16, 2020.
Debt Repayments - Excluding the impact of the financing of the litigation
settlement discussed above, using the net cash proceeds from divestitures of
non-core assets, cash generated from operations and cash generated from tighter
working capital management, we repaid (net of additional borrowings) over $7,700
million of long-term debt during the period January 1, 2016 through the date of
this filing, which includes $906 million of repayments with cash on hand during
2019.
2019 Refinancing Transactions
In March, May and December 2019, we accessed the credit markets and completed a
series of transactions, whereby we extended $4,240 million in aggregate
maturities of certain debt obligations due to mature in December 2021 through
May 2023, out to January 2027 through January 2030.
On March 8, 2019, we issued: (i) $1,000 million aggregate principal amount of
January 2027 Unsecured Notes and (ii) $500 million aggregate principal amount of
August 2027 Secured Notes in a private placement. The proceeds and cash on hand
were used to: (i) repurchase the remaining $700 million outstanding principal
amount of 5.625% Senior Unsecured Notes due 2021 (the "December 2021 Unsecured
Notes"), (ii) repurchase $584 million of May 2023 Unsecured Notes, (iii)
repurchase $216 million of 5.50% Senior Unsecured Notes due 2023 (the "March
2023 Unsecured Notes") and (iv) pay all fees and expenses associated with these
transactions (collectively, the "March 2019 Refinancing Transactions").
On May 23, 2019, we issued: (i) $750 million aggregate principal amount of 7.00%
January 2028 Unsecured Notes and (ii) $750 million aggregate principal amount of
May 2029 Unsecured Notes in a private placement. The proceeds and cash on hand
were used to: (i) repurchase $1,118 million of May 2023 Unsecured Notes, (ii)
repurchase $382 million of March 2023 Unsecured Notes and (iii) pay all fees and
expenses associated with these transactions (collectively, the "May 2019
Refinancing Transactions").
On December 30, 2019, we issued: (i) $1,250 million aggregate principal amount
of 5.00% January 2028 Unsecured Notes and (ii) $1,250 million aggregate
principal amount of January 2030 Unsecured Notes in a private placement. The
proceeds and cash on hand were used to: (i) redeem $1,240 million of May 2023
Unsecured Notes on January 16, 2020, (ii) finance amounts owed under the
Company's recently announced $1,210 million settlement agreement relating to the
U.S. Securities Litigation (which is subject to final court approval) and (iii)
pay all fees and expenses associated with these transactions. On December 18,
2019, the Company issued a conditional notice of redemption to redeem $1,240
million of May 2023 Unsecured Notes on January 16, 2020. On December 30, 2019,
the Company received the proceeds associated with the December 2019 Financing
and Refinancing Transactions, satisfying the condition included in the
conditional notice of redemption.
The aforementioned repayments, refinancings and other changes in our debt
portfolio completed during 2019 have lowered our cash requirements for principal
debt repayment over the next five years. The mandatory scheduled principal
repayments of our debt obligations as of December 31, 2019 and February 19, 2020
(the date of this filing) were as follows:
(in millions)               2020 - 2021       2022 - 2023       2024 - 2025       2026 - 2027       2028 - 2029       2030        Total
As of December 31, 2019   $       1,343     $       4,148     $      12,935     $       3,750     $       2,762     $ 1,250     $ 26,188
As of February 19, 2020             103             4,148            12,935             3,750             2,762       1,250       24,948


See Note 11, "FINANCING ARRANGEMENTS" to our audited Consolidated Financial
Statements and "Management's Discussion and Analysis - Liquidity and Capital
Resources: Long-term Debt" for further details.
The weighted average stated rate of interest as of December 31, 2019 and 2018
was 6.21% and 6.23%, respectively.
Senior Secured Credit Facilities
On February 13, 2012, the Company and certain of its subsidiaries as guarantors
entered into the "Senior Secured Credit Facilities" under the Company's Third
Amended and Restated Credit and Guaranty Agreement, as amended (the "Third
Amended Credit Agreement") with a syndicate of financial institutions and
investors.
On June 1, 2018, the Company entered into the Restated Credit Agreement,
effectuating the Restated Credit Agreement which amended and restated in full
the Company's Third Amended Credit Agreement.

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On November 27, 2018, the Company entered into the First Incremental Amendment
to the Restated Credit Agreement which provided the November 2025 Term Loan B
Facility of $1,500 million.
As of December 31, 2019, the Company had no outstanding borrowings, $170 million
of issued and outstanding letters of credit, and remaining availability of
$1,055 million under its 2023 Revolving Credit Facility.
Current Description of Senior Secured Credit Facilities
Borrowings under the Senior Secured Credit Facilities in U.S. dollars bear
interest at a rate per annum equal to, at the Company's option, either: (i) a
base rate determined by reference to the highest of: (a) the prime rate (as
defined in the Restated Credit Agreement), (b) the federal funds effective rate
plus 1/2 of 1.00% or (c) the eurocurrency rate (as defined in the Restated
Credit Agreement) for a period of one month plus 1.00% (or if such eurocurrency
rate shall not be ascertainable, 1.00%) or (ii) a eurocurrency rate determined
by reference to the costs of funds for U.S. dollar deposits for the interest
period relevant to such borrowing adjusted for certain additional costs
(provided however, that the eurocurrency rate shall at no time be less than
0.00% per annum), in each case plus an applicable margin.
Borrowings under the 2023 Revolving Credit Facility in euros bear interest at a
eurocurrency rate determined by reference to the costs of funds for euro
deposits for the interest period relevant to such borrowing (provided however,
that the eurocurrency rate shall at no time be less than 0.00% per annum), plus
an applicable margin.
Borrowings under the 2023 Revolving Credit Facility in Canadian dollars bear
interest at a rate per annum equal to, at the Company's option, either: (i) a
prime rate determined by reference to the higher of: (a) the rate of interest
last quoted by The Wall Street Journal as the "Canadian Prime Rate" or, if The
Wall Street Journal ceases to quote such rate, the highest per annum interest
rate published by the Bank of Canada as its prime rate and (b) the 1 month BA
rate (as defined below) calculated daily plus 1.00% (provided however, that the
prime rate shall at no time be less than 0.00%) or (ii) the bankers' acceptance
rate for Canadian dollar deposits in the Toronto interbank market (the "BA
rate") for the interest period relevant to such borrowing (provided however,
that the BA rate shall at no time be less than 0.00% per annum), in each case
plus an applicable margin.
Subject to certain exceptions and customary baskets set forth in the Restated
Credit Agreement, the Company is required to make mandatory prepayments of the
loans under the Senior Secured Credit Facilities under certain circumstances,
including from: (i) 100% of the net cash proceeds of insurance and condemnation
proceeds for property or asset losses (subject to reinvestment rights and net
proceeds threshold), (ii) 100% of the net cash proceeds from the incurrence of
debt (other than permitted debt as described in the Restated Credit Agreement),
(iii) 50% of Excess Cash Flow (as defined in the Restated Credit Agreement)
subject to decrease based on leverage ratios and subject to a threshold amount
and (iv) 100% of net cash proceeds from asset sales (subject to reinvestment
rights). These mandatory prepayments may be used to satisfy future amortization.
The applicable interest rate margins for the June 2025 Term Loan B Facility and
the November 2025 Term Loan B Facility are 2.00% and 1.75%, respectively, with
respect to base rate and prime rate borrowings and 3.00% and 2.75%,
respectively, with respect to eurocurrency rate and BA rate borrowings. As of
December 31, 2019, the stated rates of interest on the Company's borrowings
under the June 2025 Term Loan B Facility and the November 2025 Term Loan B
Facility were 4.74% and 4.49% per annum, respectively.
The amortization rate for both the June 2025 Term Loan B Facility and the
November 2025 Term Loan B Facility is 5.00% per annum. The Company may direct
that prepayments be applied to such amortization payments in order of maturity.
As of December 31, 2019, the aggregate remaining mandatory quarterly
amortization payments for the Senior Secured Credit Facilities were $1,126
million through November 1, 2025.
The applicable interest rate margins for borrowings under the 2023 Revolving
Credit Facility are 1.50%-2.00% with respect to base rate or prime rate
borrowings and 2.50%-3.00% with respect to eurocurrency rate or BA rate
borrowings.  As of December 31, 2019, the stated rate of interest on the 2023
Revolving Credit Facility was 4.74% per annum. In addition, the Company is
required to pay commitment fees of 0.25% - 0.50% per annum with respect to the
unutilized commitments under the 2023 Revolving Credit Facility, payable
quarterly in arrears. The Company also is required to pay: (i) letter of credit
fees on the maximum amount available to be drawn under all outstanding letters
of credit in an amount equal to the applicable margin on eurocurrency rate
borrowings under the 2023 Revolving Credit Facility on a per annum basis,
payable quarterly in arrears, (ii) customary fronting fees for the issuance of
letters of credit and (iii) agency fees.
The Restated Credit Agreement permits the incurrence of incremental credit
facility borrowings, up to the greater of $1,000 million and 28.5% of
Consolidated Adjusted EBITDA (as defined in the Restated Credit Agreement),
subject to customary terms and conditions, as well as the incurrence of
additional incremental credit facility borrowings subject to a secured leverage
ratio of not greater than 3.50:1.00, and, in the case of unsecured debt, a total
leverage ratio of not greater than 6.50:1.00 or an interest coverage ratio of
not less than 2.00:1.00.

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Senior Secured Notes
The Senior Secured Notes are guaranteed by each of the Company's subsidiaries
that is a guarantor under the Restated Credit Agreement and existing Senior
Unsecured Notes (together, the "Note Guarantors"). The Senior Secured Notes and
the guarantees related thereto are senior obligations and are secured, subject
to permitted liens and certain other exceptions, by the same first priority
liens that secure the Company's obligations under the Restated Credit Agreement
under the terms of the indentures governing the Senior Secured Notes.
The Senior Secured Notes and the guarantees rank equally in right of repayment
with all of the Company's and Note Guarantors' respective existing and future
unsubordinated indebtedness and senior to the Company's and Note Guarantors'
respective future subordinated indebtedness. The Senior Secured Notes and the
guarantees related thereto are effectively pari passu with the Company's and the
Note Guarantors' respective existing and future indebtedness secured by a first
priority lien on the collateral securing the Senior Secured Notes and
effectively senior to the Company's and the Note Guarantors' respective existing
and future indebtedness that is unsecured, including the existing Senior
Unsecured Notes, or that is secured by junior liens, in each case to the extent
of the value of the collateral. In addition, the Senior Secured Notes are
structurally subordinated to: (i) all liabilities of any of the Company's
subsidiaries that do not guarantee the Senior Secured Notes and (ii) any of the
Company's debt that is secured by assets that are not collateral.
Upon the occurrence of a change in control (as defined in the indentures
governing the Senior Secured Notes), unless the Company has exercised its right
to redeem all of the notes of a series, holders of the Senior Secured Notes may
require the Company to repurchase such holder's notes, in whole or in part, at a
purchase price equal to 101% of the principal amount thereof plus accrued and
unpaid interest.
5.75% Senior Secured Notes due 2027 - March 2019 Refinancing Transactions
On March 8, 2019, Bausch Health Americas, Inc. ("BHA") and the Company issued:
(i) $1,000 million aggregate principal amount of January 2027 Unsecured Notes
and (ii) $500 million aggregate principal amount of August 2027 Secured Notes,
respectively, in a private placement. A portion of the proceeds and cash on hand
were used to: (i) repurchase $584 million of May 2023 Unsecured Notes, (ii)
repurchase $518 million of December 2021 Unsecured Notes, (iii) repurchase $216
million of March 2023 Unsecured Notes and (iv) pay all fees and expenses
associated with these transactions (collectively, the "March 2019 Refinancing
Transactions"). During April 2019, the Company redeemed $182 million of the
December 2021 Unsecured Notes, representing the remaining outstanding principal
balance of the December 2021 Unsecured Notes and completing the refinancing of
$1,500 million of debt in connection with the March 2019 Refinancing
Transactions. Interest on the August 2027 Secured Notes is payable semi-annually
in arrears on each February 15 and August 15.
The August 2027 Secured Notes are redeemable at the option of the Company, in
whole or in part, at any time on or after August 15, 2022, at the redemption
prices set forth in the indenture. The Company may redeem some or all of the
August 2027 Secured Notes prior to August 15, 2022 at a price equal to 100% of
the principal amount thereof plus a "make-whole" premium. Prior to August 15,
2022, the Company may redeem up to 40% of the aggregate principal amount of the
August 2027 Secured Notes using the proceeds of certain equity offerings at the
redemption price set forth in the indenture.
Senior Unsecured Notes
The Senior Unsecured Notes issued by the Company are the Company's senior
unsecured obligations and are jointly and severally guaranteed on a senior
unsecured basis by each of its subsidiaries that is a guarantor under the Senior
Secured Credit Facilities. The Senior Unsecured Notes issued by the Company's
subsidiary, BHA, are senior unsecured obligations of BHA and are jointly and
severally guaranteed on a senior unsecured basis by the Company and each of its
subsidiaries (other than BHA) that is a guarantor under the Senior Secured
Credit Facilities. Future subsidiaries of the Company and BHA, if any, may be
required to guarantee the Senior Unsecured Notes.
If the Company experiences a change in control, the Company may be required to
make an offer to repurchase each series of Senior Unsecured Notes, in whole or
in part, at a purchase price equal to 101% of the aggregate principal amount of
the Senior Unsecured Notes repurchased, plus accrued and unpaid interest.
8.50% Senior Unsecured Notes due 2027 - June 2018 Refinancing Transactions and
March 2019 Refinancing Transactions
As part of the March 2019 Refinancing Transactions described above, BHA issued
$1,000 million aggregate principal amount of 8.50% Senior Unsecured Notes due
January 2027. These are additional notes and form part of the same series as
BHA's existing January 2027 Unsecured Notes.

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7.00% Senior Unsecured Notes due 2028 and 7.25% Senior Unsecured Notes due 2029
- May 2019 Refinancing Transactions
On May 23, 2019, the Company issued: (i) $750 million aggregate principal amount
of 7.00% January 2028 Unsecured Notes and (ii) $750 million aggregate principal
amount of May 2029 Unsecured Notes, respectively, in a private placement. The
proceeds and cash on hand were used to: (i) repurchase $1,118 million of May
2023 Unsecured Notes, (ii) repurchase $382 million of March 2023 Unsecured Notes
and (iii) pay all fees and expenses associated with these transactions. Interest
on the January 2028 Unsecured Notes is payable semi-annually in arrears on each
January 15 and July 15. Interest on the May 2029 Unsecured Notes is payable
semi-annually in arrears on each May 30 and November 30.
The 7.00% January 2028 Unsecured Notes and the May 2029 Unsecured Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after January 15, 2023 and May 30, 2024, respectively, at the redemption prices
set forth in the respective indenture. The Company may redeem some or all of the
7.00% January 2028 Unsecured Notes or the May 2029 Unsecured Notes prior to
January 15, 2023 and May 30, 2024, respectively, at a price equal to 100% of the
principal amount thereof plus a "make-whole" premium. Prior to July 15, 2022,
and May 30, 2022, the Company may redeem up to 40% of the aggregate principal
amount of the 7.00% January 2028 Unsecured Notes or the May 2029 Unsecured
Notes, respectively, using the proceeds of certain equity offerings at the
redemption price set forth in the respective indenture.
5.00% Senior Unsecured Notes due 2028 and 5.25% Senior Unsecured Notes due 2030
- December 2019 Financing Transactions
On December 30, 2019, we issued: (i) $1,250 million aggregate principal amount
of 5.00% January 2028 Unsecured Notes and (ii) $1,250 million aggregate
principal amount of January 2030 Unsecured Notes in a private placement. The
proceeds and cash on hand were used to: (i) redeem $1,240 million of May 2023
Unsecured Notes on January 16, 2020, (ii) finance amounts owed under the
Company's recently announced $1,210 million settlement agreement relating to the
U.S. Securities Litigation (which is subject to final court approval) and (iii)
pay all fees and expenses associated with these transactions (collectively, the
"December 2019 Financing and Refinancing Transactions"). Interest on the 5.00%
January 2028 Unsecured Notes is payable semi-annually in arrears on each January
30 and July 30. Interest on the January 2030 Unsecured Notes is payable
semi-annually in arrears on each January 30 and July 30.
The 5.00% January 2028 Unsecured Notes and the January 2030 Unsecured Notes are
redeemable at the option of the Company, in whole or in part, at any time on or
after January 30, 2023 and January 30, 2025, respectively, at the redemption
prices set forth in the respective indenture. The Company may redeem some or all
of the 5.00% January 2028 Unsecured Notes or the January 2030 Unsecured Notes
prior to January 30, 2023 and January 30, 2025, respectively, at a price equal
to 100% of the principal amount thereof plus a "make-whole" premium. Prior to
January 30, 2023 and January 30, 2025, the Company may redeem up to 40% of the
aggregate principal amount of the 5.00% January 2028 Unsecured Notes or the
January 2030 Unsecured Notes, respectively, using the proceeds of certain equity
offerings at the redemption price set forth in the respective indenture.
Remaining Senior Unsecured Notes
The aggregate principal amount of our other Senior Unsecured Notes as of
December 31, 2019 and 2018 was $7,932 million and $7,970 million, respectively,
a decrease of $38 million representing the impact of the foreign currency
exchange rate on our euro denominated note.
Covenant Compliance
Any inability to comply with the covenants under the terms of our Restated
Credit Agreement, Senior Secured Notes indentures or Senior Unsecured Notes
indentures could lead to a default or an event of default for which we may need
to seek relief from our lenders and noteholders in order to waive the associated
default or event of default and avoid a potential acceleration of the related
indebtedness or cross-default or cross-acceleration to other debt. There can be
no assurance that we would be able to obtain such relief on commercially
reasonable terms or otherwise and we may be required to incur significant
additional costs. In addition, the lenders under our Restated Credit Agreement,
holders of our Senior Secured Notes and holders of our Senior Unsecured Notes
may impose additional operating and financial restrictions on us as a condition
to granting any such waiver.
During 2018 and 2019, the Company completed several actions which included using
cash flows from operations to repay debt and refinancing debt with near term
maturities. These actions have reduced the Company's debt balance and positively
affected the Company's ability to comply with its financial maintenance
covenant. As of December 31, 2019, the Company was in compliance with the
financial maintenance covenant related to its outstanding debt. The Company,
based on its current forecast for the next twelve months from the date of
issuance of this Form 10-K, expects to remain in compliance with the financial
maintenance covenant and meet its debt service obligations over that same
period.
The Company continues to take steps to improve its operating results to ensure
continual compliance with its financial maintenance covenant and take other
actions to reduce its debt levels to align with the Company's long-term
strategy. The Company

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may consider taking other actions, including divesting other businesses,
refinancing debt and issuing equity or equity-linked securities as deemed
appropriate, to provide additional coverage in complying with the financial
maintenance covenant and meeting its debt service obligations.
The Senior Notes and Secured Notes are guaranteed by a substantial portion of
the Company's subsidiaries. On a non-consolidated basis, the non-guarantor
subsidiaries had total assets of $2,682 million and $2,954 million and total
liabilities of $1,075 million and $1,264 million as of December 31, 2019 and
2018, respectively, and revenues of $1,463 million and $1,689 million and
operating income of $121 million and $174 million for years ended December 31,
2019 and 2018, respectively.
Credit Ratings
In December 2019, Standard & Poor's upgraded our credit ratings and maintained
our outlook as stable. As of February 19, 2020, the credit ratings and outlook
from Moody's, Standard & Poor's and Fitch for certain outstanding obligations of
the Company were as follows:
                                                             Senior
                                       Senior Secured       Unsecured
  Rating Agency     Corporate Rating       Rating            Rating            Outlook
    Moody's                B2                Ba2               B3              Stable
Standard & Poor's          B+                BB                 B              Stable
      Fitch                B                 BB                 B              Stable


Any downgrade in our corporate credit ratings or other credit ratings may
increase our cost of borrowing and may negatively impact our ability to raise
additional debt capital.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We have no off-balance sheet arrangements that have a material current effect or
that are reasonably likely to have a material future effect on our results of
operations, financial condition, capital expenditures, liquidity, or capital
resources.
The following table summarizes our contractual obligations as of December 31,
2019 for the years presented:
(in millions)                          Total         2020        2021 and 2022       2023 and 2024       Thereafter
Long-term debt obligations,
including interest                   $ 35,548     $  2,758     $         4,708     $         7,568     $     20,514
Operating lease obligations               383           70                  97                  67              149
Purchase obligations                      888          557                 201                 104               26

Total contractual obligations $ 36,819 $ 3,385 $ 5,006 $ 7,739 $ 20,689

Purchase obligations consist of agreements to purchase goods and services that
are enforceable and legally binding and include obligations for minimum
inventory and capital expenditures, and outsourced information technology,
product promotion and clinical research services.
The table of contractual obligations excludes payments for: (i) contingent
milestone payments to third parties as part of certain development,
collaboration and license agreements and (ii) acquisition-related contingent
consideration. See Note 22, "COMMITMENTS AND CONTINGENCIES" and Note 6, "FAIR
VALUE MEASUREMENTS" to our audited Consolidated Financial Statements for further
details related to these contingent payments.
The table of contractual obligations excludes payments for unrecognized tax
benefits totaling $355 million as of December 31, 2019 because a reliable
estimate of the period in which uncertain tax positions will be payable,
if ever, cannot be made.
Other Future Cash Requirements
Our other future cash requirements relate to working capital, capital
expenditures, business development transactions (contingent consideration),
restructuring and integration, benefit obligations and litigation settlements.
In addition, we may use cash to enter into licensing arrangements and/or to make
strategic acquisitions. We are considering further acquisition opportunities
within our core therapeutic areas, some of which could be sizable.
In addition to our working capital requirements and other amounts presented in
the contractual obligations table presented above, we expect our primary cash
requirements for 2020 to include:

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• Debt repayments-As a result of prepayments and a series of refinancing

transactions we have reduced and extended the maturities of a substantial

portion of our long-term debt. Payments of Long-term debt obligations,

including interest as presented in the contractual obligations table above

for the year 2020 of $2,758 million, is inclusive of the payment for the

redemption of $1,240 million in aggregate principal amount of May 2023

Unsecured Notes made on January 16, 2020. As of the date of this filing,

scheduled principal repayments of our debt obligations through 2021 are $103

million. We may elect to make additional principal payments under certain

circumstances. Further, in the ordinary course of business, we may borrow and

repay amounts under our 2023 Revolving Credit Facility to meet business

needs;

• IT Infrastructure Investment-We expect to make payments of approximately $80

million, net of the amounts included in Purchase obligations in the table

above, for licensing, maintenance and capitalizable costs associated with our

IT infrastructure improvement projects during 2020;

• Capital expenditures-We expect to make payments of approximately $300 million

for property, plant and equipment during 2020, of which there were $115

million in committed amounts as of December 31, 2019;

• Contingent consideration payments-We expect to make contingent consideration

and other development/approval/sales-based milestone payments of $64 million

during 2020;

• Restructuring and integration payments-We expect to make payments of $5

million during 2020 for employee separation costs and lease termination

obligations associated with restructuring and integration actions we have

taken through December 31, 2019;

• Benefit obligations-We expect to make payments under our pension and

postretirement obligations of $3 million, $9 million and $5 million to the

U.S. pension benefit plan, the non-U.S. pension benefit plans and the U.S.

postretirement benefit plan, respectively during 2020. See Note 12, "PENSION

AND POSTRETIREMENT EMPLOYEE BENEFIT PLANS" to our audited Consolidated

    Financial Statements for further details of our benefit obligations; and


•   U.S. Securities Litigation Settlement-As more fully discussed in Note 21,

"LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements, we

expect to make payments of $1,210 million to resolve the U.S. Securities

Litigation during 2020, of which we paid $200 million during January 2020. In

December 2019, we announced that we had agreed to resolve the U.S. Securities

Litigation for $1,210 million, subject to final court approval. Once approved

by the court, the settlement will resolve and discharge all claims against

the Company in the class action. As part of the settlement, the Company and

the other settling defendants admitted no liability as to the claims against

it and deny all allegations of wrongdoing. This settlement, once approved by

    the court, will resolve the most significant of the Company's remaining
    legacy legal matters and eliminate a material uncertainty regarding our
    Company.


We continue to evaluate opportunities to improve our operating results and may
initiate additional cost savings programs to streamline our operations and
eliminate redundant processes and expenses. These cost savings programs may
include, but are not limited to: (i) reducing headcount, (ii) eliminating real
estate costs associated with unused or under-utilized facilities and (iii)
implementing contribution margin improvement and other cost reduction
initiatives. The expenses associated with the implementation of these cost
savings programs could be material and may impact our cash flows.
In the ordinary course of business, the Company is involved in litigation,
claims, government inquiries, investigations, charges and proceedings. See Note
21, "LEGAL PROCEEDINGS" to our audited Consolidated Financial Statements for
further details of these matters. Our ability to successfully defend the Company
against pending and future litigation may impact cash flows.
OUTSTANDING SHARE DATA
Our common shares are listed on the TSX and the NYSE under the ticker
symbol "BHC".
At February 13, 2020, we had 352,704,400 issued and outstanding common shares.
In addition, as of February 13, 2020, we had 7,049,164 stock options and
5,872,874 time-based RSUs that each represent the right of a holder to receive
one of the Company's common shares, and 2,355,100 performance-based RSUs that
represent the right of a holder to receive a number of the Company's common
shares up to a specified maximum. A maximum of 4,149,539 common shares could be
issued upon vesting of the performance-based RSUs outstanding.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our business and financial results are affected by fluctuations in world
financial markets, including the impacts of foreign currency exchange rate and
interest rate movements. We evaluate our exposure to such risks on an ongoing
basis, and seek ways to manage these risks to an acceptable level, based on
management's judgment of the appropriate trade-off between risk, opportunity and
cost. We may use derivative financial instruments from time to time as a risk
management tool and not for trading or speculative purposes.

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Inflation; Seasonality
We are subject to price control restrictions on our pharmaceutical products in a
number of countries in which we now operate. As a result, our ability to raise
prices in a timely fashion in anticipation of inflation may be limited in
some markets.
Historically, revenues from our business tend to be weighted toward the second
half of the year. Sales in the first quarter tend to be lower as patient co-pays
and deductibles reset at the beginning of each year. Sales in the fourth quarter
tend to be higher based on consumer and customer purchasing patterns associated
with health care reimbursement programs. However, there are no assurances that
these historical trends will continue in the future.
Foreign Currency Risk
In the year ended December 31, 2019, a majority of our revenue and expense
activities and capital expenditures were denominated in U.S. dollars.  We have
exposure to multiple foreign currencies, including, among others, the Euro,
Chinese yuan, Polish zloty, Canadian dollar and Mexican peso. Our operations are
subject to risks inherent in conducting business abroad, including price and
currency exchange controls and fluctuations in the relative values of
currencies. In November 2016, as a result of the Egyptian government's decision
to float the Egyptian pound and un-peg it to the U.S. Dollar, the Egyptian pound
was significantly devalued.  Our exposure to the Egyptian pound is primarily
with respect to Amoun Pharmaceutical Company S.A.E., which we acquired in
October 2015, and which represented approximately 3% and 2% of our total 2019
and 2018 revenues, respectively. In addition, to the extent that we require, as
a source of debt repayment, earnings and cash flows from some of our operations
located in foreign countries, we are subject to risk of changes in the value of
the U.S. dollar, relative to all other currencies in which we operate, which may
materially affect our results of operations. Where possible, we manage foreign
currency risk by managing same currency revenues in relation to same currency
expenses. Further strengthening of the U.S. dollar and/or further devaluation of
foreign currencies will have a negative impact on our reported revenue and
reported results. As of December 31, 2019, a 1% change in foreign currency
exchange rates would have impacted our shareholders' equity by approximately $52
million, which could be partially mitigated by our cross-currency swaps
discussed below.
As of December 31, 2019, the unrealized foreign exchange loss on the translation
of the remaining principal amount of U.S. denominated senior secured and
unsecured notes was $142 million, for Canadian income tax purposes.
Additionally, as of December 31, 2019, the unrealized foreign exchange loss on
certain intercompany balances was equal to $5 million. One-half of any realized
foreign exchange gain or loss will be included in our Canadian taxable income.
Any resulting gain will result in a corresponding reduction in our available
Canadian Losses, Scientific Research and Experimental Development Pool, and/or
Investment Tax Credit carryforward balances. However, the repayment of the
senior notes and the intercompany loans denominated in U.S. dollars does not
result in a foreign exchange gain or loss being recognized in our Consolidated
Financial Statements, as these statements are prepared in U.S. dollars.
We may use derivative financial instruments from time to time to mitigate our
foreign currency risk and not for trading or speculative purposes. During 2019,
we entered into cross-currency swaps, with aggregate notional amounts of $1,250
million, to mitigate fluctuation in the value of a portion of our
euro-denominated net investment in our consolidated financial statements from
adverse movements in exchange rates. The euro-denominated net investment being
hedged is the Company's investment in certain euro-denominated subsidiaries.
Prior to 2019, the Company had no derivative instruments for any period
presented.
Interest Rate Risk
We currently do not hold financial instruments for speculative purposes. Our
financial assets are not subject to significant interest rate risk due to their
short duration. The primary objective of our policy for the investment of
temporary cash surpluses is the protection of principal, and accordingly, we
generally invest in high quality, money market investments and time deposits
with varying maturities, but typically less than three months. As it is our
intent and policy to hold these investments until maturity, we do not have a
material exposure to interest rate risk.
As of December 31, 2019, we had $19,362 million and $5,144 million principal
amount of issued fixed rate debt and variable rate debt, respectively, that
requires U.S. dollar repayment, as well as €1,500 million principal amount of
issued fixed rate debt that requires repayment in Euros. The estimated fair
value of our issued fixed rate debt as of December 31, 2019, including the
foreign currency denominated debt, was $22,351 million. If interest rates were
to increase by 100 basis-points, the fair value of our long-term debt would
decrease by approximately $248 million. If interest rates were to decrease by
100 basis-points, the fair value of our long-term debt would increase by
approximately $441 million. We are subject to interest rate risk on our variable
rate debt as changes in interest rates could adversely affect earnings and cash
flows. A 100 basis-points increase in interest rates, based on 3-month LIBOR,
would have an annualized pre-tax effect of approximately $51 million in our
Consolidated Statements of Operations and Consolidated Statements of Cash Flows,
based on current outstanding borrowings and effective interest rates on our
variable rate debt. While our variable-rate debt may impact earnings and cash
flows as interest rates change, it is not subject to changes in fair value.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies and estimates are those policies and estimates that
are most important and material to the preparation of our Consolidated Financial
Statements, and which require management's most subjective and complex judgments
due to the need to select policies from among alternatives available, and to
make estimates about matters that are inherently uncertain. We base our
estimates on historical experience and other factors that we believe to be
reasonable under the circumstances. On an ongoing basis, we review our estimates
to ensure that these estimates appropriately reflect changes in our business and
new information as it becomes available. If historical experience and other
factors we use to make these estimates do not reasonably reflect future
activity, our results of operations and financial condition could be materially
impacted.
Revenue Recognition
In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance
on recognizing revenue from contracts with customers. The core principle of the
revenue model is that an entity recognizes revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those
goods or services. In applying the revenue model to contracts within its scope,
an entity will: (i) identify the contract(s) with a customer, (ii) identify the
performance obligations in the contract, (iii) determine the transaction price,
(iv) allocate the transaction price to the performance obligations in the
contract and (v) recognize revenue when (or as) the entity satisfies a
performance obligation. In addition to these provisions, the new standard
provides implementation guidance on several other topics, including the
accounting for certain revenue-related costs, as well as enhanced disclosure
requirements. The new guidance requires entities to disclose both quantitative
and qualitative information that enables users of financial statements to
understand the nature, amount, timing and uncertainty of revenue and cash flows
arising from contracts with customers.
The Company adopted this guidance effective January 1, 2018 using the modified
retrospective approach, and therefore, revenue reported for the year 2017 has
not been restated. Based upon review of customer contracts, the Company
concluded the implementation of the new guidance did not have a material
quantitative impact on its 2018 Consolidated Financial Statements as the timing
of revenue recognition for product sales did not significantly change. The new
guidance did however result in additional disclosures as to the nature, amounts,
and concentrations of revenue.
Product Sales Provisions
The following table presents the activity and ending balances for our product
sales provisions for each of the last three years.
                          Discounts
                             and                                                       Distribution
(in millions)            Allowances       Returns        Rebates       Chargebacks         Fees           Total
Reserve balance,
January 1, 2017         $      124      $      708     $      897     $       273     $        197     $   2,199
Provision                      829             423          2,545           2,145              288         6,230
Payments or credits           (786 )          (268 )       (2,348 )        (2,144 )           (337 )      (5,883 )
Reserve balance,
December 31, 2017              167             863          1,094             274              148         2,546
Provision                      865             293          2,551           1,966              212         5,887
Payments or credits           (857 )          (343 )       (2,621 )        (2,031 )           (197 )      (6,049 )
Reserve balance,
December 31, 2018              175             813          1,024             209              163         2,384
Acquisition of
Synergy                          -               3             12               -                1            16
Provision                      776             113          2,265           1,938              195         5,287
Payments or credits           (769 )          (238 )       (2,374 )        (1,979 )           (277 )      (5,637 )
Reserve balance,
December 31, 2019       $      182      $      691     $      927     $       168     $         82     $   2,050


Included in Rebates in the table above are cooperative advertising credits due
to customers of approximately $29 million and $26 million as of December 31,
2019 and 2018, respectively, which are reflected as a reduction of Trade
accounts receivable, net in the Consolidated Balance Sheets.
The development and application of the critical accounting policies associated
with the new revenue recognition guidance, including the policies associated
with each of the above product sales provisions, are discussed in more detail in
Note 2, "SIGNIFICANT ACCOUNTING POLICIES".

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Other Revenues
We generate alliance revenue and service revenue from the licensing of products
and from contract services mainly in the areas of dermatology and topical
medication. Contract service revenue is derived primarily from contract
manufacturing for third parties.
Acquisition-Related Contingent Consideration
Some of the business combinations that we have consummated include contingent
consideration to be potentially paid based upon the occurrence of future events,
such as sales performance and the achievement of certain future development,
regulatory and sales milestones. Acquisition-related contingent consideration
associated with a business combination is initially recognized at fair value and
remeasured each reporting period, with changes in fair value recorded in the
Consolidated Statements of Operations. The estimates of fair value involve the
use of acceptable valuation methods, such as probability-weighted discounted
cash flow analysis and Monte Carlo Simulation (when appropriate), and contain
uncertainties as they require assumptions about the likelihood of achieving
specified milestone criteria, projections of future financial performance and
assumed discount rates. Changes in the fair value of the acquisition-related
contingent consideration result from several factors including changes in the
timing and amount of revenue estimates, changes in probability assumptions with
respect to the likelihood of achieving specified milestone criteria and changes
in discount rates. A change in any of these assumptions could produce a
different fair value, which could have a material impact on our results
of operations. At December 31, 2019, the fair value measurements of
acquisition-related contingent consideration were determined using risk-adjusted
discount rates ranging from 5% to 25%.
Intangible Assets
We evaluate potential impairments of amortizable intangible assets acquired
through asset acquisitions or business combinations if events or changes in
circumstances indicate that the carrying amounts of these assets may not be
recoverable. Our evaluation is based on an assessment of potential indicators of
impairment, such as:
•      an adverse change in legal factors or in the business climate that could
       affect the value of an asset. For example, a successful challenge of our

patent rights resulting in earlier than expected generic competition;

• an adverse change in the extent or manner in which an asset is used or is

expected to be used. For example, a decision not to pursue a product

line-extension strategy to enhance an existing product due to changes in

       market conditions and/or technological advances; or


•      current or forecasted reductions in revenue, operating income, or cash

flows associated with the use of an asset. For example, the introduction

of a competing product that results in a significant loss of market share.

Impairment exists when the carrying value of the asset exceeds the related
estimated undiscounted future cash flows expected to be derived from the asset.
If impairment exists, the carrying value of the asset is adjusted to its fair
value. A discounted cash flow analysis is typically used to determine an asset's
fair value, using estimates and assumptions that market participants would
apply. Some of the estimates and assumptions inherent in a discounted cash flow
model include the amount and timing of the projected future cash flows, and the
discount rate used to reflect the risks inherent in the future cash flows. A
change in any of these estimates and assumptions could produce a different fair
value, which could have a material impact on our results of operations. In
addition, an intangible asset's expected useful life can increase estimation
risk, as longer-lived assets necessarily require longer-term cash flow
forecasts, which for some of our intangible assets can be up to 20 years. In
connection with an impairment evaluation, we also reassess the remaining useful
life of the intangible asset and modify it, as appropriate.
Management continually assesses the useful lives of the Company's long-lived
assets. In 2017 and 2018, management revised the estimated useful lives of
certain intangible assets in connection with market events and changes in
assumptions. In 2017, the useful lives of certain product brands, with an
aggregate carrying value of $7,618 million as of December 31, 2017, were revised
to take into consideration, among other factors, various scenarios related to
the date each product is anticipated to lose its exclusivity and the resulting
potential changes in the forecasted sales. In addition, the useful life of the
Salix Brand, with a carrying value of $569 million as of December 31, 2017, was
revised from seventeen years to ten years to reflect a number of possible
scenarios related to forecasted sales of its product portfolio.
Effective September 12, 2018, the Company changed the estimated useful life of
its Xifaxan®-related intangible assets due to the positive impact of an
agreement between the Company and Actavis Laboratories FL, Inc. ("Actavis")
resolving the intellectual property litigation regarding Xifaxan® tablets, 550
mg. Under the agreement, the parties have agreed to dismiss all litigation
related to Xifaxan® tablets, 550 mg and all intellectual property protecting
Xifaxan® will remain intact and enforceable. As a result, the useful life of the
Xifaxan® related intangible assets was extended from 2024 to January 1, 2028.
This change in the estimated useful life is considered a change in accounting
estimate and will result in changes to the Company's amortization expense
prospectively. As of December 31, 2019, the net carrying value of the Xifaxan®
related intangible assets was $4,309 million.

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Indefinite-lived intangible assets, including IPR&D and the B&L corporate
trademark, are tested for impairment annually, or more frequently if events or
changes in circumstances between annual tests indicate that the asset may be
impaired. Impairment losses on indefinite-lived intangible assets are recognized
based solely on a comparison of their fair value to carrying value, without
consideration of any recoverability test. In particular, we will continue to
monitor closely the progression of our R&D programs as their likelihood of
success is contingent upon the achievement of future milestones. See Item 7
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Overview - Focus on Core Business" for additional information
regarding our R&D programs.
Goodwill
Goodwill is not amortized but is tested for impairment at least annually as of
October 1st at the reporting unit level. A reporting unit is the same as, or one
level below, an operating segment. The fair value of a reporting unit refers to
the price that would be received to sell the unit as a whole in an orderly
transaction between market participants. The Company estimates the fair values
of all reporting units using a discounted cash flow model which utilizes Level 3
unobservable inputs.
The discounted cash flow method relies on assumptions regarding revenue growth
rates, gross profit, projected working capital requirements, selling, general
and administrative expenses, research and development expenses, business
restructuring costs, capital expenditures, income tax rates, discount rates and
terminal growth rates. To estimate fair value, the Company discounts the
forecasted cash flows of each reporting unit. The discount rate the Company uses
represents the estimated weighted average cost of capital, which reflects the
overall level of inherent risk involved in its reporting unit operations and the
rate of return a market participant would expect to earn. To estimate cash flows
beyond the final year of its model, the Company estimates a terminal value by
applying an in-perpetuity growth assumption and discount factor to determine the
reporting unit's terminal value. The Company incorporates the present value of
the resulting terminal value into its estimate of fair value.
The Company forecasted cash flows for each of its reporting units and took into
consideration economic conditions and trends, estimated future operating
results, management's and a market participant's view of growth rates and
product lives, and anticipated future economic conditions. Revenue growth rates
inherent in these forecasts were based on input from internal and external
market research that compare factors such as growth in global economies, recent
industry trends and product life-cycles. Macroeconomic factors such as changes
in economies, changes in the competitive landscape including the unexpected loss
of exclusivity to the Company's product portfolio, changes in government
legislation, product life-cycles, industry consolidations and other changes
beyond the Company's control could have a positive or negative impact on
achieving its targets. Accordingly, if market conditions deteriorate, or if the
Company is unable to execute its strategies, it may be necessary to record
impairment charges in the future.
In January 2017, the FASB issued guidance which simplifies the subsequent
measurement of goodwill by eliminating "Step 2" from the goodwill impairment
test. Instead, goodwill impairment is measured as the amount by which a
reporting unit's carrying value exceeds its fair value. The Company elected to
early adopt this guidance effective January 1, 2018.
Upon adopting the new guidance, the Company tested goodwill for impairment and
determined that the carrying value of the Salix reporting unit exceeded its fair
value. As a result of the adoption of new accounting guidance, the Company
recognized a goodwill impairment of $1,970 million associated with the Salix
reporting unit.
2018 Annual Goodwill Impairment Test
The Company conducted its annual goodwill impairment test as of October 1, 2018
and determined that the carrying value of the Dentistry reporting unit exceeded
its fair value and, as a result, the Company recognized a goodwill impairment of
$109 million for the Dentistry reporting unit, representing the full amount of
goodwill for the reporting unit. Changing market conditions such as: (i) an
increasing competitive environment and (ii) increasing pricing pressures
negatively impacted the reporting unit's operating results. The Company is
taking steps to address these changing market and business conditions.
The Company's remaining reporting units passed the goodwill impairment test as
the estimated fair value of each reporting unit exceeded its carrying value at
the date of testing and, therefore, there was no impairment to goodwill for any
reporting unit other than the Dentistry reporting unit. In order to evaluate the
sensitivity of its fair value calculations on the goodwill impairment test, the
Company compared the carrying value of each reporting unit to its fair value as
of October 1, 2018, the date of testing. As of October 1, 2018, the fair value
of each reporting unit with associated goodwill exceeded its carrying value by
more than 15%.
2019 Annual Goodwill Impairment Test
The Company conducted its annual goodwill impairment test as of October 1, 2019
by first assessing qualitative factors to determine whether it is more likely
than not that the fair value of a reporting unit is less than its carrying
amount. Where the qualitative assessment suggested that it was more likely than
not that the fair value of a reporting unit was less than its carrying

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amount, a quantitative fair value test was performed for that reporting unit. In
each quantitative fair value test performed, the fair value was greater than the
carrying value of the reporting unit. As a result, there was no impairment to
the goodwill of any reporting unit. If market conditions deteriorate, or if the
Company is unable to execute its strategies, it may be necessary to record
impairment charges in the future. Specifically, the Company continues to assess
the performance of the Ortho Dermatologics reporting unit and the Neuro and
Other reporting unit as compared to their respective projections and will
perform qualitative interim assessments of the carrying value and fair value on
a quarterly basis to determine if impairment testing of goodwill will be
warranted. The Company performed quantitative fair value tests for the Ortho
Dermatologics reporting unit and the Neuro and Other reporting unit as of
October 1, 2019, utilizing long-term growth rates of 2.0% and 1.5%, and discount
rates of 9.8% and 9.0%, respectively, in estimation of the fair value of these
reporting units.
As previously discussed the Company estimated the fair value of each reporting
unit using an income approach which values the unit based on the future cash
flows expected from that reporting unit. Future cash flows are based on
forward-looking information regarding market share and costs for each reporting
unit and are discounted using an appropriate discount rate. Future discounted
cash flows can be affected by changes in industry or market conditions or the
rate and extent to which anticipated synergies or cost savings are realized with
newly acquired entities. The Company performed its annual impairment test as of
October 1, 2019, utilizing long-term growth rates for its reporting units
ranging from 1.5% to 3.0% and discount rates applied to the estimated cash flows
ranging from 8.0% to 9.8% in estimation of fair value. To estimate cash flows
beyond the final year of its model, the Company estimates a terminal value by
applying an in-perpetuity growth assumption and discount factor to determine the
reporting unit's terminal value.
See Note 9, "INTANGIBLE ASSETS AND GOODWILL" to our audited Consolidated
Financial Statements for further details on the goodwill impairments recognized
in 2018 and 2017.
Contingencies
In the normal course of business, we are subject to loss contingencies, such as
claims and assessments arising from litigation and other legal proceedings,
contractual indemnities, product and environmental liabilities and tax matters.
Other than loss contingencies that are assumed in business combinations for
which we can reliably estimate the fair value, we are required to accrue for
such loss contingencies if it is probable that the outcome will be unfavorable
and if the amount of the loss can be reasonably estimated. We evaluate our
exposure to loss based on the progress of each contingency, experience in
similar contingencies and consultation with our legal counsel. We re-evaluate
all contingencies as additional information becomes available. Given the
uncertainties inherent in complex litigation and other contingencies, these
evaluations can involve significant judgment about future events. The ultimate
outcome of any litigation or other contingency may be material to our results of
operations, financial condition and cash flows. See Note 21, "LEGAL PROCEEDINGS"
to our audited Consolidated Financial Statements for further details regarding
our current legal proceedings.
Income Taxes
We have operations in various countries that have differing tax laws and rates.
Our tax structure is supported by current domestic tax laws in the countries in
which we operate and the application of tax treaties between the various
countries in which we operate. Our income tax reporting is subject to audit by
domestic and foreign tax authorities. Our effective tax rate may change from
year to year based on changes in the mix of activities and income earned under
our intercompany arrangements among the different jurisdictions in which we
operate, changes in tax laws in these jurisdictions, changes in tax treaties
between various countries in which we operate, changes in our eligibility for
benefits under those tax treaties and changes in the estimated values of
deferred tax assets and liabilities. Such changes could result in an increase in
the effective tax rate on all or a portion of our income and/or any of our
subsidiaries.
Our provision for income taxes is based on a number of estimates and assumptions
made by management. Our consolidated income tax rate is affected by the amount
of income earned in our various operating jurisdictions, the availability of
benefits under tax treaties and the rates of taxes payable in respect of that
income. We enter into many transactions and arrangements in the ordinary course
of business in which the tax treatment is not entirely certain. We must
therefore make estimates and judgments based on our knowledge and understanding
of applicable tax laws and tax treaties, and the application of those tax laws
and tax treaties to our business, in determining our consolidated tax provision.
For example, certain countries could seek to tax a greater share of income than
has been provided for by us. The final outcome of any audits by taxation
authorities may differ from the estimates and assumptions we have used in
determining our consolidated income tax provisions and accruals. This could
result in a material effect on our consolidated income tax provision, results of
operations, and financial condition for the period in which such determinations
are made.
Our income tax returns are subject to audit in various jurisdictions. Existing
and future audits by, or other disputes with, tax authorities may not be
resolved favorably for us and could have a material adverse effect on our
reported effective tax rate and after-tax cash flows. We record liabilities for
uncertain tax positions, which involve significant management judgment. New laws

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and new interpretations of laws and rulings by tax authorities may affect the
liability for uncertain tax positions. Due to the subjectivity and complex
nature of the underlying issues, actual payments or assessments may differ from
our estimates. To the extent that our estimates differ from amounts eventually
assessed and paid our income and cash flows may be materially and adversely
affected.
We assess whether it is more likely than not that we will realize the tax
benefits associated with our deferred tax assets and establish a valuation
allowance for assets that are not expected to result in a realized tax benefit.
A significant amount of judgment is used in this process, including preparation
of forecasts of future taxable income and evaluation of tax planning
initiatives. If we revise these forecasts or determine that certain planning
events will not occur, an adjustment to the valuation allowance will be made to
tax expense in the period such determination is made.
The Company's Benefit from income taxes for the year 2017 included provisional
net tax benefits of $975 million attributable to the Tax Act for: (i) the
re-measurement of certain deferred tax assets and liabilities based on the rates
at which they are expected to reverse in the future of $774 million, (ii) the
one-time transition tax on the accumulated previously untaxed earnings of
foreign subsidiaries (the "Transition Toll Tax") of $88 million and (iii) the
decrease in deferred tax assets attributable to certain legal accruals, the
deductibility of which is uncertain for U.S. federal income tax purposes, of $10
million. We provisionally utilized NOLs to offset the provisionally determined
$88 million Transition Toll Tax and therefore no amount was recorded as payable.
The Company has previously provided for residual U.S. federal income tax on its
outside basis differences in certain foreign subsidiaries which, due to the Tax
Act, are no longer taxable. As such, our residual U.S. federal income tax
liability of $299 million prior to the law change was reversed and we recognized
a deferred tax benefit of $299 million in the fourth quarter of 2017.
The provisional amounts included in Benefit from income taxes for the year 2017,
including the Transition Toll Tax, were finalized during 2018. Differences
between the provisional net income tax benefits provided for the year 2017
attributable to the Tax Act of $975 million, as previously disclosed, and the
benefit for income taxes as finalized are included in the Benefit from income
taxes for 2018 and were not material to the Company's financial results for the
year 2018.
Share-Based Compensation
We recognize employee share-based compensation, including grants of stock
options and RSUs, at estimated fair value. As there is no market for trading our
employee stock options, we use the Black-Scholes option-pricing model to
calculate stock option fair values, which requires certain assumptions related
to the expected life of the stock option, future stock price volatility,
risk-free interest rate and dividend yield. The expected life of the stock
option is based on historical exercise and forfeiture patterns. The expected
volatility of our common stock is estimated by using implied volatility in
market traded options. The risk-free interest rate is based on the rate at the
time of grant for U.S. Treasury bonds with a remaining term equal to the
expected life of the stock option. Dividend yield is based on the stock option's
exercise price and expected annual dividend rate at the time of grant. Changes
to any of these assumptions, or the use of a different option-pricing model,
such as the lattice model, could produce a different fair value for share-based
compensation expense, which could have a material impact on our results
of operations.
We determine the fair value of each RSU granted based on the trading price of
our common shares on the date of grant, unless the vesting of the RSU is
conditional on the attainment of any applicable performance goals based on total
shareholder return, in which case we use a Monte Carlo simulation model. The
Monte Carlo simulation model utilizes multiple input variables to estimate the
probability that the performance condition will be achieved. Changes to any of
these inputs could materially affect the measurement of the fair value of the
performance-based RSUs.
We also have performance-based RSUs that vest upon attainment of certain
performance targets. We recognize the expense associated with these
performance-based RSUs based on the number of RSUs we expect to vest, which is
estimated by comparing our latest forecast to the applicable performance
targets. If RSUs do not vest as a result of a determination that the prescribed
performance goals failed to be attained, then no expense would be recognized and
any expense previously recognized for the RSUs would be reversed upon such
determination.
NEW ACCOUNTING STANDARDS
Information regarding the recently issued new accounting guidance (adopted and
not adopted as of December 31, 2019) is contained in Note 2, "SIGNIFICANT
ACCOUNTING POLICIES" to our audited Consolidated Financial Statements.
FORWARD-LOOKING STATEMENTS
Caution regarding forward-looking information and statements and "Safe-Harbor"
statements under the U.S. Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities laws:

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To the extent any statements made in this Form 10-K contain information that is
not historical, these statements are forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, and may be
forward-looking information within the meaning defined under applicable Canadian
securities laws (collectively, "forward-looking statements").
These forward-looking statements relate to, among other things: our business
strategy, business plans and prospects and forecasts and changes thereto;
product pipeline, prospective products and product approvals, product
development and future performance and results of current and anticipated
products; anticipated revenues for our products; anticipated growth in our Ortho
Dermatologics business; expected R&D and marketing spend; our expected primary
cash and working capital requirements for 2020 and beyond; our plans for
continued improvement in operational efficiency and the anticipated impact of
such plans; our liquidity and our ability to satisfy our debt maturities as they
become due; our ability to reduce debt levels; our ability to meet the financial
and other covenants contained in our Fourth Amended and Restated Credit and
Guaranty Agreement (the "Restated Credit Agreement") and senior notes
indentures; the impact of our distribution, fulfillment and other third-party
arrangements; proposed pricing actions; exposure to foreign currency exchange
rate changes and interest rate changes; the outcome of contingencies, such as
litigation, subpoenas, investigations, reviews, audits and regulatory
proceedings; the anticipated impact of the adoption of new accounting standards;
general market conditions; our expectations regarding our financial performance,
including revenues, expenses, gross margins and income taxes; and our impairment
assessments, including the assumptions used therein and the results thereof.
Forward-looking statements can generally be identified by the use of words such
as "believe", "anticipate", "expect", "intend", "estimate", "plan", "continue",
"will", "may", "could", "would", "should", "target", "potential", "opportunity",
"designed", "create", "predict", "project", "forecast", "seek", "strive",
"ongoing" or "increase" and variations or other similar expressions. In
addition, any statements that refer to expectations, intentions, projections or
other characterizations of future events or circumstances are forward-looking
statements. These forward-looking statements may not be appropriate for other
purposes. Although we have previously indicated certain of these statements set
out herein, all of the statements in this Form 10-K that contain forward-looking
statements are qualified by these cautionary statements. These statements are
based upon the current expectations and beliefs of management. Although we
believe that the expectations reflected in such forward-looking statements are
reasonable, such statements involve risks and uncertainties, and undue reliance
should not be placed on such statements. Certain material factors or assumptions
are applied in making such forward-looking statements, including, but not
limited to, factors and assumptions regarding the items previously outlined,
those factors, risks and uncertainties outlined below and the assumption that
none of these factors, risks and uncertainties will cause actual results or
events to differ materially from those described in such forward-looking
statements. Actual results may differ materially from those expressed or implied
in such statements. Important factors, risks and uncertainties that could cause
actual results to differ materially from these expectations include, among other
things, the following:
•      the expense, timing and outcome of legal and governmental proceedings,

investigations and information requests relating to, among other matters,

our past distribution, marketing, pricing, disclosure and accounting

practices (including with respect to our former relationship with Philidor

Rx Services, LLC ("Philidor")), including pending investigations by the
       U.S. Attorney's Office for the District of Massachusetts and the U.S.
       Attorney's Office for the Southern District of New York, the pending

investigations by the U.S. Securities and Exchange Commission (the "SEC")

of the Company, the investigation order issued by the Company from the

Autorité des marchés financiers (the "AMF") (the Company's principal

       securities regulator in Canada), a number of pending securities
       litigations (including certain pending opt-out actions in the U.S.
       (related to the recently settled securities class action, (which is
       subject to final court approval, and remains subject to the risk and

uncertainty that the U.S. District Court for the District of New Jersey

may not approve the $1,210 million settlement agreement)) and the pending

class action litigation in Canada and related opt-out actions) and

purported class actions under the federal RICO statute and other claims,

       investigations or proceedings that may be initiated or that may be
       asserted;


•      potential additional litigation and regulatory investigations (and any
       costs, expenses, use of resources, diversion of management time and
       efforts, liability and damages that may result therefrom), negative

publicity and reputational harm on our Company, products and business that

may result from the past and ongoing public scrutiny of our past

distribution, marketing, pricing, disclosure and accounting practices and

from our former relationship with Philidor;

• the past and ongoing scrutiny of our legacy business practices, including

with respect to pricing (including the investigations by the U.S.

Attorney's Offices for the District of Massachusetts and the Southern

District of New York), and any pricing controls or price adjustments that

may be sought or imposed on our products as a result thereof;

• pricing decisions that we have implemented, or may in the future elect to

implement, such as the Patient Access and Pricing Committee's commitment

that the average annual price increase for our branded prescription

pharmaceutical products will be set at no greater than single digits, or

any future pricing actions we may take following review by our Patient

Access and Pricing Committee (which is responsible for the pricing of our

       drugs);



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• legislative or policy efforts, including those that may be introduced and

passed by the U.S. Congress, designed to reduce patient out-of-pocket

       costs for medicines, which could result in new mandatory rebates and
       discounts or other pricing restrictions, controls or regulations
       (including mandatory price reductions);

• ongoing oversight and review of our products and facilities by regulatory

and governmental agencies, including periodic audits by the U.S. Food and

Drug Administration (the "FDA") and the results thereof;


•      actions by the FDA or other regulatory authorities with respect to our
       products or facilities;

• our substantial debt (and potential additional future indebtedness) and

       current and future debt service obligations, our ability to reduce our
       outstanding debt levels and the resulting impact on our financial
       condition, cash flows and results of operations;


•      our ability to meet the financial and other covenants contained in our
       Restated Credit Agreement, senior notes indentures and other current or

future debt agreements and the limitations, restrictions and prohibitions

such covenants impose or may impose on the way we conduct our business,

including prohibitions on incurring additional debt if certain financial

covenants are not met, limitations on the amount of additional obligations

we are able to incur pursuant to other covenants, and restrictions on our

       ability to make certain investments and other restricted payments;

• any default under the terms of our senior notes indentures or Restated

       Credit Agreement and our ability, if any, to cure or obtain waivers of
       such default;


•      any delay in the filing of any future financial statements or other

filings and any default under the terms of our senior notes indentures or

Restated Credit Agreement as a result of such delays;

• any downgrade by rating agencies in our credit ratings, which may impact,

among other things, our ability to raise debt and the cost of capital for

additional debt issuances;

• any reductions in, or changes in the assumptions used in, our forecasts

for fiscal year 2020 or beyond, which could lead to, among other things:

       (i) a failure to meet the financial and/or other covenants contained in
       our Restated Credit Agreement and/or senior notes indentures and/or (ii)
       impairment in the goodwill associated with certain of our reporting units
       or impairment charges related to certain of our products or other
       intangible assets, which impairments could be material;

• changes in the assumptions used in connection with our impairment analyses

or assessments, which would lead to a change in such impairment analyses

and assessments and which could result in an impairment in the goodwill

associated with any of our reporting units or impairment charges related

       to certain of our products or other intangible assets;


•      the uncertainties associated with the acquisition and launch of new

products (such as our recently launched Bryhali®, Duobrii® and Ocuvite®

Eye Performance products), including, but not limited to, our ability to

       provide the time, resources, expertise and costs required for the
       commercial launch of new products, the acceptance and demand for new
       pharmaceutical products, and the impact of competitive products
       and pricing, which could lead to material impairment charges;

• our ability or inability to extend the profitable life of our products,

       including through line extensions and other life-cycle programs;


•      our ability to retain, motivate and recruit executives and other
       key employees;

• our ability to implement effective succession planning for our executives

       and key employees;


•      factors impacting our ability to achieve anticipated growth in our Ortho
       Dermatologics business, including the success of recently launched

products (such as Bryhali® and Duobrii®), the ability to successfully

       implement and operate Dermatology.com, our new cash-pay prescription
       program for certain of our Ortho Dermatologics branded products, and the
       ability of such program to achieve the anticipated goals respecting
       patient access and fulfillment, the approval of pending and pipeline
       products (and the timing of such approvals), expected geographic
       expansion, changes in estimates on market potential for dermatology
       products and continued investment in and success of our sales force;


•      factors impacting our ability to achieve anticipated revenues for our
       products, including changes in anticipated marketing spend on such
       products and launch of competing products;

• the challenges and difficulties associated with managing a large complex

       business, which has, in the past, grown rapidly;



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• our ability to compete against companies that are larger and have greater

financial, technical and human resources than we do, as well as other

competitive factors, such as technological advances achieved, patents

obtained and new products introduced by our competitors;

• our ability to effectively operate and grow our businesses in light of the

challenges that the Company has faced and market conditions, including

       with respect to its substantial debt, pending investigations and legal
       proceedings, scrutiny of our past pricing and other practices, and
       limitations on the way we conduct business imposed by the covenants
       contained in our Restated Credit Agreement, senior notes indentures and
       the agreements governing our other indebtedness;

• the extent to which our products are reimbursed by government authorities,

       pharmacy benefit managers ("PBMs") and other third-party payors; the
       impact our distribution, pricing and other practices (including as it
       relates to our current relationship with Walgreen Co. ("Walgreens")) may
       have on the decisions of such government authorities, PBMs and other

third-party payors to reimburse our products; and the impact of obtaining

or maintaining such reimbursement on the price and sales of our products;

• the inclusion of our products on formularies or our ability to achieve

       favorable formulary status, as well as the impact on the price and sales
       of our products in connection therewith;

• the consolidation of wholesalers, retail drug chains and other customer

groups and the impact of such industry consolidation on our business;

•      our eligibility for benefits under tax treaties and the continued
       availability of low effective tax rates for the business profits of
       certain of our subsidiaries;

• the actions of our third-party partners or service providers of research,

development, manufacturing, marketing, distribution or other services,

including their compliance with applicable laws and contracts, which

actions may be beyond our control or influence, and the impact of such

actions on our Company, including the impact to the Company of our former

       relationship with Philidor and any alleged legal or contractual
       non-compliance by Philidor;

• the risks associated with the international scope of our operations,

including our presence in emerging markets and the challenges we face when

entering and operating in new and different geographic markets (including

the challenges created by new and different regulatory regimes in such

countries and the need to comply with applicable anti-bribery and economic

sanctions laws and regulations);

• adverse global economic conditions and credit markets and foreign currency

       exchange uncertainty and volatility in certain of the countries in which
       we do business;

• the impact of the United States-Mexico-Canada Agreement ("USMCA") and any

potential changes to other trade agreements;

• the final outcome and impact of Brexit negotiations;

• the trade conflict between the United States and China;

• the extent and impact of the coronavirus reported to have surfaced in China;

• our ability to obtain, maintain and license sufficient intellectual

       property rights over our products and enforce and defend against
       challenges to such intellectual property (such as in connection with the
       recent filing by Sandoz Inc. ("Sandoz") and Norwich Pharmaceuticals Inc.

("Norwich") of their respective Abbreviated New Drug Application ("ANDA")

for Xifaxan® (rifaximin) 550 mg tablets and the Company's related lawsuit

       filed against Sandoz in connection therewith. The Company intends to file
       suit against Norwich within the regulated timeframe);


•      the introduction of generic, biosimilar or other competitors of our
       branded products and other products, including the introduction of

products that compete against our products that do not have patent or data

exclusivity rights;

• our ability to identify, finance, acquire, close and integrate acquisition

targets successfully and on a timely basis and the difficulties,

challenges, time and resources associated with the integration of acquired

companies, businesses and products;

• any additional divestitures of our assets or businesses and our ability to

successfully complete any such divestitures on commercially reasonable

       terms and on a timely basis, or at all, and the impact of any such
       divestitures on our Company, including the reduction in the size or scope
       of our business or market share, loss of revenue, any loss on sale,
       including any resultant impairments of goodwill or other assets, or any

adverse tax consequences suffered as a result of any such divestitures;

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• the expense, timing and outcome of pending or future legal and

governmental proceedings, arbitrations, investigations, subpoenas, tax and

other regulatory audits, examinations, reviews and regulatory proceedings

       against us or relating to us and settlements thereof;


•      our ability to negotiate the terms of or obtain court approval for the
       settlement of certain legal and regulatory proceedings;

• our ability to obtain components, raw materials or finished products

supplied by third parties (some of which may be single-sourced) and other

manufacturing and related supply difficulties, interruptions and delays;

•      the disruption of delivery of our products and the routine flow of
       manufactured goods;

• economic factors over which the Company has no control, including changes

in inflation, interest rates, foreign currency rates, and the potential

effect of such factors on revenues, expenses and resulting margins;

• interest rate risks associated with our floating rate debt borrowings;

• our ability to effectively distribute our products and the effectiveness

and success of our distribution arrangements, including the impact of our

       arrangements with Walgreens;


•      our ability to effectively promote our own products and those of our
       co-promotion partners;

• the success of our fulfillment arrangements with Walgreens, including

market acceptance of, or market reaction to, such arrangements (including

by customers, doctors, patients, PBMs, third-party payors and governmental

       agencies), and the continued compliance of such arrangements with
       applicable laws;

• our ability to secure and maintain third-party research, development,

manufacturing, licensing, marketing or distribution arrangements;

• the risk that our products could cause, or be alleged to cause, personal

injury and adverse effects, leading to potential lawsuits, product

liability claims and damages and/or recalls or withdrawals of products

from the market;

• the mandatory or voluntary recall or withdrawal of our products from the

market and the costs associated therewith;

• the availability of, and our ability to obtain and maintain, adequate

insurance coverage and/or our ability to cover or insure against the total

amount of the claims and liabilities we face, whether through third-party

insurance or self-insurance;

• the difficulty in predicting the expense, timing and outcome within our

legal and regulatory environment, including with respect to approvals by

the FDA, Health Canada and similar agencies in other countries, legal and

regulatory proceedings and settlements thereof, the protection afforded by

our patents and other intellectual and proprietary property, successful

       generic challenges to our products and infringement or alleged
       infringement of the intellectual property of others;


•      the results of continuing safety and efficacy studies by industry and
       government agencies;

• the success of preclinical and clinical trials for our drug development

pipeline or delays in clinical trials that adversely impact the timely

       commercialization of our pipeline products, as well as other factors
       impacting the commercial success of our products, which could lead to
       material impairment charges;


•      the results of management reviews of our research and development

portfolio (including following the receipt of clinical results or feedback

from the FDA or other regulatory authorities), which could result in

terminations of specific projects which, in turn, could lead to material

impairment charges;

• the seasonality of sales of certain of our products;

• declines in the pricing and sales volume of certain of our products that

       are distributed or marketed by third parties, over which we have no or
       limited control;


•      compliance by the Company or our third-party partners and service

providers (over whom we may have limited influence), or the failure of our

Company or these third parties to comply, with health care "fraud and

abuse" laws and other extensive regulation of our marketing, promotional

and business practices (including with respect to pricing), worldwide

       anti-bribery laws (including the U.S. Foreign Corrupt Practices Act and
       the Canadian Corruption of Foreign Public Officials Act), worldwide
       economic sanctions and/or export laws, worldwide environmental laws and
       regulation and privacy and security regulations;



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• the impacts of the Patient Protection and Affordable Care Act, as amended

by the Health Care and Education Reconciliation Act of 2010 (the "Health

Care Reform Act") and potential amendment thereof and other legislative

and regulatory health care reforms in the countries in which we operate,

including with respect to recent government inquiries on pricing;

• the impact of any changes in or reforms to the legislation, laws, rules,

regulation and guidance that apply to the Company and its business and

products or the enactment of any new or proposed legislation, laws, rules,

       regulations or guidance that will impact or apply to the Company or its
       businesses or products;

• the impact of changes in federal laws and policy under consideration by

       the Trump administration and Congress, including the effect that such
       changes will have on fiscal and tax policies, the potential revision of
       all or portions of the Health Care Reform Act, international trade

agreements and policies and policy efforts designed to reduce patient

out-of-pocket costs for medicines (which could result in new mandatory

rebates and discounts or other pricing restrictions);

• illegal distribution or sale of counterfeit versions of our products; and

• interruptions, breakdowns or breaches in our information technology systems.

Additional information about these factors and about the material factors or
assumptions underlying such forward-looking statements may be found elsewhere in
this Form 10-K, under Item 1A. "Risk Factors" and in the Company's other filings
with the SEC and the Canadian Securities Administrators (the "CSA"). When
relying on our forward-looking statements to make decisions with respect to the
Company, investors and others should carefully consider the foregoing factors
and other uncertainties and potential events. These forward-looking statements
speak only as of the date made. We undertake no obligation to update or revise
any of these forward-looking statements to reflect events or circumstances after
the date of this Form 10-K or to reflect actual outcomes, except as required by
law. We caution that, as it is not possible to predict or identify all relevant
factors that may impact forward-looking statements, the foregoing list of
important factors that may affect future results is not exhaustive and should
not be considered a complete statement of all potential risks and uncertainties.
Item 7A.  Quantitative and Qualitative Disclosures About Market Risk
Information relating to quantitative and qualitative disclosures about market
risk is detailed in Item 7 "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Quantitative and Qualitative Disclosures
About Market Risk" and is incorporated herein by reference.
Item 8.  Financial Statements and Supplementary Data
The information required by this Item is contained in the financial statements
set forth in Item 15 "Exhibits and Financial Statement Schedules" as part of
this Form 10-K and is incorporated herein by reference.
Item 9.  Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
Item 9A.  Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company's management, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, has evaluated the effectiveness
of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of December 31, 2019. Based on that evaluation,
the Company's Chief Executive Officer and the Company's Chief Financial Officer
have concluded that as of December 31, 2019, the Company's disclosure controls
and procedures were effective to provide reasonable assurance that the
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to management as
appropriate to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control Over Financial Reporting
The Company's management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act. The Company's internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles.

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Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
Under the supervision and with the participation of management, including the
Company's Chief Executive Officer and the Company's Chief Financial Officer, the
Company conducted an evaluation of the effectiveness of its internal control
over financial reporting as of December 31, 2019 based on the framework
described in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on that
evaluation, management has concluded that the Company maintained effective
internal control over financial reporting as of December 31, 2019.
The effectiveness of the Company's internal control over financial reporting as
of December 31, 2019 has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report which
appears herein.
Changes in Internal Control over Financial Reporting
There have not been any changes in the Company's internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) during the last fiscal quarter of 2019 that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
Item 9B.  Other Information
None.

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